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Oral Answers to Questions
(11 years, 4 months ago)
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Mark Garnier (Wyre Forest) (Con)
1. What assessment he has made of the effectiveness of his Department's innovation fund projects in helping disadvantaged young people.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The innovation fund is a £30 million investment testing cutting-edge projects to improve the employment prospects of our most disadvantaged 14 to 24-year-olds. So far the fund is working well: 6,000 young people are being helped, and recent statistics show 1,800 positive outcomes—each an improvement such as better school attendance, improved skills, qualifications or a move into work—which are being measured for future expansion.
Mark Garnier
I know my right hon. Friend recognises the importance of financial education and financial literacy in schools. Can he repeat his support for financial education to start in primary schools and will he reassure the House that he recognises the need for his Department to work closely with the Department for Education to deliver this important measure?
Mr Duncan Smith
I can confirm that a strong passion of mine—and certainly one of the DWP’s—is to get financial education literacy into the national curriculum. I hope that view would be shared on both sides of the House. Clearly, people coming out of the education system need at some point to understand what interest rates are, for example—otherwise they will get ripped off by unscrupulous lenders. The national curriculum is published in its final form for first teaching in the autumn of September 2014. The Department for Education and ourselves are consulting on including financial education in it, and I believe that we are likely to get that, so I can say an honest “yes” to my hon. Friend.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
The Daily Record recently alleged that Youth Contract wage incentives are being handed out to people already in work—just to give the illusion that the funds are being used. What investigation has the right hon. Gentleman made of that report?
Mr Duncan Smith
This is not directly related to the innovation fund, which is about testing programmes so that extra skills, quality and money can eventually be put in. However, I am aware of what the hon. Lady says, as is the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Fareham (Mr Hoban) who is looking into it and will ensure that action is taken. If the allegation is true, we will act; if not, it will simply be a scurrilous report.
Mark Pawsey (Rugby) (Con)
2. What assessment he has made of the use of electronic correspondence by the Child Support Agency.
The Minister of State, Department for Work and Pensions (Steve Webb)
For the 1993 and 2003 child maintenance schemes, the preferred method of contact is by telephone—simply because of the sensitive nature of the material, which would otherwise have to be e-mailed. However, the ability to provide electronic communication is being embedded into the design of the 2012 scheme.
Mark Pawsey
I was very surprised when my constituent, Louise Cawser, was told by the agency that she could not deal with it by e-mail, because there was no effective tool to provide sufficient security. Given the drive across government as a whole and in various agencies to consult electronically, will the Minister provide some reassurance to clients of the Child Support Agency about how this will develop in the future?
Steve Webb
Yes, I am pleased to say that, starting later this year, clients on the 2012 system will have the equivalent of internet banking, so they will be able to log on, see their account and report changes of circumstances. We will close all existing cases over the next few years, and those who want to remain in the statutory system will move on to the 2012 system and they will have that service available to them.
Barbara Keeley (Worsley and Eccles South) (Lab)
3. What assessment he has made of the most recent data on the performance of the Work programme.
The Minister of State, Department for Work and Pensions (Mr Mark Hoban)
Work programme performance has significantly improved; it is working. The numbers of people finding lasting work—at least six months for most people or three months for the hardest to help—has increased significantly from 9,000 in March 2012 to 132,000 in March 2013.
Barbara Keeley
Recent data on the Work programme show that it has failed to meet its minimum performance level in every category, and that the proportion of employment and support allowance claimants achieving a sustained job was less than a third of the minimum. Every week, I hear from unemployed people in my constituency who are desperate to find a job, and they are being utterly let down by this programme. What is the Minister going to do about it?
Mr Hoban
I just point out that in the hon. Lady’s area, the Work programme is exceeding its targets for young people aged between 18 and 24. She should get to grip with the facts on what is happening with the Work programme. It is helping people into work, and particularly in her area. On the point about ESA claimants, she should not forget that when her party was in government, it wrote those people off. This is the first time we have had a major programme to get people who have been out of work through sickness or ill health back into employment. More work needs to be done, but what we are doing is a significant improvement on how the Labour Government abandoned those people in the past.
Nigel Mills (Amber Valley) (Con)
Will the Minister join me in welcoming the improvements in performance of the Work programme providers that cover my constituency of Amber Valley? Notwithstanding that, there are clearly some areas of concern. Will the Department now use the market shift mechanism to make sure that those who are not succeeding will have more encouragement to improve in the future?
Mr Hoban
My hon. Friend is right. Although performance has improved significantly, more progress is needed. We aim to reward the best providers by shifting more referrals to them, and that will start happening on 1 August. At that time, at least 14 market share shifts will take place to encourage good performers and to send a message to those who are performing badly.
Dame Anne Begg (Aberdeen South) (Lab)
The Minister must be disappointed by the figures relating to employment and support allowance. The people concerned were not abandoned by the last Government; there was a programme called Pathways to Work, and the figures were far better then than they have been during the two years of the Work programme. Will the Minister please look into what is happening to this cohort with a sense of urgency? These people are being let down.
Mr Hoban
I disagree with the hon. Lady’s presumption that they are being let down. I have ensured that each provider has an action plan. We have also set up a “best practice group” to share information about what is working well, and to ensure that each provider gives the best possible service to this important group of people.
George Hollingbery (Meon Valley) (Con)
A couple of weeks ago I met George Gallop of A4e, who runs the Work programme in Southampton. He introduced me to two young people whose lives had been utterly transformed by the programme. It was truly inspirational. Does the Minister agree that we should be celebrating such successes, and spreading the techniques employed by Mr Gallop more widely around the country?
Mr Hoban
My hon. Friend is right. One important thing that we can all do is visit Work programme providers in order to understand what they are doing. I have been doing that since I took over this job in September. It is clear that lives are being transformed, and that people who might otherwise have been out of work for years are gaining employment as a consequence of the programme. We need to learn from what is successful, and spread best practice throughout the country.
Fiona Mactaggart (Slough) (Lab)
What does the Minister plan to do with people who come out at the other end of the Work programme? According to a letter that I have received from my local branch of Jobcentre Plus, the programme’s intensive regime will reduce the number of people on benefits, but will not increase the number of those in work. Will the Minister assure us that the activities involved in following up people who have been left without work on the programme will not include bullying them off benefits, and will include getting them into work?
Mr Hoban
It was the hon. Lady’s party, when it was in government, that established targets for sanctions on jobseekers—targets that the present Government scrapped.
A range of measures exist to support those who are leaving the Work programme and bring them closer to employment. However, we are also asking people to go into the jobcentre every day in order to receive one-to-one support, and I think we shall find that that is very effective.
Mr Philip Hollobone (Kettering) (Con)
A4e tells me that 38% of its Work programme clients in the east midlands are aged between 18 and 24, and that one of the biggest challenges that they face is the provision of inadequate or irregular transport services in rural areas, and bad bus services in particular. Is the Minister aware of that problem, and what work can he do with the Department for Transport to deal with it?
Mr Hoban
My hon. Friend has raised an issue that applies to a number of areas. Work programme providers, Jobcentre Plus, employers and transport companies have worked together well to improve transport links, and to ensure that as many people as possible can travel to a job that enables them to look after themselves and their families.
Damian Hinds (East Hampshire) (Con)
4. What contribution his Department has made to strengthening the social investment market.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Social investment involves taking a new approach to the tackling of our most entrenched social problems, thus enabling investors to have a positive impact on society and make a return that guarantees more long-term investment. After initiating the scheme, the Government, along with Sir Ronnie Cohen and others, launched Big Society Capital, which is the world’s first institution of its kind, and established the Early Intervention Foundation. My Department has set up 10 social impact bonds, taking the total in the country to 13. We are improving the concept, and we are now a world leader in the field.
Damian Hinds
Will my right hon. Friend seek to maximise the involvement of retail investors in the social investment market? Does he agree that the new social investment tax relief has great potential to unlock new funding to finance valuable local projects and help to turn lives around?
Mr Duncan Smith
I will certainly try to encourage precisely those people to invest. The aim is eventually to establish a proven project which delivers a social return, thus encouraging both trusts and private sector investors, as well as local authorities, to supply guaranteed funds to organisations that would otherwise have no funding. We think that the potential market is enormous. The Americans, among others, have said that they are grateful for our leadership in this regard, and the G8 was very keen on hearing from us.
Guy Opperman (Hexham) (Con)
Does the Secretary of State agree that social investment could be channelled through local regional banks and expanded credit unions, which are surely the best-placed organisations and the closest to their local communities?
Mr Duncan Smith
All those are options. We have put in extra investment in credit unions—some £35 million—to try to increase their scope and to bring them together again. My hon. Friend is right. Local is what this is all about. It is about giving projects in the local area, with local authorities, a chance to obtain reasonable, long-term investment to deliver life-changing results. It is interesting that, at the G8 conference—this is the most important thing—many of the countries said that this is the way for them to go, too. This country has led on this area, thanks to the coalition.
Naomi Long (Belfast East) (Alliance)
5. How many people who worked in Northern Ireland and paid national insurance contributions while aged 14 or 15 between 1947 and 1957, which did not count towards their qualifying years for a full basic state pension, fall two years or less short of the years needed to qualify for such a pension.
The Minister of State, Department for Work and Pensions (Steve Webb)
As the hon. Lady will be aware, state pensions in Northern Ireland are the responsibility of Ministers in the Northern Ireland Executive. Her Majesty’s Revenue and Customs is responsible for national insurance matters. However, I am advised by HMRC that the information that she has requested could be obtained only at disproportionate cost.
Naomi Long
I thank the Minister for his answer, but some of the people who worked during that period, before the school leaving age changed in Northern Ireland, would be resident in other parts of the UK as well as in Northern Ireland. Therefore, will he undertake at least to raise the matter again with HMRC, in order that it can reconsider its response?
Steve Webb
The issue for HMRC is that the records that the hon. Lady is talking about—those of people who left school at 14 and 15 in the 1940s and 1950s—are on pieces of cardboard in a cupboard somewhere. That information could only be gathered at disproportionate cost.
Sir Tony Baldry (Banbury) (Con)
Does not this question demonstrate the fact that the concept of national insurance has always been a bit of a con in that it is not, and never has been, an insurance scheme? Essentially, those who are in work at any time are paying, out of their taxed income, for the pensions of pensioners of that time, on the understanding that when they reach pensionable age those in work will pay their pensions. Ever since it was introduced, the phrase, “national insurance”, has been misleading.
Steve Webb
My hon. Friend is correct: it is an intergenerational pension promise, although we hold to the notion that we pay bigger pensions to those who have made more years of contributions. Therefore, we believe that there is an insurance element to the scheme.
Graham Jones (Hyndburn) (Lab)
6. What assessment he has made of eligibility for the state pension following the rise in contributions to 35 years from 2016.
The Minister of State, Department for Work and Pensions (Steve Webb)
In the long term around 85% of people will get the full single-tier pension under the Government’s proposals.
Graham Jones
Does the Minister accept that as a result of the changes fewer people overall will qualify for the state pension by 2020? Does he agree that that is particularly unfair to people who, being so close to retirement, will not have time to make up the years?
Steve Webb
We have put in place special provision for the very people to whom the hon. Gentleman refers. When we value their pension rights at 2016, we will do so under the current rules, where 30 years are needed to qualify, and the new rules, where 35 years are needed, and we will use whichever of the two provides the highest number. The 2016 calculation will take whichever set of rules treats people most favourably and they will build upon that.
Mr Julian Brazier (Canterbury) (Con)
Does my hon. Friend accept that the proposed arrangements will greatly reduce means-testing in the long run and so restore incentives for people to save?
Steve Webb
My hon. Friend is right. The danger with the current system is that people who save find that the Government come along and say, “You’ve saved some money—we’ll take some money off you.” Our intention is to encourage, not penalise, saving. Paying a single, simple, decent pension just above the level of the basic means test will greatly enhance those incentives.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
The Government’s case for the new state pension is that it will increase the incentive to save in private pensions, but does the Minister agree with his hon. Friend the Member for Warrington South (David Mowat), a Treasury Parliamentary Private Secretary? He told the House during Second Reading of the Pensions Bill:
“One reason that people are not saving is that there is massive distrust of the industry. I have many colleagues in the private sector who would almost cut their arms off than invest in the pensions market.—[Official Report, 17 June 2013; Vol. 564, c. 712.]
What will the Minister to encourage people to make those savings in private pensions?
Steve Webb
I agree with the hon. Gentleman to the extent that there is mistrust of private pensions, which is why we have taken strong action,: for example, we have banned consultancy charges, which were a source of concern. On savings incentives, if he looks at our analysis, he will find that low earners in particular will have much smaller withdrawal rates when they save. Therefore, the return on savings, particularly for low earners, about whom I am sure he is most concerned, will be enhanced by the proposals.
Charlie Elphicke (Dover) (Con)
Does the Minister anticipate making pensions the subject of a cap at any stage?
Steve Webb
I think my hon. Friend might be referring to the idea of a total welfare cap, and while the Chancellor of the Exchequer has explicitly ruled out the idea of capping state pensions, I understand there are others in this House who are prepared to cap state pensions.
Richard Fuller (Bedford) (Con)
7. What assessment he has made of the performance of the Work programme in helping young people into work.
The Minister of State, Department for Work and Pensions (Mr Mark Hoban)
Just under half the young people who had been on the Work programme for a year had work, and over 46,000 had had more than six months of work.
Richard Fuller
I do not know whether the Minister is as disappointed as I am at the sniping negativity of Labour MPs towards the Work programme, when what they should be doing is rolling up their sleeves and making it work in their constituencies. In that spirit, will the Minister applaud the 50 small businesses in Bedford which, working in conjunction with the two Work programme providers, will on 11 July be giving 200 young people the equivalent of a day of speed-dating interviews to give them a good restart in their careers?
Sheila Gilmore (Edinburgh East) (Lab)
From this month, hundreds of jobseekers, including young people, will be returned to jobcentres. The DWP originally said they would be asked to come in weekly, but I think I heard the Secretary of State say they will be coming in daily, and the Chancellor of the Exchequer announced that new jobseekers will be coming in weekly. The problem here is that the National Audit Office has said job advisers are seeing far more jobseekers than ever before, that the time they spend with jobseekers is down, and that the DWP budget fell by 9% in last week’s spending review. Is this not just a lot of hot air? Is it not something that is not actually going to happen?
Mr Hoban
I remind the hon. Lady that over the last seven months the number of jobseekers has fallen. She has not welcomed that, but it is good news for her constituents and for people across the country. We want to make sure Jobcentre Plus advisers offer a good quality service. They do that, and I am very disappointed that a member of the Select Committee cannot see fit to thank Jobcentre Plus advisers for their hard work.
Andrew Bridgen (North West Leicestershire) (Con)
Will my hon. Friend confirm that job vacancies are at their highest level since 2008?
Andrew Gwynne (Denton and Reddish) (Lab)
In the invitation to tender for the Work programme, the Minister’s Department said it expected providers significantly to exceed the minimum standards it had set out, but the facts are that they have not even reached the minimum standards, including for young people getting back into work, and that about half the providers have not even met the standards his Department said would be met without a programme in place. Is not the Minister even a tiny bit embarrassed?
Mr Hoban
I am pleased to be able to say that performance is improving. Across the country the performance of Work programme providers has improved, and about half of providers have significantly exceeded the minimum standards. That is why people are getting into work; that is why we are seeing lives transformed. I wish the Opposition would stop carping and congratulate the work the providers are doing to get people into work.
Margot James (Stourbridge) (Con)
18. Until recently, a significant part of the labour market, including young people, was referred to as unemployable. May I congratulate my hon. Friend and the Secretary of State on challenging this deeply negative assumption? To be getting 132,000 previously unemployed people into employment is a considerable achievement. Does my hon. Friend agree that the payment-by-results model has been instrumental in this achievement?
Mr Hoban
Under previous schemes, money was paid upfront to providers without much attention being paid to whether people got jobs and work. Under this scheme, the interests of taxpayers, the unemployed and providers are closely aligned, because providers get paid only if they get people into work for six months.
Heidi Alexander (Lewisham East) (Lab)
8. If he will take steps to ensure that work capability assessments better meet the needs of people with mental health problems.
The Minister of State, Department for Work and Pensions (Mr Mark Hoban)
We recognise the challenges in accurately assessing people with mental health conditions, and the potential vulnerability of such claimants. The previous Government built safeguards into the work capability assessment. We have introduced further improvements to ensure the process deals with people with mental health conditions fairly and accurately.
Heidi Alexander
In recent months, I have been in contact with a number of constituents with mental health conditions who tell me that the work capability assessment fails to recognise the nature and severity of their problems. In the light of the recent court case in which it was ruled that the current assessment process discriminates against those with mental health problems and autism, will the Minister stop the transfer of people with mental health conditions from incapacity benefit to employment and support allowance until the system is fixed for that group?
Mr Hoban
It is important to ensure that we get the right support in place for people. Not long after ESA was introduced under the previous Government, 33% of people with a mental health condition received the support allowance, but under this Government the figure has increased to 43%, so more people are getting the right support as a consequence of this assessment.
Mrs Anne Main (St Albans) (Con)
Will the Minister encourage a scheme that Mind had—the “way to work” campaign—under which people with spasmodic mental health illnesses could work flexibly? It was not taken up as well as it could have been by employers, and it would help people who are assessed as having periods of good health as well as ill health.
Mr Hoban
My hon. Friend rightly says that we need to find ways to help people with mental health conditions, and other conditions, back into employment—the work we do under the Work programme is part of that, but other interventions are also being made—because there is a strong link between work and good health outcomes.
Nic Dakin (Scunthorpe) (Lab)
23. Given today’s launch of Rethink’s Unfair WCA campaign, when will the Minister finally decide whether to implement the changes to the descriptors recommended over a year ago by the mental health charities?
Mr Hoban
Work is going on at the moment to test those descriptors, and we are working closely with the charities. Today also marks the launch of the call for evidence of the fourth independent review of the WCA, which recognises our commitment to improving on the system we inherited from the previous Government.
Simon Hughes (Bermondsey and Old Southwark) (LD)
Will the Minister examine the way in which people with mental and physical health problems are assessed before they are placed in their WCA, specifically by Seetec in my part of the world? Will he examine how appropriate the placement is after they have started, because in my experience such placements are often inappropriate and therefore do not benefit anybody at the end of the exercise?
Mr Hoban
The Work programme does not undertake the assessments; they are undertaken as part of the ESA process. It is in the interests of providers to ensure that they get people placed with the right employer, because that maximises the chance of that person staying in work and, thus, the provider getting paid for the right outcomes.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
In May, Dr Greg Wood, an Atos-appointed doctor, made a series of specific allegations about failings in the WCA process as he saw it, as a doctor working for Atos. I asked the Prime Minister to investigate and I received a reply from the Secretary of State for Work and Pensions this week that made absolutely no reference to the specific allegations that have been raised. Does the Minister understand that one reason why there is such a lack of confidence in the Atos test is this complacent, contemptuous disregard for, and head-in-the-sand attitude towards, what is happening in the system?
Mr Hoban
I just point out to the hon. Gentleman that, as I said in response to the hon. Member for Scunthorpe (Nic Dakin), today we have launched a call for evidence for the fourth independent review of the WCA. That demonstrates our commitment to ensuring that we get this right, so that people get the right support, and that we continue to deliver the right outcomes for people going through this process.
James Morris (Halesowen and Rowley Regis) (Con)
It is encouraging that over the past three years the number of people with mental health conditions who have been put into the support group has trebled. Does the Minister agree, however, that we need constantly to monitor the effectiveness of the WCA, perhaps by working with mental health charities, to make sure that it is suitable for people with fluctuating mental health conditions?
Mr Hoban
My hon. Friend makes an important point. It is because we are committed to continuing to improve the whole process that we work with mental health charities. Since coming to office, I have had several meetings with charities to talk about what we can do, and this is why we are currently going through the process of assessing alternative descriptors, particularly for those with fluctuating conditions and mental health issues.
Laura Sandys (South Thanet) (Con)
9. What progress he has made on supporting disabled people back into work.
The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)
The Department offers a range of support to help disabled people get into work and stay in work, including the Work programme, Work Choice and Access to Work. Although there has been a welcome improvement in the disability employment rate over recent years, much still needs to be done. We will be doing that by launching a new, two-year disability employment campaign in July.
Laura Sandys
I thank the Minister for that reply. I also thank the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Fareham (Mr Hoban), who is coming to our jobs fair tomorrow morning where there will be information about jobs that local companies have designed around people with certain abilities and disabilities. What can we do to communicate to businesses the value of employing people with elements of disability and to ensure that they play a good part in our work force?
Esther McVey
I congratulate my hon. Friend on the work she is doing. Employers have the jobs and young people want those jobs, so getting them together is key. That is precisely what we will be doing when we launch our new employment strategy: getting together all the FTSE 100 companies, SMEs and young disabled entrepreneurs so that they can employ people and share best practice.
Derek Twigg (Halton) (Lab)
The Minister has mentioned programmes that help disabled people get into work, but how many of those people remained in work 12 months after they got a job?
Esther McVey
Of the nearly 13,000 people who have started on Work Choice, a third—30%—have stayed in work. That situation has improved, but we want to do more, so we are starting the “disability confident” campaign, which will, we hope, help to achieve better outcomes.
Jane Ellison (Battersea) (Con)
Will the Minister confirm that disabled people can, through Access to Work and as part of the new enterprise allowance, get more equipment that will help them set up their own businesses?
Esther McVey
My hon. Friend is correct. We have extended the new enterprise allowance to help disabled entrepreneurs with support from Access to Work and she will be pleased to know that more than half a million disabled people have now set up their own businesses.
Mrs Anne McGuire (Stirling) (Lab)
In spite of the bluff and bluster of the Minister of State for employment, the reality is that Work programme outcomes for new ESA clients show a pathetic performance outcome of only 5.3%, three times worse than doing nothing.
However, I want to turn to another employment support programme for disabled people, Access to Work, which the Under-Secretary has just mentioned. According to the DWP’s most recent statistics, the programme is now supporting 27,000 people compared with 37,290 in the year 2009-10 and 35,000 in 2010-11. Given that many disabled people want to get into work and are constantly told that they need to get into work, can the Minister advise when both the Work programme and Access to Work will start to make a real change to their lives?
Esther McVey
The right hon. Lady is quite right that Access to Work is key in helping people to remain in work, which is why we have extended it to young children who want to do internships and to new people who want to set up in business. It is working well and we are continuing to expand it, but we must also ensure that it works as best it possibly can. I am proud of what we are doing and we will build on that good platform.
Sir Bob Russell (Colchester) (LD)
Thanks to organ transplants, many lives have been saved, but in some cases despite their outward appearance the person is inwardly still disabled. What advice is given to jobcentres and other Government agencies to draw attention to the special needs of those who have had organ transplants?
Esther McVey
I am not aware of any specific advice that is given about people with organ transplants, but I do know that our disability employment advisers have in-depth knowledge and help people with all disabilities.
Jessica Morden (Newport East) (Lab)
10. What assessment he has made of the operation of work capability assessments; and if he will make a statement.
The Minister of State, Department for Work and Pensions (Mr Mark Hoban)
The work capability assessment is aimed at ensuring people out of work through ill health or disability get the support they need. It is under regular review and today the call for evidence for the fourth review is being launched.
Jessica Morden
In recent weeks, it seems that more of my constituents have been put in the work-related activity group without even having a face-to-face assessment. Will the Minister confirm whether the use of discretionary powers is increasing and will he reassure me that that is not a case of cutting corners to clear a backlog?
Mr Hoban
It depends on the information provided and if claimants are providing good-quality information through the ESA50, they can be referred without a face-to-face assessment. I would also point out that the proportion of people going into the support group has increased in recent times, particularly as a consequence of not using face-to-face assessments.
Jesse Norman (Hereford and South Herefordshire) (Con)
11. What steps he is taking to encourage jobcentres to work with local employers and voluntary organisations.
The Minister of State, Department for Work and Pensions (Mr Mark Hoban)
Jobcentre Plus has a national network of employer relationship and partnership staff whose task is to work collaboratively with voluntary organisations to support more people back to work and encourage and support employers to open up their vacancies to the unemployed.
Jesse Norman
I thank the Minister for that reply. Newton Farm community association in my constituency has signed up a number of high-profile local people from both the private and the public sectors to mentor unemployed people in Herefordshire. Will he join me in congratulating the association and commending that spirit of self-help and mutual support? Will he also consider ways in which the Government can use jobcentres to offer further support to that and similar mentoring programmes?
Mr Hoban
I can not only join in the congratulations but say that the local jobcentre has a positive relationship with the Newton Farm community association. We want to do more work with local organisations to encourage people into work, and we are keen to support them in any way we can.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Many smaller voluntary organisations and social enterprises that signed up for the Work programme have had appalling experiences—some not even receiving a single referral—and they complain of being the fig leaf of local engagement for large companies, even though they know the local skills and job market best. What will the Minister do to improve their experience?
Mr Hoban
The Work programme providers argued for freedom and flexibility over who to contract with, but we have introduced the Merlin standard to govern the relationship between Work programme contractors and their subcontractors. If organisations have concerns about the way they have been treated by the Work programme providers, they should refer those concerns to the Merlin committee.
Mr Graham Stuart (Beverley and Holderness) (Con)
Will the Minister join me in congratulating Jobcentre Plus in the Beverley and Holderness area on working closely with me in organising a jobs fair, which hundreds of local people attended; on the part it has played in ensuring that Beverley and Holderness has one of the highest figures on apprentice starts in the country; and on the fact that unemployment is now 3.5%? There has been a 20% drop in youth unemployment in my constituency in the past year.
Stephen Timms (East Ham) (Lab)
A key step for jobcentres will be the introduction of universal credit. A press release from the Secretary of State in May last year claimed that
“all new applications for existing benefits and credits will be entirely phased out by April 2014.”
Will the Minister acknowledge that jobcentres will still be handling new applications for existing benefits long after next April?
Mr Hoban
The right hon. Gentleman never ceases to amaze me with the number of questions he asks about universal credit. He knows exactly what the time scale is. We have said when the national roll-out will be completed and I thought he would have been delighted today that we have extended the roll-out to Wigan.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
12. What his plans are for reducing absolute child poverty.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The hon. Gentleman asks a really important question about absolute poverty. The threshold has been rebased this year under a new baseline. That changes the way it is reported. Those changes result from a reclassification and do not represent a real change in children’s circumstances. However, low-income and material deprivation is static or marginally improved.
The hon. Gentleman asks about what we are doing. There are a number of programmes through bringing in universal credit to help the poorest to some of the Work programme and the troubled families programme—I will go through more detail with him if he wants—as well as the pupil premium, and early intervention and education. There is a raft of work to try to change the lives of those likely to be on low incomes.
Mr Sheerman
I know the Secretary of State to be thoughtful man, and quite a caring man as well, but is he not concerned that Maggie Atkinson, the Children’s Commissioner, only as recently as last week said that the recent reforms of welfare benefit had put another 600,000 children into real poverty?
Mr Duncan Smith
I like to think that on both sides of the House the objective is to reduce child poverty. That is our stated objective; I think it was the stated objective of the Labour Government.
Mr Duncan Smith
I hear from a Labour Front Bencher, “It has gone up.” Actually, relative poverty has fallen by 300,000 since the start of this Parliament. Before Labour Front Benchers intervene again, I should say that while the hon. Gentleman’s question is thoughtful, their interjection is not. The reality is that throughout the past 10 years they talked about relative poverty as the measure, not absolute poverty, so they ought to be slightly careful. It has fallen under this Government.
The real point is that we are in a difficult time; there is no question about it. Just the other day, we saw that the Office for National Statistics has revised its figure on the scale of the collapse in 2009 down to 7%, which is a dramatic fall. We will drive all those programmes that I mentioned to the hon. Gentleman, and the change—we hope—to the measurement is about getting real help to real people.
Nigel Adams (Selby and Ainsty) (Con)
Is it not the case that in the past, enormous sums were spent on moving people just over the relative poverty threshold without addressing any of the causes of poverty? Will my right hon. Friend reassure the House that he will change that?
Mr Duncan Smith
Yes. The important point to make is that from 2004 to 2010, the last Government spent £171 billion on tax credits alone, but relative poverty rose in that period, and absolute poverty was absolutely static, falling only at the end, when inflation crashed below zero because the economy crashed with it.
Ian Austin (Dudley North) (Lab)
This multi-millionaire Secretary of State, with his stately home lifestyle, has never gone hungry in his life, but for some children in poverty, the free school dinner is the only square meal in the day. Ministers still refuse to set out their plans for the future of the free school dinner under universal credit, and there are rumours of a new cut-off for families earning more than £135 a week. Will he end the uncertainty for 168,000 families and tell us when he will set out his plans?
Mr Duncan Smith
We have always said that we stand by the existence of free school meals, and I stand by that now. As we bring in universal credit, we will make it very clear how this will work—and work well. I do not need any lectures from the hon. Gentleman. He may accuse us, but it was not us who crashed the economy and forced lots—thousands—of people into poverty. That was a direct result of his Government’s incompetence. This Government are doing more to get people back to work, more to get them out of poverty, and more to help them through family breakdown than his Government ever did, so I do not need lectures from an empty barrel like him.
Pauline Latham (Mid Derbyshire) (Con)
13. What recent estimate he has made of the number of women in work.
The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)
Women’s participation in the labour force has never been higher. There are 13.8 million women in work—the highest number on record, and 250,000 more than before the recession.
Pauline Latham
I thank the Minister for that answer. Does she agree that although much progress has been made on the issue, it is important that the Government continue to focus on and monitor the number of women in work?
Esther McVey
I absolutely agree with my hon. Friend, and we will do just that. I hope she agrees that the step that the Chancellor took—adding another £200 million to child care support—will be essential in helping mums and dads back into the workplace.
Mr Frank Roy (Motherwell and Wishaw) (Lab)
Many women in my constituency lost their job when the Government supported the closure of the Remploy factory. Nearly a year later, they have not found any employment. Why?
Esther McVey
I will tell the hon. Gentleman what has been happening: out of the 1,100 people who came forward from the Remploy factory and wanted support, to date, 400 have work and 328 are in training. When it comes to getting people into work, that is a higher rate than for any regular redundancy. We have provided £8 million in tailored support and have tracked those people—something that the previous Labour Government never did when they closed down 29 factories in 2008.
Mr Marcus Jones (Nuneaton) (Con)
15. What progress his Department has made on improving feedback from social security tribunal decisions.
The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)
From 10 June, judges in four social security and child support tribunals are providing the Department for Work and Pensions with more in-depth information on why they overturn employment and support allowance decisions. That builds on the drop-down list of primary reasons for overturning decisions that was introduced last July.
Esther McVey
My hon. Friend is correct, and that information is key, because decisions are overturned for many reasons. Most of the time, it is because new information comes into play at the appeal. We need to find out why decisions are overturned, not just for the claimant but for the DWP and everybody involved.
Chris Bryant (Rhondda) (Lab)
Is not the truth of the matter that in the vast majority of cases where a decision was overturned, it was because the wrong decision was made in the first place? Would it not make far more sense to make the right decision in the first place, so we did not have to waste time, money and energy on pursuing the matter all over again?
Esther McVey
I do not believe that the hon. Gentleman was listening to what I said. Actually, the majority of overturns are the result of new information being supplied on appeal. To ensure that we get this right first time, there will be mandatory reconsiderations, just like under universal credit and the personal independence payment. That will also be the case for employment and support allowance from the end of October. That will provide a proper administrative route, rather than a judicial one involving extra costs, extra pain and extra stress. We are getting this right, which is something the previous Government never did.
Mary Macleod (Brentford and Isleworth) (Con)
16. What assessment he has made of the performance of the Work programme in helping young people into work.
The Minister of State, Department for Work and Pensions (Mr Mark Hoban)
In my hon. Friend’s area, 1,700 young people have had more than six months’ work as a consequence of the Work programme, and two of the three Work programme providers in her area have significantly exceeded their targets.
Mary Macleod
One of the best ways to create and nurture aspiration in our young people is to have better careers advice and guidance in schools and further education colleges. What discussions is my hon. Friend having with other Ministers on this, and is there more that we can do to encourage young people to set up their own businesses?
Mr Hoban
My hon. Friend raises an important point. I have regular discussions with ministerial colleagues, particularly the Under-Secretary of State for Skills, on careers guidance and advice. A further education college in my constituency is setting a good example by having an employment adviser in the college who talks to young people about the opportunities that can flow from the courses they are taking. That kind of innovation is really important if we are to ensure that young people make the best of their qualifications.
Kerry McCarthy (Bristol East) (Lab)
I hope that Ministers will be aware of the excellent research being carried out by the Single Parent Action Network, which supports young single parents as well as older parents who are trying to get into work. Its recent report on the Work programme found that many barriers still exist to prevent them from getting work, including the lack of affordable child care. May I urge Ministers to look at that report and to acknowledge that getting into work is not so easy for people with child care responsibilities?
Mr Hoban
The hon. Lady raises an important point. We need to work with those organisations that support lone parents to see what more the Work programme can do to help them into employment. The Chancellor announced last week that we will be providing more support to lone parents in the two or three years before their child goes to primary school.
Mr Peter Bone (Wellingborough) (Con)
Does the Minister agree that what we really need for young people is jobs in the economy? Will he welcome what is happening at Rushden Lakes, a major new retail and leisure park that is currently going through its planning process? It will create thousands of jobs, many of them for young people, thanks to the leadership of the Conservative-dominated Government.
Mr Hoban
My hon. Friend is absolutely right. Labour did not believe that the private sector would create the necessary jobs to offset public sector job losses, but over the past three years, for every job lost in the public sector, three were created in the private sector. Labour criticises that, but we should congratulate the sector.
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
T2. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Today I welcomed the announcement in the spending review that we will reinvest more than £350 million a year in extra support to help people move into work. Through up-front work search, more intensive work preparation, weekly signing on and mandatory English language courses, we are ensuring that those who need the most help get it, giving them the best possible chance of finding work.
Mr McCann
Judging by the evidence of my constituency surgeries, the testimony of other Members and the number of successful appeals, it appears that Atos cannot tell the difference between someone who is sick and someone who is not. Given that that is the company’s job, when is the Secretary of State going to sack Atos?
The Minister of State, Department for Work and Pensions (Mr Mark Hoban)
As I have said in earlier responses, we are continuing to build on the system that we inherited from the previous Government. We have also had the fourth independent review of the work capability assessment and our own independent review, and we are seeing that the proportion of people going into the support group has increased in recent years.
Andrew Jones (Harrogate and Knaresborough) (Con)
T3. What assessment has my hon. Friend made of the number of people who have come off the main unemployment benefits since May 2010?
Mr Hoban
If my hon. Friend looks at the three main benefits—jobseeker’s allowance, employment and support allowance and lone parent income support—he will see that, since the general election, there has been a reduction of 300,000 in the number claiming those benefits. That is a consequence of the measures that we have taken to get people into work, and of welfare reform.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
Will the Secretary of State tell the House whether he thinks the bedroom tax is proving a runaway success?
Mr Duncan Smith
It is proving a success, because what it is doing—[Laughter.] No. What it is doing is finally shining a light on the previous Government’s failure to sort out the mess in social housing, with the housing benefit bill doubling in 10 years and set to rise by another £5 billion. I never hear from the right hon. Gentleman, or anyone else on the Labour Benches, about their failure, because they left so many people—a quarter of a million—in overcrowded accommodation and a waiting list that had grown to 1.5 million. When he gets up, perhaps he would like to tell us: is he going to reverse this policy or not?
Mr Byrne
If the Secretary of State thinks that the bedroom tax has been a success, he is living on a different planet. Back in 2011 the pensions Minister told the House that the bedroom tax would solve overcrowding, but this morning we heard on the BBC that there are houses lying empty from Teesside to Merseyside. They are not overcrowded; they are empty. Councils up and down the country are saying that arrears are up by 300%, and military families are saying that they have been lied to and cheated. When is the Secretary of State going to realise that this policy costs more than it saves and that this Government should be taxing mansions, not bedrooms?
Mr Duncan Smith
Let me tell the right hon. Gentleman something about empty homes. The previous Government left a huge amount of empty homes when they left office. There are now around 710,000 empty homes, which is 73,000 below the peak in 2008, which was under them. There are now 259,000 long-term empty homes, which is down 20,000 since they left office. The reality is this: the Labour party left a shambles, and never once did the people living in overcrowded accommodation hear anything from the Labour party about them. They are having to suffer while we subsidise to nearly £1 billion people living in houses with spare rooms. Perhaps he can say whether he, if he ever got into office again, would reverse that. Why does he not stop moaning about it?
Jesse Norman (Hereford and South Herefordshire) (Con)
T4. I would like to thank the Under- Secretary of State for Work and Pensions, my hon. Friend the Member for Wirral West (Esther McVey), for her productive meeting last week with representatives from the Royal National College for the Blind in Hereford. Does she share my view that the best way to achieve efficiencies in the residential training programme is to encourage disability employment advisers to make more referrals to that very successful scheme?
The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)
I believe that would be a good way forward. After the meeting, we asked them to put forward all their ideas on how they could really reach out to more disabled people and help more into work.
Keith Vaz (Leicester East) (Lab)
T5. Last year the parents of 47,009 children living abroad received child benefit totalling £55 million. What steps is the Secretary of State taking to fulfil the promise he made on 30 May to fight every step of the way to resolve that issue?
Mr Duncan Smith
As the right hon. Gentleman knows, that is an existing problem. The European Union insists that family benefits are paid at the highest level, depending on which country the recipient is in. Someone coming to the UK to work from, say, Poland would still get their family benefit paid to them, but if it is lower than family benefits over here, the top-up amount will go back to their families. I believe that is iniquitous, and I am not alone. I have had a series of discussions with others from Holland, Denmark and Germany, and there is a genuine consensus—it is growing dramatically—that it is wrong and that we need to change it, so we are engaging with the Commission on a plan to change it.
Caroline Dinenage (Gosport) (Con)
T6. A high percentage of employment and support allowance claims have been won on appeal because the claimant produced evidence that had not previously been made available. What can the Department do to encourage all relevant documents to be provided from the outset to save unnecessary costs and emotional stress?
Mr Hoban
My hon. Friend makes an important point. We ask claimants when we send out ESA50 forms to contact GPs and consultants so that we get the right medical information to help our decision makers reach the right outcome. I encourage GPs and others to take more time to send in the returns quickly so that we have the best information possible to make those decisions.
Dan Jarvis (Barnsley Central) (Lab)
T7. The pensions Minister knows that I have been in regular contact with the Pensions Regulator regarding the Carrington Wire pension fund. He also knows that I am grateful for his support in addressing concerns about the ability of some foreign-based multinational companies to renege on their pensions responsibilities to UK pension holders. What progress are the Government making on addressing that important issue?
The Minister of State, Department for Work and Pensions (Steve Webb)
I am grateful to the hon. Gentleman and pay tribute to his assiduous work on behalf of his constituents in that case. I hope that this afternoon he was able to have a telephone conversation with the Pensions Regulator to discuss it. In general terms, the Pensions Regulator has powers to act overseas, as in the 2007 Sea Containers case and the 2011 Great Lakes case. I am happy to continue working with the hon. Gentleman on the issue.
Stephen Phillips (Sleaford and North Hykeham) (Con)
T8. What steps is the Department taking to support those who have worked for one company for most of their lives and whose pensions have now gone into the pension protection fund?
Steve Webb
I am pleased to announce that we recognised that the cap in the pension protection fund on those who are early-retired was affecting people particularly adversely if they had long service. We will be tabling amendments to the Pensions Bill so that those who have long service of more than 20 years with a firm will get an enhanced level of protection.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
T9. The number of people accessing emergency food aid from Liverpool’s central food bank in my constituency has jumped by 70% over the past year. The chief cause of this is delays in them receiving their social security support. What assessment has the Secretary of State made of how many more people will be forced to turn to food banks and payday lenders by his Government’s proposal to extend the wait for jobseeker’s allowance?
Mr Duncan Smith
The story that the cause is an increase in waits is not true; in fact, waits have fallen and have improved by 4% since 2009-10. The Trussell Trust’s director of UK food banks has set out the real reason behind most of this:
“The growth in volunteers and awareness about the fact you can get this help if you need it helps explain the growth this year.”
Mark Garnier (Wyre Forest) (Con)
T10. Can the Minister share with the House what steps she has taken to deliver a cross-government disability strategy?
Esther McVey
My hon. Friend asks a timely question, because tomorrow we will publish a detailed, cross-departmental action plan on how to help disabled people in many different respects. That plan has been developed with disabled people, and it ranges from employment to education to transport to social participation.
Ms Karen Buck (Westminster North) (Lab)
In 2011 Lord Freud told peers that in theory his housing benefit policy would cause rents to fall, that it is a matter of market forces, and that it was irresponsible to suggest that thousands of people would be made homeless as a result. In fact, rents have soared, most new claims for housing benefit are from working families, and in London there has been a 91% increase in homelessness applications from people losing their private sector tenancies. How is that theory going?
Steve Webb
The hon. Lady refers to soaring rents, but I hope she accepts the evidence from the Office for National Statistics, which last week published figures for rents in London in the private rented sector that showed an increase of 2.2% below the rate of inflation.
Duncan Hames (Chippenham) (LD)
A constituent of mine on jobseeker’s allowance who is actively seeking work was recently made to give up some of the volunteering he was doing. What good is an arbitrary 16-hour-a-week limit on volunteering by JSA recipients when what really matters is that they do whatever is best to increase their chances of getting a job?
Mr William Bain (Glasgow North East) (Lab)
The bedroom tax is causing councils enormous financial strain, as it is for hundreds of thousands of vulnerable people across the country. On 11 June the pensions Minister told me that the Government are not making monthly checks on how much discretionary housing payment money councils are spending. What will happen to hundreds of thousands of vulnerable people when the money runs out?
Steve Webb
I am glad that the hon. Gentleman mentions the support we give to local authorities through discretionary housing payments. We constantly hear that it is not enough, so he may be startled to learn that in the year just ended, 2012-13, over 300 local authorities in England, Scotland and Wales sent us back money totalling over £11 million because they could not spend it.
Graham Evans (Weaver Vale) (Con)
In the interests of time, Mr Speaker, I should say that I was about to ask that question.
Mr Speaker
Well, that is a first, not just from the hon. Gentleman but more generally.
Jim McGovern (Dundee West) (Lab)
The most recent figures suggest that of the people who are on the back-to-work programme in my city of Dundee, 9% have managed to get back to work. I admit that that is an improvement on the farcical 1.4% that we had last year—the lowest in the UK, I believe—but it is not necessary to be an expert in arithmetic to work out that that means that 90% of people on the programme have still not found work. Will the Government admit that with the recent bedroom tax, which has been mentioned, and welfare benefit cuts, they are not just starving families in work but starving them full stop—
Mike Crockart (Edinburgh West) (LD)
What assistance can my right hon. Friend offer my constituent who, anxious not to be a burden on anyone, took a zero-hours contract? Although he generally works for significantly fewer than 16 hours, on the odd occasion that he does work for more than 16 hours his department suggests that he makes a new claim when cancelling the old one. How can that be right?
Mr Duncan Smith
I recognise that this is an issue. Some 200,000 people are employed on zero-hours contracts, which is just less than 1% of all workers. The current benefit system deals with claimants on zero-hours contracts, but universal credit will mean that they will not have to re-sign on. Personally, I think there should be far fewer zero-hours contracts. We are trying to work with employers and the Department for Business, Innovation and Skills to persuade those who have a genuine long-term job to get off zero-hours contracts and get a proper contract of work.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
The pensions Minister’s answer a couple of minutes ago on discretionary housing payments was quite frankly absurd, because he knows full well that the bedroom tax was not in operation in the last financial year.
To return to the question of impact, local authorities throughout the country, including my own, now find that arrears are going up because people cannot afford the bedroom tax that is being imposed on them. What does the Minister expect local authorities to do about this, because it is affecting their overall budgets as well?
Steve Webb
Just to be clear, when we made reductions in housing benefit for 2012-13 we were told that the support was not enough, but the hon. Gentleman’s local authority, Edinburgh, returned to us £162,000 of help that it could not spend. We have increased the support to Edinburgh council this year compared with last year.
Mr David Ruffley (Bury St Edmunds) (Con)
Benefit tourism can be deterred if greater conditionality is introduced into the UK benefit system. Will the Secretary of State tell us whether or not our European partners will allow us to do that?
Mr Duncan Smith
I believe they will. I think that a large number of countries in the European Union are concerned that, while they want people to travel for work—as do we—through free movement, they do not want people to pick and choose which benefit system they want to be a part of when they are out of work. We have had recent conversations with Germans and others, and we are all moving together towards an eventual proposal to get the European Commission to work with us to change this.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Distributional analysis of the Government’s spending review shows that 20% of people on the lowest incomes—namely pensioners, the disabled, the unemployed and those in low-paid work who depend most on DWP support—are paying a disproportionate price as a result of the austerity cuts. Are Ministers not ashamed that they are asking the poorest to pay the highest price?
Mr Duncan Smith
It is this Government who have protected pensioners more than any other Government: we introduced the triple lock and their incomes have risen faster and further than for a long time, particularly compared with when that lot in the Labour party were in office. The reality is that we are protecting pensioners far better than any recent Government.
Philip Davies (Shipley) (Con)
Paul Stewart was paralysed from the waist down and told that he would never walk again after a snowboarding accident. Through sheer willpower and determination he has defied the odds and next month he will undertake his IronSpine Challenge of a 2.4 mile swim, a 112 mile cycle, a 26.2 mile walk and a cliff-face climb to raise money for spinal research. Does the Minister agree that Paul is a tremendous inspiration to others who suffer such life-changing disabilities?
Esther McVey
I do indeed agree with my hon. Friend. When I first heard about Paul’s story, I had to read it twice because I could not believe what he intended to do. He was paralysed from the waist down; now he is paralysed from the knees down and has learned to walk with aids and adaptations. The Prime Minister has supported him and I will be there at the start of this excellent challenge.
Alison Seabeck (Plymouth, Moor View) (Lab)
Have Ministers had any discussions with the Housing Minister about the benefits of switching funding from escalating housing benefit expenditure to new, affordable house building?
Steve Webb
The hon. Lady will have heard in the comprehensive spending review announcement that the Government are committed to a £3 billion investment in building affordable housing. This is a priority for this Government and we agree entirely that previous Governments left far too few affordable houses.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
When the benefit cap, which will develop strong work incentives, is rolled out to Plymouth, will my right hon. Friend be able to tell me how many people will be encouraged to get a job, rather than depend on benefits?
Points of Order
Dr Julian Lewis (New Forest East) (Con)
On a point of order, Mr Speaker. I am sure that there was not an MP in the House who was not hugely relieved when questions of MPs’ pay and expenses were given out to an independent body. Notwithstanding that, is there any way in which you can convey my concern and, I suspect, that of many other people, that two years or more in advance, it is being proposed that there should be a massive uplift in MPs’ pay, when we cannot know what the economic circumstances will be whenever such a pay increase is awarded? Why on earth does this Pandora’s box have to be opened now? Is not the Independent Parliamentary Standards Authority gripped by some sort of delusional folly if it insists on opening it?
Mr Speaker
In October of this year, I will have known the hon. Gentleman for 30 years. I have always hoped that he might overcome his natural shyness and reticence, and he is making some progress on that front. He knows, and I can confirm, that his words will be recorded in Hansard. I have a suspicion that a copy of that Hansard will, by one means or t’other, wing its way to the desk of the chief executive of IPSA.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
On a point of order, Mr Speaker. Have you had any representations from the Prime Minister about why, yet again, he is not making a statement following a European Council meeting? The last time, he said it was because the meeting was so boring. Given his deep disappointment with his counterparts at this meeting, it clearly was not boring, so do we have a better reason this time?
Mr Speaker
I recall the previous instance. The hon. Lady will recall that the following day, I granted a Member an urgent question to put to the Foreign Secretary because I felt that such matters most definitely did warrant an airing in the House. I have a strong hunch that the hon. Lady’s thirst for interrogation on this matter will soon be satisfied, and I feel sure that she will be in her place when it is.
Alison Seabeck (Plymouth, Moor View) (Lab)
On a point of order, Mr Speaker. In my haste and my desire to comply with your signals to keep my question short, I omitted to declare an indirect interest as I should have done.
Mr Speaker
That is extremely courteous of the hon. Lady. Her interest has now been asserted.
Finance Bill (Ways and Means)
Resolved,
That provision may be made about interim remedies in court proceedings relating to taxation matters.—(Mr Gauke.)
Finance Bill (Programme) (No. 2)
Ordered,
That the following provisions shall apply to the Finance Bill for the purposes of supplementing the Order of 15 April 2013 in the last Session of Parliament (Finance (No. 2) Bill (Programme)):
1. Proceedings on consideration shall be taken on the days shown in the following Table and in the order so shown.
2. Each part of the proceedings shall (so far as not previously concluded) be brought to a conclusion at the time specified in the second column of the Table.
First day | |
|---|---|
Proceedings | Time for conclusion of proceedings |
New Clauses and new Schedules relating to income tax rates | Two and a half hours after commencement of proceedings on the motion for this order |
New Clauses and new Schedules relating to a mansion tax | Five hours after the commencement of proceedings on the motion for this order |
New Clauses and new Schedules standing in the name of a Minister of the Crown other than New Clause 7; new Clauses and new Schedules relating to the general anti-abuse rule | 12 midnight |
Second day | |
Proceedings | Time for conclusion of proceedings |
Remaining new Clauses standing in the name of a Minister of the Crown; amendments standing in the name of a Minister of the Crown other than amendments to Schedule 18; new Clauses and new Schedules relating to the impact, on revenue from rates and measures in the Finance Bill, resulting from the Spending Review | Two and a half hours after the commencement of proceedings on consideration on the second day |
Amendments to Clause 38 and Schedule 18; remaining new Clauses, and remaining new Schedules, relating to tax measures concerning housing | Four and a half hours after the commencement of proceedings on consideration on the second day |
New Clauses and new Schedules relating to the tax treatment of financial services; remaining proceedings on consideration | Six hours after the commencement of proceedings on consideration on the second day. |
3. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion one hour after the conclusion of proceedings on consideration.—(Karen Bradley.)
Finance Bill
(11 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
17:40 - The House divided: - Ayes: 229 / Noes: 290 - Question accordingly negatived.
19:50 - The House divided: - Ayes: 226 / Noes: 281 - Question accordingly negatived.
22:19 - The House divided: - Ayes: 0 / Noes: 0 - Question accordingly negatived.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I beg to move, That the clause be read a Second time.
The Government have previously declared that we are “all in this together”, and I want to develop that theme. I am sure the Exchequer Secretary will be listening intently. They have insisted that those with the broadest shoulders should bear the greatest burden, but in Work and Pensions questions earlier, we heard that some Opposition Members are somewhat sceptical about that claim. Although the Government have also consistently told us that their priority is to cut the deficit by what they describe as “fair and reasonable means”, in politics it is actions, not mere words, that show priorities. The same Government, in tough times and against the backdrop of falling living standards—borrowing up last year, growth continuing to flatline and drastic cuts being made to benefits for hard-working families—have decided to give millionaires a tax cut. [Interruption.] I hear the hon. Member for Beverley and Holderness (Mr Stuart) call out that that is nonsense. I am more than willing to take an intervention from him should he wish to justify the tax cut for millionaires.
Mr Graham Stuart (Beverley and Holderness) (Con)
I am delighted to intervene on the hon. Lady. She will be aware that the art of taxation is to extract the maximum amount of money with the minimum amount of hissing. Is she aware of the principle that a lower tax rate can often lead to a higher tax take, and does she think it might apply in this case, thus meaning that millionaires pay more, not less?
Cathy Jamieson
It will be no surprise to the hon. Gentleman that I do not agree with his point.
Cathy Jamieson
I am aware of that point of principle and I will come to it in due course, because it is an issue to consider.
Stewart Hosie (Dundee East) (SNP)
Before the hon. Lady comes to that principle, she will be aware that the 2012 Red Book confirmed that, according to the Government’s own figures, the change would cost £450 million. At the most basic level, whether we agree with that number or think it is too low, if there is £450 million going spare, it would be better to do something socially productive with it than to give it back to people who are already wealthy.
Cathy Jamieson
I thank the hon. Gentleman. He and I do not always agree on every matter that is discussed in the Chamber, but on this occasion I accept what he says.
We have heard disagreement on the Government Benches with the point that I was making, but the reality is that as of this April, 13,000 people earning more than £1 million a year are receiving a tax cut equivalent to £100,000. Another 254,000 people earning more than £150,000 a year are also seeing their income tax bills go down. At the same time, if we take into account the changes that the Tory-led Government have made to tax, tax credits and benefits, households in the UK will be an average of £891 a year worse off. That is the reality that people face. As I have said in a number of previous debates, that may not seem a lot of money to the millionaires who are getting a tax cut from the Government, or to those on the highest wages, but it is a lot of money for my constituents and, I am sure, for the constituents of other hon. Members. I see some heads nodding on the Government Benches. It is a huge amount for constituents throughout the country, who are being ruthlessly squeezed to pay for the Chancellor’s economic failure.
Andrew Gwynne (Denton and Reddish) (Lab)
It is indeed a lot of money for many of my constituents and my hon. Friend’s. Is she aware of the figures published by the Institute for Fiscal Studies showing that for a two-earner couple with children, the loss caused by the changes rises to £1,869.09?
Cathy Jamieson
Yes indeed. My hon. Friend makes an important point on which I will comment further in due course.
Cathy Jamieson
Let me answer my hon. Friend’s point because it is important to understand the impact that this Government’s policies are having on families across the country. He makes the important point that a couple with children in such circumstances will face difficulties, and in some instances must make choices about how they will pay for things that we or our children perhaps take for granted. Government Members have simply failed to recognise or respond to, or in many instances acknowledge, that point.
Cathy Jamieson
The hon. Gentleman has probably heard many Opposition Members stand at the Dispatch Box and make our position absolutely clear: if we were in government just now, that is not what we would be doing. There is a whole range of other things—
Cathy Jamieson
I want to finish this point. If the hon. Gentleman can contain his excitement, I am sure he will have the opportunity to develop his arguments at some stage. It is important to recognise that the Government are doing many things that Labour simply would not do. We suggested a whole range of things that the Government could do to get growth back into the economy, and I will mention some of those today. It is important, however—[Interruption.] I hear the Minister from a sedentary position say, “Borrowing more”. Is that an admission that his Government are borrowing more than they set out to do, that they have not got the deficit down as planned, and that they have not brought growth back into the economy as they promised? I would be more than happy if the Minister wished to put something on the record at this point. [Interruption.] He does not, so I will give way to the hon. Member for Nuneaton (Mr Jones).
Mr Jones
The hon. Lady said that if Labour was in power now it would reverse the decision and reinstate the 50p tax rate, but there will not be a general election for the next two years. If the Labour party is in government in two years’ time, would it then reverse that decision and reinstate the 50p tax rate—yes or no?
Cathy Jamieson
I find it astonishing that Government Members never seem to take any responsibility for what is going on under their watch. Under their watch, the deficit has not come down as much as they promised, borrowing is higher than planned, and the Government have failed to get growth back into the economy.
Richard Fuller (Bedford) (Con)
The hon. Lady made some important and passionate points about the impact of being worse off every year by £800, which is a big amount of money for many of my constituents. Given that we have just broadly agreed public expenditure figures for the next Parliament, does she feel that if this is a point of principle it is beholden on her to answer the question posed by my hon. Friend the Member for Nuneaton (Mr Jones) about whether a Labour Government would stick to their principles in the next election?
Cathy Jamieson
I can say to the hon. Gentleman that yes, we would stick to principles of fairness and equality, and we would not seek to advantage those who already have the highest incomes at the expense of those on lower incomes. Once again, I repeat what a number of Labour Members have said: at this point we do not know in what shape the economy will be two years from now, and as a responsible Opposition we intend to look in detail at where spend would be best put in the years ahead.
Cathy Jamieson
I want to make progress but I will, of course, give way to the hon. Gentleman.
Jacob Rees-Mogg
I am extremely grateful to the hon. Lady; she always covers these issues with great interest. Why is the shadow Chancellor able to commit to following our spending plans, yet will not give any indication of tax rates? Surely that is the second side of the coin.
Cathy Jamieson
I always listen with interest to what the hon. Gentleman has to say, and I know from his contributions in the House and in Public Bill Committees that from time to time he scrutinises the Government fairly thoroughly. There is a difference between saying that the overall spending limit put on by the Government will be our starting point, and accepting their approach in full, which is not what the shadow Chancellor has said, of course. He has made it clear that we would look at that overall spend and see how we could allot resources more fairly.
Despite the fact that the Government tried to make much of fairness in the spending review, let us look at the millionaires who will benefit from the tax cut. First, 643 bankers earn more than £1 million and the combined tax cut will be worth £34.6 million to them—[Interruption.] There is a lot of grumbling and other muttering from a sedentary position by Government Members. If they wish to speak, they will be able to do so later.
My constituents want to know how the Government can justify that tax cut for millionaires at a time when those on middle and low incomes are being squeezed so hard. I can understand why the public are angry and why they do not feel that the Government are acting fairly. They see many people on massive salaries that ordinary people can only dream of and working in the very same banks that were bailed out by the taxpayer now receiving a handout from the coalition. People do find that difficult to understand. That is why our amendment would require the Chancellor to consider the effect that the tax cut will have on the level of bonuses in the financial sector. That is what the taxpayer—ordinary people trying to make ends meet when their living standards are being reduced—wants to know.
Richard Fuller
The hon. Lady makes a good point about the impact on bonuses. Does she welcome the recommendation from the Parliamentary Commission on Banking Standards, which the Prime Minister has accepted, which will change from very short-term bonuses to long-term ones? Would not that mitigate some of the very real concerns that she has mentioned?
Cathy Jamieson
I am glad that the hon. Gentleman recognises the points that I have made. He will, of course, be aware of some of the discussion that took place in Committee on the Finance Bill and the Financial Services (Banking Reform) Bill. It is unfortunate that the Government chose not to accept our amendments to those Bills, and so far we have not seen legislation to enact the change that he mentions. I look forward with interest to further debates on that subject at a later date.
Mr Graham Stuart
The hon. Lady is making a powerful speech, but she has mentioned what makes the public angry. I think what makes the public angry is when they see members of a party opposing in principle, and expressing great moral outrage about, the bedroom tax—the spare room subsidy—or the 50p tax rate and then refusing to answer a straightforward question about whether they would reverse one or both of them. It is not good enough, and it is no wonder that the public think politicians are slippery and cannot be trusted.
Cathy Jamieson
The hon. Gentleman started by trying to pay me some sort of compliment, saying that I was making a powerful speech, but I simply do not accept his assertion that what outrages the public is politicians standing up to make passionate speeches on their behalf. The points that I am making are the very ones that have been made by my constituents, by the constituents of my hon. Friends and—I am sure—by many of the hon. Gentleman’s own constituents.
It is not good enough for Government Members simply to sit there and say, “What is the Labour party going to do two years from now?” when they are taking no responsibility whatever for what they are doing at the moment. It is a responsible position for us as the Opposition to say, “We understand that there will be an overall spending limit; that will be our starting point, but that does not mean that we have committed to it as an end point, and it does not mean that we are committed to doing exactly what the Government would do.” I am sure that as we move forward, a number of initiatives will be developed and outlined in greater detail.
Sheila Gilmore (Edinburgh East) (Lab)
Does my hon. Friend agree that what is going to annoy many of our constituents is that they were told three years ago that all the measures put in place then were for a purpose, that the deficit would be brought down by the end of this Parliament and that we were all in it together, when that has simply not happened?
Cathy Jamieson
Once again, my hon. Friend is absolutely correct. When we heard the spending review announcements last week, many members of the public recognised that this was a spending review brought forward not because it was part of some grand plan by the Government or something that they were always going to do, but because of the Government’s own failures on the economy—their failure to get the deficit down as promised; their failure to deal with borrowing; and, indeed, their failure to get growth back into the economy.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I congratulate my hon. Friend on her excellent speech. Further to confirm her point so that everybody gets it, did not the Chancellor promise not to introduce another spending review before the next election, and is not the failure of his economic policies the reason why we needed to have that spending review?
Cathy Jamieson
My hon. Friend is absolutely correct. Many members of the public will not look at the Chancellor’s spending review as a success—it is not—and they will recognise that this Government have, as we said at the outset, cut too far and too fast, so that we have had all the pain and none of the gain that the Government promised. [Interruption.] Conservative Members can sit and sigh, make all sorts of side interventions, look at the ceiling, look to their feet or whatever else, but the harsh reality is that the constituents we all meet on a day-to-day basis know that their living standards are dropping. They know that the money in their purse does not go as far at the end of the week, because prices are rising at a time when wages have stagnated at best, and are dropping at worst.
To return to the new clause, the bankers earning £1 million or more a year will benefit from the combined tax cut at a cost of at least £34.6 million. As I said earlier, we can understand why the public are angry and why they do not feel that this Government are acting fairly. Given some of today’s comments, I suspect that many of the people watching this debate will gain the impression that the Government are not listening to them, that they have no understanding of the issues they face and that, sadly, in many instances, if not all, they do not actually care.
Our new clause is a relatively mild-mannered amendment—one of the sort that we proposed regularly in the Finance Bill Committee, asking the Government to look at the impact of the policies that they are introducing. In this particular instance, the new clause asks the Chancellor to consider the effect that his tax cut will have on the level of bonuses in the financial sector. There 30 million taxpayers in the UK—30 million people who go out to work every day and have to pay their way—yet they realise that the Chancellor has decided to cut taxes for the richest among them. There is no getting away from that. That tells you everything you need to know, Mr Speaker, about this Tory-led coalition. Never mind the rhetoric of “We’re all in it together”, and never mind the risible attempts to paint themselves as the party of fairness as they tried to do in the spending review, because when it comes down to it, the Tories and the Liberal Democrats are effectively topping up bank bonuses with a further tax cut. That is the reality of what is happening.
Labour Members believe that there is a better way. We have consistently said that we would use a tax on those massive bonuses to fund a jobs guarantee for every young person who has been out of work for a year or more. We would do that because the trends in long-term employment remain extremely worrying.
Kwasi Kwarteng (Spelthorne) (Con)
How much money does the hon. Lady expect to raise through a tax on bank bonuses, and how does she think it could be spent on the projects on which she wants to spend it?
Cathy Jamieson
We have consistently said that we would seek to use the tax specifically to provide a jobs guarantee for every young person who has been out of work for a year or more. I am sure that the hon. Gentleman, and indeed most Members in all parts of the House, will have met—or received e-mails, letters or telephone calls from—young people who are absolutely desperate to be given that first start, to walk through the doorway, to show what they can do, to use their skills and to learn more. Sadly, as we have heard, the guarantees provided under the Work programme have not met expectations, so it is important for us to think about what we could do. In March this year—
Cathy Jamieson
I want to finish what I am saying. In March this year, 167,000 adults had been out of work for more than two years. The figure has increased by 97% since 2012, and by 216% since 2011. We believe that the way to get people back into work is to tax the very richest. I am sure that Members in all parts of the House would agree—
Cathy Jamieson
I want to finish what I am saying, and I want to make progress. I think that I have been reasonably generous with my time so far.
I am sure that Members in all parts of the House would agree that returning people to work is the best way of reducing the benefits bill and getting the economy moving again. However, the facts speak for themselves, showing that the Government prioritise those at the top and leave everyone else to struggle. Let me return to what my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said earlier.
Cathy Jamieson
No; I really do want to put this on the record. As my hon. Friend said, a two-earner couple with children are losing an average of £1,869 while a millionaire receives a tax cut. Would the hon. Gentleman care to explain to a two-earner couple with children in his constituency why that is fair?
Kwasi Kwarteng
I am grateful to the hon. Lady for giving way. I did not catch the answer to my earlier question. How much money in a fiscal year does the hon. Lady expect to raise from the bank bonus tax?
Cathy Jamieson
I note that the hon. Gentleman showed no inclination to explain to that two-earner couple with children in his constituency why it is right for a millionaire to receive a tax cut at a time when they are set to lose a significant amount of money.
Barbara Keeley (Worsley and Eccles South) (Lab)
I wonder whether my hon. Friend remembers two things. She may remember that, an hour before the beginning of the debate, we witnessed a lamentable performance by Ministers who failed to answer question after question about the Work programme, which is one of the worst and least successful programmes for the unemployed that we have seen for years; and I am sure that she remembers the future jobs fund, which was hugely successful in my constituency and returned hundreds of people to work. I think constantly about the people—nearly 1,000, including 195 young people—who have been unemployed for more than a year, and I fervently wish that we still had the future jobs fund, which was not only a successful programme but returned more than it cost.
Cathy Jamieson
My hon. Friend is right to mention the success of the future jobs fund. I still believe that, as we said at the time, the Government made a huge error in abolishing the future jobs fund. As I know from my own constituency, it gave young people an opportunity to get into the habit of going to work and learning skills, and gave the voluntary sector, the social economy, the third sector, call it what you like, an opportunity—
Cathy Jamieson
No. I am going to finish what I am saying, because I want to make clear the extent to which people are losing out. The future jobs fund gave opportunities to many young people and it was short-sighted of the Government to scrap it. It seemed to me that the Government did so simply because it was brought in by the previous Government. However, following questions in the House and elsewhere, we know that the Work programme has not delivered for many young people in our constituencies.
I go back to the fact that individuals and families are losing out in our constituencies. Not only will a two-earner couple with children lose on average £1,869, while a millionaire gets a tax cut, but a single parent who works and has tried to do the right thing in getting into employment and holding down a job, as well as meeting their caring responsibilities, will lose £1,226. At the same time, the millionaire banker about whom we talked earlier will see his tax bill cut. Two earners without children who are a couple will lose £672.
Those are remarkable figures. As I said earlier, they sum up the coalition’s warped sense of priorities. They are looking after those at the top, while making everyone else pay the price for their economic failure.
Cathy Jamieson
I will in a moment.
No wonder that people think that there is one rule for the richest and another for the rest. No wonder people are questioning why the Government believe that the way to motivate people on low incomes is to pay them less, and the way to motivate people on high incomes is to pay them more. In these challenging economic times, surely we should focus on supporting those who need it most. New clause 8 asks the Government to look at the issue again. We are asking them to undertake a proper assessment of the impact of the cut, as well as an analysis of how much the Treasury would gain if the additional rate were returned to 50% in 2014-15. That is not an unreasonable request. I hope that, on this occasion, the Government will accept the new clause and report back in due course, although I suspect that that may not be the case.
I outlined earlier why the Opposition think that the Chancellor’s logic is rather odd. He claims to find tax avoidance morally repugnant and to want to crack down on it, but this tax cut simply rewards the wealthiest. He appears to justify it on the ground that the behavioural response to the 50p rate was more avoidance. There seems to be a rather strange logic here. Instead of cracking down on the avoidance, he is rewarding it. Surely those are not the values that we want in the Government: one rule for the richest and another for the rest of us.
It is not what the Government used to say, before their façade of fairness began to slip. The Prime Minister no less said:
“I have been very clear—we have all been very clear—that we have to do this in a way that is fair so that the broadest backs bear the biggest burden.
That is why we haven’t changed… the 50p tax rate.”
However, the Government are giving those with the broadest backs a tax cut, while people on lower incomes are shouldering the bigger burden. I heard Government Members supporting what the Prime Minister said. It is a pity that they now seem to have gone back on that.
Cathy Jamieson
If the hon. Gentleman can contain himself for a few more moments, I would like to quote the Chancellor. I am sure he will want to hear what his own Chancellor said. Indeed, he may even have been at his party’s conference when the Chancellor said this:
“We could not even think of abolishing the 50p rate on the rich while at the same time I am asking many of our public sector workers to accept a pay freeze to protect their jobs. I think we can all agree that would be grossly unfair.”
Does the hon. Gentleman agree that would be grossly unfair?
Kwasi Kwarteng
The hon. Lady will know that I have always consistently argued for lower tax rates across the board, so that is my answer to her point. I am also perplexed as to why she will not give an answer to my earlier question about the amount of money she hoped to raise from a bankers bonus tax, given that that is such a key element of her party’s fiscal plans.
Cathy Jamieson
Once again, it is rather strange that the hon. Gentleman does not seek to give any comfort to his own constituents or give any explanation of his own policies. We have put forward the idea of the bankers bonus tax to get young people back into employment, and I also think the general public would like those bonuses to be less than they have been over the past few years.
I want to go back to the point the Chancellor made. He said at his party conference that he would not
“think of abolishing the 50p rate on the rich while at the same time…asking many of our public sector workers to accept a pay freeze”.
I do not often agree with the Chancellor, but I do think he was right then—and that he is absolutely wrong now.
In the interests of balance, however, I should also quote what is perhaps my favourite of these interventions. It was made by the Chief Secretary to the Treasury—the Lib Dem Chief Secretary. He summed things up quite neatly when he said:
“People who think that the priority for this Government should be reducing the tax burden on the very wealthiest are living in cloud cuckoo land.”
So in the words of the Government’s own Chief Secretary to the Treasury, this is a decision from cloud cuckoo land. I think that many members of the public would agree with that.
No doubt Government Members will protest and say that the higher rate was not raising any money—
Cathy Jamieson
No, I want to move on. I have been very generous in taking interventions, and it is important that I now move on to make the many points I have not yet had the opportunity to put on the record.
As I have said, no doubt Government Members will protest and say that the higher rate was not raising any money due to tax avoidance, but the Institute for Fiscal Studies has said:
“By giving out £3 billion to well-off people who pay 50p tax…the Government is banking on a very, very uncertain amount of people changing their behaviour and paying more tax as a result of the fact that you’re taxing them—”
Cathy Jamieson
I want at least to get to the end of that quote—that would be quite nice. I would like other Members to have the opportunity to contribute to the debate; indeed, I am sure the hon. Gentleman is gearing himself up for that as we speak.
Just in case anyone missed that IFS quote, let me make clear what it said:
“By giving out £3 billion to well-off people who pay 50p tax…the Government is banking on a very, very uncertain amount of people changing their behaviour and paying more tax as a result of the fact that you’re taxing them…There is a lot of uncertainty, a lot of risk on this estimate.”
I know that Government Members will from time to time quote the IFS and will, from time to time, doubt its figures. Just in case they do not accept what the IFS has said, let us look at what the Office for Budget Responsibility has said about this issue. It said that any decrease in tax avoidance from the reduced rate would be “highly uncertain”. A written answer from the Exchequer Secretary in the summer of 2012 stated that in 2010-11 70% of people earning over £250,000 were paying more than 40% in tax and 80% of people earning between £500,000 and £10 million were paying the 50p rate. Each and every one of those people is now in line for the tax cut.
Cathy Jamieson
I will give way to the hon. Gentleman, whom I feel sure will explain to me what the Government intend to do about tax avoidance and how they will stop this issue emerging?
Jacob Rees-Mogg
As it happens, I was going to say something different, which will not surprise the House particularly. I was going to say that history tells us that cutting taxes raises more money, and that is probably a better bet to working out what will happen than fishing around for convenient forecasts. In 1979 and 1988 tax rates were cut and revenue went up, and that is a pretty good basis for doing this again.
Cathy Jamieson
I look forward to the hon. Gentleman’s contribution in our future debates about the possibility of a mansion tax and a reduction to a 10p rate. I always listen with interest to what he has to say, but on this occasion I have to say to him that the first year of the new rate is not a real basis for estimating the revenue raised, or likely to be raised, by the 50p rate.
The Government should be tackling tax avoidance. We all want to see that, and we will be debating it more when we discuss later clauses.
Cathy Jamieson
I will give way to the hon. Gentleman, as I know he takes this issue very seriously.
Richard Fuller
I wish to take the hon. Lady back to the impact of the bankers bonus tax on getting young people back to work, because I do not think she had the numbers to hand. May I just indulge you with some statistics, in order to help the Opposition, Mr Speaker? Last year, the bankers’ bonus total was £5.2 billion. There are 61,000 young people who have been out of work for more than a year. Much of that £5.2 billion would have been paid to taxpayers who are not UK-resident—they will work for a UK bank but not be resident here—but let us assume that it is all paid to UK residents. An increase in the rate from 45% to 50%, as the Opposition are proposing, would yield £260 million a year—the equivalent of £4,500 per young person out of work. Is the basis of her argument that £4,500 is enough to employ a young person who has been out of work for more than a year?
Cathy Jamieson
I thank the hon. Gentleman for his information; I gave way to him because I know he takes these issues seriously. As with a range of other issues, we would have to look—if the bankers bonus tax was brought in—at the circumstances at the time and how best to get young people into employment. Other hon. Members will have heard me speak about this issue before, but I can tell the House that we believe young people and those who have been out of work for two years ought to accept that there will be a compulsory jobs guarantee. From speaking to a number of small businesses and some of the larger ones, I know they believe that a range of things could be done to encourage them, as local companies and national companies, to take on young people and get them into employment.
Where the Government have done things that we think are helpful, for example, in relation to national insurance contributions, we have supported them. As has been said, we do not accept that the move away from the future jobs fund was the correct thing to do.
Mark Field (Cities of London and Westminster) (Con)
Does the hon. Lady not recognise the fatuousness of her argument that this money could somehow be ring-fenced for the less well-off, which has been exposed by my hon. Friend the Member for Bedford (Richard Fuller)? The same applies to the next set of amendments on the mansion tax and the 10p tax rate—the figures are not well-researched. The proposition might be attractive to the public at large, but the comparison is fatuous and has been ably exposed by my hon. Friend.
Cathy Jamieson
I do not think that my constituents in Kilmarnock and Loudoun who are out of work and desperate to get jobs—including the 400 or so people across East Ayrshire and into neighbouring Lanarkshire who lost their jobs as a result of the collapse of Scottish Coal, the people who lost their jobs when Diageo moved out of the town of Kilmarnock and closed the historic bottling plant, which bottled Johnnie Walker whisky, and all the people who are out of work as a result of the squeeze on small local businesses—would believe that it is fatuous to suggest that a tax cut for millionaires is the wrong priority when cuts have also been made to working tax credit and when other things could be done to support people into work.
Barbara Keeley
I want to follow up on the points made by the hon. Member for Bedford (Richard Fuller) about the future jobs fund and to hark back to an impact analysis of the fund done for the Department for Work and Pensions, which found that society gained £7,750 per participant through wages, increased tax receipts and reduced benefit payments. Participants were calculated to have gained £4,000 and employers to have gained £6,850, with the cost to the Exchequer calculated at £3,100 a job. The figures the hon. Gentleman cited would cover the cost. Even better, two years after the start of their time with the fund, those former jobseekers were much less likely to go back to being on benefits. Is that not something we should be re-exploring?
Cathy Jamieson
My hon. Friend has made her point extremely succinctly and has put on the record why we feel that the future jobs fund was not only important but a successful initiative. I say again to Government Members who think that the proposal has no impact on the lives of ordinary people that all those who went through the future jobs fund programmes and who worked on them say that the fund was a valuable way of getting young people back into work. People in my area would certainly have liked it to continue.
Let me come back to the points about the new clause. As I said, the Government should be tackling tax avoidance—we will debate that further later—but that does not mean that we should compensate the wealthiest at the expense of those on middle and low incomes. I would have hoped, in the light of everything the Government proclaimed around the time of the spending review about fairness and ensuring that growth came back into the economy, that even at this stage they might have dropped the plan for a millionaires tax cut. That is a forlorn hope, however.
The decision to create that tax cut goes to the heart of the coalition’s political vision and beliefs—and by that I mean both sides of the coalition. We face a period of national upheaval at a time when resources are stretched. The Government criticise the Opposition when we take responsible decisions to think about the way forward while failing to explain their positions. At a time when resources are stretched, when people up and down the country are working harder and harder than ever before for less in their pockets and when public services are being cut so drastically, it is even more crucial that our Government should be a uniting force rather than a dividing one. In that context, I must ask again why on earth this is the time for a tax cut for the richest.
The Government try to talk a good game, but as I said at the outset, reality does not match their rhetoric. They do not seem to understand the need for a one nation approach to politics and they are not able to encourage a sense of national mission, no matter how much they talk about being “all in it together”. This Government will go down in history as the most divisive.
Mr Graham Stuart
I am grateful to the hon. Lady, who is being most generous in giving way. She said earlier that this matter is about action, not words, and has just said that it is about reality, not rhetoric. She is making an impassioned speech, but will she explain why she did not vote against the 50p tax rate and why, in addition, she is not committed to reversing the measure? Why, after the faux outrage over the spare room subsidy, is she not committed to reversing that either? People outside will think that this has a stench of hypocrisy about it.
Cathy Jamieson
The reality for my constituents and those of Labour Members is that they want to know why the Government made the change in the first place. They want to see action taken in the future, but there are two years until the general election—we will lay out how we intend to take things forward in good time for that—and I respectfully suggest to Government Members that we do not know exactly what sort of mess we will be left with. We see no responsibility taken by the Government for the situation that the economy is in at the moment and what has happened on their watch—
Cathy Jamieson
I hear yet again that tired mantra from Conservative Members, as if, somehow, Labour created the global financial crisis—
Sheila Gilmore
We have been asked that question over and over again. Had we been asked it two years ago, and had we based our answers on the projections that we were given by the Government, that answer would be very different from the one we would have to give now. That might well be the case in two years’ time.
Cathy Jamieson
My hon. Friend speaks words of wisdom. I have repeatedly said today, and it has been said by others, that while we have accepted that, come 2015 if we are in government, we will have to take as a starting point the overall spending plans that have been laid out, that does not mean that we would have made the same choices or that we would make the same choices in the future.
Andrew Gwynne
I would not expect my hon. Friend to set out our tax policies two years before a general election, but is it not important to emphasise that there is a question of priorities here? The issue is that the Government have chosen to clobber some of the lowest-paid workers in my constituency and in hers with a council tax increase caused by their changes to council tax benefit?
Cathy Jamieson
My hon. Friend speaks with great passion on behalf of his constituents and he is correct to identify the fact that we need, in difficult times, to talk the language of priorities. That is why on previous occasions—from the Dispatch Box and elsewhere—I have asked the Government why they believe that it is fair to give the tax cut to the richest and, on top of that, to give those very same people the winter fuel allowance even if they happen to be pensioner millionaires. To me, that does not seem to be fair and reasonable, and I am sure it does not to my hon. Friend either.
Even where a council tax freeze has been put in place, people are seeing local services that they rely on being cut to the bone. They are not able to access educational opportunities, leisure opportunities, support via social services, library services, the arts and culture. It is all very well having a freeze, but in a range of areas people feel that they are not necessarily getting the services in return.
Andrew Gwynne
My hon. Friend is absolutely right, but the situation is even worse than that for 2.4 million low-paid families, who are losing some, if not all, of their council tax benefit. That is an in-work benefit, paid not just to people who are out of work. Those families will, for the first time, be getting a tax increase, because they will have to pay council tax.
Cathy Jamieson
Once again, my hon. Friend is absolutely right. He is a powerful advocate for his constituents and those on the lowest incomes. He is correct to identify the fact that, despite the rhetoric, the Government have, across the piece, consistently attacked the living standards of those in work and on low incomes. I need only refer again to tax credits, particularly for those working part-time hours. The Government seem to think it fairly straightforward for them simply to get additional hours of work, but we know that in many industries, it is not that easy; it is not possible to get the requisite number of hours. Many people who were, to use the Government’s mantra, doing the right thing—taking up employment, for however few hours and however low the wages, rather than doing nothing or sitting at home on benefits—found their working tax credits cuts. As my hon. Friend correctly says, that was compounded by changes to housing benefit, which mean that many of them are even worse off.
Let us look at the impact. I said that this Government will go down in history as a Government who divided; of the richest who are receiving a tax cut, 85% are estimated to be men, and about 70% of the revenue raised from direct tax and benefit changes will come from women. Some 52% of those benefiting are based in London and the south-east. I do not for a moment mean to suggest that there are not people there on extremely low incomes; of course there are, and many of my hon. Friends will no doubt wish to make that point. However, long-term unemployment, including in the north and Scotland, is on the rise.
Andrew Gwynne
My hon. Friend is being incredibly generous in giving way. She is right to emphasise the impact on low-income families, but the tax changes are also hitting moderate and middle-income families. She will be aware that the measures involve lowering the higher rate tax threshold to £41,450. Why is it that those on the lowest incomes and middle incomes are being clobbered, whereas those on the highest incomes are getting a tax cut?
Cathy Jamieson
Once again, my hon. Friend makes an important point, particularly in relation to many middle-income earners. The issue of the lowering of the threshold at which the higher rate of tax is paid has perhaps not had as much air time as some other topics, or other cuts that the Government are making, but the reality is that it affects many who would not see themselves as particularly well off, who have worked hard over the years and been promoted in a company or in the public sector, and who are trying to do the right thing for their family, and are feeling the squeeze.
To go back to the point about who will suffer most as a result of the Government’s policies, I emphasise that I know that in many places in London and the south-east, employment is not at the level that it is elsewhere, and incomes are being squeezed, but it is interesting to note the geographic spread.
Perhaps we should not be surprised to see the Tories operating in this way. I recall, on first entering this place, attending a debate on cutting and abolishing child trust funds. I was surprised that the Government thought that was the correct thing to do at that stage. They were once again attacking those who were trying to do the right thing and support their children and families. Under their approach, it is women and families— the very people they say they want to protect—who consistently suffer. The rhetoric and the reality are two very different things. We should perhaps not have been surprised by the Government’s proposals. It is an age-old Tory mantra that the poor—those on the lowest incomes—are expected to work harder; otherwise, they will be made poorer. At the same time, the rich will work harder only if we make them richer. In this instance, there seems to be one rule for the very richest and another for everyone else. This is arguably the same old out-of-touch Tories—this time, sadly, aided and abetted by the Liberal Democrats.
I always like to try to end on a positive note, however, and I come back to the point that the new clause is a relatively mild-mannered proposal. It seeks nothing more than that the Government should use their good offices to gather the necessary information to make an assessment of the impact of the changes and to produce a report. That does not seem an unreasonable request. Indeed, when the Exchequer Secretary to the Treasury was in opposition, he regularly requested such reports and no doubt regularly tabled amendments and new clauses to that effect. He is nodding his head. I hope that he will remember those days, and remember why it is so important to have such reports and assessments. I hope that he will show that he is not only a listening Minister but a Minister who is prepared to act, and that he will accept new clause 8.
Sir Edward Leigh (Gainsborough) (Con)
The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) has waxed lyrical at some considerable length about the iniquity of the Government’s seeking to reduce the higher rate of tax, but the question that kept occurring to me was this: if she and her colleagues felt so strongly about this, why were the Labour Government quite happy to keep a maximum higher rate of tax of 40% for their entire 13 years in office?
Mark Field
I should just correct my hon. Friend: there was one month in that 13-year period when the rate was different. Does he agree, however, that it would be interesting, if the Minister were minded to accept the new clause, to see a full analysis of that 13-year period?
Sir Edward Leigh
I was going to go on to say that the Labour Government lasted 13 years, and that it was only in the last month that, under the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), they felt so strongly that they had to impose a 50% rate.
This is an important point. For their first 10 years, that Labour Government were led by Tony Blair. When he and Lord Mandelson were planning for that Government, they made a conscious decision not to replicate the old-fashioned language of class warfare that we have heard so much of today. They made a conscious decision that, if the Labour party was ever to regain the trust of the British people and regain power after 18 years in opposition, it would have to reach out to the centre ground. One of the principal ways in which they did that was to commit themselves, before getting into government, to accepting the spending plans of the then Chancellor of the Exchequer, my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), now the Minister without Portfolio. They accepted his spending plans and made it absolutely clear that they would not raise the higher rate of tax during their term of office. That was a very sensible thing to do.
In truth, the only possible justification for raising the higher rate of tax above 40% is a political one. It is political because it appeals to the argument, which we have heard repeatedly today, that a right-wing, vicious, unpleasant Tory Government are only helping millionaires. At first sight that might seem quite an attractive argument for the Labour party to adopt in opposition, but if it is so attractive, why did the right hon. Tony Blair, when he was in opposition and planning for the greatest election landslide in Labour’s history, not follow it? He did not follow it because he realised that it was nonsense economically and, ultimately, nonsense politically.
Richard Fuller
My hon. Friend is making the point, very cogently, that elections are won on the middle ground. The old Labour party, under Tony Blair, understood that. What we are seeing today, in this new clause, is the new Labour party moving to the left and seeking to introduce more taxes. When we turn over the page in the amendment paper, we see that its next new clause proposes yet another tax. Is not this just the start of a further leftward lurch by the Labour party to tax people more and waste public money?
Sir Edward Leigh
I do not know why we are bothering to give the Labour party this friendly advice. Why are we trying to help it, when it is so obvious that its approach is increasingly to remain in its comfort zone on tax?
The speech we just heard was littered with the word “millionaire”. It is the old language of Denis Healey, going back to the 1970s, when they wanted to tax the rich until the pips squeak. It does not impress anybody, and one reason for that is that people think it is fundamentally hypocritical. The point has been made again and again: the Labour party is not making any commitment to reverse the changes. If Labour Front Benchers really felt so passionately about this matter, they could say now from the Dispatch Box that it is iniquitous and make an economic case against it.
Throughout the speech that we have just heard there was virtually a complete absence—a desert—of economic facts and justification on how much money would be raised. All we heard, constantly, was the mantra about millionaires getting richer. The truth is that the top 5% pay 25% of taxation. There is no evidence—Tony Blair understood this—that if we tax them more we will increase tax revenues for the Exchequer. All we would be doing is increasing avoidance. It is bad economically, bad politically and it does not make sense.
Mark Field
My hon. Friend has hit the nail on the head. I am afraid that the impulse has been a political one. If there was any understanding of economics on the Labour Front Bench—perhaps there was in the brief glimpse in 1996 and 1997 to which he referred—those Front Benchers would understand the Laffer curve and its operation and that reducing headline tax rates will bring in rather more money. That was the case in the 1970s and 1980s, as was mentioned earlier in the debate, and I am sure that it will prove to be the case again when we look at the numbers in the year ahead.
Sir Edward Leigh
We are all familiar with the Laffer curve and the point made by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). When taxes were reduced in the late 1970s and the 1980s, revenue increased. There is no economic case whatsoever for having a 50% tax rate. The only case, and I think it is very poor, is a political one. What I am seeking to argue—I do not know why I am seeking to help the Labour party—is that it impresses nobody.
One good point was made in the many interventions we heard from the Opposition side, and from the Government side: why are the Government dragging more people into the higher rate of tax at all? That is a fair point, and it leads me to an argument I have made many times: if we want to improve tax revenues and get more fairness in the tax system, we should move as much as possible towards a flat rate of tax. We have the longest tax code in history. If a Chancellor of the Exchequer on Budget day takes with one hand and gives with the other, and if has his little schemes to help investment or job creation, all he is doing is creating perverse incentives. A much better way of creating a modern, progressive and successful tax system would be to have as flat a rate of tax as possible, as is being done increasingly around the world. It is ridiculous that a deputy head teacher of a primary school, for example, has to pay a higher rate of tax. I think that shows some of the problems the country is in economically.
I do not want to repeat all the old arguments about who got us into this mess, but perhaps I will be forgiven for saying that unfortunately we have to pay our way, and the Government are therefore between a rock and a hard place. It is absurd to be dragging more people into higher rates of tax; what we should be trying to do, across the House, is to flatten the tax base and make it much simpler, much more coherent and much more understandable, so that people know that there is, to all intents and purposes, a single rate of tax. It does not matter whether they earn £30,000, £300,000 or even £3 million a year—they will be paying 35% of it in income tax. If we had such a modern tax system, it would generate a huge surge in productivity. The only people who suffered would be the chartered accountants, thousands of whom might lose their jobs; I pity the chartered accountants. I want to try to generate a modern, progressive tax system where people know that as they work harder they can increase the money coming into their family. If we are going to have a sensible debate as opposed to one based on party politics, these are the sorts of arguments that we should making. It is sad that we do not have the courage to do so.
Cathy Jamieson
I am listening to the hon. Gentleman with interest. I wonder what he would say in response to the Institute for Fiscal Studies, which has pointed out that the rise in receipts may be due to wealthier people trying to avoid the 50p tax rate. It says:
“Receipts in April will have been boosted by high income individuals shifting income such as bonuses and special dividends from 2012-13 to 2013-14 in anticipation of the fall in the top rate of income tax from 50 per cent to 45 per cent.”
Is he suggesting that the right way to deal with people avoiding paying their tax is to reward them with a tax cut?
Sir Edward Leigh
It is not a question of rewarding them. The truth is that the more complicated the tax system, the more it is the case that the only people who suffer are middle-income groups, often people in employment on pay-as-you-earn. The rich—the millionaires; let us talk about the group that the hon. Lady is always going on about—will always, through their expert accountants’ advice, seek to avoid paying tax, quite rightly, as it is perfectly legal and proper, and largely they will be successful. The people she is talking about—the millionaires—are precisely the sort of people who have income streams that are very mobile around the world. They are often foreign nationals. Does she honestly think that if we go on piling more and more tax on to these people they will just sit around doing nothing? Of course not; they will seek to avoid paying tax. It is a question not of rewarding avoidance but of accepting the facts of life. She might think it unfortunate—I do not—but we need these risk-takers, entrepreneurs and wealth creators in this country. Unfortunately we are in a highly competitive situation with other countries, particularly Ireland and other low-tax countries. Unless we attract these people here we will not create jobs and investment in the private sector.
We can go back to our comfort zone; we can lie in the warm bath of our own prejudices and dislike millionaires. We would probably all like to be millionaires. None of us are millionaires, unfortunately; we chose to go into public service and we are not going to become millionaires. We can have a pitch at millionaires and think that in doing so we are making ourselves popular with the rest of the population, but unfortunately they will not sit tight; they will simply leave and take that entrepreneurship and job creation away. That is what Tony Blair recognised and that is what we should recognise.
Barbara Keeley
I am surprised that the hon. Gentleman is not including the most obvious millionaires in this country. Does he really think that the risk-takers, the entrepreneurs and the wealth creators do not include football players, many of whom are earning multi-millions of pounds? Frankly, the notion that we need all these wealth creators—these people earning fantastic amounts in football—does not hold up.
Sir Edward Leigh
That is an absurd argument. I watched the Brazil match yesterday—did the hon. Lady? Millions of our constituents were watching it and enjoying it. I agree that these people are ludicrously overpaid, but they are men of 21 who have an amazing skill. What does it matter if they earn £1,000, £2,000, £3,000 or £100,000 a week or a month? It is none of our business; it does not matter. To claim that my argument is defeated because a few millionaires earn ridiculous sums of money and because there are footballers’ wives is such a ludicrous argument economically that it is barely worth answering.
Mr Graham Stuart
I am grateful to my hon. Friend for giving way; he is being most generous. I must correct him on one thing, if he meant income tax when he said that 25% was being paid by 5% of taxpayers. In fact, 40% of the Government’s largest single receipt—income tax—is paid by 5%, and that includes footballers, rock stars and entrepreneurs, all of whom left this country in the 1970s, leaving us all poorer. The hon. Member for Worsley and Eccles South (Barbara Keeley) and other Opposition Members are lurching to the left and want to send them out of this country again. That would impoverish all of us, but most of all the low-income people in our constituencies who rely on receipts from such people.
Richard Fuller
I am grateful to my hon. Friend for his generosity in giving way. He has highlighted the precise premise of the Opposition’s argument: they like talking about millionaires and football players because they realise that people perhaps do not like footballers and bankers earning lots of money. However, does my hon. Friend agree that, once they have started with bankers and footballers, they will then move on to judges, teachers and regional sales managers—the middle-income people who earn the money that produces the highest tax yield? Should we not all be aware of the danger in allowing Labour’s new tax policy to harm the middle classes and working people in this country?
Sir Edward Leigh
Of course. There should be a huge health warning on Labour’s proposal. British people should be warned that it is not footballers or bankers who will suffer, but middle England—people who work really hard to create small and successful companies, who are halfway up the corporate tree and who are near the top of the public sector. Moreover, it is those precise people in the public sector whom we need to incentivise to make efficiency savings, if we are to have a successful economy.
People should not swallow the lie that this is only about bankers and footballers. They can look after themselves in any country—they always have and they always will—and if there is a Labour Government, I predict that they will get richer and richer. We should forget them and concentrate on middle England.
Finally, if the Labour party wants to get back into power it should remember what Tony Blair did. He was its most successful leader ever, because he realised that politics had to be won on the centre ground. At the moment, Labour is going nowhere.
Chris Evans (Islwyn) (Lab/Co-op)
It is always a joy to follow the hon. Member for Gainsborough (Sir Edward Leigh). In a different life, when I worked for my predecessor, he was the Chairman of the Public Accounts Committee and I spent many a happy afternoon at the back of the room listening to him pontificating and taking on the tax dodgers and anyone else the National Audit Office thought was a little bit dodgy. I miss those days.
The more time I spend in this House and the more I listen to Government Members, the more I sense that all we do is talk about history and hark back to the past. Government Members like to talk about 13 years of Labour “misrule” and 18 golden years of Tory Government. The one conclusion that I have come to from studying economics at A-level and from listening to many hon. and right hon. Members speak in this House is that it is not possible to run the economy like a scientific discipline. It is not like that.
Hon. Members have mentioned the Laffer curve, which was meant to be the wonderful idea of its time. In 1980, a future US President—he was about to become vice-president at that time—said that trickle-down economics was voodoo economics. He was right then and he is right now. The hon. Member for Gainsborough gave the Labour party some advice and I want to do the same for his party. The Conservative party is still in the grip of an economic theory that failed.
I do not want to talk about history, even though I am an historian myself. I do not want to go back to the ’80s—there is no point in talking about that. It is a moot argument. I want to talk about the future, but in 1989 and 1990 we had the worst recession ever. That followed the recession in 1981, which, at the time, was the worst recession that we had had. Trickle-down economics is based on the mad belief that a tax cut for the very rich will somehow trickle down through society. It has never worked. Quite simply, that is common sense.
Mr Graham Stuart
I just want to make a simple point. Every time the tax rate for the richest was cut under the previous Conservative Government, the amount paid by the top 10% went up in cash terms and in relation to what was paid by the rest of the population. In other words, every time the tax rate was reduced, the amount that the rich paid went up and the percentage of the overall pot that they paid went up. How does the hon. Gentleman explain that trickle-down effect?
Chris Evans
The tool that the previous Tory Government used, which this Tory Government are using as well, was value added tax. Indirect taxation has always gone up under a Tory Government. Value added tax went up from 12% to 15%, and then to 17.5%. It is now 20%. This Government have also given a tax cut to the highest earners in society. The problem with indirect taxation is that everybody has to pay it. That is why the tax take always goes up. Such taxation is regressive. It does not matter what people are earning; everybody has to pay it. People who are very rich and have means do not have to worry about it, but those who are struggling at the bottom, such as those who are struggling to get by on the state pension, have to pay it, whatever the rate is.
Richard Fuller
I am very interested in what the hon. Gentleman is saying. Would he therefore approve of a permanent reduction in VAT, compensated for by an increase in income tax?
Chris Evans
As I was saying, there is a problem with trying to impose a scientific discipline on something that has nothing to do with science. I do not believe in that kind of economics. We have to take stock of the situation that we find ourselves in. That might have been a way forward in the ’90s, given the economic situation that was faced then. However, we do not know what we should do until we are faced with the economic situation.
Richard Fuller
It is almost impossible to have a debate when Opposition Members talk about the past but when questioned about what they would do just say, “We don’t know. We have no idea.” Presumably the hon. Gentleman will at least accept that if he is proposing a reduction in value added tax, given the state of the public finances, a future Labour Government would have to increase income tax. He must also accept that the yield on income tax comes from middle-earning people up and down the country. That is what a future Labour Government would do.
Chris Evans
The hon. Gentleman is not listening to what I am saying, if I may be so bold. I did not make any commitment to reducing VAT. I was harking back to the economic theory of the Laffer curve and supply-side economics, under which indirect taxation is used to cut taxes for those at the very top. When the top rate of tax is cut for people at the top, they have mobility and can spend the money in different countries. We have heard that already. That applies to footballers as well. However, when the tax rate is cut for middle earners, they tend to spend the money on the high street and stimulate the economy in that way.
I do not want anybody in this House to think that I have a problem with millionaires. Like the hon. Member for Gainsborough, I have a lot of friends who want to be millionaires. There is nothing wrong with aspiring to be something better. That is what the Labour party is about. I am sorry to hark back to his speech so much, but the hon. Member for Gainsborough said that that is what we understood in the mid-’90s. Human beings aspire to something better. There is nothing wrong with wanting to be a millionaire. My point is that if we could find the money to give a 5p tax cut to higher earners, why could we not do that for middle income earners? A 1p tax cut for people under the top rate of tax would have done more to stimulate the economy than a 5p tax cut for higher earners, because they will spend the money elsewhere.
I also sense that this is a moral argument. Whatever I believe about cutting tax for the very richest in society, a lot of the people I talked to when the top rate of tax was cut were very angry, especially constituents of mine. They said to me that it is the people who are riding in limousines who are getting the tax cut, not the ones who are driving white vans and keeping this country working. Those are the people who are feeling the pain. We should look at the level of anger.
If we look at a breakdown of the figures, taking into account all the changes to tax, tax credits and benefits that have been introduced since 2010, we see that households in the UK will be an average of £891 worse off this year, or £17 a week. A one-earner couple with children will be a staggering £3,995.65 worse off this year. For a multi-family household with children, it will be £1,723.88. It is all very well quoting statistics—I do it all the time, and everybody is guilty of it—but I am sure that every family affected aspire to something better for their children. Yet the message they are getting from the Government is that they should be worse off.
Mr Graham Stuart
The hon. Gentleman is being generous in giving way. I hope that he tells his constituents the truth about where the Government have concentrated their efforts to lower tax. The main effort has gone into lifting the tax threshold. Does he support the fact that, under this Government, people can earn up to £10,000 and not pay any income tax, because the Government are determined to try to make work pay?
Chris Evans
Surprisingly, I agree with the hon. Gentleman on his last comment—work does pay. At the end of the day, we can have any Government scheme we want to bring people out of poverty, but there is only one way out, and that is work. The only way out of the current difficulty is for people in work to pay their taxes. If there are even more cuts to the public sector, there will be even more people out of work and the welfare bill will go up, defeating the object of the exercise. It will lead to a high welfare bill, which will have to be paid for, and a low tax yield because of people being out of work.
I say to the hon. Gentleman that we have to wake up to the fact that the social benefits that we want to enjoy will come only from businesses being successful. We must do all we can to ensure that we have a fair, simple and transparent tax regime. How can we stimulate the economy when it seems that those in the middle are being squeezed?
The hon. Gentleman asks whether I talk to my constituents. I do, and those in social housing or council housing are concerned about the so-called bedroom tax. Some 80% of social tenants in Caerphilly county borough are in two or three-bedroom houses. That is not their fault, because no one-bedroom flats or houses are being built. After the war, when Aneurin Bevan invested in social housing, he invested in family homes so that people could bring up children and go to work.
We have heard from the Government, and from hon. Members today, about how much the cut in tax from 50p to 45p will raise. Everybody seems to be able to predict the future—every Government Member who has spoken today has done so, and even the Exchequer Secretary will be guilty of it. They seem to think that they are some sort of latter-day seer, guru or wise man who can see that in future, it will be wonderful under the Tories whereas it would be terrible under the Labour party. However, we do not know what is next. We might be lucky—we might find gas, or we might find oil off the Pembrokeshire coast or more oil in the North sea, which will stimulate the economy. On the other hand, we might have another financial crisis. We do not know. When we talk about what the tax cut will raise, we are basically licking our finger, putting it in the air and wondering which way the wind is going to blow.
To get back to the new clause, it is important that we have a review of the tax cut.
Barbara Keeley
One thing that is predictable is that the bedroom tax, which my hon. Friend mentioned, is going to lead to a hit of about £4 million in Salford, which will be one of the worst hit places in the country. That money will be taken out of pockets and shop tills in our local communities. It is now predicted that the arrears that will be run up as a result will also run into the millions. In fact, it looks like it may well get to the point where it is not worth having made the change, because those arrears will not be counteracted and because of the £4 million taken out of our local economy. That situation is becoming evident as the weeks go by, and we can predict what the result will be in a few months.
Chris Evans
I thank my hon. Friend for that wise intervention. Welfare reform is a warm and nice thing to say, especially for those of a right-wing bent who want to take out the scroungers and make them pay. But when benefits start to be cut and people are kicked out of their houses, it is a serious concern—I do not want to be melodramatic—that we could see the return of the workhouse.
In constituencies such as mine and those of my hon. Friends, I am fearful that we will see homelessness on a wide scale. The Government may have thought it was a good idea at the time to cap benefits and introduce the bedroom tax, but when we have a huge homeless population and emergency schemes need to be introduced to sort that out, I am afraid that it will be the taxpayer who picks up the bill.
Does the squeeze on benefits motivate anybody to go to work? If someone has arrears or debt and is seeing more of their pay go down the drain, why would they go to work? The Government should be motivating people to go to work; they should be tackling worklessness. Instead of cutting welfare, they should be stepping in to stimulate people to go to work, and talking to those people individually.
We talk about economics all the time, but it is not a scientific discipline—it is about people and how they react to certain circumstances. If I found myself out of work, my needs would be different from those of someone with a lower educational attainment or problems with reading and writing. However, we should be able to say to that person, “What is stopping you going to work? What are the barriers?” What can we provide to get people into work? Yes, that will cost money up front, but in the long term the country will win because of it.
Let me return to my point about putting a finger in the air and wondering which way the wind will blow. It has been estimated that 267,000 people who earn more than £150,000—including 13,000 people who earn more than £1 million—will receive an average tax cut of £100,000, according to figures from HMRC. In contrast, child benefit will be frozen for a third year, and tax credits and other working-age benefits will increase by just 1%, and these real-terms cuts will affect a shocking 9.7 million households. Can we understand that? My constituency has 56,000 electors, but 9.7 million households will be affected by this measure and each person will have an individual story and will have struggled.
The figure of 9.7 million in relation to benefits might conjure up an image of worklessness, but 7.3 million of those households—75% of all households claiming benefits—are in work. That is the crux of the problem we face. We talk about welfare reform and so-called scroungers, but the people suffering most are those we are trying to encourage—those who work hard and play by the rules but who are locked in an economic theory that has clearly failed. Some 2.4 million families will pay on average £138 more in council tax in 2013 as a result of cuts to council tax benefit. That is the ultimate failure of Government—six in 10 working people are claiming benefits. For all the talk of work paying, for many people work is not paying.
Let me return to what I said about the new clause. We need a report. I sat on the Finance Bill Committee with the Minister—I feel sorry for him, as I would for anybody who sat through that. Every day he felt as if he was batting off different reviews. However, this is such an important issue, and the coalition Government have made it such a cornerstone policy, that it needs to be reviewed. We have heard so much about it being wonderful, but we must test the theory: is it stimulating the economy, bringing money through and making work pay? We will not know unless we have a review. That is why it is so important.
I hope the Minister listens. I have a lot of time for him. As I have said, I was in Committee with him: he is sensible and takes a rational view of these matters—[Interruption.] That is the problem—we judge a man by his friends. This is such a cornerstone policy that I hope the Minister will give us some prospect of monitoring it.
I do not want to go into the history of the 1980s and tax cuts again, because I have touched on it already. But I am deeply concerned that we again face a Government who believe in an economic theory that ultimately failed the country. It was not just that we lost heavy industry in the valleys: I think of all the people in the 1980s who were motivated by the dream of starting a business or buying their own homes. By the end, their businesses went bust or they were forced into rented accommodation because they could no longer afford the mortgage. For all that Government’s lauding of their control of inflation, it was through the roof and interest rates hit 15%. We have heard recently from the Governor of the Bank of England that interest rates will go up next year, and I am deeply concerned that this Government will blindly follow the theory of supply-side economics, of Karl Popper and of leaving everything to the market.
Governments have responsibilities. They have a responsibility to create the environment for businesses to flourish and for people to achieve their dreams. I came into politics because I wanted people to aspire to something better, but the Government are giving the very rich a tax cut and everybody else is losing out—660,000 people will lose an average £728 a year under the bedroom tax. Why are the people at the bottom—the people we should be helping—feeling the pain?
I have said before many times that I do not want to knock the bankers. I worked in banking myself and I know how difficult the industry is. I have met my fair share of bankers and they are not all bad, and banking is the cornerstone of this economy, so I always tread carefully when we talk about bankers, but any industry has people who are guilty of criminal activity. In this case, the guilty have not been punished for their criminal activity. It is the Government’s failure that has allowed people to walk away.
Richard Fuller
The hon. Gentleman may be right about that, but the acts that he is complaining about happened under the last Labour Government, and it is the laxity of their regulation that means that people are not facing criminal prosecutions now.
Chris Evans
When Conservative Members were talking about the Laffer curve, Ronald Reagan came to mind. For some reason, when the hon. Gentleman stood up, Ronald Reagan came to mind again, as I recalled him saying to Jimmy Carter in the 1980 election campaign, “There you go again.” The person sitting tonight at their kitchen table, worrying about paying the rent, the mortgage, the gas bill or the electric bill, and watching this debate—although given the time they will probably be watching “Pointless”—[Interruption.] I walked into that one. They might be watching ITV instead—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think that is enough about television shows.
Chris Evans
I was just wondering what the man at the kitchen table was watching. I apologise, Mr Deputy Speaker. All we hear is the same old debate and the same charge that it is all the Labour Government’s fault, so let me challenge the hon. Member for Bedford (Richard Fuller).
Mike Thornton (Eastleigh) (LD)
The hon. Gentleman talks about banking fraud. The laws that would have been broken would have been laws under the Labour Government, and most of us do not believe in retrospective legislation. I agree with him that most bankers are decent people, but there have been exceptions. Unfortunately, those people did not actually break laws; they simply took appalling decisions with other people’s money, which I agree is a disgrace. As far as I know, however, we have seen no accusations of banking fraud; I could be wrong, but that is my understanding.
Chris Evans
I agree that we do not know, as there has been no investigation.
Mr David Ruffley (Bury St Edmunds) (Con)
To help the hon. Gentleman out here, if he had been in the Chamber this time last year, he would recall the Chancellor of the Exchequer saying in respect of LIBOR rigging that he had referred the facts in those cases to the Serious Fraud Office, which is, as we speak, still undertaking a review. Before the hon. Gentleman says, “Why haven’t the Government done anything?” let me remind him of the core principle under the British constitution of the independence of prosecutorial authorities from Ministers. Will he concede that?
Chris Evans
Yes, but I should tell the hon. Gentleman that I was in the Treasury Committee when Bob Diamond came to give evidence about LIBOR and that I was in the Chamber when the Chancellor announced the investigation. I listened to it and it made me sad. It made me sad because I realised for the very first time that people do not trust anybody any more. That is the problem. It goes much deeper than economics, politics, banking or whatever. People simply do not trust others any more. [Interruption.] I know that I am digressing from the new clause, Mr Deputy Speaker, and that you are itching to stop me. I want to put it on the record, however, that I genuinely feel that people do not trust each other any more. That is the saddest thing of all about this issue. It does not matter whether we are talking about Conservatives or Labour, people just do not trust politicians, journalists, lawyers or others. This is a much deeper problem than anything else for our society.
That brings me to the issue of anger about what the family man or family woman will save from what is on the kitchen table tonight. When those people hear about the tax cuts for the rich, I am sure they will think of those bankers who may or may not have committed crimes, of the journalists who may or may not have committed crimes, and of the editors of national newspapers—people earning six-figure salaries—and they will believe that those are the people who will get rewarded. That may not be the case, but that is the perception, and as we all know as politicians, the perception is usually stronger than reality. What members of the public will think about this Government and about this place is that they are run by an elite who are more interested in helping out their friends in the City than anything else. That is the real tragedy of this issue.
I have sat here and heard all the arguments about the tax cuts. Yes, I have attacked what I believe is a failed economic theory, but the truth is that the Government won the election in May 2010. I do not like that personally, and I hope that we can turn that around in 2015. The Government have the right to put whatever they want into the Finance Bill, and we cannot change it, much as I would have loved to table an amendment to abolish this tax cut. I cannot, and all we can do is bring about a review. This review is crucial because it will allow us to see how much this cut for millionaires is affecting the British economy.
This may be deemed an aside, Mr Deputy Speaker, and you may call me to order, but let me ask the Minister one more question. When the Treasury was considering the 5p tax cut, did it also consider a 1p tax cut for those whose earnings were below the threshold? If it did not consider that option, why did it not do so, and if it did, why did it rule it out?
You are clearly champing at the bit, Mr Deputy Speaker. Perhaps you want me to wind up my speech, and I shall try to do so. [Interruption.] Do not get too enthusiastic, please!
We need a review. We need to know the facts, because this is so important.
The Exchequer Secretary to the Treasury (Mr David Gauke)
We have heard a couple of rather lengthy speeches about a topic that is fairly familiar to those of us who have dealt with Finance Bills in the past. We discussed the reduction in the top rate of income tax at some length during the early, middle and late stages of last year’s Bill, and we have discussed it on a number of occasions during our earlier debates on this Bill. It is striking, however, that the number of Labour Back Benchers present during much of today’s debate so far has been three or perhaps four. Although we have heard some passionate and lengthy speeches, I am not sure that I need to make a lengthy speech in response, but a few basic points are worth making.
The Government agree that the wealthiest should make the biggest contribution to deficit reduction, and it will be clear to anyone who looks at our record across the board that we have stuck to that principle. In the 2010 Budget, the higher rate of capital gains tax was increased. In the 2011 Budget, we tackled a major area of tax avoidance, namely disguised remuneration. The Labour party opposed that measure in Committee, but we tackled the problem none the less, and our action has resulted in considerable extra revenue, particularly from high earners.
The 2012 Budget, which contained the measure that has provided the subject matter of most of today’s debate—the cut in the 50p rate of income tax—also introduced a new rate of stamp duty for high-value homes, measures to clamp down on stamp duty land tax avoidance, and a cap on reliefs used in the tax system, which raised an amount considerably larger than the cost of the cut in the 50p rate. The 2012 autumn statement provided for action to reduce the cost to the Exchequer of pensions tax relief, and the 2013 Budget contained further measures to tackle offshore tax evasion by, in particular, high earners.
We clearly have a strong record in this respect. We have gained additional revenue not only from capital gains tax and stamp duty, but—as is shown by the distributional analysis—from the income tax paid by the top 1% of earners. That was mentioned by a number of my hon. Friends, including my hon. Friend the Member for Gainsborough (Sir Edward Leigh), who pointed out that we are receiving more from the top 1% than the Labour party ever managed to.
It is interesting to note that the proportion of income tax contributed by the top 1% exceeded 25% in only one year during Labour’s time in office, namely 2009-10, which was a slightly strange year because a large amount of income was brought forward so that the tax could be paid at a rate of 40% rather than 50%. In that year, 26.5% of income tax was paid by the top 1%, but in the remaining years the proportion was 25% or lower. We estimate that in 2013-14, with the new lower rate of 45%, nearly 30%—to be precise, 29.8%—of income tax receipts will come from the top 1%. The problem with the 50p rate was that it was not very good at doing what a tax is supposed to do—raising revenue. That is the Labour party’s essential difficulty in advocating a 50p rate of income tax.
Bob Stewart (Beckenham) (Con)
I do not understand all the differentials, but is the Treasury model that we would get more tax income by reducing the rate than by leaving it at 50%?
Mr Gauke
My hon. Friend brings me to the point that I wanted to move on to: the report that the Chancellor of the Exchequer commissioned in Budget 2011 to evaluate the Exchequer impact of the additional rate of income tax. The report was published alongside Budget 2012. It concluded that the underlying yield from the increase from 40% to 50% was much lower than originally forecast, owing to large behavioural effects—it was possibly only £1 billion and could in fact be negative. The 50% rate also risked damaging growth and the UK economy if it had remained permanent.
Mr Brooks Newmark (Braintree) (Con)
The hon. Member for Islwyn (Chris Evans) focused on our policies. The inconvenient truth for the Labour party is that it had the opportunity for 13 years to test the 50p rate to destruction, but we quickly saw the evidence of the Laffer curve, which shows that, as we lower tax rates, we can collect more revenue. The Government should be congratulated on finding alternative ways of trying to get the rich to pay their just deserts, if the Labour party wants them to do that. In fact the Government have collected more money from the rich by lowering the rate from 50p to 45p and by looking at other ways to collect that money.
Mr Gauke
My hon. Friend is absolutely right. The point is not whether we should seek to get a significant contribution from the wealthiest; it is how we go about doing it. There is a real problem with a very high rate of income tax directed at the most mobile people, who have many more options in how they respond. Not surprisingly, the evidence that the HMRC evaluation discovered is that there is a significant behavioural response.
The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) said, “This is all tax avoidance and one should crack down on tax avoidance.” I agree: one does need to address tax avoidance, and we have more ambitious targets for HMRC than it has ever had before. We have made a number of changes to the law to address avoidance. I could go on at some length about the steps that we have taken, but the behavioural effect is not only about tax avoidance, it is also about behaviour that is entirely consistent with Parliament’s intentions. One might find people making bigger pension contributions, for which the House has determined tax relief should be available. One might find people retiring earlier or locating in other jurisdictions. All those things have an impact.
Therefore, there is a significant behavioural effect in this area, which brings me to the point that my hon. Friend the Member for Braintree (Mr Newmark) made: the 50p rate is not an effective way of raising revenue, which is why, in my opinion, the Labour party will not give a commitment to bringing the 50p rate back. It knows it is bad economics and does not raise revenue. It knows it sends a bad message about the UK as a location in which to do business. That is why Labour had a 40p rate for 4,722 of the 4,758 days that it was in office. There was a 50p top rate for just 36 days at the very fag end of the last Government, when they knew with a fair degree of confidence that they were going to lose office.
Mr Newmark
I sympathise somewhat with the point of the hon. Member for Islwyn (Chris Evans) about his and his party’s desire to target bankers, but if we want to create an entrepreneurial society, we must realise that not all the big wealth creators are bankers; they are also people in manufacturing, hi-tech industry and so forth. If we want them to settle in the UK, we must make our tax environment attractive and competitive internationally.
Mr Graham Stuart
My hon. Friend is giving a thoughtful economic analysis, but he perhaps misunderstands where the Opposition are coming from, because I do not think they are particularly interested in the economics. The fact is that their position is now so desperate that they have their 36% strategy, they are entirely paid for by the union movement, and their desire now is to lurch to the left. They do not care if they get less money; what they want to do is appeal to a core vote which they hope will be enough to return them to power because of the invidious and unfair electoral system we have. That is what is going on, which is why we waste our time when we talk about entrepreneurialism or the benefits to public services, because they are not really interested.
Mr Gauke
My hon. Friend takes a sceptical view of the Opposition, and events may well turn out to justify it. I want to take a more charitable view, however—although perhaps it is, in fact, a different form of scepticism or cynicism. My view is that they are not really serious about the 50p rate at all; much though they talk about it, they will not, in truth, pursue this policy because they know it is so damaging and that it does not do anything to raise revenue. That is why, despite repeated questions earlier, the hon. Member for Kilmarnock and Loudoun, who does like to be straightforward with the House, refused to say whether Labour would support a 50p rate after the next general election. She makes the argument that Labour will have to delay and wait to see what the state of the economy is, but given that we know this does not raise any substantial amount of revenue, it cannot be dependent on the state of the public finances; instead, it is a matter of political calculation. I hope my hon. Friend is wrong and that the Opposition are trying to edge away from a position that they saw as populist but which, in truth, is economically incoherent.
Cathy Jamieson
I am intrigued by the amount of advice being given to the Labour party by those on the Government Benches. Given that the Minister said he wanted to be in charitable mode, to return to the new clause, will he not concede that there is an argument for looking at the matter more thoroughly and having this review in order, as the Treasury Committee concluded in its report on the 2012 Budget, to discover what the actual impact of reducing the rate would be?
Mr Gauke
I am not persuaded by that argument. I hoped the hon. Lady would take that opportunity to provide some clarity on the Labour party’s position, but she did not do so. We do not need another review. We have evaluated the impact of the 50p rate. It was an economic failure. It failed to raise revenue. It in effect put up a “closed for business” sign over the UK economy. It was about politics, not economics.
I urge the Opposition to withdraw the new clause, and I hope they will also return to their approach of a few years ago. As my hon. Friend the Member for Gainsborough pointed out, when Tony Blair was in charge he was making pledges not to increase the top rate of income tax. That at least demonstrated a sense of where the UK needed to be and its place in the world, but that has, I am afraid, been long forgotten by the Labour party which just drifts ever leftwards.
Cathy Jamieson
Following the Minister’s example, I will be brief. We have had a useful debate containing some impassioned speeches, not least those from my hon. Friend the Member for Islwyn (Chris Evans) and from the hon. Member for Gainsborough (Sir Edward Leigh), who, interestingly, sought to give advice to the Labour party. My hon. Friend gave an interesting critique of Laffer curve economics but related it, importantly, to what happens in the real world. He spoke with a great deal of passion and experience from his time working in the financial services sector. He was absolutely right to say that not everyone working in the banks was wrong, and many people working on the front line are trying to change things and to clear up the problems. These people did not adopt the principles that got the banks into such difficulty.
Earlier, I read out a couple of quotes from various hon. Members about cutting the top rate, but, to keep a balance across the coalition, let me cite one that I missed from the president of the Lib Dems. The hon. Member for Westmorland and Lonsdale (Tim Farron) has said:
“Cutting the top rate was a stupid thing to do. It probably raised up to £3bn a year. We should pledge to restore the 50p rate at the next election. It’s not enough to be fair, you have to be seen to be fair.”
That has been one of the threads running through this afternoon’s debate. [Interruption.]
Again, I hear Government Members muttering from a sedentary position about what the Labour party is going to do. I outlined this earlier, but I will state it again: we will, of course, set out our manifesto in due course, in time for the general election—that is absolutely the correct thing to do—but we will not make false promises. We will not make promises that we will not be able to keep. Let me remind the House of that quote from the Prime Minister:
“I have been very clear—we have all been very clear—that we have to do this in a way that is fair so that the broadest backs bear the biggest burden.
That is why we haven’t changed… the 50p tax rate.”
As I outlined, that particular pledge was not kept and those with the broadest backs do not appear to be carrying the biggest burden.
The Minister said that he wanted to be charitable and to understand why we tabled the new clause, and I know from Finance Bill Committees that he does at least reflect on things. He rarely gives in to temptation to resist the advice he is given to reject all amendments and new clauses, but he does at least give the appearance of reflecting. In this case, I cannot understand why he will not accept a mild-mannered proposal that simply seeks to have a review of the impact of this measure and to bring forward further information for the interest of hon. Members across the House. That is a reasonable and sensible thing to do, and I know that the Minister, certainly in opposition, has regularly argued for this type of review. We have heard nothing from him today to explain why, suddenly—[Interruption.] Given the side conversation that is going on, I am sure that the Minister never got any of those reviews into the legislation at that time, but I say to him that there is a first time for everything. He could, even at this late stage, decide it was the correct thing to do to allow the review to go ahead and ensure that the House had further information.
I do not want to repeat all the points made earlier, as that would not be helpful at this stage. However, I simply remind the House that it is not only Opposition Members who are claiming or suggesting that there are concerns about this measure. To go back to the IFS, it stated:
“By giving out £3 billion to well-off people who pay 50p tax…the Government is banking on a very, very uncertain amount of people changing their behaviour”.
Much of the Government’s argument has been predicated on the notion that people will change their behaviour, but I have heard nothing from the Government that suggests to me that behaviour would be changed in such a way that there would suddenly be a huge influx of resource into the Treasury. The IFS went on to say:
“There is a lot of uncertainty, a lot of risk on this estimate.”
Cathy Jamieson
I am coming to a conclusion.
Let me finish by quoting the Office for Budget Responsibility, which stated:
“This is a judgement based on not even a full year’s data based in terms of how people have responded to the 50p rate, in particular in terms of those self assessment tax-payers.”
I have heard nothing from the Government that convinces me that we do not need to look at this issue in more detail. I am disappointed that they have not accepted the new clause and I therefore want to press it to a vote.
Question put, That the clause be read a Second time.
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move, That the clause be read a Second time.
New clause 9 calls for the Chancellor of the Exchequer, within six months of Royal Assent to the Finance Act, to lay before Parliament proposals for an income tax rate of 10% on a band of income above the personal allowance. The range of income to be covered by that 10% rate should be determined by the Exchequer yield from a mansion tax—a Liberal Democrat proposal that I used to think the Liberal Democrats stood four-square behind. Perhaps in a moment those Liberal Democrats who remain in the Chamber—they are diminishing in number—will tell us a little about where they stand on the issue.
We feel that the full benefit of that 10% or 10p rate of income tax should not be available to taxpayers paying the higher or additional rates—the £50,000-and-above levels, or higher rate payers. It should be targeted and focused on basic rate taxpayers. That is the logic of new clause 9.
We think that the measure would be welcomed across the country, and that all hon. Members, including Conservative Members, should consider it seriously, because living standards are being squeezed, and for most people, life is getting a lot harder, as is manifested by the fact that wages have fallen in real terms. In fact, at the beginning of the year, we saw the steepest fall in living standards since the 1970s. That is a direct consequence of the tax and spending choices and priorities of the Government parties—the tax credit cuts that have hit lower and middle-income households; the squeeze on child benefits; and the rise in the VAT rate to 20%.
Mr Ruffley
What does the hon. Gentleman say to the Institute for Fiscal Studies, which states that the latest Labour proposal to reintroduce the 10p rate
“has no plausible economic justification. It would complicate the income tax system and achieve nothing that could not be better achieved in other ways”?
Chris Leslie
I would say that the aim of the 10p policy should be to encourage people on low incomes to take higher-paid work, to work longer hours and to start the transition up the income scale. That is why it
“is right that we need to introduce a 10p tax rate in the interim; otherwise, people will go straight from their tax-free allowance to being taxed on any income above that.”—[Official Report, 22 January 2013; Vol. 557, c. 37WH.]
Those are not my words but those of the hon. Member for Camborne and Redruth (George Eustice), in a debate in favour of a 10p starting rate of tax that was held some months ago.
Mr Ruffley
I want to return to the question that I asked the hon. Gentleman. Most technical experts say that a 10p rate would complicate the tax system. Let me ask him once again: would not his proposal complicate the tax system? Indeed, was not that the reason why the Labour Government abolished the 10p rate in 2007?
Chris Leslie
I would be the first to concede that it was a mistake to abolish the 10p rate in 2007. I do not think that it creates complexity in the tax system. The Institute for Fiscal Studies has long been in favour of simplicity in the number of tax bands, but I believe that there is a genuine debate to be had about progressivity in the income tax system. The hon. Gentleman’s colleagues can see the case for a 10p rate, and I believe that it would be a useful way of introducing a transition from the tax-free personal allowance to the 20p basic rate of tax. A 10p rate would be an important staging post along the way. A tax cut for those on lower and middle incomes would be broadly welcomed throughout the country.
Geraint Davies (Swansea West) (Lab/Co-op)
Does my hon. Friend agree that it is in the very nature of progressive taxation to have increasing marginal tax rates as someone earns more money? The Institute for Fiscal Studies has shown that there is therefore a genuine trade-off between social justice and increasing fairness, as people have more money, and tax efficiency. That is fair enough, and we should opt for progressive justice.
Chris Leslie
Indeed. Having a 10p band in the income tax scale ensures that we can focus on that sense of fairness. “Fairness” is a word that might not necessarily be recognised by some Government Members, but it is important in our tax system. We know that their idea of fairness is to cut the highest rate of income tax from 50p to 45p. They can justify that in their own terms, and to their own constituents, but we believe that it is far better to focus on giving help by introducing that lower rate straight above the personal allowance.
Mr John Redwood (Wokingham) (Con)
The hon. Gentleman wishes to pay for a 10p rate from the proceeds of a mansion tax. Will he advise the House of Labour’s definition of a mansion? Could it, for example, include an one or two-bedroom flat in central London that was lived in by people of rather modest means?
Chris Leslie
I think the right hon. Gentleman is thinking of the bedroom tax, and we can come to that in a moment. I will come to the details of what a mansion tax would look like. We have looked carefully at the well-crafted and evidently well-thought-through proposal from the Liberal Democrats. They have proposed that properties worth £2 million or more should attract an annual charge, saying that that could net approximately £2 billion. That would allow an income tax band of around £1,000, which would give a tax cut of about £100 to those benefiting from the 10p band.
Mr Russell Brown (Dumfries and Galloway) (Lab)
It is interesting that the mansion tax could raise £2 billion. I wholeheartedly agree with such a proposal. If we could transfer that £2 billion from the pockets of the wealthy and give it to the poorest, it would undoubtedly find its way back into the economy. That is very much what is needed. We need to push more money into the economy, and to try as best we can to stimulate some kind of growth. We are seeing nothing at the moment.
Chris Leslie
My hon. Friend has touched on the other argument in favour of the proposal. This is not just a matter of fairness; there is also an economic imperative involved.
I apologise for boring the House about the need for growth and jobs in our economy. That seems to be anathema to some Members on the Government Benches. Many lower and middle income families have suffered increased taxes and cuts to their tax credits, and that is the price that they are paying for the failure of the Government’s economic ideology. The Government promised that all this pain would be worth while. The Chancellor promised that he had done all he needed to do, and that he would not need to come back and ask for more, but what did we see last week? He came back for yet more. That is the price to be paid for the Government’s failed economic plan. The economy is flatlining, and the Government have delivered barely 1% of economic growth since the fabled 2010 spending review in which they promised 6% by now. And let us not forget the rising deficit in the last financial year, up from £118.5 billion in 2011-12 to £118.7 billion in 2012-13. That is a rise in the deficit—
Chris Leslie
And the hon. Gentleman is rising as well. Perhaps he would like to confirm those figures.
Mr Newmark
Following on from what my right hon. Friend the Member for Wokingham (Mr Redwood) said, I would like to ask the hon. Gentleman whether he shares my concern that many elderly people are asset rich but cash poor. How would his proposal deal with that particular challenge?
Chris Leslie
I am not sure how many elderly people would find themselves in that predicament, but such circumstances ought to be dealt with in the design of a mansion tax. The hon. Gentleman will therefore see the logic of our new clause, which seeks to encourage the Chancellor to introduce proposals within six months. Let us look at the design of them, and think about those rare circumstances in which someone might be living in a £2 million property but have no means by which to pay an annual levy. I imagine that that would be quite rare—it is perhaps quite difficult to believe—but such circumstances might exist. I am convinced that the hon. Gentleman’s Liberal Democrat colleagues have thought through all those points when they drew up their carefully crafted proposals. Perhaps there are channels between the coalition parties that we are not party to, and perhaps they exchange information on these matters. I am sure that such a tax could be designed correctly, if not by the Chancellor then by the Office for Budget Responsibility, if that would be a better way of doing it.
David Wright (Telford) (Lab)
Is my hon. Friend as puzzled as I am by the Government’s opposition to this proposal? During the previous debate on the top rate of tax, the Minister and Government Back Benchers were suggesting that our proposal would not deliver revenue because people would avoid the tax system. They suggested that a higher rate system would not generate income, but they now seem to be opposed to a proposal for a tax on a fixed asset, which presumably would not move. My hon. Friend is making a valuable contribution and I hope that some Members on the Government Benches will join us in the Lobby later.
Chris Leslie
It is the oft-trotted-out claim of the Liberal Democrats that they are there to temper the worst excesses of the Conservative party, and perhaps they do exercise such influence. We all know that the Conservatives are there to defend the wealth of the very wealthiest in society—that is a given—but we want to see whether the Liberal Democrats in the coalition have managed to bend that ideology a little more towards the centre ground of politics and towards the space in which most people would agree that those with the greatest assets and wealth should make a fairer contribution. That would be a good thing to do.
Mr David Burrowes (Enfield, Southgate) (Con)
Can the hon. Gentleman clarify, for any of my constituents who might inhabit one of those 55,000 properties, that the levy that would be imposed on them would be £36,000? Is that correct?
Chris Leslie
I do not think that it would necessarily be £36,000. Again, I suggest that the hon. Gentleman talks with the Liberal Democrats, who have done some careful workings on this. He will be interested to know that the Government have introduced about 90 clauses in the Bill that relate to ATED—annual tax on enveloped dwellings—which is basically code for a mansions tax on properties owned by companies. I recommend that he reads through the 90-odd clauses. Essentially, the Government are introducing a tax on properties worth more than £2 million, with a new annual fee, to be assessed in a very detailed way. He will see that there is a set of bands for the value of the property, from £2 million to £5 million and right up the scale. The Treasury has therefore been doing a lot of work on the issue, and I think that it should be commended, because it is very worth while. When we debated the matter in Committee, we asked what would happen if the annual tax on enveloped dwellings applied not only to properties owned by companies, but to all those worth more than £2 million. That information would allow us to work out properly what the rates would be.
Mr Burrowes
There is a real question of financial competence, particularly in relation to the hon. Gentleman’s boss, so can he substantiate his argument, because it is his new clause that we are discussing? He needs to give us answers. My maths is not so good, so can he tell me, if he wants to raise £2 billion, how much the levy would be for 55,000 properties?
Chris Leslie
That is precisely why we think the proposal needs the Treasury’s support—to ensure that we can see what the levy would be. To return to our new clause, we think that the Liberal Democrats make a reasonable point that £2 billion could be raised on properties worth more than £2 million. We have not included those figures in our new clause; we have simply said that the Exchequer Secretary should study the issue and consider a 10p income tax rate band, to be funded by the proceeds of a mansion tax. That obviously depends on how wide the 10p band would be, so it is obviously moveable and that would flow through into the figures on the mansions tax.
Mr Gauke
I am afraid that I am going to disappoint the hon. Gentleman. He says that the Labour party’s objective is to raise £2 billion. Our assessment, as my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) has pointed out, is that there are 55,000 properties worth more than £2 million in the country. We have the finest minds in the Treasury working on this, and they have divided £2 billion by 55,000—it did not require a huge amount of work—and ended up with an average of £36,000 a year as the annual levy. That is an average, and there might be some cases where the hon. Gentleman would want a lower rate for those who are property rich but cash poor. Can we just have some clarity? Does the Labour party want an average levy of £36,000 on all properties worth more than £2 million?
Chris Leslie
That was a good try by the Exchequer Secretary, and I understand where he is going with that argument, but I am not an estate agent and do not have a figure for the number of properties worth more than £2 million. However, it is very interesting that the Government have started counting the number of such properties. He talks about how the £2 billion would be defrayed across that number, which I am not sure is correct, but of course there would be a banding exercise, with different bands for properties worth more than £2 million, and we would see how far that goes. That is precisely why we need the Treasury to share some of its calculations with us. I am sure that it must be more than a back-of-a-fag-packet calculation from the Exchequer Secretary. Let us do the work, publish the findings— [Interruption.] Well, I will give way to him if he will agree to publish that work. Will he publish the internal Treasury assessment of the policy, because it would be very helpful?
Mr Gauke
Short of showing the workings, £2 billion divided by 55,000 is £36,000. The hon. Gentleman says that there would be different bands, but we would still end up with an average of £36,000. He will also find that most of the properties worth more than £2 million are worth only slightly more—between £2 million and £3 million. He will not find huge numbers of properties worth between £5 million and £10 million and so on. He has all the numbers he needs. I think that we can move on to the next debate.
Chris Leslie
I know that the Liberal Democrats support the Government on that and note the sedentary remarks from one of only two Liberal Democrats in the Chamber today. It is typical of the Treasury to hold back key information on these facts and figures. We need to know where those properties are and what valuations have been made. The Exchequer Secretary has done the work on the annual tax on enveloped dwellings, but he did not say that he would publish those findings. I think that we might be about to reach some consensus on this, because he is suggesting that the Treasury has done some work on it secretly, rather like the secrets held back in the spending review document, which was so thin that we still do not really know where the cuts have hit. Why does he not publish that information and start telling us how that could work in those circumstances? Will he publish it?
Mr Gauke
Actually, I quoted the figure of 55,000, which appears to have come as a huge surprise to the hon. Gentleman, several times when we had a similar debate in Committee. Admittedly, he was not dealing with the matter; his hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) was. The figure has been in the public domain for some time. Has he done any work on the matter?
Chris Leslie
I do not know how simple I need to make the point for the Exchequer Secretary, so I will do so very slowly and particularly. The new clause suggests that the Treasury—that means him, by the way—should publish some proper, worked-through evidence on where those properties lie across the country, how a banding proposal might work and what the options for the width of the 10p starting rate of income tax might be. By the way, he did not say a word about whether or not he supports a 10p starting rate of income tax.
Geraint Davies
Surely my hon. Friend will agree that the figure of 55,000 is a complete red herring. It is being said that housing wealth should be progressively taxed, and that the current council tax rates are out of date. Some of these properties are worth much more than £2 million, and perhaps even £10 million—we hear stories about Russian oligarchs and all the rest of it. Add to that the Chancellor’s strategy to generate more sub-prime debt by offering cut-price mortgage deals, and we will presumably have a progressive system of different rates and a thought-out new council tax regime that would be progressive, and we would not end up with everyone paying £36,000 at all, and the Minister knows it.
Chris Leslie
That is why we must ensure that we move the issue forward and get some proper workings from the Treasury—[Interruption.] The hon. Member for Enfield, Southgate seems to think that he has all the answers, so why do the Government not publish them? What is going on with Government Members? They should share these things in the public domain. Do we really have to make a freedom of information request to Ministers in order to get those data?
Chris Leslie
I will give way to the hon. Gentleman in a moment. The Liberal Democrat 2010 manifesto—I know that he has his own signed copy—said that they would introduce a mansion tax at the rate of 1% on properties worth more than £2 million, paid on the value of property above that level. We looked closely at the workings they did on the issue. They suggested that £2 billion of revenue could be raised. If that was extrapolated through to the 10p band, the band would be roughly £1,000, but it might not be. We should look at the details.
Mr Newmark
I know that maths is not the hon. Gentleman’s strongest suit, because in Committee we heard that he could raise £2 billion from £1.85 billion in bonus taxes. The Minister has been very clear that £2 billion divided by 55,000 is £36,000 on average. Does the hon. Gentleman at least accept the principle that this is going to cost taxpayers £36,000 per household on average, not in relation to bands?
Chris Leslie
The Government have apparently undertaken their own valuation exercise, perhaps stealthily, so they could publish the information on the numbers of properties across the country. Perhaps the Deputy Prime Minister, with his 16 special advisers, fanned out across the country to look at the issue. I do not know how they found out the 55,000 figure. If the hon. Gentleman has that information and publishes it, I will be interested to see it, but I am afraid I cannot be certain that it is the correct figure. Labour Members have to be very careful and cautious in taxation matters. We want to make sure that all the figures are very clear and well worked through instead of taking the Exchequer Secretary’s back-of-a-fag-packet approach. I take it as a commitment from him that all this information will be published in the public domain, and then perhaps we can work on devising this measure in a less partisan way.
Susan Elan Jones (Clwyd South) (Lab)
Does my hon. Friend find it extraordinary that Government Members appear to have been sitting down with their pocket calculators regarding the mansion tax, but none of them has come up with how much ordinary taxpayers who pay the basic rate of tax would benefit from the 10p proposal?
Chris Leslie
It is all because their focus is on protecting the wealth of the wealthiest. Ducks go quack and Conservatives defend wealth and privilege. It is in their DNA; it is how they operate.
Bob Stewart
On the 10% tax rate, I understand graduated taxation in principle, but a lot of people who pay the higher rate of tax are not very rich. Paragraph (3) of the new clause says:
“The full benefit of the 10 per cent rate shall not be available to taxpayers paying the higher or additional rates of tax.”
That seems to be pretty unfair on some people.
Chris Leslie
I am grateful for the hon. Gentleman’s thought on this issue, but I disagree. I do understand that more and more people are being brought into the 40p rate. That is another stealthy move by the Chancellor as he broadens out the 40p band. In the interests of fairness, our concern has to be with basic rate taxpayers on the 20p rate. There are 25 million basic rate taxpayers, and if revenue is to be generated from a mansion tax, then most of our efforts should be focused on that group. As my hon. Friend the Member for Clwyd South (Susan Elan Jones) said, that group in society feel under the most pressure and are finding it hardest to get by and to make ends meet, and they would therefore benefit most from this tax cut. It is an important point, and I am glad that the hon. Gentleman raised it.
Mr Redwood
I wish to make a procedural point. Does not the shadow Minister accept that when a Minister asks his officials for some information and they research it, and he then comes to the House to impart that information to us, that is publishing the information? I know that that will come as a shock to a Labour shadow Minister, because Labour Ministers always made sure that somebody else was told rather than Parliament, but I rather like the fact that the Minister researches this, takes us seriously and tells us the answer. Why cannot we now work from the published answer?
Chris Leslie
Obviously I believe every word that the Exchequer Secretary utters, because it would be unparliamentary to do otherwise, Madam Deputy Speaker, but I am asking for just a little bit more from him. I just want to see the detail that the Treasury has produced on the mansion tax proposition. It would be entirely possible for him to put that in the public domain. I am sure that even Liberal Democrats would like to see it and would find it of interest, as would other hon. Members.
Sheila Gilmore
Does my hon. Friend agree that we seem to have got involved in a debate that is certainly not the debate that the Deputy Prime Minister was engaged in as recently as February when he talked about the advantages of a 1% levy on properties over £2 million or the possibility of extending council tax bands? It seems a bit strange that he was in favour of that and, presumably, his hon. Friends are in favour of it. Perhaps that is what we should really be talking about.
Chris Leslie
On 24 February the Deputy Prime Minister said:
“Victor Hugo observed that it is near impossible to resist an idea once its time is come…He was again proved right as calls for a mansion tax, first proposed by the Liberal Democrats in 2009, gathered new momentum…I offer certainty: the mansion tax, or a version of it, will happen.”
We all know that when he is determined to get these things through, he is a very persuasive individual.
In clause 97—on page 57 at about line 27, for those who are interested—there is a table of the amount chargeable under the mansion tax for homes owned by companies, which is, in essence, what the Government are proposing. For properties worth between £2 million and £5 million, the annual chargeable amount would be £15,000 a year; for those worth between £5 million and £10 million, it would be £35,000; for those worth between £10 million and £20 million, it would be £70,000; and for those worth more than £20 million, it would be £140,000. That is the Government’s half-hearted attempt at a mansion tax. Thankfully, we have it in black and white—well, black and green—in this Bill. We tabled the new clause because we would like to see equivalent detail on how a mansion tax would work on a range of different widths of the 10p tax rate band, and then we can make a judgment about what change it is reasonable and prudent to implement.
My hon. Friends are right to start to focus on the other part of the pantomime horse. I am sure that the Liberal Democrats are sometimes in the lead on these issues in the coalition. They are in a very precarious position on the mansion tax. Having advocated it for so long, they have consistently found ways and means to vote against it whenever it has been presented to the House. I do not know whether the Liberal Democrat present in the Chamber, the hon. Member for Eastleigh (Mike Thornton), wants to say how he is going to vote today, but I live in hope. In a spirit of cross-party consensus, I hope that he will agree with his noble Friend Lord Ashdown, who warned those in his party before the last time they changed their minds on this issue that it would be “weird” for fellow Liberal Democrats to vote against such things. The Business Secretary said:
“It depends entirely on how they phrase it. If it is purely a statement of support for the principle of the mansion tax I’m sure my colleagues would want to support it.”
That was like the version of the amendment that we tabled previously. We did not get very far with it on that occasion, so this time we have tried a proposal that explicitly talks about passing on the revenue to those who need it most of all through the 10p rate of income tax.
The proposal has not been plucked from the air. Other jurisdictions have equivalent property charges at certain levels. I gather that in New York City, which is hardly a bastion of socialism, owners of properties worth more than $3 million—roughly £2 million—can find that they need to pay the equivalent of £22,000 a year under their form of mansion tax. The Treasury’s own documents have blown apart the argument that the Exchequer Secretary used to deploy, which was “This stuff isn’t workable; it would mean mass revaluations of council tax.” All those things have been pushed to one side as the Government propose their brand-new tax—the annual tax on enveloped dwellings. That is clear as the light of day. It has four bands, which suggests that it is entirely feasible.
The documentation on ATED states:
“The aim of the new annual charge is both to deter avoidance and to ensure the owners of high value residential property pay their fair share of tax.”
We can all go along with that. The document continues:
“The interest to which the charge will apply will be the freehold or leasehold interest”.
So far, so good. It also notes that the annual charge will be applied separately to the freehold and the leasehold and that the value of the property interest
“which will be relevant for the annual charge”
will be its value on 1 April 2012.
Geraint Davies
My hon. Friend will know that there is an increasing trend of international financiers buying London properties in particular as part of their asset portfolio in an uncertain world and that, at the top end of the market, an increasing share of them are owned by Russian oligarchs, oil sheikhs and so on. Does he agree, therefore, that this is a great opportunity to introduce a charge on foreign owners who invest in London—which is fair enough—in order to redistribute some of their massive wealth to the poorest people in Britain?
Chris Leslie
Yes, I agree. Governments often ask Oppositions how they will pay for tax cuts for those who need them most. We have given a clear example of one possible option. It is important to show that there is a fair way to give a tax cut to the vast majority of lower and middle-income households through the introduction of the new 10p band. The mansion tax is feasible and has cross-party support, as indeed does the 10p starting rate, and the Minister’s arguments are diminishing by the day, to the extent that we have managed to get him to lift the skirt of the data and publish more of them, which is what we want to see.
It is important to consider the arguments for fairness behind the 10p starting rate, which we think would provide a good tax incentive into work, especially for those on lower incomes. It is widely supported, especially by those Conservative Members who were champing at the bit only a matter of months ago when they tried to persuade the Chancellor and the Prime Minister to consider the proposal. Conservative Back Benchers have managed to get the Government on the run on their favoured topics, including an EU referendum and a tax break for married couples. They have the bit between their teeth, so perhaps we can persuade them to consider the 10p tax rate, too.
The principle of fair taxation is at stake in this debate. It should transcend party differences. We should be looking at funding a tax cut, not defending the wealth of the wealthiest. If the Government really mean it when they say that we are all in this together, the time has come for a mansion tax to help those most in need. The Government have a history of giving tax cuts to the wealthiest—they have already reduced the 50p rate, thereby giving millionaires a tax cut—and they have hit pensioners with what came to be known as the granny tax.
Kwasi Kwarteng
If the 10p rate is such a good idea, why did the previous Labour Government get rid of it?
Chris Leslie
I did say earlier—I do not know whether the hon. Gentleman was in the Chamber—that it was a mistake to get rid of it in 2007. There were arguments. The Institute for Fiscal Studies looked at the issues. The basic rate of income tax had been reduced and calculations had to be made about how to pay for it. I think, however, that the right thing to do is to take these steps and have progressivity in the income tax scale.
It is wrong to hurt those in society who are most in need. They are paying the price and life is getting harder for them because the Government’s economic plan has failed. We need to concentrate on the contribution that the wealthiest 1% in society should make. They should pay a fairer share and we should make sure that that money goes to the vast majority—25 million people—on lower and middle incomes.
Geraint Davies
In essence this debate is about political choices and not just the technical efficiencies of marginal rates of tax. When this Government took over from Labour in 2010, two thirds of the deficit had been created by the banking community and a third by pump-priming in response to the financial tsunami after a history of sustained growth under the Labour Government. The new Government decided to focus not on growth, but on cuts to get down the deficit, which was a fundamental error that has led to a flatlining economy. They then had to decide who should bear the brunt in order to pay down the deficit—80% in cuts and 20% in taxes—and the answer that the Conservatives and the Liberal Democrats came up with was that it should be the poorest who were hit hardest.
The recent spending review and infrastructure plans replayed the same Tory agenda: the cuts will hit hardest in the poorest areas, including Wales and the north, and 80% of the investment in infrastructure for growth will benefit London and the south-east in order to shore up the Tory and coalition votes. This new clause is about making a move in the other direction so that the very rich make a slightly greater contribution, which will be redistributed to people in the middle and at the lower end of the income scale.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The hon. Gentleman may have read an Institute of Welsh Affairs blog today by Gerry Holtham, the well-respected Welsh economist, who was scathing in his criticism of the hon. Gentleman’s party for adopting Tory austerity policies. How concerned is the hon. Gentleman, on the back of his criticisms of the UK Government’s austerity policies, about the fact that his party has adopted the very same strategy?
Geraint Davies
A moment ago I talked about Arab oil sheiks and now I am going to talk about Welsh milk shakes. On a serious note, what the Labour party has said is that when we take over in 2015, should the people of Britain give us their confidence, as I hope they will, we will inherit—this is self-evidently true—the current Government’s spending plans for 2015-16, so we will carry them out. As we make progress, I hope that the focus will switch to growth more than cuts, as it did after we inherited the Conservative party’s spending plans when we took over in 1997. We ran with those plans for a year and then we had consistent growth. The economy grew by 40% from 1997 to 2008 before the financial tsunami caused by sub-prime debt. I imagine that we will do the same in 2015. We offer no apology that we will have fiscal discipline alongside a focus on growth and that we will get people into jobs to pay down the debt. We will also change the composition of cuts to the rich and poor in certain areas.
Mr Russell Brown
My hon. Friend and I arrived in this House in 1997. In government, Labour confined itself to the overall spending of the previous Government, but we had different priorities which we put in place. It is not as if we came to power in a golden era. There was a debt and servicing it cost the equivalent of what was being spent on transport and defence put together. There was no golden inheritance. We had difficult choices to make as well.
Geraint Davies
I am glad that my hon. Friend brings that point up in this debate about the mansion tax. In 1997, we had the same old Tory economics, which we are seeing again because history is repeating itself. There was massive unemployment and that was being paid for by cutting services for the poorest. There was a huge debt that the Labour party paid down. The interest on that debt was excessive. We all remember Black Wednesday. We made the Bank of England independent to keep interest rates low.
The Opposition are serious about keeping interest rates low and having fiscal discipline, but our priority is economic growth. That is what any sensible business would suggest. A business man in Swansea said to me the other day, “If I was running at a loss, the last thing I would do is sack my workers and sell my tools, because I would not have a business. I would tighten up and focus on new product development and sales.” That is the balance that we want. We want a mansion tax and a 10p rate, because if we can recover some money from the richest and redistribute it to make it more worth while for everybody to work, that has to be a good thing.
The right hon. Member for Wokingham (Mr Redwood) brought out his violin and gave the heart-breaking story of the poor people who have a two-bedroom flat in Chelsea worth £2 million. He said, “Isn’t that awful. Surely you wouldn’t do that.” That is in sharp contrast to what Tory Members say about the person in the two-bedroom council flat who will be punished because their children grow up, get on their bike and get a job, as Norman Tebbit said, and vacate their bedroom. They say that there is nothing wrong with the forced evacuation of such people from London to a one-bedroom flat in a lower cost area; but they say that it is wrong that somebody who is living in a £2 million two-bedroom flat should have to rebalance their asset portfolio to generate revenues to pay the mansion tax. If someone has a £2 million Chelsea flat, it is possible for them to rent it out at enormous rents, live somewhere else in the countryside that is many times bigger, pay the mansion tax and make a handsome profit. That is not a heart-rending problem compared with the bedroom tax. However, it appears that Tory Members are more concerned about people who own £2 million properties than people in council flats.
A woman from my neck of the woods in Swansea came to see me two weeks ago and said that she had been on the waiting list for 11 years, asking to be moved from her two-bedroom flat to a one-bedroom flat, but the council does not have any one-bedroom flats. Why is that? It is because the local council has rightly been building for families in need with children. Suddenly we have the bedroom tax, which makes no economic or social sense, but there is no admission of that from the Government.
We have made the sensible suggestion, which has been thought through by the Liberal Democrats, that we should make the council tax more progressive.
We are all aware that house prices have gone up and down in different areas at different rates. In London, there is a skewed situation, because there is very quick house price inflation compared with elsewhere. People are making enormous capital appreciations. In essence, the financial disaster was caused by the bankers and sub-prime debt. That is likely to be repeated as we approach the general election because the Chancellor and his assistant, the Exchequer Secretary, have suggested triggering more sub-prime debt by covering people’s deposits. On the one hand, they are telling the banks to run a tight ship and to have enough capital reserves to cover their lending, because they do not want them to go bust again. On the other hand, they are saying that they will subsidise the purchasing of new houses. That is likely to happen in London, because people know that there is price inflation and will take a punt with a lower deposit and at a lower risk, hoping that they will recover their money through an escalation in house prices.
The very high-value property in London is being gobbled up by foreign speculation. The expensive property is being bought by people who want to get their money out of places such as Russia and by people who have huge accumulations of money from trade or oil surpluses. There are many cases of blocks of flats in London being bought outright. Nobody is living in them because the people who buy them know that they will make so much money through appreciation that they cannot even be bothered to rent them out. It is unbelievable.
We are asking, at a time of difficult choices and austerity, for a percentage of those transactions by multi-millionaires to be redistributed to make life easier for people who work in communities across Britain, not just in London. I accept that most of these properties are in London. For example, the constituency of the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) does not contain a £2 million house.
Paul Uppal (Wolverhampton South West) (Con)
The hon. Gentleman is making some partisan points, so I want to add balance to the debate. I have been poor—dirt poor. I used to share my bedroom with my siblings and cousins. By modern descriptions, I would have been classified as homeless. His main argument is about foreign capital coming to the UK and London. Does he not think that that is symptomatic of people recognising that we have a Government who are making credible decisions and creating financial stability?
Geraint Davies
I am grateful to the hon. Gentleman for telling me his economic background. It is useful that people of modest means come here and represent a range of views.
I am all for attracting foreign capital into infrastructure and productive opportunities. For example, Swansea will celebrate the centenary of Dylan Thomas’s birth next year and is on the shortlist to become city of culture in 2017. I am all in favour of encouraging foreign investors to invest in infrastructure that supports our cultural asset base. They would get a return from that over time, while generating wealth, tourism and jobs.
However, we are not talking about that. We are talking about people making speculative investments in house prices. They could just as easily be investing in aluminium futures or anything else. It just happens that London houses are on the up. If people have loads of money, they can buy a few of them and their money will grow. They know that that will continue because the Exchequer is irresponsibly putting taxpayers’ money into sub-prime debt to subsidise profits and further boost inflation. That will cause an imbalance in asset values and house prices between London and the rest of Britain. That situation is being stoked up by the irresponsibility of the Government, because they think that rising house prices in London will help them deliver Tory constituencies in the general election. That cynical ploy is unbalancing everything and encouraging foreign investors to take a punt.
That is not a symptom of the great stewardship of the Tories—far from it. The record of the Tory Government has been judged. The triple A rating has been torn up and thrown away.
Madam Deputy Speaker (Dawn Primarolo)
Order. Mr Davies, do you think that we could come back to the mansion tax and the 10p rate? Your setting of the scene has gone rather too wide of the specific issues that we are discussing.
Geraint Davies
I am grateful for your expert advice, Madam Deputy Speaker. I will move quickly back to the mansion tax.
At the moment, foreign investors are buying mansions for capital appreciation. A properly worked-out mansion tax would not be a simplistic flat rate of £36,000. That was the Government’s arithmetic—it was laughable, wasn’t it? It was, “Oy, what yer gonna do? ’Ave I got this roight? We want £2 billion, we’ve got 55,000 mansions, so you divoid it in—that’s it, it’s £36,000, innit? That’s what you’re gonna do.” Obviously, that would not be the strategy. It would be to have an escalating rate according to capital values, which would change over time.
The system would obviously have to be refined and played with, and as my hon. Friend the Member for Nottingham East (Chris Leslie) pointed out, the impact would depend on the delivery. To a certain extent, £2 billion is just a ballpark figure. That is why he asked for more detailed figures. There are various factors driving demand for such properties, and they have a range of prices in the marketplace, so the likely yield would change over time. We therefore need to consider a sophisticated system. However, it is clear that it is the right direction of travel for the very richest to make a contribution at the most difficult times, to make work pay for everybody else.
It is clear from international examples, such as in New York city, which already charges a mansion tax on $3 million properties, that the tax is tried and tested. We can learn from our friends and colleagues in America how to apply it correctly. We should come together—I know that the Liberal Democrats have always been keen on the tax, and I hope that they will join us in the Lobby to support it.
Sheila Gilmore
When the debates took place on whether the 50p tax should be changed, Government Members were keen to tell us that we could make up a lot of what was lost, and perhaps make even more, through various forms of property taxation. They obviously had in mind changes in stamp duty, ways of dealing with companies that buy very expensive houses and so on. We were told how much better a property tax would be than a tax on income, and that we would get far more money from it. However, when we follow that train of thought and suggest that there is merit in considering a mansion tax, we are suddenly told, “No, no, that would be terrible.” We are told either that it would be terribly expensive, and people would not be able to afford it, or that it would simply be the wrong thing to do. It seems that when we come to talk about something real, the Government run backwards as fast as they can.
We have had some figures thrown at us that are not mentioned in our new clause. They come not from anything that we have said but from what the Government have said, yet we are being told that we have to justify them. We are being told that figures such as a £2 billion yield and 55,000 houses are correct, which will mean people having to pay £36,000. I do not know whether 55,000 houses is the correct number of those that would be affected, but I do know that at the moment, according to Zoopla, there are 3,847 properties on the market for £2.1 million or more in London. That is not all the properties of that price but just those that are for sale. On that basis the figure of 55,000 is perhaps a conservative estimate, but the whole debate has been based on that figure.
Mr Jim Cunningham (Coventry South) (Lab)
In relation to the mansion tax, does my hon. Friend not think that there is too much looking at London and not enough looking at how the rest of the country would fare? It often strikes me that debates on legislation apply only to London, even though they matter to the rest of the country. I agree with a mansion tax, but the Government are split on it—the Conservatives do not support it; the Liberals do.
Sheila Gilmore
We had certainly always understood that the Liberals supported a mansion tax, but every time the opportunity comes up to consider it, vote on it or even speak about it, they seem conspicuously absent.
The differences between London and the rest of the country, on property prices and other issues, are a serious matter. The gap is increasing, and we should all be seriously concerned about the impact of that on the whole UK. It has happened during nearly all previous recessions, after which Governments of all parties have sought to restore some balance and encourage economic growth in places outside the south-east. We always seem to be running to stand still. The situation is serious, and we should consider it.
Jobs and people are being sucked southwards in quite a big way, and local government finance now works in such a way that there are huge differences. In many areas, for example the north-east of England, the loss of public sector jobs and income for local government means that there are no jobs for people who have just qualified as teachers, for instance. All the jobs are in the south-east. We should be worried about that. We should not wait for three, five or 10 years and then say that we have to do something to redress the balance.
Property taxes do have significant advantages over income taxes. We hear a lot about the mobility of income. One argument that has always been made against raising income tax rates—it was made against the 50p tax rate when it was introduced and has been made in favour of reducing it—has been that people will leave the country or not come here. It has been argued that, faced with that tax, people will simply move elsewhere and we will not attract people here. The one advantage of a property tax—it has been an advantage of council tax and its predecessor the rates—is that it is much harder to evade or avoid, because the property is actually there. There is a significant place in our fiscal balance for property taxation.
Chris Leslie
My hon. Friend is making a powerful point about the mansion tax. Has she followed the Government’s argument on clauses 97 and beyond, which are about the annual tax on enveloped dwellings? Has she noticed over the past hour that Government Members have not made a single argument against the administration and operation of a mansion tax? All that they can come up with is particular cases and arguments about how many properties will be affected. The administration of a mansion tax would not involve changes to council tax or other such matters. The annual charge could be used as a broad foundation of a mansion tax.
Sheila Gilmore
I thank my hon. Friend for that helpful steer towards the point that it might not be as difficult as some people assert to implement something of that kind. The advantage of property taxation is that it is more solid than income taxation, as we have clearly seen. Worryingly, the biggest reason some people give for why the 50p tax rate does not raise as much as they thought it would is that people were able to move income forward and back. Income is quite mobile.
Geraint Davies
Using that argument, people have said, “Oh well, we’ll raise more with a 45p rate than a 50p rate” yet my hon. Friend will know that year on year, bankers’ bonuses went up 64%. Does she agree that bankers were moving their income from a 50p year into a 45p year, and that if we had kept that rate up we would have raised that money? We should have done that as well as the mansion tax.
Sheila Gilmore
It certainly sounds on the face of it as if some sort of income arrangement was possible. For a lot of us, including people on PAYE, that would be difficult to do, but it is easier for other people. I have advocated not running away from a tax on property too easily. Not long ago we had that debate at some length in Scotland after a proposal by the Scottish Government to move to local income tax—again, they decided not to proceed with that. Some of the problems with local income tax concern the mobility of individuals’ incomes and the fact that some wealthy people might be able to avoid paying that tax. Those of us in political parties in Scotland that opposed moving to local income tax argued strongly the advantages of a property tax. Interestingly, the SNP Government, from 2007, backed away from their proposal in the face of those arguments.
Geraint Davies
I am grateful for my hon. Friend’s enormous generosity in giving way. She may know that in the past two years, the top 10% have seen their income rise by 5.5% each year—that is 11% in two years while everyone else is being squeezed. The rich are getting richer and richer, and the Tories are cutting the top rate of tax. Given that people are buying bigger and bigger houses with the great huge buckets of money they are getting, is it not right that they should face a mansion tax?
Sheila Gilmore
I was looking through the property pages of The Sunday Times yesterday, and interestingly it was full of descriptions about valuable houses and how property prices are rising. Since property prices at the top end were rising so much—driven partly by investment from abroad—it was argued that that would be good for everyone because it would lever up property prices for all. The argument is that high property prices are always beneficial, but those who tried to buy homes up and down the country long before the credit crunch know that high property prices are a double-edged sword because many could not get on the property ladder at all. In many parts of the country, not just in London, the amount that must be earned to buy even an average-priced house is more than people can earn in that area.
Mr Jim Cunningham
As property prices go up, rents also start to go through the roof. That has been reflected up and down the country and it will make it more difficult for people to rent property.
Sheila Gilmore
There has undoubtedly been a huge increase in the private rented sector. When I was elected as a councillor and became interested in housing, all the housing authorities and textbooks said that the private rented sector had become a residual sector and was disappearing. It might perhaps be there as a niche for young professionals or students, but it was not expected to be an important part of the housing mix. Within a short period—probably 10 to 15 years—we have seen an explosion in the private rented sector and in private sector rents. That is another issue for young people, particularly those who might wish to settle permanently. They cannot afford to buy a home because house prices are too high or they cannot get a mortgage. In the meantime they pay very high rents, which makes it difficult to save. I am not entirely convinced that high property prices are always a great bonus, and we should be looking for a more stable property market.
Geraint Davies
I am grateful for my hon. Friend’s enormous generosity in giving way again. Is she aware—I am sure she is—that property prices in London have grown so much that some local authorities have greater asset value than the entirety of Wales? Therefore, the mansion tax is a sort of cap—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Davies, you were right when you said that you have intervened a lot. I do not mind you intervening but please do not take up so much time that you are almost making a speech.
Sheila Gilmore
I was not aware of the figure to which my hon. Friend the Member for Swansea West (Geraint Davies) refers, but if that is the case, it is a fascinating reflection on the huge differences between different parts of the country. If we do not do something about that soon, we will regret it in the near future.
Labour Members are constantly berated about the fact that we—the previous Government—abolished the 10p tax rate. At the same time, the current Government do not seem that keen on reintroducing it. We are accused of changing our mind, but it now appears that the Government are changing theirs. When the 10p tax rate was abolished, they attempted to make great political capital out of the issue—fair enough; that is what politics is about—and they have done so since by saying that it was a bad thing for us to have done and should not have happened. Now we are talking about reintroducing a 10p tax rate, and suddenly that is a bad thing to do. For people in low-paid employment—of whom there are many—there are advantages in having a more graduated taxation system that enables them to build up disposable income as they go. As we know, disposable income has fallen for many households in this country, which is a serious matter.
Looking specifically at the new clause, I hope it is not unreasonable to suggest that we consider and study such a measure. It perhaps prompts the question of why the Government are so against it, because if they are sure that a study would show that it would not be practicable or successful, there is nothing much to lose. From what the Minister said during an intervention, it sounds as if the Government may have already done some work on the provision, and on that basis, it should not be so difficult. People in the country want to see whether the measure could be a feasible means of ensuring that those who have asset wealth pay their fair share.
Jonathan Edwards
It has been a number of weeks since we debated the provision in earlier stages of the Bill. My concern about the mansion tax policy, which I support in principle, is whether agricultural land would be included as a part of the estate that would be taxed. Does the hon. Lady agree that we must ensure that farmers are protected?
Sheila Gilmore
And Scottish farmers, I am sure, and so on.
A mansion tax—I think my colleagues on the Front Benches would agree—is about residential property, not business property, which is already taxed in various ways. Obviously, a whole raft of taxes are appropriate for businesses, and that would be the best way to deal with the issue, rather than a mansion tax. If a mansion tax is a way of ensuring that we can appropriately tax wealth, we should consider it very seriously, given that it is probably a better basis for taxation than income, which people can move around—I have yet to see a house be dragged offshore. That may not be impossible, but in this country we generally do not put houses on wheels and move them, unlike in the United States—at least, so we see in the movies. A mansion tax would be a way to help the low-paid, through the introduction of the 10p rate.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My hon. Friend has made a strong speech so far, but is she—as I am—completely bemused by the position of the Liberal Democrats? In February, the Deputy Prime Minister said:
“My approach is simple: taxes on mansions; tax cuts for millions.”
It is more like no taxes on mansions and tax cuts for millionaires.
Sheila Gilmore
I suspect that that policy got lost in the negotiations that are part of a coalition. I have also heard the Deputy Prime Minister say that he would flex his muscles on all kinds of issues, the most recent being the number of children that could be cared for. The Deputy Prime Minister was keen to tell the country that he had flexed his party’s muscles and prevented that change from being introduced, but he has not flexed them on the mansion tax. Either it is possible for the junior partner in the coalition to flex its muscles successfully or it is not. There are other areas in which the Liberal Democrats have seemingly not thought it necessary to use the muscle they claim to have.
In relation to the mansion tax we will doubtless hear a lot about income-poor people—how will they be able to afford it? Would we expect them to sell their homes or move elsewhere? We cannot have that debate, however, without talking about the bedroom tax. A constituent of mine is 59 and has recently been made redundant. She is looking for work, but with a retirement age of 63 she will not easily find another job. She has been living in her home for 18 years, but it has a relatively small single second bedroom. The kitchen opens off the living room, which militates against taking in a lodger—one of the things people have been advised to do. Her current income is less than £72 a week. From that, she is paying £14 towards her rent as a result of the bedroom tax. That is a significant proportion of her income.
My constituent does not want to leave her home, as she has put a lot of effort into it and she lived there with her husband until she was widowed about four years ago. She has looked into the possibility of moving, but there is a shortage of one-bedroom homes in the city. Two weeks ago, 23 one-bedroom homes were advertised—the total from all the social landlords in the city, the housing associations and the council. Those homes attracted varying numbers of applications, but the lowest was 45 and the highest was 370. Four had more than 200, and another seven had between 100 and 200. My constituent’s prospects of being rehoused are, therefore, not great. Our city also has a large number of people waiting for this kind of housing who are living in expensive private rented housing or temporary accommodation that costs far more in housing benefit than the rent being charged to my constituent.
People like my constituent are being asked to make some serious sacrifices, and they do not have an easy choice. It is not easy to downsize, because there is nowhere to downsize to—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am sure that the hon. Lady must be getting to the point at which she links her remarks with the new clause. I am struggling to see the link at the moment.
Sheila Gilmore
The link is that some would argue that a mansion tax would be oppressive on people who may live in a house that is valued at more than £2 million, but have a very low income, and they should not be expected to find that payment. As has been suggested to my constituent and others, such people may wish to consider taking in a lodger, releasing some of their equity or downsizing. I suspect that downsizing with that type of property would be easy. I would hope, therefore, that such arguments would not be made against a mansion tax. I hope that the Government will support the new clause, because if their arguments are as strong as they say, they will be able to disprove our case very quickly.
Chris Evans
I feel as though this is part two of my speech. I listen to Government Members, and I hear the sound of the creation of two Britains. We have the Britain of the elite who are protected by the Government, who bring about tax cuts for the most affluent in our society. Then we have the other Britain—people who are playing by the rules but have seen their benefits squeezed, their tax credits cut and their council tax benefits cut. When they go shopping, their bills have increased because of the VAT increase. Nor is this society encouraging work, because work does not pay. Those people in work can be reliant on the benefits system, but the policies of the coalition Government are skewed against them—the vast majority of people in this country who are playing by the rules and want something better from their lives.
I feel sorry for the hon. Member for Eastleigh (Mike Thornton), who has not been a Member for very long. He is in his place alone as we challenge the Liberal Democrats on their approach to the mansion tax. As on tuition fees, VAT, tax avoidance and the tax cut for the most affluent, what they said in opposition, when they sat on this side of the House with no hope of being in government, was a different kettle of fish from what they say in government.
I can never clear my mind of the image of the Deputy Prime Minister, in a party political broadcast, implying—I do not wish to use unparliamentary language—that anyone who was not a Liberal Democrat was a teller of mistruths. Students remember that party political broadcast saying that tuition fees would not go up under any Liberal Democrat Government. It was a different matter when they found themselves in government.
In February, the Deputy Prime Minister said:
“I continue to believe we should ask for what would be a modest contribution from the very wealthy, either in the form of a Mansion tax—a 1% levy on properties worth more than £2m—applied just to the value over and above £2m; my preferred option. Or, alternatively, we could introduce new council tax bands at the top end, again, affecting properties worth over £2m…Nothing could do more to demonstrate a commitment to greater fairness in our tax system. I will continue to make this argument, in this Coalition and beyond. My approach is simple: taxes on mansions; tax cuts for millions.”
What did the Deputy Prime Minister do in the coalition? Did he sit there and fight for a mansion tax? No, the evidence—and we have to go on the evidence—is against it. In every major decision that the coalition has made, many of them unpopular, the Deputy Prime Minister has been found wanting. Let me explain something to the hon. Member for Eastleigh, who, in fairness, is the only Liberal Democrat Member who has sat through this entire debate. If that is who his leader is—if that is what his leader is about—he should ask whether the Deputy Prime Minister is equipped to lead the Liberal Democrats into the next election.
David Wright
It gets even worse for the Liberal Democrats. Not only did the Deputy Prime Minister say in that discussion point that he was a supporter of the mansion tax, but the Business Secretary went on to say to the BBC in March this year:
“Nick Clegg and I are very strong supporters of the mansion tax”.
I am really pleased to hear that, and I am sure my hon. Friend will be, too. I await to see how they will vote in the Lobby this evening.
Chris Evans
I, too, hope to see them in the Lobby, but I am sure that they will not be there. That is the wonderful thing about the Liberal Democrats: it is the only party that can support something—have the bare-faced cheek to stand up in favour of something—and then vote for the exact opposite in the Division Lobby. That is what the Liberal Democrats should remember: in the marginal seats that they need to hold on to, they will be judged on their priorities—[Interruption.] Does the hon. Member for Eastleigh want me to give way to him, or is he happy to listen? [Interruption.] Indeed, we do not usually hear from a Liberal Democrat.
The Liberal Democrats will be judged on their priorities, and their priorities have not been what they said they would be. They are not for the students; they are not for the elderly; they are not for the poorest paid in society: they are simply there to prop up this coalition Government. They are becoming nothing but voting fodder for this Tory Administration. I notice that the Tory Members were nodding when I said that. If any further proof were required about who is in the senior part of—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Evans, I gave you a little leniency on the earlier new clause, but on this one, we have got so far off the mark that I do not know how to drag you back. I am worried about the time ticking away, and it would be better for the House if you spoke to the new clause. I am sure that that is exactly what you are going to do next.
Chris Evans
I have the Bill in my hand, Mr Deputy Speaker, and I am going to come to the relevant clause.
Mr Deputy Speaker
Having the clause in the hon. Gentleman’s hand is not necessarily helpful; it is what he says that matters more.
Chris Evans
I was just coming on to that point, Mr Deputy Speaker, I just needed time.
Chris Evans
I ask anybody who says that this mansion tax cannot be introduced to read clause 92, which relates to the annual tax on enveloped dwellings. Under the heading of “Charge to tax”, it states:
“A tax (called ‘annual tax on enveloped dwellings’) is to be charged in accordance with this Part…Tax charged in respect of the chargeable interest if on one or more days in a chargeable period…the interest is a single-dwelling interest and has a taxable value of more than £2 million, and…a company, partnership or collective investment scheme meets the ownership condition with respect to the interest.”
That seems very much like a mansion tax to me. Clause 97 goes on to state:
“The amount of tax charged for a chargeable period with respect to a single-dwelling interest is stated in subsection (2) or (3).”
A table then sets out the annual chargeable amounts, highlighting the taxable value of the interest on the relevant day. It shows that if the property is worth more than £2 million but not more than £5 million, it would raise £15,000; if it is worth more than £5 million but not more than £10 million, it would raise £35,000; if it is worth more than £10 million but not more than £20 million, it would raise £70,000; and if it is worth more than £20 million, it would bring in a whopping great £140,000. If that is not a step towards a mansion tax, I do not know what it is. But still—
Mr Deputy Speaker
Order. I can cope a little bit with this speech. The Liberals may well want to hear the hon. Gentleman, but he has to address the Chair. Constantly looking at the Liberal is not helpful for Mr Thornton, but it would be helpful for Mr Evans if he were looking at the Deputy Speaker. I am sure that the rest of his speech will be conducted through this Chair, rather than through the Opposition chair—much as Mr Leslie would provide him with advice, he really should speak to this Chair.
Chris Evans
I am sorry, Mr Deputy Speaker. Much as I think the Liberal Democrats believe that the world revolves around them—[Interruption.]
Jonathan Edwards
Let me try to help the hon. Gentleman out. He will be aware that in Wales we had a council tax revaluation for domestic properties in 2005. Does he think that a similar evaluation for England might achieve the objectives of a mansion tax and probably raise far more?
Chris Evans
I find myself in shock, but I agree with a member of the Welsh nationalist party. There is some merit in that idea, which is something we can look at.
This new clause presents an opportunity for the Conservatives to reverse the inequality that I have talked about—the two Britains that are starting to emerge in our society. If we agree with a mansion tax, we will be able to fund a tax cut for millions of people. We support the increase in personal allowances, but the reintroduction of the 10p tax would mean that work pays once again. I know that the Tories will say that we abolished it. We must be big enough in politics to admit that we got something wrong, and we got it wrong when we abolished the 10p tax rate, which would give the lowest in society an opportunity to go out to work and make work pay. This is what I mean when I talk about how difficult it is to get back to work once someone is out of it. We can do this today.
Bill Esterson (Sefton Central) (Lab)
My hon. Friend makes an important point about how work will pay. The other side of the coin is how the 10p tax rate would make it advantageous for employers to take people on, because it becomes far more attractive to employers to do that. Does he see that benefit for employers, too?
Chris Evans
Yes, I do. I think this is a win-win situation for everyone. Yes, I have said that we got the 10p tax wrong, but I think a lot of employers would welcome a 10p tax rate. As I have said here before, Opposition Members agree that work is the only way out of poverty, and a mansion tax could provide a way forward on that.
The new clause deals with a mansion tax. Labour has often been accused of having no policies and of not setting out our policies or of not being forthcoming enough, but we have said that we need to introduce a mansion tax to bring about a 10p tax cut and bring some fairness into society. Fair taxation should not be a Labour issue, a Tory issue or a Lib Dem issue; it should be across party. Fair taxation should interest us all, but without a fairer and less complex system, we cannot hope to achieve what we want, which is to see more people in work, paying their taxes and bringing down the deficit that way. With that, and after a number of interventions from you, Mr Deputy Speaker, I shall sit down.
David Wright
I was in the Chamber at the opening of the debate, and I would like to make a brief contribution on this subject. I am keen to see us move the debate forward a little on the issue of progressive taxation. My hon. Friend the Member for Islwyn (Chris Evans) was right to say that the Labour party was wrong to abandon the 10p tax rate before the last election, as it caused a good deal of concern in constituencies right across the country. It is important that we reassess that policy position now.
It is useful that we are matching the commitment to reintroduce the 10p band with a proposal for a mansion tax, linking the two objectives, and I am particularly supportive of the mansion tax. As we heard in an earlier segment of the debate, one of the key issues is tax avoidance, and Government Members made great play of the fact that the higher rate of income tax introduced at the end of the last Labour Government was not going to deliver much revenue because people would attempt to avoid it. I can understand that argument, but I think they are wrong, because we did not have a long enough period to see it work though, and not enough time was given to allow the new top rate we brought in to bed down.
One thing that can be said of the mansion tax is that one can with certainty ensure that income is being delivered for the Exchequer. Clearly, by their very nature, properties do not move. Some Members have referred to the possibility of revaluation of the council tax base. I do not think that there should be a broad revaluation in England at this stage, but I do think that it would be logical to apply a mansion tax to the largest properties in the country, given the need to generate a tax system that is fair and progressive.
Mr Gauke
New clause 9 proposes the introduction of an income tax rate of 10p on a band of income determined by the Exchequer yield of a mansion tax. Let me explain why the Government do not believe that the new clause is sensible
We are already helping people on low and middle incomes by means of the tax system. In May 2010, the coalition agreement set out our commitment to making the first £10,000 of income free from income tax by the end of the Parliament. In April we increased the personal allowance to £9,440—that was the largest ever cash increase—and it will rise again, by a further £560, to reach £10,000 in 2014-15, meeting this Government’s commitment a whole year early.
Opposition Members clearly think that it would be better to introduce a starting rate of income tax, but let us not forget that they introduced a 10% rate once before and then scrapped it, to the cost of many of the people further down the income scale whom they claim to want to help. We have replaced the 10p rate that they doubled with successive increases in the tax-free personal allowance which effectively provide a 0% band. Our changes in the personal allowance have already more than compensated those who lost out when the 10% rate was abolished. In fact, since April 2013, those who lost the most as a result of the last Government’s policy have paid no income tax at all.
According to the Institute for Fiscal Studies,
“the proposal for a new 10p starting rate of income tax, has no plausible economic justification. It would complicate the income tax system and achieve nothing that could not be better achieved in other ways.”
The IFS says:
“A far simpler and more sensible way of achieving these aims would be to spend the same amount of money on increasing the personal allowance...This would have virtually the same impact on individuals’ tax payments… be slightly more progressive, take some people out of income tax altogether and avoid the complexity involved in introducing a new income tax rate.”
Proposed subsection (2) of the new clause proposes the introduction of a mansion tax to pay for the proposed introduction of a 10p rate. That proposal has already been debated a number of times in the House, and the Government’s position is clear. The coalition parties have different views, but the view of my party is that a mansion tax is not the answer.
We expressed our concern in the Public Bill Committee, during a debate on the annual tax on enveloped dwellings. As we made clear then, a third of the properties in London that are worth over £2 million have been owned by the same people for more than 10 years. Many of those people, such as elderly owners whose properties had increased substantially in value during that period, would be faced with an average tax of £36,000 every year, and could be forced out of their homes. Moreover, families or other owners of high-value homes would not necessarily have the liquid income that would enable them to pay the tax. A mansion tax could hit asset-rich but potentially income-poor households.
Mr Gauke
I will in a moment. I look forward to the hon. Gentleman’s question, and will listen to it attentively. Before I do so, however, I should acknowledge his assurance that there would be a case for some type of mitigation for people in the circumstances to which I have just referred. That would, of course, have an impact on the yield, and the average of £36,000 would increase.
Chris Leslie
With whom do the Minister’s sympathies lie most? Do they lie most with the householder faced with the hardships of the bedroom tax, or with the householder faced with having to deal with the mansion tax?
Mr Gauke
Let me reply by echoing what was said by my right hon. Friend the Secretary of State for Work and Pensions during Question Time this afternoon. For all that we hear from Labour Members about the so-called bedroom tax—the spare-room subsidy—they have given no indication that they would reverse the current Government’s policy. For all the bluster on that—[Interruption.] Let me make this point. Labour Members should be straightforward about the fact that their policy would have an impact on, for example, elderly widows who have lived for many years in a property whose value has increased. Would they seek to address that?
In addition, the mansion tax would not be precisely targeted at the very wealthy. It would not take into account the number of properties owned. Therefore, a person owning two properties valued at £1.9 million each would not fall within its scope but a family owning a £2 million home would, even though their property wealth was much lower. Any mansion tax would be complex to introduce and administratively burdensome for HMRC to operate. It would come at a cost for taxpayers, not to mention that it would be intrusive for the person having their home inspected.
I know that the essence of Labour’s argument is that we already have the annual tax on enveloped dwellings. However, that is a very targeted tax. Essentially, only 1,000 properties are likely to be affected by it, so it applies to only a very small group of taxpayers. HMRC can therefore administer the tax manageably, relying on self-assessment, with a limited number of inquiries. A mansion tax would affect a much larger number of taxpayers and require greater administration and valuation, which would make it much more expensive, time consuming and difficult to collect.
Chris Leslie
I am interested in the fact that the Minister thinks that the analogy is not applicable. How, though, would the administration of the mansion tax be more time consuming? The owner of the property would have responsibility for the valuation. It would not be more onerous for HMRC in that respect, if it were to follow the design of the ATED arrangements.
Mr Gauke
We do not believe that that model could be scaled up to apply more generally. A proper valuation process will be needed if the mansion tax is a much less targeted tax. Let me give the Labour party a degree of credit, however. The hon. Gentleman said that Oppositions are often asked how they would pay for a measure, and the hon. Member for Islwyn (Chris Evans) said that Labour has a policy to pay for this proposal. However, under the mildest of questioning, the policy appeared to unravel before our eyes. The target yield is £2 billion. I repeat a number that I gave some weeks ago in Committee: the Treasury believes that 55,000 properties are valued at above that level. We undertook that research to cost the annual tax on enveloped dwellings. That is the number. A very simple calculation gives us an average of £36,000 a year. Rather than Labour saying, “We accept that. That is how we will pay for this. That is how we will get a yield of £2 billion,” it is sliding away from the policy. It is not accepting that that is the consequence of what it is advocating. If it thinks that £36,000 is too steep—maybe it does not, maybe it does—it should acknowledge that, but that is the average cost. I suspect that Labour does think that it is too steep and that is why the £2 million threshold is under threat. That is why, to raise £2 billion, any Government would have to apply the mansion tax to lower down the property ladder. That is why a tax that is designed for the few will become a tax for the many. The tax is ill thought out. Either it will result in very high sums being levied on small groups, or it will not raise anything like the yield that the Labour party claims it will and it will apply more generally.
Introducing a mansion tax would create real fairness issues by hitting asset-rich but potentially income-poor households. It would serve only to create complexity and uncertainty. The personal allowance is the most effective way to support those on low and middle incomes, because it enables people to keep more of their money. It is a better policy than reintroducing the 10p rate of income tax. The Government have made huge strides to make a fairer society and a stronger economy. All elements of the new clause are flawed. I urge the hon. Member for Nottingham East (Chris Leslie) to withdraw the motion.
Chris Leslie
I can assure the Minister that he is wrong to have concerns that anyone is looking to apply the policy to properties below £2 million in value. I can assure him that Gauke Towers will be safe, unless of course in leafy Hertfordshire that property has now increased in value to that level. Perhaps the Valuation Office Agency could give us an estimate, but I assure him that that is not the intention. We simply urge the Government to come clean on the research, which we now understand the Treasury has commissioned.
We now have a couple of Liberal Democrats in the Chamber, albeit looking at their iPhones—[Interruption.] Their Samsung Galaxys—my apologies. They will be interested to know that the Treasury has commissioned research into the feasibility of a mansion tax, so now we know that it is worth a freedom of information request to try to elicit the information. Let us draw out the information.
The Minister mentioned that there are 55,000 properties worth £2 million or above. The Liberal Democrat manifesto promise may well yet come to fruition. We know that the Liberal Democrats put a lot of effort into pulling together the detailed figures on the proposal. We were persuaded of the case and now it looks as though slowly but surely the Treasury is coming into that frame of mind, too.
It is right that we focus on finding a way to support a tax cut that would supplement the personal allowance zero rating. The 10p starting rate would be a better and more progressive tax, which could be supported by the hon. Members for Harlow (Robert Halfon), for Camborne and Redruth (George Eustice), for Aberconwy (Guto Bebb) and for Cleethorpes (Martin Vickers)—those Conservative Members who have voiced the case in favour of a 10p starting rate of income tax in recent months.
We know that the annual tax on enveloped dwellings could be the foundation upon which the administration of the policy could work. I was not convinced by the Minister’s argument that there was no read-across from that new tax, which the Treasury is introducing in this Bill. My hon. Friends the Members for Swansea West (Geraint Davies), for Edinburgh East (Sheila Gilmore), for Islwyn (Chris Evans) and for Telford (David Wright) spoke eloquently about the economic benefits that could arise if the new 10p band were in place for lower and middle-income households. That money could feed through into the economy more directly and in a progressive way. The hardship and the tax rises that we have seen from the coalition parties have not reduced the deficit, which is going up. Unfortunately, that is the price being paid for the Government’s failed economic plan.
We still hope to persuade the Government that steps can be taken to help people on lower and middle incomes this year. Let us get the Treasury to publish that work. Now we know that research has been commissioned, let us have it published and in the public domain. It could help to stimulate the economy and help the many people who are finding life much harder under this Government. The concept of a mansion tax, asking those with considerable wealth to pay a fairer share to help those on more modest means, is an idea whose time has come.
Nigel Adams (Selby and Ainsty) (Con)
In my neck of the woods, there are not too many people with £2 million houses. There may well be in Nottingham East. This issue was raised earlier, but will the hon. Gentleman make it absolutely clear whether the Labour party’s plans for the mansion tax include farmhouses?
Chris Leslie
I do not think that our plans do. We would look at mansions—that form of housing accommodation. However, I would be prepared to see whether the Treasury study, which could be commissioned under the new clause, could look at whether farmhouses would be ruled out. We would be happy to look at such questions. We should, however, be looking at personal estates of £2 million and more in that built-mansion context. That is the nature of the proposition before us. In clause 97 and beyond, definitions of property are set out in respect of the annual tax on enveloped dwellings. They provide a series of exemptions and set out where the line should be drawn in terms of farmhouses and so forth. I recommend those clauses to the hon. Gentleman, as they may well serve as a guide to how a mansion tax could work in future.
We need that work to be undertaken, however. This new clause does not seek instantly to implement the Liberal Democrat proposition. It simply seeks to find ways of building on that as a basis on which to look at the annual tax on enveloped dwellings, thinking of how that might apply to a mansion tax, and in particular using that revenue to help 25 million basic rate taxpayers. That is the objective. We have got to give more help to those who are finding it difficult to make ends meet. That is why I commend this new clause to the House.
Question put, That the clause be read a Second time.
Madam Deputy Speaker (Dawn Primarolo)
With this it will be convenient to discuss the following:
Government new clause 5—Restrictions on buying capital allowances.
New clause 12—Anti-abuse measures—
‘(1) Her Majesty’s Revenue and Customs shall review the possibility of bringing forward measures as part of the GAAR to work in conjunction with other G8 countries to require multi-national companies to publish a single easily comparable statement of the amount of corporation tax they pay in the UK.
(2) The Chancellor of the Exchequer shall review the effect of incorporating a global standard for public registration of ownership of companies and trusts via a convention on tax transparency, including a requirement on companies to publish a single easily comparable statement of the amount of corporation tax they pay in the UK, on Treasury tax receipts.
(3) The Chancellor of the Exchequer shall consider, when counteracting tax advantages arising from tax arrangements that are abusive, what steps HM Government could take, working alongside developing country governments, to assess how UK companies could report their use of tax schemes that have an impact on developing countries, and how the UK could assist in the recovery of that tax.
(4) Within six months of the passage of Royal Assent, the Chancellor of the Exchequer shall place copies of the review in the House of Commons Library, and consult with G8 countries on their effectiveness.’.
Government new schedule 1—Transfer of deductions.
Government new schedule 2—Restrictions on buying capital allowances.
Mr Gauke
This Government are determined to crack down on tax avoidance by the small minority of individuals and companies who are unwilling to pay their fair share of tax. This Bill includes some important anti-avoidance provisions, including the general anti-abuse rule—the GAAR—a major new development in UK tax law and a key part of this Government’s drive to tackle tax avoidance, and, in particular, abusive tax avoidance schemes. The Government have also made it clear that we will continue to legislate to close down specific loopholes if there is a clear case for doing so.
Before addressing the GAAR and the Opposition’s new clause 12, let me discuss new clauses 4 and 5, and new schedules 1 and 2. At this year’s Budget, the Chancellor of the Exchequer announced that the Government proposed to introduce legislation in the Finance Bill 2013 to prevent companies from entering into arrangements to access, as part of a business transfer, various forms of unrealised corporation tax losses from unconnected third parties—a practice that, for the sake of brevity, I will refer to for the rest of the evening as latent loss buying. Legislation on that matter was not included in the Finance Bill published in March, in order to allow more time for consultation with interested parties. Technical detail on the circumstances and manner in which the proposed legislation would operate was published on 20 March. That was followed on 28 March by the publication of draft legislation for a period of technical consultation. New clauses 4 and 5 and new schedules 1 and 2 introduce those targeted latent loss buying rules to this Finance Bill, and take on board comments received during the technical consultation.
Let me set out a little background to these new clauses and schedules. The UK’s loss relief system provides a measure of parity between taxing profits and relieving losses over the life cycle of a business, ensuring that businesses with different patterns of profit and loss pay a broadly similar amount of tax. Relief is based on long-standing underlying principles that: brought-forward trade losses should only be relievable against future profits from the same trade, carried on by the same legal entity; tax losses should not be transferable against profits of unconnected parties; and the movement of losses between companies should be allowed only where they are under common economic ownership for the accounting period when the losses arise. Within those principles, companies can gain relief for losses through being set off against profits in a number of ways. However, loss relief and business reorganisation rules are designed to prevent companies from passing the benefit of a loss to an unconnected third party. Those tax rules are designed to prevent companies from “selling” losses to some unconnected company that has taxable profits.
However, Her Majesty’s Revenue and Customs is now seeing a marked increase in companies entering into different arrangements to access deductions not caught by those existing rules. Indeed, we are expecting the new rules to bring in revenue of close to £1 billion over the next five years. A particular pressure point arises where it is possible to dictate or predict the amount and timing of reliefs, allowances and deductions. Where those are sizeable, they can encourage tax-motivated reorganisations through which unconnected entities may get access to what are, in effect, unrealised losses.
Where the amount and timing can be dictated or predicted, ownership or part-ownership changes can take place in advance of the crystallisation of the amount, enabling the current loss-buying rules to be bypassed. Such arrangements may take the form of selling all or some of the shares in a company or the assets of a company, where either there are allowances that could have been claimed but were not by the previous owner or where it is known that a debit will be created in a future accounting period. Arrangements can, however, be more complex and contrived, and may also involve moving profits into a company to use up relevant deductions.
These new clauses and schedules therefore deliver on what the Chancellor announced at the Budget. They bring the tax treatment of unrealised amounts, involved in a transfer between unconnected parties, more closely into line with the long-standing treatment of realised losses. The proposed changes introduce three separate rules to combat latent loss buying. The first rule expands the application of current rules in chapter 16A of part 2 of the Capital Allowances Act 2001—I am sure you have fond memories of that Act, Madam Deputy Speaker. The other two rules are targeted anti-avoidance rules—TAARs—to be included in a new part of the Corporation Tax Act 2010. One seeks to counter tax-motivated reorganisations between unconnected parties involving other forms of relevant deductions, and the other seeks to counter arrangements that aim to transfer profits to companies so that the relevant deductions can be used.
A draft of the legislation was published for technical consultation on 28 March and nine responses were received: four from legal firms, two from accountancy firms and three from individual businesses. The majority of representations related to the technical application of the legislation rather than the underlying policy intent and have been addressed in the provisions before us today. I hope that is helpful to the House and anticipates some of the questions that might be raised by those on the Opposition Front Bench. Of course, I am happy to deal with any further questions later this evening.
Let me turn to what I suspect will take up most of the time for our debate this evening—that is, new clause 12. As I have said already, the GAAR is an important new tool, but it is not a panacea. New clause 12 focuses on much broader issues to do with the taxation of multinational companies, which have already been extensively debated during the course of the Bill and fall beyond the scope of the GAAR. Let me once again explain why that is the case.
New clause 12 first asks for a review of ways to require companies to publish a clear statement of their UK tax payments. That is not a matter for the GAAR. I am aware that the GAAR does not do what people want it to do by tackling a wider range of tax issues, particularly those involving multinational companies. We have never pretended otherwise.
The GAAR can of course apply to multinational companies if they engage in abusive schemes, but the broader issues concerning where and how their profits are taxed are grounded in how the international tax system operates. That is why we are driving forward the OECD’s work on improving international tax standards through the G8 and G20. Both the Chancellor and the Prime Minister have set out clearly that international tax problems need international solutions.
We accept that tax rules have not kept up with the age of electronic business, but the answer is not for the UK to take unilateral action. That approach would do the UK no favours as a location for business investment. It would risk setting in train a disparate approach among our trading partners, with serious consequences for international trade and growth and hence for jobs in the UK.
The OECD report on base erosion and profit shifting, which was endorsed by the G20 in February this year, shows that to tackle the issue effectively requires collective action to strengthen international tax standards. The Government have been at the forefront in taking forward work on the issue through the OECD.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
The Minister has made some rather bold statements. Will he reiterate what he just said? He suggested that the proposal made by new clause 12, which asks the Chancellor to review proposals for the Government to require the production of a single corporate tax figure, as well as the other amendments, would result in lost jobs in the UK. Will he confirm whether that was what he said and on what evidence the statement was based?
Mr Gauke
That is not quite what I said. I said that it would not be sensible for the UK to take unilateral action to change the tax law that applies internationally and that the best approach to dealing with international tax issues is to work multilaterally with other economies to update the tax system. I shall turn to some of the specific elements of new clause 12 in a moment, but I am setting out the framework. It is sensible for us to work with other countries to ensure that the international tax system does what it needs to, rather than going off on our own and making changes that could damage the UK’s competitiveness. I am sure that no one in this House would want us to do that.
Mr Newmark
I congratulate the Government on their work, particularly in the G8 meeting, in trying to co-ordinate efforts to prevent abuse by multinational companies. Such companies are extremely portable and, does he not agree that the big problem is that if we do not act on a multi-jurisdictional basis, they can move anywhere? If we take unilateral action and they move, that risks jobs in this country—that is why we must never act unilaterally in dealing with such situations.
Mr Gauke
My hon. Friend makes a very important point. Elements of a business are highly portable. In 2007-08, for example, the UK’s position on headquartered companies was very uncompetitive because of our controlled foreign companies regime and a number of businesses moved their headquarters out of the UK and went elsewhere, which had an impact not just through lost corporation tax revenue but more widely, as it meant that individuals paying income tax and decision making were moved out of the UK. That was not in the UK’s long-term interest, so we reversed the situation. Now we have a much more competitive position, which means that companies are moving back to the UK and that new businesses are moving here, too.
My hon. Friend the Member for Braintree (Mr Newmark) is absolutely right that elements of a multinationals’ business are very mobile and that we need a tax system that reflects that. An important part of making our tax system fit for purpose is that it should reflect that, which is why we should work multilaterally.
Mr Newmark
Not that I like to pick on individual countries, but does my hon. Friend agree that the evidence from France, with a relatively newly elected left-wing Government, suggests that businesses and wealthy individuals are moving across the channel in their droves to set up business in the UK?
Mr Gauke
I would say—I think that this is the most tactful way of putting it—that the Government are determined to send the signal that the UK is open for business. That is how we can win the global race. Other Governments might wish to take other approaches, and that is for them to decide. For the UK, we believe in open markets and a competitive tax system—but a tax system, none the less, in which businesses pay the tax they should and in which economic activity is properly taxed.
We have made a commitment to act and have backed that up with extra resources for the OECD. The UK has been actively participating in the development of the OECD’s comprehensive action plan for tackling such issues, which will be presented to the G20 later this month. It might interest hon. Members to know that at the recent Lough Erne summit the G8 called on the OECD to draw up a common template for multinationals to report to tax authorities where they make their profits and pay taxes around the world. That will give tax authorities a new tool against tax avoidance to help them efficiently identify and assess risks, but requiring publication of that information would put the UK at a competitive disadvantage to other countries that did not require publication. It would also impose costly administrative burdens on business and Government.
The new clause proposed by the Opposition would require all multinational companies to report all their UK corporation tax payments—not just tax related to the GAAR, but the whole of their UK corporation tax. That goes way beyond the clear policy that we have set for the GAAR and would risk giving an impression that the GAAR has an impact on all corporation receipts, creating the sense of uncertainty about the impact of the GAAR that we have gone to some lengths to avoid.
Stella Creasy (Walthamstow) (Lab/Co-op)
I am interested by the Minister’s comments. The Minister has concerns about publishing such data, but in other cases the Prime Minister extols sunlight as the best disinfectant. Is it not important, if the public are to be confident in our tax system, for them to have such information? Why does he feel that tax receipts should be exempt from that disinfectant process?
Mr Gauke
There is a long-standing and widespread approach that tax is a matter of confidentiality between taxpayers and the tax authorities. I say that the approach is long standing; it is the approach we have had in the UK for time immemorial.
It is also the position that applies in pretty well all major economies, and if we were to change that approach, it would be sensible to do so multilaterally. If we introduced a requirement that multinationals based in the UK had to publish information in a way that would not apply if they were based elsewhere, that would raise questions about the attractiveness of the UK as a place in which to do business.
On how to move forward in this area, I would make the wider point that we work multilaterally. That approach was endorsed by Tony Blair, who, in a recent interview, said that if countries move unilaterally, others will eat your lunch, to put it bluntly. I think that was the phrase he used. It is right that we work with other countries to ensure that we have an effective tax system, but I would not favour measures that left the UK isolated in such a way.
Stewart Hosie
I am genuinely confused. The Minister said that the measure would go wider than the GAAR as intended, because it covered all a business’s corporation tax, but part 5 of volume II of the Bill states at clause 203(3):
“The general anti-abuse rule applies to…corporation tax, including any amount chargeable as if it were corporation tax or treated as if it were corporation tax”.
The idea that the proposal would widen the measure beyond the scope of the Bill does not appear to be correct.
Mr Gauke
I hope I can clear up the hon. Gentleman’s confusion. The GAAR applies to corporation tax—I am not arguing for a moment that it does not—but the point is that lumping in the new clause, which is based on the GAAR, and moving from the GAAR being quite carefully targeted at abusive tax avoidance to essentially saying that everything needs to be published under the GAAR as part of a general anti-avoidance or anti-abuse rule would rather confuse things. It is a pity to muddle the two. There is an argument for greater transparency and for publishing things, and there is an argument for a GAAR, but to bring the two together as the Opposition have done—perhaps that is partly due to parliamentary constraints and so on—sends out an unfortunate message. The two should be kept apart. I hope that has made things clearer for the hon. Gentleman.
Stewart Hosie
Well, not particularly, because the other argument that the Minister used is that the proposal might put us at a competitive disadvantage. However, the Bill is clear: one of the priority rules is the double taxation agreements that are already in place, so nothing could be done that impacted on the amount of tax a corporation paid in relation to its tax in the UK and elsewhere, because the double taxation agreements would have priority in any event. The Minister is trying hard to explain why he does not like the proposal, but he is not really succeeding.
Mr Gauke
The double taxation agreements are part of the international structure, but that is not the only element that determines whether the UK tax system is competitive. The point I am arguing is that our engagement and the leadership shown by the Prime Minister and the Chancellor represent the right way to go about changing how multinationals are taxed. I would consider, for example, what came out of the Lough Erne summit and, more broadly, measures to ensure that people pay the right amount of tax, as well as the dramatic progress that has been made including, on tax evasion, the exchange of information between Crown dependencies and overseas territories, and indeed the creation of a new international norm based on the American Foreign Account Tax Compliance Act, or FATCA. That is a big step forward, and we continue to take steps, leading the way in this multinational effort to give tax authorities new tools to deal with tax avoidance by providing more information about beneficial ownership. All those are steps that can help us to deal with tax avoidance and tax evasion. I hope they will be welcomed by all Members of the House.
John Mann (Bassetlaw) (Lab)
May I say how pleased I am to hear that the Minister is a converted Blairite these days? In extolling the virtues of what he has done with the overseas territories, he has ignored the fact that none of us, including Treasury officials, knows who owns what company and what company structures are there, and therefore what moneys are around. That includes some of the big banks and state-owned banks.
Mr Gauke
I am grateful to the hon. Gentleman, who brings me on neatly to the next issue, which is registration of ownership. New clause 12(2) asks for a review of the effects of
“a global standard for public registration of ownership of companies and trusts via a convention on tax transparency”.
At the recent Lough Erne summit, the G8 leaders all committed to work internationally to ensure that tax collectors and law enforcers can easily obtain information about who really owns companies. That represents real progress in the UK’s aim to secure a substantial change in international tax transparency. That is an important point and something that we have been pressing. We have agreement from the overseas territories to develop their plans to ensure that there is access to information on beneficial ownership.
John Mann
I thank the Minister for generously giving way. We do not even know in this country about thousands of companies based here because inadequate returns are made to Companies House, which has neither the wherewithal nor, it would appear, the desire to do anything about that. How on earth is anyone meant to get on top of structures abroad when we are not even on top of corporate structures in this country?
Mr Gauke
The hon. Gentleman tempts me into an area that I am very much looking forward to debating with him on Thursday afternoon. He has secured a debate on that very subject, so perhaps I shall keep some of my powder dry for that occasion. The point that I am making is that the Government are making substantial progress in this area and we also have an international agenda, ensuring that other countries move as well, so that there is much more information about beneficial ownership. That is not to say that the job is done and that there are not challenges that we face, but we have made a great deal of progress, particularly at the recent Lough Erne summit. That should be acknowledged.
Returning to new clause 12, the final element takes us back to an issue that we have debated previously, which is a requirement on the Government to assess how UK companies could report avoidance of tax in developing countries and how assistance could be offered in the recovery of that tax.
Under the disclosure of tax avoidance schemes—DOTAS—regime, UK companies are already obliged to report to HMRC their use of tax avoidance schemes carrying certain hallmarks. That applies to avoidance schemes that have an impact on developing countries, but only where UK taxes are affected.
The Opposition’s new clause 12 effectively suggests that Her Majesty’s Government should require UK companies to report their use of tax schemes, so that developing countries’ tax authorities can be notified of tax avoidance schemes, and that the Government should assist them in recovering any tax lost. It is unlikely that HMRC will have sufficient understanding of the details of developing countries’ tax systems to enable it to do that.
Catherine McKinnell
I appreciate that we debated the issue at some length in Committee, but I should like to pick up on the Minister’s language: he stated that it was “unlikely” that HMRC would have sufficient information on developing countries’ taxation regimes. Will he clarify whether HMRC and the Treasury have undertaken an assessment? That is what the new clause is asking for. It is not asking whether they can do these things, but whether they will undertake an assessment of what they can do, and how they could do it.
Mr Gauke
I have certainly sought advice, in preparation for this and other debates, on how practicable it would be for HMRC to provide such a service. HMRC makes the point that it is not something that it is well set up to do; its expertise is on how the UK tax system works. It is also worth pointing out that DOTAS is based on hallmarks set by UK tax law. Trying to extend it in the way suggested would be very difficult. That would require a major change to a successful tool—the hon. Lady and I have debated this point before—for tackling tax avoidance, and would risk disrupting the effectiveness with which HMRC does its job. My answer to her is one that I have given in the past: I do not believe that this is something that HMRC could do effectively. It is not a good priority for us. All sides want to do more to help developing countries to develop their tax systems, but it is better to focus on building capacity by providing training and support than for HMRC to try to judge, police and assess the tax system in developing countries.
Catherine McKinnell
The Minister perhaps betrayed the true answer at the end of his comments. His previous response sounded a bit “computer says no”; he said it was all very difficult and he did not believe it would be possible. However, he just said that it would not be a good use of HMRC resources. Does he not agree that a bit of transparency on the possibility of putting the clause into action would be of benefit, not only to Parliament, but to the public, so that it could understand the reasoning and how the conclusion was arrived at?
Mr Gauke
The reasoning remains what it always was. HMRC has a large number of specialists on the UK tax system, and the UK tax system does not apply in other countries. Assessing whether a particular arrangement constituted tax avoidance in Tanzania, to pluck a country at random, would require a detailed understanding of the Tanzanian tax system. If the hon. Lady is asking whether we could train up somebody to learn an awful lot about the Tanzanian tax system, in theory that could be done, but it would be a better use of HMRC resources to help train the Tanzanian tax authority, so that it was in a better position to collect the taxes that are due. Indeed, that is exactly what we do; we provide a lot of support to the Tanzanian tax authority.
Stephen Doughty
The Minister will recall our debates on this issue in Committee. I am afraid that I still do not buy the arguments that he makes, just as I did not buy them then. Does he not understand the disappointment felt by the many campaigners on this issue? The Enough Food for Everyone If campaign said that Treasury Ministers’ refusal to consider the amendments put forward in Committee, which are very similar to new clause 12, was shocking. There is a real contrast between the Prime Minister’s big words at the G8 and what is happening in practice. This is a reasonable new clause, and campaigners just do not buy the arguments.
Mr Gauke
It is not just me saying this, and there is no desire to be unhelpful. Indeed, the Government’s record on building up tax capacity in developing countries is very good, with regard to providing them with technical assistance so that they gain a better understanding of the tax that they could collect. Indeed, we are providing support to help developing countries to make greater use of the new information exchange positions.
I will again quote Richard Murphy, whose views on these matters tend to differ profoundly from mine. He works closely with the non-governmental organisations, and he has said:
“I admit, I have never seen how extending DOTAS internationally could work. I can’t see how HMRC could know if they got accurate data, or none at all and as such can see no way such a scheme could be enforced in which case I admit I can’t see how it could ever be workable.”
I do not often pray in aid Richard Murphy, but he makes that point not from any desire to limit the help that we provide to developing countries but as a matter of sheer practicality. He makes a reasonable point.
Catherine McKinnell
The Minister certainly does not often pray in aid Richard Murphy. Indeed, I think this is the only thing that Richard Murphy has said that he agrees with, and he is using it to advance his argument. Will he acknowledge that all the elements of new clause 12 relate to information sharing and transparency? We are asking the Government to consider how they can improve information sharing and transparency and use DOTAS to that end, and it would be helpful if the Minister could focus his comments on that. I think that members of the public will struggle to understand why the Government are refusing even to consider that proposal.
Mr Gauke
It is important that our debates on these matters should not simply be about the expression of warm words. They should also be about working out what we can do at a practical level, and what will and will not work. I take the view that extending DOTAS will not be effective, but our response to the hon. Lady’s proposals should not be, “Oh, they are all terrible.” It should be to ask ourselves what would be effective. There is a lot that we can do that is effective. This is about capacity building. It is about ensuring that developing countries have the right information, and about bringing them into the existing web of treaties so that they can have access to more information. It is also about ensuring that multinationals provide information that is useful to tax authorities in order to ensure that the right amount of tax is collected and the tax authorities’ efforts can be focused in the right place. That is the agenda that we have been pursuing, with some success.
I am sympathetic to what new clause 12 is getting at, and I do not in any way doubt the motives behind it, but I do not believe that it is necessary. We are already leading international action on tax transparency and on the taxation of multinational companies, and I do not believe that the GARR, as drafted, is the right vehicle for tackling these issues. For those reasons, I urge Opposition Members not to press the new clause to a vote.
Catherine McKinnell
It is a pleasure to speak here today on these important issues. I shall focus particularly on those covered by amendment 56 and by new clause 12. First, however, I shall touch on new clauses 4 and 5, and on new schedules 1 and 2, which relate to measures announced in Budget 2013. Together, they introduce three separate rules to combat what the Minister describes as loss buying. That activity goes against the accepted concept that losses brought forward on or after a change in company ownership should be allowable for corporation tax relief to the company and to the trade in which they occurred.
The Government’s new clauses seek to strengthen the loss-buying rules, first by expanding the application of chapter 16A of part 2 of the Capital Allowances Act 2001 so that it applies to “qualifying activities” and not just trades, as is currently the case. The other two rules introduced by the clauses are targeted anti-avoidance rules and will be included in a new part of the Corporation Tax Act 2010. As a consequence of the new clauses, companies will be prevented from entering into arrangements to access, as part of a business transfer, various forms of unrealised corporation tax losses from unconnected third parties. The Opposition support the introduction of these anti-avoidance measures, but it would be helpful if the Minister outlined, in response to this submission, what additional annual yield the Exchequer is expected to receive as a result of their introduction.
Before speaking specifically to the Opposition’s new clause 12, I would like to refer more generally to the Government’s general anti-abuse rule, which will be introduced by clauses 203 to 212, and take the opportunity to probe the Minister on its implementation, because it was last discussed in Committee of the whole House back in April. The Government have made much of the GAAR, their flagship policy for tackling tax avoidance, but, as the Minister knows, several serious concerns were raised about its likely impact, or lack thereof, during our debate in April.
We have been advised that the GAAR will target only “egregious”, “very aggressive” or “highly abusive” avoidance schemes, which the Bill defined as those that use “contrived or abnormal steps” to obtain a tax advantage. Yet the GAAR guidance’s definition of what those entirely subjective terms mean is inadequate. It states merely that they will be interpreted and applied in their “normal” sense. I do not know how Government Members would apply those terms in their normal sense, but I am interested to know whether Opposition Members would know how to apply those terms in their normal sense, given that we will be voting on that tomorrow when the Bill is considered on Third Reading.
Stella Creasy
I wonder whether my hon. Friend, like me, is concerned that the subjectivity and lack of clarity on this subject is a little like the concept of pornography; we all know it when we see it, but defining it is very difficult unless there is clarity. With tax avoidance schemes, clarity is absolutely crucial.
Catherine McKinnell
I fear that you, Madam Deputy Speaker, might accuse me of straying into rather unexplored territory if I were to compare tax avoidance to pornography, so I simply acknowledge the point my hon. Friend makes, which is that they are very subjective terms. That point has been made not only by me, but by many experts who are very concerned about the wording in the legislation. That is why it would be useful if the Minister responded to some of the concerns that have been raised during the Bill’s consideration.
The GAAR is projected by the Government to result in an additional yield of only £85 million a year by 2017-18. That is a notable sum of money, but it does not even come close to putting a serious dent in the £5 billion tax gap estimated to arise each year as a result of avoidance activity, and it is a mere drop in the ocean compared with the overall annual tax gap of £32 billion estimated by HMRC, which we know is a conservative projection. We also know that concerns remain about the so-called “double reasonableness” test and the GAAR advisory panel that will judge whether arrangements can
“reasonably be regarded as a reasonable course of action.”
As I have highlighted previously, what one person—let us say, a tax expert who has spent his or her entire career advising companies on how they might reduce their tax liability—regards as reasonable could be very different from what a member of the public or, indeed, a Member of this House might consider to be reasonable.
Stewart Hosie
The hon. Lady is asking whether the GAAR is too narrow. It is designed to squeeze out tax advantage through abusive means. The advantages include
“relief or increased relief from tax…repayment or increased repayment of tax…avoidance or reduction of a charge to tax or an assessment…avoidance of a possible assessment…deferral of a payment of tax or advancement of a repayment”
and
“avoidance of an obligation to deduct or account for tax.”
What else could she add to widen that if she thinks it is too narrow?
Catherine McKinnell
The hon. Gentleman makes a helpful point. One would question to what extent the Government can rely on their general anti-abuse rule when they still have to invoke targeted anti-abuse rules, many of which we debated in Committee. Yet the GAAR is supposed to provide reassurance in relation to these matters. Will the Minister clarify exactly how it will work? As the hon. Gentleman says, there is much debate about whether it is too general or too narrow—too general to be effective or too focused on what could be deemed by a reasonable person to be egregious behaviour, and therefore arguably too narrow. I would be interested to hear the Minister explain exactly how the GAAR will work in reality.
The Minister will be aware of the concerns raised in Committee about how the GAAR’s effectiveness will be reviewed. Our amendment calling for an evaluation to be held two years post-implementation was dismissed on the grounds that it would be impractical. At what stage does the Minister think it would be practical to conduct a post-implementation review, given that this is one of the Government’s main tools to tackle tax avoidance? At what point does he think it would be appropriate to consider whether the GAAR needs to be strengthened by, for example, a penalty regime? He has said that it will be kept under review, so it would be extremely helpful if he could provide details of the time scales involved.
One of the most widely held concerns about the GAAR is that it simply does not deal with many of the issues about which members of the public in particular are understandably angry with regard to corporation tax avoidance. The Minister has said that the Government have never sought to give the impression that they will deal with these issues, but many people feel that when they raise concerns about corporate tax avoidance the Government give the impression that their general anti-abuse rule will somehow deal with them.
We believe that the Government could and should use this Finance Bill to go much further on tax avoidance and on increasing tax transparency in particular. We have presented the Government with many opportunities to put their money where their mouth is and to take action now.
I was pleasantly surprised to read in The Guardian on Friday that the Minister voiced his intention to take firm action on this issue—the Minister is looking at me blankly; I am not sure whether he reads The Guardian—during last week’s Back-Bench business debate on multinational companies and UK corporation tax avoidance. I usually pay attention to everything the Minister says, but I confess that Friday’s revelation passed me by. Given his reported new-found enthusiasm for tackling the issue head on, the Opposition would like to take this final opportunity, through new clause 12, to persuade the Minister and Government Members to use this year’s Finance Bill to demonstrate a commitment to increasing tax transparency and to cracking down on tax avoidance both here and abroad. It is unfortunate that the Liberal Democrat Benches are devoid of Liberal Democrat Members, because this is their opportunity finally to walk the walk on this issue, given that they have been very good at talking the talk on it for so many years.
The nub of the issue is this: there has been a monumental breakdown in public confidence in the corporation taxation system and it is clear that the era of tax secrecy should end. At a time of austerity around the world, when people have lost or are losing their jobs and are seeing their services cut and the cost of living rising while the value of their wages does not, they are rightly angry when they see the complex and extraordinary lengths to which multinational companies may go in order to avoid paying their fair share of tax in the countries where their profits are actually being generated. People, including more than 1 million supporters of the IF campaign, are equally furious that aggressive tax avoidance activity is reducing the ability of developing countries to tackle the issue effectively and contributing to their failure to combat hunger and invest in the vital infrastructure that we take for granted. As the OECD estimates, these countries lose three times more through tax avoidance than they receive in aid every year.
The Opposition believe that rather than simply calling on the OECD
“to develop a common template for country-by-country reporting”,
which the G8 has said it will do, we should actively work with our G8 partners to ensure that all multinationals, regardless of sector, are required to publish a single, easily comparable statement on the amount of tax that they pay in each country in which they operate. That needs to be introduced as a matter of urgency.
Kerry McCarthy (Bristol East) (Lab)
My hon. Friend is doing a good job of spelling out the sheer ludicrousness of countries losing more by profits being put into tax havens than they are given in aid. I am sure that she is aware of the recent ActionAid report, which mentions a single transaction made through UK-linked tax havens that would have provided the Indian Government with $2.2 billion in tax if it had not taken place offshore. Surely that is something that the Government ought to rectify.
Catherine McKinnell
My hon. Friend gives a powerful example of how ludicrous the failure to act on this issue is.
At a stroke, statements would give people, whether they are experts or not, the information they need to assess the amount of tax that multinationals pay. That would give British consumers the power to take such matters into consideration when they decide who to buy from. It would also give developing countries a vital boost to their resources so that they could tackle hunger and invest in the infrastructure that they so desperately need.
As the Minister is all too well aware, the Opposition have backed the calls of the IF campaign for a convention on tax transparency. We saw the UK’s presidency of the G8 as a prime opportunity to take international leadership on the issue by launching a convention at the G8 summit to establish a global standard of public registration for the ownership of companies and trusts. As the House knows, the G8 nations took a step in that direction; we have acknowledged that steps have been made in the right direction.
The G8 stated in “Common principles on misuse of companies and legal arrangements”:
“Beneficial ownership information on companies should be accessible onshore to law enforcement, tax administrations and other relevant authorities including, as appropriate, financial intelligence units. This could be achieved through central registries of company beneficial ownership and basic information at national or state level. Countries should consider measures to facilitate access to company beneficial ownership information by financial institutions and other regulated businesses.”
At the end of the day, there was a statement about what could or should be achieved or considered by G8 nations, and the UK promised to establish a register at Companies House on beneficial ownership of companies in the UK, but to make it available only to HMRC, not the public. That was a step in the right direction, but the Opposition feel that it did not go far enough. We believe that we need proper transparency about who is holding their wealth behind shell companies and trusts in tax havens, not just secret lists at Companies House.
My hon. Friend the Member for Bassetlaw (John Mann) put to the Minister doubts about the effectiveness of the UK’s proposed arrangements. Those doubts have been well articulated recently. Private Eye commented:
“Those with knowledge of the Companies House reality would take a great deal of convincing that it is about to become a tough enforcer able to scare global or even home-grown tax evaders—any more than it has ever deterred conmen the world over.
Companies House is merely a receiver and filer of documents. It is not set up to be reactive, never mind proactive. ‘We do not have the statutory power or capability to verify the accuracy of the information that companies send to us,’ a Companies House official candidly admitted to the Mail on Sunday last month when the newspaper wanted to know if a foreign currency investment company director actually existed. Hardly surprising when it is considered that there are 3 million ‘live’ companies on the UK register.”
Aware of the Government’s steadfast opposition to our proposals on country-by-country reporting and a global standard of public registration of company ownership, we have tabled new clause 12 to ask HMRC and the Government to at least review the possible effect of those measures. It is eminently reasonable and perfectly sensible for Government Members to support it. Crucially, on the subject of abusive tax arrangements, it calls on the Government to consider what steps they could take when working alongside the Governments of developing countries—not should, but could—to assess how UK companies could report their use of tax schemes that might have an impact on those countries, and how the UK could then assist in the recovery of that tax.
Stella Creasy
My hon. Friend is making a powerful case about the importance of the measures in question for developing countries. Does she agree that the Exchequer Secretary, having spoken about the importance of acting multilaterally and understanding how international companies operate, should be able to see the benefits of transparency to the UK tax system? Surely one thing that we are concerned about right now is UK companies using overseas territories to avoid paying tax in the UK. If we had the transparency that we suggest and HMRC worked with countries such as Tanzania, there would be benefits for both UK taxpayers and developing nations. It would be a win-win situation for all concerned.
Catherine McKinnell
My hon. Friend makes a good point. The Government have trumpeted their commitment to 0.7% of GDP being spent on international aid, but they stand by and say that they can do little to assist in ensuring that that is not swallowed up by the three times more that is lost in tax avoidance every year. If they could assist, that would be a win-win situation for developing countries and the UK.
In new clause 12, we call for additional transparency in what the Exchequer Secretary admitted are four fairly reasonable requests. Those requests are well considered and are made in all sincerity. We want to be able to bring in additional tax receipts for the UK Treasury, but we also want to use our powers and information, and the additional intelligence that we would gain from transparency, not only to benefit the lives of UK citizens, for whom public resources could be funded through the tax receipts, but to support developing countries.
My hon. Friend makes the point that it is a win-win situation, and we very much agree. That is why we urge hon. Members to support our new clause. As I have said, it is completely reasonable and I cannot see why Government Members would oppose it, particularly Liberal Democrat Members—I am pleased that the hon. Member for Burnley (Gordon Birtwistle) is in the Chamber to hear this debate on an issue that I know the Liberal Democrats feel strongly about. Indeed, at their recent party conference they held a debate in support of some of the measures we are proposing. I therefore see no reason why Liberal Democrat Members will not vote with the Opposition in the Lobby this evening.
Stephen Doughty
My hon. Friend has been making strong points. Does she agree that in a way this debate exemplifies the difference between settling for charity and seeking justice on some of these issues? I would not say that the Government are not charitable. They continue to give aid; we continue to give aid—that is charity and people on both sides of the House do charitable work. However, when it comes to achieving justice on these issues, and getting a grip of the problems and understanding why they are there in the first place, we often find the Government wanting.
Catherine McKinnell
My hon. Friend makes the important point that we are talking about justice. We talk about justice and fairness in relation to developing countries when considering how a disclosure of a tax avoidance scheme, and the information we receive from it, might be used to support developing countries and international justice on that level. However, it is also about justice for UK taxpayers. We must ensure that companies that engage in the sort of tax avoidance activities that so rile members of the public, and should concern every Member of the House, do not have a competitive advantage over companies that do not engage in such activities, which may mean that their business ends up suffering.
That is what we are discussing and the amendments should not be just a step in the right direction. The announcements that came out of Lough Erne and the G8 agreement contained warm words and welcome sentiments, but there is an opportunity for the Government to start walking the walk, not just talking the talk. They must make not only warm statements but legislative changes that will move the issue forward and show the leadership that the UK should be showing. That would give us greater leverage when debating such matters on an international scale.
The Prime Minister rightly put tackling tax avoidance and evasion at the top of the G8 agenda, and Government Members now have the opportunity to demonstrate their commitment to delivering in that area. What came out of the G8 does not have to remain a statement of intent; it could become a reality for the UK today. We believe that our amendments would help the UK to take genuine action towards securing tax transparency and the fairness the world needs in the 21st century. I therefore urge all Members on both sides of the House to back our suggestions for how the Government can put their money where their mouth is on this issue.
Nigel Mills (Amber Valley) (Con)
It is a pleasure to be here to discuss issues that we have already discussed once or twice this year. The Government’s new clauses have rightly been introduced to tackle loss buying and capital allowance avoidance planning. Those are examples of what we can, following the logic of the hon. Member for Walthamstow (Stella Creasy), call hard-core tax abuse. The rules have been allowed to get out of date and have been exploited for years, so it is right that they are tackled.
The new clauses demonstrate, however, that the system is far too complex. There are far too many different types of loss and of relief, which create the scope for transactions to try to exploit them. I am not entirely sure why we need trading losses, schedule A losses, D3 losses, non-trade debits and capital losses—and probably a few more I cannot remember off the top of my head. If we moved to a simpler corporation tax system that had only revenue losses and capital losses, we could perhaps tackle avoidance more easily, rather than having to introduce separate anti-avoidance rules for each different kind of loss to try and ensure that they all work. I encourage the Minister for the umpteenth time to try to simplify our corporation tax system, because it would help in tackling these problems.
There is an interesting question on the interaction of legislation with the general anti-abuse rule—if each time we see some aggressive abuse that we think the general anti-abuse rule should stop, we end up producing a specific anti-abuse rule, what does that say about how strong we believe the general anti-abuse rule is? I would personally prefer specific, clear legislation that all taxpayers can read, understand and abide by, rather than relying on some general statement of principle, but there has to come a point when we say, “We think that is abusive and falls foul of the general anti-abuse rule, and that is enough for us to tackle it. We do not need to introduce more complexity to our tax code: instead, we will rely on the rule.” It will be interesting to see, as the years pass, how confident the Government are in that position. For us to be able to evaluate how successful the general anti-abuse rule is, we will probably need to see if the Treasury—or, at least, HMRC—can win some court cases relying on that rule. It may be a few years before we have some returns filed and challenged on that basis.
Catherine McKinnell
Does the hon. Gentleman share the concerns of some people that we will never see those court cases, because the panel, depending on how it is selected, may deem most tax behaviour to be so eminently reasonable that it prevents such cases from ever getting to court?
Nigel Mills
I doubt that. The general anti-abuse rule came out of some proposals by Graham Aaronson, a leading tax counsel, so it is not fair to suggest that the whole industry is so wedded to egregious tax abuse that they will find any arrangement acceptable. That would make a complete mockery of the whole thing. I do not share that concern, but we have to be careful in how we draft the general anti-abuse rule. Effectively, it comes back to saying, “Although Parliament may have passed legislation in these terms, what we really meant was something slightly different.” Perhaps we did not envisage a complex scheme that works its way into what we actually said, rather than what we really meant.
If we tried to define a general anti-abuse rule too closely, we would be straight back on the horns of the dilemma of what Parliament meant when it passed a certain piece of legislation. I suspect that most people would say that we actually mean what we write in the many hundreds of pages of taxes that we pass each year. We have to allow the courts room to interpret where arrangements are clearly not what we intended when we passed them. The clue is in the word “general” in “general anti-abuse rule”. If we make it too focused, it will not work. We will see in a few years what happens.
Another measure we could use is whether the tax gap comes down. Do we see fewer of these abusive arrangements being entered into? Is that because of the threat of a general anti-abuse rule? Perhaps we could also measure it by the weight of the Finance Bill next year. If we do not need all these anti-avoidance clauses, the Bill will be an inch thinner and the Government will be happy that the general anti-abuse rule is working. I expect I will serve on the Committee next year and I am not optimistic about the Bill being much shorter.
I cannot support new clause 12. I can see why it was drafted, and I might have drafted some amendments in Committee that were equally creative as a way to force an issue into a debate where it does not really fit. I generally agree with the idea that we should require more transparency from our largest corporate taxpayers about how much tax they are paying, but also crucially why they are paying that amount of tax.
Kerry McCarthy
What the hon. Gentleman says about the requirements he proposes for Companies House would go some way towards addressing the issue of transparency, but a recent report by ActionAid noted that one in 10 of this country’s top companies were not complying with existing Companies House rules on declaring how many subsidiaries and associate companies they had overseas. As I understand it, his suggestions relate only to accounts that would be filed in respect of their UK operations. We would not be able to tell from that whether such companies were channelling their profits through other companies and making use of tax havens, which is what people are really concerned about.
Nigel Mills
I agree with the hon. Lady’s sentiment, but I was confining my remarks to the content of new clause 12, which refers to
“a single easily comparable statement of the amount of corporation tax they pay in the UK.”
My thought was that the most single easily comparable statement would be the corporation tax return, which obviously has a consistent format, as everyone has to file it. She is right about the use of tax havens. Where tax havens are used underneath a UK corporate, HMRC has the power to get a group structure and to use the controlled foreign company rules to look at what is happening in the tax havens. It is clearly much harder for HMRC when those havens are sat above the UK, making it much harder to get the information because there is no shareholder ownership that obliges disclosure. That is why we need global work to get a clear and full corporate structure published. It will be interesting to see how much progress is made on that. It needs to be global, not just for the G20, because if one nation somewhere in the world will not agree to publish its share, that might be the one that blocks the attempt to disclose the havens.
Kerry McCarthy
I thank the hon. Gentleman for his generosity in giving way. Is it not the case that about one in five of the tax havens used by companies are UK-owned tax havens in UK overseas territories? To ensure some compliance, we should be able at least to start working with them to get them to share information.
Nigel Mills
I am not sure that we should use the term “UK-owned” as I am not sure that our friends in Jersey or Guernsey would appreciate that kind of description, although perhaps it is true in respect of the Crown. The hon. Lady is right that we should set an example of leadership, however, and try to ensure that the territories over which we have some influence have rules that comply with global standards. We heard some encouraging noises from the UK’s overseas territories when they agreed some issues with the Prime Minister before the G8 summit. Quite a few have taken pretty good steps in the direction of transparency by signing information exchange agreements, so we should not impugn them all with the same accusations, as some are clearly more a matter of concern than others.
Let me return to the proposal to require the publication of corporation tax returns. The requirements applying to UK company accounts include a requirement to publish a tax note that reconciles accounting profit with the tax charge and lists the key factors involved. It was intended to provide a summary of the tax return in some respects. If the tax charge is materially different from, say, 24% of the accounting profit, the reasons should be set out so that the user of the accounts can understand what is happening.
I have probably read more sets of accounts than most Members of Parliament. I am not sure that the tax note takes the user any further, because it is so brief, because there are so many ways of merging entries, and because of the impact of deferred tax. The note was designed to deal with the absence of complete transparency in regard to corporate tax affairs, but I think we could achieve that much more effectively by requiring the publication of actual tax returns. That would not reveal too many commercially sensitive data; indeed, I think that far more information is required in a set of statutory accounts than would ever be required in a corporation tax return.
We would probably not be acting unilaterally, given the disclosures that are required by many other stock exchanges around the world. The disclosures required by, for example, the Securities and Exchange Commission for its listed corporations are well in excess of those required in the UK. I do not think that this simple step would put us out of line with the rest of the world. Given requirements to disclose the tax amounts, taxable profits, how they were arrived at, and the details of overseas transactions with related parties, including amounts and charges, I do not consider it particularly onerous for a company to be required to declare “We have paid royalties of £5 million to our US parent.” In fact, many sets of accounts include such declarations. There are measures that we could take as a UK regime that would not harm our standing in the world.
I think that if there is one action that will damage prospects for UK investment, it is allowing a series of large multinational investors to be dragged through the newspapers, hauled over the coals and accused of engaging in abusive tax practices, especially when they are innocent. We do not want a regime that allows information relating to selected people to be leaked. Let us enable that information to be clearly, generally and widely published so that everyone can see who is responsible for bad behaviour, rather than trying to attack those who are innocently taking advantage of reliefs that we have sensibly introduced.
Although I agree with the intention behind most of new clause 12, I do not think that it will work. I have proposed a way of ensuring that the information we need is in the public domain year after year without imposing an unacceptable burden on UK corporate taxpayers. Perhaps the Opposition will back that proposal, which I shall continue to advance whenever we debate an issue that we have probably already debated half a dozen times this year.
John Mann
It is always a pleasure to follow the hon. Member for Amber Valley (Nigel Mills). I trust that Opposition Front Benchers were taking detailed notes, because the hon. Gentleman speaks common sense. It is no surprise that Ministers repeatedly ignore that common sense.
Unlike the hon. Gentleman, I am not volunteering to sit annually on the Finance Bill Committee. I was sadly not afforded the honour of participating this year, but the opportunity to participate in a debate on the Floor of the House could not be missed. I shall confine myself to expressing avid support for the excellent new clause 12 rather than straying into matters that would be better dealt with in the Backbench Business Committee’s debate on Thursday, in which I urge all Members to take part. I want to allow some of the adjuncts of matters raised in this debate—not least the issues of the role of Companies House, company structure and formation, and company records—to be discussed in appropriate detail, so that future Governments can be informed of what they should do, and the current coalition can be informed of what it has failed to do.
We know why the rhetoric from Government Front Benchers is as it is. They all now wish to become a bunch of pasty eaters and to be recognised in society and by the electorate for the way in which they are battling for the little man against the big multinationals. However, when it comes to the detail, the natural instincts of those on the Conservative Treasury Bench overwhelm the common sense of people such as the hon. Member for Amber Valley and other Back Benchers, who have pragmatic, practical, positive ideas that could be considered immediately. Some could be put into action.
What those Ministers fall back on is the perceived vested interest of the multinational. We have a charade, led by the Prime Minister and his sidekick the Chancellor —the Liberals are counted out of this; they are not important enough when it comes to economic matters—where the Government try to portray themselves as wishing to grab additional taxation. They have put up taxation such as VAT on the motorist, the consumer and the rest of society, so Conservative Front Benchers are a bunch of tax grabbers. Through the minimal changes that they are proposing and through the Prime Minister’s proposals to the G8, they wish to portray themselves as being the ones who are going to roll back against the multinationals.
Kerry McCarthy
My hon. Friend is, as ever, making a powerful case. We see the mismatch between the rhetoric and the action of the Government on other issues such as climate change; they claim to be the greenest Government ever, yet they do not implement measures such as the decarbonisation targets. Is he aware that, after the Prime Minister spoke at the G8 saying that he would tackle the tax issue, the Finance Bill Committee refused to consider amendments on the issue? Enough Food IF said:
“It seems like Treasury ministers haven’t got the memo. The government is saying one thing while doing another.”
Is that not exactly what is happening?
John Mann
I do so wish I had been offered the chance to sit on the Finance Bill Committee in order, day after day, to be able to get into the details and hold the Government more to account, although sadly next year ends with a 4 and I am unable in any year that ends with a 4 to sit on a Finance Bill Committee.
Jonathan Edwards
Following the G8 summit, the Prime Minister said that the provisions of the summit would raise about £1 billion for the Exchequer, which leaves about £29 billion unaccounted for, according to HMRC. Has the hon. Gentleman’s Front-Bench team informed him how much new clause 12 would raise for the Exchequer?
Catherine McKinnell
I thought I would take this opportunity to say that we have thoroughly missed my hon. Friend on the Finance Bill Committee this year. In response to the intervention by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), I point out that the new clause asks for a review of how these aims can be achieved. The cost of HMRC undertaking the review would be the issue to consider.
John Mann
I thank my hon. Friend for that intervention. In this matter, as in many matters, my approach is to beef up my own Front Bench, as well as expose the fallacies, weakness and hypocrisy of the Conservative Front Bench and the absence of anything from the Liberal Front Bench. Therefore, the stronger the Opposition Front Bench is in the practical detail, and in saying to the British public that it is unfair and unjust that these large companies pay so little tax that a company such as Starbucks pays less than a café in the centre of Worksop, the better. How can that in any way be just?
This is not just about justice, however. Those of us on the Opposition Benches must articulate the fact that this is about economic efficiency. Let us consider the small entrepreneur or the new company, the company looking to grow, or the company that has reached its place in society, such as a small family café that is providing an excellent service to the community and that pays its taxes and is being undercut by multinationals. How can they compete with large multinationals avoiding their taxes?
Stella Creasy
I should start by saying that I have been remiss in respect of reading the Worksop Guardian, but I will wager that it is full of comments from people who are concerned about value for money in our taxation system and those who are desperately concerned about the impact of cuts on local services. Those cuts have been driven by the fact that we do not get the tax-take in this country that we seek. This new clause and new clause 12 seek to help the Government to be better at collecting tax. Does my hon. Friend think that that would go down well with the readers of the Worksop Guardian?
John Mann
I think the readers of the Worksop Guardian will hear my hon. Friend’s comments. Those such as your good self, Mr Speaker, who are expert at using the internet can read those pearls of wisdom without having to go all the way to Worksop or order a copy at this difficult time for the parliamentary budget. I recommend it to all.
Although I failed to be selected to serve on the Finance Bill Committee, I am prepared to volunteer for a new task, if it is not too late to do so. This relates directly to new clause 4 and the Minister’s speech, and I should make it abundantly clear that I am prepared to accept the task for no additional salary, directly or indirectly. It is to do with the advisory panel on the GAAR. If its members have not yet been selected, surely the Minister would love the opportunity to select an Opposition Member who is prepared to ask some questions that the public would perhaps want asked. I would be prepared to sit on this body without additional remuneration, should the Minister, the Government and the House wish that to happen. The Minister is not intervening, so perhaps I will have to put in a written application as well.
The question of the overseas territories is very important. Hansard will record precisely what the Minister said some minutes ago, but I shall paraphrase his comments as I did not have the opportunity to take down his exact words verbatim. In essence he said that we are the leaders in the world in dealing with tax avoiders, we are showing the way, and we are going to ensure that this all happens, yet we should not do more than anybody else. But the UK Crown dependencies and overseas territories are not German, French or American, and they rely on the British armed services to protect them in times of crisis or against the threat of invasion or assault. They rely on the British legal system and on the British royal family as part of their very essence, as democracies. Therefore, our relationship with these territories is a symbiotic one, in which we should expect absolute transparency in all matters relating to taxation and to companies and individuals from here.
The banks are the worst examples of complex structures that they themselves do not understand. They allow money laundering from Mexican gangsters—the worst kind—as proven by many successful US court proceedings. Big banks at the top are happy to tell us that they do not understand their own structures because they are so complex, but the structures are established in order to maximise profit—in other words, to minimise taxation—in territories that rely on our armed services, on our legal system and our democracy to underpin and oversee them. That is a cost to us that we rightly bear, yet corporates and individuals can hide things behind the opaqueness of structures there, so that these days my constituents cannot even discover who owns their football club and what moneys are there. This applies to even the most simple of examples, never mind the biggest and most complex of banks, financial institutions and other multinationals.
Kerry McCarthy
I wish to give one example. The Cayman Islands have a population of about 57,000, yet 92,000 companies are based there and it is estimated by the Bank for International Settlements that $1.4 trillion of bank assets and liabilities are there. My hon. Friend has raised an important question: how on earth can a country that is so small govern what Professor Jeffrey Sachs describes as a financial “time bomb” in its own territory?
John Mann
Somebody is making money, because my own football club would appear to have been part-based in the Cayman Islands, in a structure that then took it into the British Virgin Islands and into Monaco and who knows where else. There are intricate webs criss-crossing these so-called “tax-efficient countries”—these tax havens for tax dodgers, corporate and individual. This Bill follows the biggest financial crisis since the 1930s, with working people losing real income year by year, unemployment rising, a worldwide recession, and people less well-off than they were five years ago. The Bill, however, contains no constructive, detailed, productive proposals on how we are going to deal with these territories. We spend taxpayers’ money providing the armed services to guarantee them and then we turn around and claim that we are the world leaders. I say poppycock to us being the world leaders. This is an excuse of a policy. This is an excuse of an attempt in a Finance Bill. This is an embarrassment to the coalition partners, who would love, if they could come up with some ideas, a robustness to put behind it.
The big dividing point in British politics at the moment is this unwillingness to deal with the tax dodgers. These little clauses—new clause 4 and new clause 12—in their own small way encompass the problem in front of us and in front of the British people.
Mr Newmark
I felt that the hon. Gentleman might need to refuel a little, as he was running out of breath. I am curious—given that many of the unions and pension funds invest in funds that invest in offshore places such as the Cayman Islands, making a lot of money for ex-union members and pensioners, will he suggest that the Labour party recommends that those unions and pension funds no longer use fund managers who invest in those offshore entities?
Mr Speaker
I have known the hon. Member for Bassetlaw (John Mann) for 27 years and I can think of a long list of adjectives that could, in various scenarios, be applied to him, but breathless is not one of them.
John Mann
But on this occasion, Mr Speaker—one scratches one’s head at some interventions, which are so inaccurate, so irrelevant and so unconnected to the clause. I will not rise to the bait, Mr Speaker, and risk your ire by explaining to the hon. Member for Braintree (Mr Newmark) exactly how the unions invest their money, interesting though that subject would be. I fear your wrath, Mr Speaker, if I did so. Instead, I shall return to the key core theme of the clauses, which is morality—
Chris Heaton-Harris (Daventry) (Con)
The hon. Gentleman is being very generous in giving way. In his shy, retiring and meek way he is making some interesting points. I sometimes wish he would come out of his shell a bit more and tell us what he actually thinks. He weakens his case, does he not, when he tries to say that this is a party political matter? Last week, my hon. Friend the Member for Dover (Charlie Elphicke) highlighted how little money water companies and utilities were paying in tax in this country. My hon. Friend the Member for Stevenage (Stephen McPartland) has a website with a record of what corporate taxes are being paid by major corporates in this country. I am a member of the Public Accounts Committee, and across the parties on the Committee there has been a big push in this area. Is it not better for us to work together to try to sort it out?
John Mann
I thank the hon. Member for Daventry (Chris Heaton-Harris)—the fruit and veg man, a successful small business man—and I commend him. He is another on the Tory Back Benches like the hon. Member for Amber Valley, whom I specifically itemised in precise praise, as I did in last year’s Bill Committee, encouraging him to press to a vote his sensible and modest proposals to simplify the tax system. He would have had my support in that. In this House, there are times when we need to work across the parties to deal with an incompetent Treasury Front-Bench team. I would welcome further discussions beyond this Chamber with the hon. Gentlemen and others on the Conservative Benches about how best those of us who fully understand—be it a café in Worksop, or the fruit and veg man in Daventry or the accountant in Amber Valley—the economic inefficiency of this Prime Minister, this Chancellor and this immoral Treasury Front Bench’s failure to deal with tax dodgers, tax avoiders, corporate structures and the opaqueness of the overseas territories.
As a country, through this Government, we are unwilling to give the international lead that our position in providing defence and other support to the Cayman Islands and many others requires. That economic efficiency, that justice and that morality would liberate good British companies who are prepared to do the decent thing and to pay modest, small amounts of taxation rather than avoiding their appropriate duty to do so. That is what competition in the market is about and what those of us on the Opposition Benches are about. It is also what some—I am happy to give them plaudits—on the Conservative and Liberal Back Benches are about, but it is absent from the Prime Minister, the Chancellor and Treasury Front-Benchers, who are devoid of it. They do not get the real world, have not come from it and will never understand it. They do not get what the public and small businesses are saying. I would suggest that they do not really care about that, because they are interested in their paymasters and in ensuring that the status quo remains. They are failing to challenge vested interests.
Stella Creasy
I am sorry to stop my hon. Friend mid-flow because he is making a powerful case not only for the readership of the Worksop Guardian, but for being on a Bill Committee with him, especially when it comes to finance measures. That would clearly be a unique experience. Does he agree that new clause 12 would be beneficial because it offers an opportunity to gather the evidence on the tax take that would show whether the Prime Minister’s warm words about tackling tax avoidance were being put into practice? I agree with the hon. Member for Daventry (Chris Heaton-Harris), who talked about Members on both sides of the House being interested in the matter, but one thing we all need is the information. The new clause offers precisely that opportunity.
John Mann
The new clause is so modest and so moderate. How could any reasonable and rational Member of the House possibly not vote for it? I would go much further and give more robustness, including a great wealth of powers to ensure that those overseas territories and Crown dependencies were forced to give economic efficiency, justice and morality in return for the defence and everything else that they get from this country, but I recognise that one needs a majority in the House to do such things. Therefore, I appeal to those decent, sensible, smiling Back Benchers to join us in an historic vote tonight—vote with the Opposition.
David Rutley (Macclesfield) (Con)
I understand the real passion that the hon. Gentleman brings to the debate, as he often does, but I have some concerns. It is great to see a politician put his body on the line, wanting to ensure that he serves on the GAAR board, but is this now a bid for him better to represent the British overseas territories in Parliament as well? Has he consulted the residents of Retford and of Worksop to check whether they can spare him, given all the hard work that he is doing in the constituency?
John Mann
I fear that due to our expedition next year with injured British soldiers, which I expect to take place via the parliamentary mountaineering group, I will perhaps be too busy to make a big commitment of time other than to that great cause, which the hon. Gentleman and I hope to push forward with other mountaineers and injured servicemen.
The hon. Gentleman gives us a timely reminder of priorities. I give that reminder to those on the Treasury Bench. This is about priorities: their priorities in government, which are the wrong priorities, the failed priorities, letting down the small businesses and the honest taxpayers of Britain. That is who they are letting down tonight and who they have been letting down for three years. Here is a modest opportunity for those who wish to save their seats: join the Opposition, do the right thing—the modest, the moderate thing—and support new clause 12.
Alison Seabeck (Plymouth, Moor View) (Lab)
It is a real pleasure to follow the two previous speakers. The hon. Member for Amber Valley (Nigel Mills), who is just trying to escape the Chamber, gave a particularly thoughtful speech, understandably, given his background in taxation. My hon. Friend the Member for Bassetlaw (John Mann) gave a rabble-rousing speech. By the end of it, I was absolutely gutted that he did not make it on to the Bill Committee. I am sure that Government Members do not share my sorrow. I fully expect him at least to ask the readers of the Worksop Guardian whether he should be on the GAAR board—a proposition put forward by the hon. Member for Macclesfield (David Rutley).
Turning to new clause 12, I want to talk about my visit to Gala Bingo in Plymouth last week, at which I met the chief executive officer of the Bingo Association, Miles Baron. As hon. Members would expect, those present wanted to talk about tax—mainly VAT—and the lack of a level playing field, but we moved beyond the debate that we had on that in Committee, and they talked to me about the competition in gambling and bingo from offshore, tax-avoiding, multinational companies. Gala highlighted that it pays tax in the UK, but it feels that it loses out when it comes to VAT levels, and loses out significantly to offshore multinationals, which use innovative means to avoid paying tax in the UK. It feels that it is a smaller company trying to do the right thing.
Gala is not alone, as my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) made clear. If new clause 12 is taken forward, there could be a win-win situation for a number of companies in Britain and internationally, including in many third-world countries. British taxpayers are gambling away not only their income but our country’s tax revenues by using online offshore companies. If the UK is losing out, so too are many other countries; gambling is an international pastime, whether we like it or not.
Customers made clear their anger at corporation tax avoidance by Starbucks; I hope that they will continue to be discerning in a range of other fields, including gambling. To do that, they need a little more information about exactly who is doing the avoiding, and where and how avoidance happens. That is why new clause 12 is so important. The plea from my Front-Bench team for greater transparency is really welcome, because it empowers consumers.
At a time when we hear Members of the House, charities such as Christian Aid, non-governmental organisations involved in the third world as well as the general public express clearly the need to trade ethically, the need for more transparency, the need not to disadvantage developing and third-world countries, and the need for tax to be paid in the UK, we must ask whether the general anti-abuse rule in the Bill goes far enough. Does it have teeth? The Minister made all sorts of excuses and gave all sorts of reasons for not going any further, but he really needs to address the very sensible series of questions put to him by my hon. Friend the Member for Newcastle upon Tyne North on the GAAR’s lack of scope, and its failure to tackle the tax avoidance activity of multinationals.
The point that my hon. Friend the Member for Bassetlaw made about clarity of company ownership is one that virtually every MP in this House will have some sympathy with, because on a constituency level, we will have tried to track down directors of companies, and to get background information on companies, to solve relatively minor problems. Here, we are trying to ascertain exactly where they pay their tax.
To come back to bingo, a lot of people disapprove of gambling, but it is just one small part of the tax avoidance picture. It is the part of the issue that I have highlighted, simply because it is fresh in my mind following my visit. People may disapprove of gambling, but they probably disapprove more of tax avoidance. We have heard many examples of the type of companies that have been using the rules to avoid paying tax in the UK. It is worth repeating that the estimate for the tax that could be recouped by the GAAR is about £85 million, and that the current tax gap between the money that HMRC estimates could be collected and the actual amount collected is £4.5 billion. That is a significant difference.
I note that the Minister said that the GAAR was not a panacea. In fact, it is barely a sticking plaster. Although first aid is always welcome, the problem probably needs more major surgery, in the form of a strong commitment from the UK Government and the wider international community. Developing countries lose an estimated £160 billion per annum through tax dodging by multinational companies. That is much more than they receive in aid. Poor countries struggle to access the information that they need to counteract tax avoidance by foreign nationals and multinational companies. Our own tax rules need to make it easier for developing countries to identify and share vital information in order to avoid those losses. If an expert on the tax regime in a particular country were required, for example, that would be an appropriate course of action to take.
Stella Creasy
Is my hon. Friend surprised, as I am, that there is not more support for this proposal from some of those Members on the Government Benches who are less committed to the aid budget. After all, if we could tackle this problem—
Mr Speaker
Order. I say to the hon. Member for Bridgwater and West Somerset (Mr Liddell-Grainger): be quiet, and if you cannot be quiet, get out. You are adding nothing, and you are subtracting a lot. It is rude, it is stupid, it is pompous and it needs to stop—whoever it was.
Stella Creasy
Thank you, Mr Speaker. I was merely reflecting that if we could tackle the way in which tax avoidance is affecting the developing nations, we might not need to have an aid budget in the future.
Alison Seabeck
Indeed, but that is a whole separate debate. My hon. Friend makes a serious, sensible point.
In this recession, we really cannot afford to allow those billions to disappear. Nor should we allow those developing countries to lose out so substantially. We need to work closely with other Governments to bring consistency into the process and, in doing so, ensure that doing the right thing in taxation terms is given value. We need transparency so that the public can take more informed decisions about the products they buy and from whom they buy them. I hope that those Members on the Government Benches who have been toying with the idea of supporting new clause 12 will see the sense in getting justice into the taxation system, and that they will support the new clause.
Mr Gauke
We have had a thorough debate. I do not intend to reprise all my earlier arguments, but I want to pick up some of the points that hon. Members have raised. The issue of the yield for the loss-buying rule was raised by the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). It is around £200 million a year, but there is a more precise breakdown available in the tax information and impact note.
Several hon. Members have mentioned the general anti-abuse rule—the GAAR—which is expected to raise around £235 million over the next five years. It will also protect revenue that would otherwise be lost. We believe that it will change the avoidance landscape as its impact starts to be recognised. It will act as a deterrent to those tempted to engage in abusive avoidance schemes, and where those schemes persist, the GAAR will give HMRC the means to tackle them and to secure payment of the right amount of tax.
We have accepted the proposal from Graham Aaronson that a narrowly targeted GAAR is the right approach to tackling the persistent problem of abusive avoidance schemes. This has to be viewed in the context of the fact that the previous Government did not bring in a general anti-abuse rule. We believe that a broader rule would be likely to generate considerable uncertainty, which could lessen the attractiveness of the UK as a place to do business, and generate significant cost for HMRC. We are not complacent, however, and we will continue vigorously to tackle all forms of tax avoidance. Indeed, the Bill will close 10 loopholes, and the Budget announced further reviews of tax law that is being exploited for avoidance.
Simply because a scheme is not caught by the GAAR will not mean that it is okay. The GAAR will not set the boundary for tax avoidance. It deliberately targets abusive avoidance schemes, but HMRC will continue to tackle all forms of tax avoidance using the full range of tools available. As for the argument that we will not need targeted anti-avoidance rules in future, we believe that it would be reckless to remove a central protection against avoidance without being fully confident that doing so would not create risks. Although we expect the proposed GAAR to be effective in tackling and deterring abusive tax avoidance schemes, it might take time for those who engage in persistent avoidance to accept that their schemes do not work, so there will still be a need to retain existing anti-avoidance provisions and amend other legislation that provides unintended tax planning opportunities that are not within the scope of the GAAR.
The Financial Secretary to the Treasury (Greg Clark)
I beg to move, That the clause be read a Second time.
New clause 6 is a technical amendment designed to give a belt-and-braces protection to prevent any possible attempt to avoid the incidence of the bank levy on the part of banks in a particular respect. Paragraph 70 of schedule 19 of the Finance Act 2011 specifies that high-quality liquid assets held by banks are not liable for the levy. This is to make sure that there is no disincentive for banks to hold assets that give liquidity protection in the event of a crisis. By their nature, the return on such assets is small, and without relief the bank levy would reduce the margins, making it uneconomic to hold such assets. It was always envisaged that the definition of assets covered would be the same as that of the high-quality liquid assets recognised by the regulator —now the Prudential Regulation Authority.
It has come to the attention of HMRC that some banks were contemplating arguing that a wider definition of assets might apply, against the intention of the original legislation. In fact, the Government do not believe that the current legislation can be interpreted in this wider way, and HMRC could and would make a legal challenge against any bank engaging in this. However, such a challenge would take some time to be heard, and in the meantime other banks could follow suit and attempt to use a wider interpretation. I hope that the House will agree that the most straightforward way to proceed is to amend the relevant Act to put the matter beyond doubt by defining high-quality liquid assets explicitly as
“assets that are eligible for inclusion in a firm’s regulatory liquid assets buffer”.
It is right that the new clause should be applicable from the introduction of the bank levy in 2011, as the Government have been clear from the outset that this was the intention. For example, the Government’s consultation document in October 2010 stated that the deduction would be for those assets
“which meet the FSA definition of high quality liquid assets for the purposes of inclusion in the liquidity buffer”.
I hope that the House will agree that it is right to move quickly to close the scintilla of a possibility that ingenious lawyers could help any bank to avoid paying its full contribution to the levy.
Chris Leslie
It is good to see the Minister popping up in the debates on the Finance Bill for the first time, at the eleventh hour. [Interruption.] That is not true; I apologise. He took part in Committee of the whole House, although he did not do the heavy lifting in Committee upstairs. Perhaps it seems now as though it never happened.
This is an interesting little Government new clause. Because of the hour, it would not be surprising if hon. Members’ eyes glazed over and they did not necessarily spot what is going on, but this is an admission from the Government that their bank levy has not been successful. In fact, they are having retrospectively to adjust the rules around the bank levy to make sure that they can net in the supposed £2.5 billion of revenue that the Prime Minister, no less, promised it would yield.
Let us recall the facts about the bank levy. In the last financial year, 2012-13, the bank levy did not bring in £2.5 billion, it did not even bring in £2 billion—it brought in a pathetic £1.6 billion. We should not forget that that does not include the cut in corporation tax that the Chief Secretary and others collaborating in the coalition gave away to the banks at that time. In other words, it raised a net £1.4 billion—a shortfall of over £1 billion on the amount that the Government said that it was supposed to produce. My hon. Friend the Member for Bassetlaw (John Mann), and others in the Chamber, could certainly think of ways in which £1 billion of revenue could be put to good use. That was the giveaway that the design of the bank levy set in train for the banks. It raised not £2.5 billion but just £1.4 billion in the last financial year.
It is worse than that, because in the previous financial year, 2011-12, the bank levy raised just £1.8 billion. Deducting from that the £100 million in corporation tax, it raised a net £1.7 billion. The levy has not brought in the money it should have. The Government said that it would raise £2.5 billion, but in total it has brought in £1.9 billion—nearly £2 billion—which is less than they said it would raise.
If any other Department promised to bring in £5 billion over those two financial years but raised only £3 billion, there should and would be outrage. However, given that the Treasury hide a lot of these issues in the complex lexicon of bank taxation, many would be forgiven for not spotting that this is an absolute scandal.
John Mann
I thank my hon. Friend for inviting me to suggest what this money could be spent on. The infrastructure projects of Serlby Park school and Elkesley bridge—not started in three years under this Government—are shovel-ready and could immediately be commenced. I have launched a campaign today to send a postcard a day to the Chancellor until he gets his shovel out and starts work on them.
Chris Leslie
That is the point. The Government like to say that they are trying their best to bring in revenues, but when it comes to the banks and the wealthy they have a blind spot. Is that any wonder when nearly £2 billion of bank levy money has gone uncollected over the past two financial years?
Will the Minister give us an absolute, cast-iron commitment that the £2.5 billion from both 2011-12 and 2012-13 will retrospectively be brought into the Treasury? That, as a basic minimum, should be the intention of this new clause, although I do not necessarily think that it is the only tweak that will have to be made to the bank levy. Can we be sure that the lost £2 billion will be brought into the Treasury?
Will the Minister confirm that, by making this change, he is in effect ceding the bank levy policy to the regulators? If tax deductibility for liquid asset buffers is to be set by the regulators, does that not mean that bank levy policy will henceforth be in the hands of the Financial Policy Committee and the Prudential Regulation Authority? Will the Minister explain the consequences of last week’s decision by the Financial Policy Committee to relax the liquidity buffer rules for many of the banks? That big change will reduce significantly the amount of liquidity that banks are required to hold. That could be good news, because it may mean that there will be less tax deductibility for bank levy purposes. Will the bank levy be allowed to rise above £2.5 billion—that would be welcome—or will the Minister adjust the revenue available back down to £2.5 billion for each financial year even though the liquidity deductibility is not relevant in this particular case?
Will the Minister also explain whether the regulators will be given the right in statute to define equity or other liabilities? Other aspects of the bank levy that are enshrined in legislation could nevertheless be affected by the regulators, such as the definition of capital requirement.
I want a sense of what the new clause will do. We know that the Government are soft on the bankers because they do not want to repeat the bonus levy, which will result in a big tax cut for those bankers who did very well on their bonuses—they went up 64% in one month—in April. We also know that the millionaires’ tax cut has handed 643 bankers in this country a tax cut of at least £54,000 a year, so they are doing very well. We want to hear commitments on the bank levy. Will the Minister bring in the full £2.5 billion for financial years 2011-12 and 2012-13?
Greg Clark
I am glad to respond to this short debate.
I do not think that the hon. Member for Nottingham East (Chris Leslie) listened to my remarks earlier, in which I said that the purpose of the new clause was not to raise additional revenue, but to protect the assumptions that were there from the outset. It was always envisaged, going right back to the consultation documents that the Government published before introducing the levy, that the deduction had to be in line with the regulatory requirement. It was a rumour that legal advice was being taken on whether liquid assets could be deducted that went beyond that regulatory buffer which caused us, in anticipation, to close off that possibility and to emphasise that this definition was always what was intended and that there should be no possibility of wriggling out of it. I hope he would acknowledge that that is sensible.
The new clause is not one of the measures that we are taking to increase the yield of the levy. That is dealt with elsewhere. It will protect the yield that was always assumed would be made by the levy. As the hon. Gentleman raises the question of the yield, he will recall our debates in Committee of the whole House on the new clauses that I moved to increase the rate of the bank levy, reflecting our commitment to raise £2.5 billion from it. He will know that in the Budget earlier this year, the Office for Budget Responsibility made its assessments on the basis of the proposed increase in the levy that we have set out. This year, rather than raising £2.5 billion, the OBR forecasts that we will raise £2.7 billion. Next year and for every subsequent year, the OBR estimates that the levy will raise £2.9 billion. That means that we will recoup the under-collection of the bank levy. It is a new levy and it is not always possible to know exactly what such a levy will raise. It has always been clear that the Government intend it to raise at least £2.5 billion. The OBR’s central estimate is that we will more than recoup the requirement that we set out.
Chris Leslie
The Minister has said that there will be a £200 million increase above the £2.5 billion for this financial year. However, we have established that the Government are £2 billion behind the curve. There is £2 billion to be recouped. The Minister is culpable for the loss of significant sums of money. He has not given any commitments on that. It would be wrong if he did not go back to the drawing board and think again about this issue.
Greg Clark
Our commitment is clear that we will raise £2.5 billion a year. The amendments that we have made to the Bill will do precisely that. We have introduced a permanent bank levy, in contrast to the one-off tax that the Labour party imposed on the banks. During 13 years in government, the only bank levy that the Labour party introduced was, in effect, a levy by the banks on the taxpayer. This levy is the opposite of that: the taxpayer is benefiting from revenue from the banks.
It is right that we target the £2.5 billion yield that we have always had in mind. In addition, when we spot opportunities that might be taken to avoid the levy, we should close them. That is what the new clause does.
Question put and agreed to.
New clause 6 accordingly read a Second time, and added to the Bill.
New Clause 12
Anti-abuse measures
‘(1) Her Majesty’s Revenue and Customs shall review the possibility of bringing forward measures as part of the GAAR to work in conjunction with other G8 countries to require multi-national companies to publish a single easily comparable statement of the amount of corporation tax they pay in the UK.
(2) The Chancellor of the Exchequer shall review the effect of incorporating a global standard for public registration of ownership of companies and trusts via a convention on tax transparency, including a requirement on companies to publish a single easily comparable statement of the amount of corporation tax they pay in the UK, on Treasury tax receipts.
(3) The Chancellor of the Exchequer shall consider, when counteracting tax advantages arising from tax arrangements that are abusive, what steps HM Government could take, working alongside developing country governments, to assess how UK companies could report their use of tax schemes that have an impact on developing countries, and how the UK could assist in the recovery of that tax.
(4) Within six months of the passage of Royal Assent, the Chancellor of the Exchequer shall place copies of the review in the House of Commons Library, and consult with G8 countries on their effectiveness.’.—(Catherine McKinnell.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
The House divided: Ayes 231, Noes 300.
“arrangements (in Part 14A) | section 730B” |
“as a deduction (in Part 14A) | section 730B” |
“C (in Part 14A) | section 730B |
“deductible amount (in Part 14A) | section 730B” |
“qualifying change (in Part 14A) | section 730B” |
“the relevant day (in Part 14A) | section 730B”. |
Business without Debate
DELEGATED LEGISLATION
Administration
EU Funding (Rotherham and Barnsley)
John Healey (Wentworth and Dearne) (Lab)
These end of day Adjournment debates are normally confined to the Member, the Minister and, of course, you, Mr Speaker. The Minister will note the strong presence of my Labour colleagues tonight, especially from South Yorkshire, but also from Merseyside, which I welcome. All the points of concern and criticism about Barnsley and Rotherham, and our position in relation to the new European Union funding, apply equally across South Yorkshire, the Sheffield city region and the Liverpool city region. In our area, and for the rest of South Yorkshire and for Merseyside, we face cutbacks in European funding that are much more severe even than our worst fears—massively deeper than in any other area in the UK.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
indicated dissent.
John Healey
It is no good the Minister shaking his head, because we face a cliff-edge cut in the funding for the new European funding period as compared with the previous ones. The European funds are designed to give a boost to the economy of flagging regions. I have to say that it is an outrage that areas of the UK with more wealth, more jobs, more business and more prosperity are also getting more European funding in the period ahead.
Let me tell the Minister that it aggravates our anger to learn that the major factor in this unfair distribution and the cuts that our areas will uniquely take is the Government’s plan to direct top-up funds from South Yorkshire and Merseyside in order to support Scotland, Wales and Northern Ireland—to limit their losses to 5% when we face cuts of more than 50% in our funding for the next period. There is no logic and no equity in that and we have seen no effort to be even-handed.
Paul Blomfield (Sheffield Central) (Lab)
I am sure that my right hon. Friend will share my incredulity at seeing the Minister sitting there shaking his head. Will he note, as I do, that the chairman of the Sheffield City Region local enterprise partnership—the Government look to local enterprise partnerships to provide business leadership—would disagree vehemently with the Minister, because he has pointed out that our arguments have been ignored and that our EU funding allocation has been cut by about a half?
John Healey
My hon. Friend is right to voice the view from the chairman of a local enterprise partnership, which has been echoed by the Liverpool City Region’s LEP. Both are concerned that the potential for boosting our economies will be lost in Barnsley and Rotherham, as in our other two city regions.
Steve Rotheram (Liverpool, Walton) (Lab)
In his usual eloquent manner, my right hon. Friend makes a good point about the unfairness. Can he see any rationale to justify how the Government have gone about allocating this European funding?
John Healey
No. My hon. Friend is right; I was saying that these decisions defy equity and logic, and there appears to be no attempt to be even-handed in the allocation of this funding.
Michael Fallon
The right hon. Gentleman says that we are defying logic. Is he seriously suggesting, given the wealth of his region at 84.6% of gross domestic product, that South Yorkshire should be entitled to more funding than Shropshire and Staffordshire, Merseyside, Lincolnshire, Tees Valley and Durham, all of which are poorer than the South Yorkshire region? Where is the logic in that?
John Healey
The Minister will have a chance to respond in full, but he is perfectly aware—I have had meetings with him and written to him on this point—that the comparison I make is regarding the special protection put in place for Scotland, Wales and Northern Ireland. Scotland has a GDP higher than that of South Yorkshire, Northern Ireland has a GDP higher than that of South Yorkshire and Wales has a GDP roughly on the same level. That is not fair, and it does not make good policy sense.
Jim Shannon (Strangford) (DUP)
I thank the right hon. Gentleman for bringing this very important issue before the House for consideration. Obviously, as an MP for Northern Ireland, I am concerned that Northern Ireland receives its full share. Unemployment is higher, youth unemployment is higher and job opportunities are even scarcer than in other parts of the United Kingdom. Does the right hon. Gentleman want to see the same opportunity given to Rotherham and Barnsley as has been given to Northern Ireland?
John Healey
Indeed. The hon. Gentleman sums up my full argument in a nutshell, and I am grateful to him for that.
Mr Watts
Is not the key point that the Government have taken money from some poor parts of the country and given it to other poor parts of the country? If we look at Cheshire and Warrington, for example, although its GDP is at 119%, it will get £157 compared with Sheffield’s figure, which is less, and Merseyside’s, which is less. How can it be right for a more affluent area to get more funding per person than some of the most deprived parts of Britain?
John Healey
Over the last year, my hon. Friend and I have campaigned for special transition region status for the purposes of the new European funding programme, and have tried to persuade the Minister of the case. My hon. Friend has anticipated some of the points that I shall be making later, which lie at the heart of the problem. I want to deal with the facts, the fix and the future. I want the Minister to confirm the facts, explain the fix, and pledge to make good the funding of our areas for the future.
Let me begin with the facts. As the Minister knows, I welcome the commitment to the European regional development fund and the European social fund as part of a European budget settlement that represents the first-ever real-terms cut overall. I welcome the inclusion of transition region status for ERDF purposes, although the Government held out against it until the final agreement. I welcome, in particular, the Minister’s commitment in his statement on 27 June to a local rather than a central programme, with decision-making powers in local areas. I also welcome the decision to enable European funds to take their place as part of the strategic plans of the local enterprise partnerships.
We know how to use European funding in South Yorkshire, we know how to use it well, and we have firm plans for its use in the future. The advanced manufacturing park on the edge of Rotherham would not be there without support from European funding, and the nuclear advanced manufacturing research centre and the knowledge transfer centre in Rotherham would not be there without £15 million from the ERDF. We have plans for the future. We can put the money to good use, and that will include support for the city deal and for 4,000 extra apprenticeships throughout South Yorkshire.
However, whereas our current seven-year programme of funding from the European Union is worth is worth more than €400 million in South Yorkshire alone, the new seven-year funding programme will provide €203 million, not just for South Yorkshire but for the five north Nottingham and north Derbyshire districts as part of the Sheffield city region. As was pointed out by my hon. Friend the Member for St Helens North (Mr Watts), that is about €117 per head in an area with a population of nearly 1.8 million and a GDP that is 84% of the European average. It represents a cut of more than 50% in South Yorkshire’s funding for the current seven-year period.
Ours is one of the 11 transition regions in the United Kingdom. That means that our GDP is between 75% and 90% of the European average. Which economies have been earmarked for extra funding to boost jobs, skills and businesses? All the more developed regions have a GDP of at least 90%, and nine of them will receive more, not less, funding than the Sheffield city region. They include Worcestershire, Leicestershire and, as my hon. Friend said, Cheshire and Warrington. Cheshire and Warrington has not a GDP of 84% like South Yorkshire but a GDP of 119%, and will receive EU funding of not €117 a head like South Yorkshire, but €157 a head.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
Will my right hon. Friend give way?
Mr Blunkett
I am very grateful to my right hon. Friend, and I congratulate him on the work that he has done on this issue.
The purpose of objective 1 was to recognise levels of deprivation, and the purpose of the transitional arrangements was to recognise what had been invested and how the work needed to be done. Was it not an insult to the people of our communities for the Minister to use Shropshire as a comparator? I went to school in Shropshire, on the border of Wales, and I know the area very well. The notion that a comparison between Shropshire and South Yorkshire, North-East Derbyshire and Nottinghamshire can be anything but a gerrymander is palpably absurd. We should ask why this is being done, and what the objective is. A cynic would obviously ask about Cheshire—as my hon. Friend has just done—given the nature of the constituencies there and the nature of the Chancellor.
John Healey
My right hon. Friend makes a full point. He is right. This decision is unfair and unjustifiable and undermines the very purpose of the European funds.
To develop my right hon. Friend’s point, let me turn from the facts to the fix. Three months ago, out of the blue, the Minister announced on 26 March:
“EU Structural Funds are important for supporting economic activity. The EU formula would have seen several areas in most need of funds lose out, so we have taken the decision to correct that.”
He also said that
“the UK government has decided to re-allocate EU Structural Funds to minimise the impact of sudden and significant cutbacks in Northern Ireland, Scotland and Wales.
This decision means that each Administration is only subject to an equal percentage cut of around 5 per cent in funding compared to 2007-13 levels.”
It seems that no one in government was there to speak up for England when these deals were done for the devolved regions. There is one pot of European funding for the period, so England must pay to protect the other UK nations. Ministers are ripping funds away from South Yorkshire and from Merseyside to top up Scotland and Northern Ireland, where GDP is higher, and Wales, where GDP is at a similar level.
Let me illustrate the point about the deep flaws and unfairnesses of this decision with the highlands and islands of Scotland. The highlands and islands is an ex-objective 1 area, like South Yorkshire. It is a current phasing status area, like South Yorkshire. It has a GDP of 84%, like South Yorkshire. It will have transition region status, like South Yorkshire, but unlike South Yorkshire its funding will not be €117 per head. It will not even be €147 per head, as in Merseyside. It will be €741 per head. Its economic status is similar but it will have over six times more funding for every man, woman and child in the highlands and islands. The Chief Secretary has clearly been doing his job for his area. What has the Deputy Prime Minister been doing for our area? This is Forgemasters mark II. There has been no evidence of concern, and certainly no evidence of influence from the Deputy Prime Minister when this critical decision for Sheffield city region was taken. He is standing up while the Government blatantly make bad and damaging decisions for our area in South Yorkshire.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
Will my right hon. Friend give way?
John Healey
If my hon. Friend will forgive me, I have been generous in giving way and I am running out of time.
I turn to the Minister’s position on this matter. He kindly wrote to me a couple of weeks ago to try to justify the anticipated announcement of the deep cuts in South Yorkshire. He said in the letter on 19 June:
“In the case of Merseyside and South Yorkshire, current EU Structural Funds are gradually reducing from 2007 to 2011, due to their relative rise in prosperity…Their funding has been a taper…For 2014-20 it is therefore not envisaged that either of these regions will enjoy special status…especially as these two regions are no longer amongst the poorest of the English Transition regions.”
I want to say three things to the Minister. First, the relative rise in prosperity in South Yorkshire anticipated at the start of the period has not happened as we were hit harder than many other areas by the global financial crisis and the austerity-driven downturn after 2010. Secondly, the profile of the spend each year during the seven-year period has been broadly equal and not sharply declining towards the end of the period. Thirdly, unfortunately, it remains the case that only three regions in the UK are poorer than Merseyside and only four regions, including Merseyside, are poorer than South Yorkshire. I hate making the case in those terms because I want to talk about the new businesses, the jobs programmes, the skills base, the investment plans and the economic potential of our area, but that is the argument that the Government are using, so that is the argument that I must counter.
Finally, let me turn to the written ministerial statement confirming these allocations for England issued on 27 June. At the end of the statement, it says:
“All allocations are subject to final agreement on the EU regulations and the EU 2014-2020 Budget in the European Parliament. The European Commission will also need to agree the UK Government’s specific proposals.”—[Official Report, 27 June 2013; Vol. 565, c. 9WS.]
I have to say to the Minister that seeing UK regions with a level of prosperity so much higher than ours getting so much more than ours seems to me to ride roughshod over the purpose of the EU budget agreement. That is why I and my hon. Friend the Member for St Helens North have written to Commissioner Hahn asking him to take a hard look at the UK’s decisions and whether they breach the intention of the EU’s allocation policy and formula, and our MEPs, Linda McAvan and Arlene McCarthy, have done the same. There must be a strong case for a judicial review, which I know is also being seriously considered. Although I say to the Minister that we have no wish to hold up the allocation of these funds, as all our areas can put these funds to very good use, we have to fight for funding that treats all our areas equally and that directs the most support to those areas with the greatest need and the greatest potential.
The Minister told me in his letter and in our meeting:
“Unfortunately, very little flexibility remains here.”
Well, he has been painted into a corner by his colleagues in Government making special provision for the devolved regions and making that an early announcement. Tonight we want him to make good this wrong and to balance this deeply flawed decision by reviewing the allocations to South Yorkshire and Merseyside and making a commitment to use other funding routes to rectify the shortfall. We are asking not for special treatment, but just for the same treatment as Scotland, Northern Ireland and Wales, and certainly not to be singled out for such special and swingeing cutbacks.
This is not an argument about a one-off annual grant. The Minister’s decisions now will stand for the whole of the next Parliament and Government, and beyond. That is why what he has to say to the House and the action he takes following this debate are so important.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on securing this debate, and thank him for the opportunity to address some of the concerns he has raised. I know they are shared more widely than South Yorkshire; obviously they extend to Merseyside, some of whose Members are present tonight.
Before I come to last week’s announcement of the provisional allocations of the structural funds to England, I want to remind the House why we faced a number of extremely complex and difficult decisions when making these allocations. First, let us go back to the overarching goal of the funds. The aim of the funds is to provide EU member states and regions with assistance to overcome structural deficiencies and to enable them to strengthen competitiveness and increase employment. For the next seven-year period, the focus of the funds will be on enhancing economic growth, with a focus on innovation and research, small and medium-sized enterprises, the low-carbon economy, skills, employment and social inclusion.
During the current programming period, there were two notable decisions that impacted on us. First, the last Government decided to prioritise the north when making allocations for the current seven-year period, which expires this year. I have had many representations from those representing the interests of the south, and some of the poorer areas of the south, arguing passionately that the Government should not repeat what happened in 2007 and should shift funding back to the south. While I concede that the south is richer overall, we must not forget that within many areas in the south there are significant pockets of deprivation.
Secondly, the area that includes Rotherham and Barnsley was categorised as a “phasing-in region” for the current funding period, 2007 to 2013. For hon. Members less familiar with the technicalities, let me explain that “phasing-in” is a designation given to a region that is emerging from the poorest regional category—“convergence” or “objective 1”—and into the mainstream “competitiveness” category. Competitiveness regions characterise most of the wealthiest countries of the EU. As such, it is the current EU budget period—2007 to 2013—that is the transitional period for South Yorkshire, and the EU funds have been on a declining taper for the entire seven-year period, in order for partners in that area to adjust to a lower level of EU receipts. The highlands and islands, of course, were not on a phasing-out regime; they were on a phasing-in regime. The precise objective of the phasing-in status is to avoid a cliff edge for these regions. Therefore, comparing the allocation that South Yorkshire received for the whole of 2007 to 2013 with the allocation announced for 2014 to 2020 and concluding that there is a 66% reduction ignores the reality of what phasing in actually means.
The current programme clearly states:
“Because of its phasing-in status South Yorkshire’s financial allocation annual profile is heavily weighted towards the first four years and tapers off towards the end of the programming period”.
That is mirrored in the ESF operational programme. Over the current programme, structural funds to South Yorkshire started at €153 million in 2007 and have ended up at €20 million in the current year. Let me be clear that in each of the past three years that has been the figure. For each of the next seven years the figure will be €23 million—an increase. So let us just be clear: there will be an increase in funding for South Yorkshire, not a decrease.
John Healey
As I said, it is patently incorrect to say that the planned profile reflects the reality of how the money has been spent over the period. May I ask the Minister either to confirm or correct any of the facts I gave the House in my speech in a letter to me afterwards? As he clearly may not get to this, given the sort of technical detail he is keen to read out to the House, will he also confirm what, if anything, he proposes to do to try to rebalance this very significant shortfall of funding for South Yorkshire and for Merseyside?
Michael Fallon
I am certainly very happy to write to the right hon. Gentleman about any technical detail that I may have missed, but I do not want him to mislead the House. In the last three years of the current Parliament, South Yorkshire has had €20 million a year. In each of the next seven years, South Yorkshire will receive—
John Healey
On a point of order, Mr Speaker. I think that the Minister was suggesting that I had misled the House, when in fact what I had told him was that the patterns of actual spend in the European regional development fund funding for the final years of this current programme are broadly similar right across the range and have not sharply dropped as the original plan envisaged.
Mr Speaker
I was listening and I thought the Minister was saying that he did not want the House to be misled. I am sure that he would not accuse any Member of misleading the House, because he would be in breach of our procedures if he did. The Minister was not suggesting that, was he?
Michael Fallon
I certainly was not, Mr Speaker. I just wanted to make it absolutely clear that in each of the past three years the allocation has been €20 million and for each of the next seven years it will be €23 million. I cannot call that a cut, and if other colleagues can, I am extremely puzzled.
Steve Rotheram
I thank the Minister for giving way, but I thought the preamble to his speech seemed like it had been written by Antony Jay and Jonathan Lynn; it was certainly like something out of “Yes Minister”. He spoke earlier about fairness and criticised my hon. Friend the Member for St Helens North (Mr Watts) for the comparison he made. If Cheshire is getting more than Merseyside, can the Minister explain the rationale for that?
Michael Fallon
Let me be clear: overall, Cheshire is not getting more than Merseyside. The issue for Merseyside is very simple, as it is for South Yorkshire. I cannot justify to the House why either South Yorkshire or Merseyside should get more than the Tees Valley, Durham or Lincolnshire, which are poorer regions.
Mr Clive Betts (Sheffield South East) (Lab)
Does the Minister accept this basic fact: over the seven-year period of the spending review, comparing the last spending review round with the round to come, South Yorkshire will get less than half the previous amount, whereas Scotland and Wales will get 95% of the previous amount? Are not those facts true?
Michael Fallon
What is true is that South Yorkshire is transitioning. It was a poorer region and is now becoming a wealthier region. Let me repeat: in each of the next seven years, South Yorkshire will get more than in the past three years. Really, we need to be very clear about this.
Michael Fallon
I think I have been very generous in giving way.
What is a transition region? It is a category of region introduced to support those that have a GDP level between 75% and 90% of the average. It means that those regions are no longer eligible for the highest levels of support—that for the so-called less developed regions—and nor are they considered more developed regions. “Transition region” means that they will get benefits providing greater flexibility in how to spend the funding. I want to highlight that during the current funding regime, for which the right hon. Member for Wentworth and Dearne was responsible as one of the Ministers involved, 50% of the funding was retained by central Government to determine how it was spent. I am sure that that was expedient to the effective delivery of Government programmes and so on, but I am very pleased that in the seven years beginning next year, local areas will define and have at their disposal 95% of all the funding available. Of course it is true that some areas would have had higher levels of funding in the past, but they will certainly be able to direct more of the money they want in the same way.
Michael Fallon
I am sorry, but I only have a minute left.
I have focused my remarks on the structural funds, but that is not the only way in which we are helping South Yorkshire. We have granted enterprise zone status across the Sheffield city region, we have a city deal leading to £72 million in public and private investment and we have a transport fund that could be worth £500 million to the Sheffield city region. No other transition region has a deal like that. More than £80 million has been awarded through the regional growth fund, including a local enterprise partnership-led £25 million unlocking business investment programme.
The footprint of all that growth will be approximately 2,000 sustainable private sector jobs. In Rotherham, we are supporting the advanced manufacturing research—
Ministerial Corrections
(11 years, 4 months ago)
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Justice
(11 years, 4 months ago)
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Simon Hart
To ask the Secretary of State for Justice on how many occasions his Department has, following an order of the Crown Court, paid money out of public funds to (a) the RSPCA and (b) defendants prosecuted by the RSPCA in the last five years; and what amount was paid on each such occasion.
[Official Report, 12 June 2013, Vol. 564, c. 370W.]
Letter of correction:
An error has been identified in the written answer given to the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) on 12 June 2013. The answer should have been from Jeremy Wright.
The full answer given was as follows:
Jeremy Wright
The Legal Aid Agency (LAA) does not record whether the prosecuting authority is the RSPCA. I can confirm that the LAA does not fund prosecutions, including those carried out by the RSPCA.
Transport
(11 years, 4 months ago)
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Bridget Phillipson
To ask the Secretary of State for Transport when he plans to reply to the letter from the hon. Member for Houghton and Sunderland South of 11 December 2012.
[Official Report, 24 June 2013, Vol. 565, c. 122W.]
Letter of correction from Norman Baker:
An error has been identified in the written answer given to the hon. Member for Houghton and Sunderland South (Bridget Phillipson) on 24 June 2013.
The full answer given was as follows:
Norman Baker
The Department for Transport does not have a record of receiving a letter from the hon. Member dated 11 December 2012, but we will be pleased to respond speedily if she could provide a copy.
The correct answer should have been:
2013 White Paper on Pension Reform
Written Statements
Industry Training Boards (Triennial Review)
(11 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
The coalition Government made a commitment to review public bodies, with the aim of increasing accountability for actions carried out on behalf of the state. The triennial review of the industry training boards is one of the Department of Business, Innovation and Skills (BIS) reviews of non-departmental public bodies (NDPBs) scheduled to commence during the third year of the programme (2013-14). The review will commence in July 2013. This is not a review of the policy relating to skills funding, to which the Government remain committed.
The review will be conducted as set out in Cabinet Office guidance, in two stages.
The first stage will:
Identify and examine the key functions of the industry training boards and assess the requirement for these to continue;
If continuing, then assess delivery options and where the conclusion is that a particular function is still needed examine how this function might best be delivered, including a cost and benefits analysis where appropriate;
If one of these options is continuing delivery through the industry training boards then make an assessment against the Government’s “three tests”: technical function; political impartiality; need for independence from Ministers.
If the outcome of stage 1 is that delivery should continue through the industry training boards as an NDPB, then the second stage of the project will be to ensure that they are operating in line with the recognised principles of good corporate governance, using the Cabinet Office “comply or explain” standard approach.
When completed the report of the review will be placed in the Libraries of both Houses.
ISA Qualifying Investments
(11 years, 4 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
On 13 March the Government published a consultation on including shares traded on small and medium-sized enterprise equity markets within ISA qualifying investments. This consultation sought views on the Government’s proposed method of implementing this policy.
Following the consultation, the Government today publish their response. The majority of respondents to the consultation broadly agreed with the Government’s proposal, although some suggested alternative approaches. The Government have carefully considered all the responses. On balance, they believe that their proposed approach remains the most appropriate: their reasons are set out in the summary of responses.
The Government therefore intend to introduce the necessary legislation before summer recess to amend the ISA regulations in line with the consultation proposal. They will be amended to expand the range of ISA qualifying investments to include company shares admitted to trading on a recognised stock exchange in the European economic area. This will meet the main objective of allowing company shares on SME equity markets into the scope of ISA qualifying investments.
I am placing copies of the summary of responses in the Libraries of both Houses.
Planning and Travellers
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
The coalition Government have taken a series of steps to ensure fair play in the planning system. We have tackled the abuse of planning rules by a small minority, abolished top-down targets, increased protection of the green belt and aligned the planning system for Traveller sites with that for settled housing. A more detailed list of measures we have taken is outlined in my answer of 25 April 2013, Official Report, column 1132W.
Protecting the Green Belt
Our policy document, “Planning Policy for Traveller Sites”, was issued in March 2012. It makes it clear that both temporary and permanent Traveller sites are inappropriate development in the green belt and that planning decisions should protect green belt land from such inappropriate development.
As set out in that document and in March 2012’s national planning policy framework, inappropriate development in the green belt should not be approved except in very special circumstances. Having considered recent planning decisions by councils and the planning inspectorate, it has become apparent that, in some cases, the green belt is not always being given the sufficient protection that was the explicit policy intent of Ministers.
The Secretary of State wishes to make clear that, in considering planning applications, although each case will depend on its facts, he considers that the single issue of unmet demand, whether for Traveller sites or for conventional housing, is unlikely to outweigh harm to the green belt and other harm to constitute the “very special circumstances” justifying inappropriate development in the green belt.
The Secretary of State wishes to give particular scrutiny to Traveller site appeals in the green belt, so that he can consider the extent to which “Planning Policy for Traveller Sites” is meeting this Government’s clear policy intentions. To this end he is hereby revising the appeals recovery criteria issued on 30 June 2008 and will consider for recovery appeals involving traveller sites in the green belt.
For the avoidance of doubt, this does not mean that all such appeals will be recovered, but that the Secretary of State will likely recover a number of appeals in order to test the relevant policies at national level. The Secretary of State will apply this criteria for a period of six months, after which it will be reviewed.
Revoking “Equality and diversity in planning”
Under the last Administration’s flawed rules, a sense of unfairness was embedded in the planning system. Unauthorised developments created tensions between Travellers and the settled population, while some community groups seemingly were given favoured treatment. That approach has harmed community cohesion. We want to redress the balance and put fairness back into local communities.
I appreciate that there is ongoing concern, as reflected by some hon. Members recently proposing a Private Members’ Bill on this issue.
I can announce today that the Government are cancelling the last Administration’s practice guidance “Diversity and Equality in Planning” which was issued by the Office of the Deputy Prime Minister in 2005.
This guidance is outdated, excessive in length (at 186 pages), and sends unhelpful signals about the planning process. For example, the document:
Fails to strike the correct balance between the spatial impact of a planning proposal and the background of the applicant in considering a planning application.
Encourages monitoring of local residents’ private lives—such as through intrusive lifestyle/diversity surveys.
Promotes the excessive use of equality impact assessments, which are an expensive and bureaucratic burden on the public sector.
Tells councils to translate into foreign language, which undermines integration by discouraging people from learning English, weakens community cohesion and a common British identity, and wastes taxpayers’ money.
As part of our wider consolidation of practice guidance, we do not intend to replace it.
The national planning policy framework makes it clear that councils should plan to provide wide choice of high-quality homes based on the needs of their local community. Councils should simply use their common sense in the light of prevailing legislation, planning policy and material considerations.
I hope this will send a positive message about treating all members of the community with respect and with due process, and that this Government are restoring a proper sense of fairness to the planning system.
Armed Forces Pay Review Body (Appointment)
(11 years, 4 months ago)
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The Secretary of State for Defence (Mr Philip Hammond)
I am pleased to announce that the Prime Minister has appointed John Steele as the next chair of the Armed Forces Pay Review Body commencing 1 July 2013 until 28 February 2016. This appointment has been made in accordance with the guidance of the Office of the Commissioner for Public Appointments.
Corporate Covenant
(11 years, 4 months ago)
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The Minister of State, Ministry of Defence (Mr Mark Francois)
The armed forces covenant is a priority for the Government. It places an obligation on the whole of society—including government at all levels, charitable bodies, private organisations and individuals—to support the armed forces community. The community covenant, which we launched in 2011, provides a mechanism for local authorities and other local organisations to show their commitment, and over 330 local authorities—over three quarters of the total across the United Kingdom—have now signed one.
The corporate covenant will now allow businesses of all sizes to express their support for the whole armed forces community as well.
The new corporate covenant is a written and publicised voluntary pledge from businesses and charitable organisations who wish to demonstrate their concrete support for the armed forces community. All corporate covenants include a core statement of commitment that businesses adopting the scheme sign up to, which reiterates the two key principles of the armed forces covenant. This states that:
no member of the armed forces community should face disadvantage in the provision of public and commercial services compared to any other citizen; and
in some circumstances special treatment may be appropriate, especially for the injured or bereaved.
In addition, each company or charitable organisation will be encouraged to offer support in a way most appropriate to their situation and capacity, with the pledge document including a “menu” of areas for them to sign up to. This menu covers employment support for veterans, reservists, service spouses and partners, as well as support for cadet units, Armed Forces day, and discounts for the armed forces community. For instance, in practical terms, this may mean committing to offer veterans and service spouses and partners job interviews, or providing extra leave to allow reservists to complete their training. There is also an opportunity for companies and charitable organisations to add their own commitments, based on local circumstances.
By offering companies and charitable organisations the opportunity to sign up to a range of commitments, we hope to encourage small and medium organisations as well as larger corporations, to participate in the corporate covenant.
Five key business organisations (the British Chambers of Commerce, the Business Services Association, the Confederation of British Industry, the Federation of Small Businesses, and the Institute of Directors) publically pledged their support for the corporate covenant at its launch on the eve of Armed Forces day. We will now begin a process of recruiting individual companies, both large and small across the UK, to sign up to the corporate covenant. We will report back to Parliament on the progress of this initiative later this year.
I am placing a copy of the corporate covenant and the associated concise guidance notes in the Library of the House and copies of both will also be available on the new website at: https://www.gov.uk/the-corporate-covenant.
National Adaptation Programme/Strategy for the Adaptation Reporting Power
(11 years, 4 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)
I wish to inform the House that I have today laid in Parliament both a report on the “National Adaptation Programme” and the “Strategy for the Adaptation Reporting Power”.
National Adaptation Programme
Recent extreme weather in Britain, such as the flooding last year, has brought into sharp relief just how important anticipating and managing weather extremes can be. In the case of flooding, the costs of rebuilding can run in to hundreds of millions of pounds. Essential public services such as schools and hospitals can be heavily disrupted and business—particularly small businesses—can be hit severely. Extreme weather abroad also affects us at home. For example, harvest failures abroad can push up food prices here.
The Climate Change Act 2008 requires the Government to undertake a climate change risk assessment, followed by the publication of a national adaptation programme. In January 2012 the Government published the “Climate Change Risk Assessment” (CCRA). This brought together the best available evidence, using a consistent framework to identify the main risks and opportunities related to climate change. The Government’s response to the CCRA is the first National Adaptation Programme (NAP).
The report on the National Adaptation Programme I am publishing today sets out the progress we have achieved through the programme and describes what the Government consider to be the most urgent areas for action structured around seven themes: built environment, infrastructure, healthy and resilient communities, agriculture and forestry, natural environment and business. The themes address a range of different types of risk. These include: flooding, water availability, extreme weather events and heat waves.
However, the Government cannot act alone. That is why I am delighted that we have worked so closely with so many experts from outside Government—from industry, from local government and from civil society and the report describes action by the Government and these other organisations. All the actions agreed so far are listed in a section of the report called the “Register of Adaptation Actions”. These preparations, based on the best evidence and a spirit of partnership, will help avoid costs and damage and so support the growth of a stronger and more balanced economy.
The National Adaptation Programme is primarily for England but also covers reserved, excepted and non-devolved matters. The individual devolved Administrations are developing their own programmes and the Government are working with them on areas of common interest to ensure a consistent approach in the shape and focus of all the programmes.
Strategy for the Adaptation Reporting Power
The Adaptation Reporting Power was introduced under the Climate Change Act and aims to:
ensure climate change risk management is systematically undertaken by reporting authorities;
help ensure public services and infrastructure are resilient to climate change;
monitor the level of preparedness of key sectors to climate change.
Following consultation, the strategy I am publishing today sets out a voluntary approach for the second round of reporting. I will invite those organisations which took part in the first round of adaptation reporting to provide progress updates on the actions that they set out in their reports to Government. These organisations are primarily from the energy, water and transport sectors. I will also invite a small number of organisations to report for the first time on their assessment of the current and predicted risks and opportunities from climate change to their functions, as well as their proposals and policies for adapting to climate change. I am not intending to issue directions to organisations to report under the second round of the adaptation reporting power.
I am placing these documents in the Libraries of both Houses. They will also be published on: https://www.gov.uk/government/policies/adapting-to-climate-change
Agriculture and Fisheries Council
(11 years, 4 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)
I represented the UK at the Agriculture and Fisheries Council on 24 and 25 June in Luxembourg. Richard Lochhead MSP, Alun Davies AM and Michelle O’Neill MLA also attended.
The Irish presidency’s objective for council was to obtain political agreement from member states on the four regulations that set out the rules for the common agricultural policy (CAP) over the 2014-20 financial period. An agreement was reached on a revised mandate late on Tuesday night. On the basis of that mandate, the presidency was then able to reach an outline agreement with the European Parliament on Wednesday 26 June.
The UK agreed to the mandate on the direct payments, rural development and the horizontal regulations. Overall I do not think the CAP package represents genuine reform. However, thanks to our efforts, working with other like-minded member states, it is in a much better state than the original proposals. By agreeing a deal on these regulations we have provided certainty for farmers and delivery bodies.
On the direct payments regulation, I argued strongly on the importance of flexibility for member states to deliver the Commission’s “greening” proposals, if they wish to, through national certification schemes, allowing all the regions of the UK the possibility to achieve a better balance between costs and environmental benefits than if we were to apply the measures set out in the Commission’s original proposal. On coupled support, the prospect of return to tobacco subsidies has been successfully resisted. However, it is disappointing that there is not a common set of rules for member states and there will be an opportunity to increase the use of coupled schemes. This is a backward step as EU agriculture has made good progress in phasing out subsidy linked to production. In terms of simplification there will be a mandatory active farmer test but we successfully negotiated this should only be based on assessing against a much shorter list of business types. In addition, the small farmer measure will also be voluntary though the young farmer provisions ended up as mandatory.
On rural development, the agreed regulation will enable all regions of the UK to deliver environmental benefits and rural economic growth through their rural development programmes. A solution was found which removes the threat of farmers being paid twice, once under each pillar of the CAP, for carrying out the same environmental measures. Member states will also have to spend at least 30% of their rural development budget on environmental measures. This is important to help support farmers in their crucial role in enhancing and protecting the natural environment.
On the horizontal (finance and control) regulation, there was the inclusion of some UK-inspired simplifications. This includes on areas such as audit provisions, having a longer transition period for mapping requirements under the greening measures, and a more proportionate approach on penalties. The ability to use a monthly average euro to sterling exchange rate may also help give more certainty to farmers and paying agencies who decide to use this option.
Together with Germany I abstained in the vote on the single common market organisation (single CMO). In an attempt to secure agreement with the European Parliament, changes were introduced which did not continue on the trajectory of reform. Market intervention is unnecessary, costly, and should only be used in times of genuine crisis as it has negative effects on farmers’ abilities to respond to market signals and consumer demand. While end dates have been set for production quotas for sugar beet and planting rights for vines, these have been extended beyond dates previously agreed. Nor were adequate safeguards introduced for the sugar refinery sector. This is bad for businesses and consumers, and will keep prices artificially high. In addition, I was unhappy with the move to allow the European Parliament’s involvement in decisions on reference prices and intervention prices that was part of the final agreement. I believe this does not adhere to the treaty on the functioning of the European Union principles on the balance of responsibilities between the Council and the European Parliament. It was right that the UK took a principled stand.
Throughout the negotiations, I worked closely with all of the devolved Administrations and, as a result, secured outcomes that successfully address some of their key concerns. Most importantly, I achieved a statement from the European Commission which acknowledges that all four regulations can be implemented regionally, in line with the UK’s devolution arrangements. I also obtained a smoother transition than in the Commission’s original text from historical to area-based direct payments, a switch that the devolved Administrations have yet to make. Finally, I was able to ensure that the text included a provision giving them flexibility to utilise their regional reserves to top-up payments to new entrants to farming, an issue which was particularly important to the Scottish Government.
There was one AOB point on the Council agenda from a number of member states who had been affected by flooding in central and eastern Europe. The Council noted concerns on the impact on agriculture in these countries and noted that there were a number of existing tools available that member states could draw on to provide additional support in such times of crisis.
Foreign Affairs Council/General Affairs Councils
(11 years, 4 months ago)
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The Minister for Europe (Mr David Lidington)
I attended the Foreign Affairs Council (FAC) on 24 June and the General Affairs Council (GAC) on 25 June. The Foreign Affairs Council was chaired by the High Representative of the European Union for Foreign Affairs and Security Policy, Baroness Ashton of Upholland, and the General Affairs Council by the Irish presidency. The meetings were held in Luxembourg.
Commissioners Hedegaard (Climate Action), Ftile (Enlargement and European Neighbourhood Policy) and Piebalgs (Development) were in attendance for some of the discussions at the FAC.
Commissioners Šefcovic (Inter-Institutional Relations and Administration), Lewandowski (Financial Programming and Budget), and Füle were in attendance for some of the discussions at the GAC.
Foreign Affairs Council
A provisional report of the meeting and conclusions adopted can be found at: http://www.consilium.europa. eu/uedocs/cms_data/docs/pressdata/EN/foraff/137593.pdf.
Introduction
Baroness Ashton raised the outcome of the elections in Iran and assured Ministers that she would seize any opportunity for greater engagement on the nuclear issue.
Baroness Ashton updated the Council on the situation regarding Turkey, expressing concern about the Government’s and police’s handling of the recent protests while stressing the importance of the EU remaining engaged.
Eastern Partnership
Baroness Ashton noted the good progress made in the association agreement (AA) negotiations with Armenia, Georgia and Moldova, and the real prospect that they would be initialled at the eastern partnership summit in Vilnius in November. The European External Action Service (EEAS) and Commission maintained regular and intense dialogue with Ukraine, underlining the need for the December 2012 FAC conclusion benchmarks to be met.
I underlined that the UK wanted a successful summit and hoped that some of the AAs could be signed/initialled at Vilnius, assuming the documents were technically ready and remaining conditions met. The UK wanted to move forward with Ukraine, but significant concerns remained. In this climate signature at Vilnius could not be guaranteed, so the EU would need to consider alternative measures of success.
Climate Diplomacy
Baroness Ashton and Commissioner Hedegaard introduced the second FAC discussion of climate diplomacy following the previous discussion in July 2011. Climate change was a core foreign policy issue given its security, economic and physical impacts. The EU had played a key role in the agreement at the UN climate change conference in Durban in 2011 thanks to our ability to speak with one voice and build the right alliances with over 100 progressive developing countries.
Member states strongly supported the EEAS and Commission work, reflection paper and proposed way ahead. I emphasised that the commitments from Durban were only achievable with political support at the highest levels so, with a critical two years ahead, we needed to raise the issue of climate change at the strategic level, across the EEAS, Commission and member states. Conclusions were agreed and it was decided that the FAC should return to this next year.
Middle East Peace Process (MEPP)
Member states agreed on the importance of US Secretary of State John Kerry’s current efforts and discussed the best ways for the EU to support these. Member states’ views varied as to the most effective use of conclusions this month, which were not agreed. Following the debate, the high representative reaffirmed the EU’s commitment to a two-state solution and stressed that the EU fully supports the current efforts of the US in support of the resumption of direct and substantial negotiations. The FAC will revert to the issue in July.
Afghanistan
Over lunch, NATO Secretary-General Rasmussen shared views about Afghanistan’s development post-2014, and how the international community should continue to support the country after military draw-down. Ministers were cautiously optimistic about the recent opening of a political office in Qatar for peace negotiations with the Taliban, and pressed for all stakeholders to participate constructively in the process. The Council agreed that, in co-ordination with other international players such as NATO and the UN, the EU should agree a comprehensive strategy for its engagement with Afghanistan post-2014. This would complement the EU-Afghanistan co-operation agreement on partnership and development, which would hopefully be finalised soon.
I underlined the importance of the EU continuing to send a strong signal of support to Afghanistan beyond 2014 and of prioritising funding for it. EUPOL should be a key part of this, following a strategic review in the autumn. Conclusions were agreed which focused particularly on urging progress on fulfilment of Afghanistan’s commitments under the Tokyo mutual accountability framework and on preparations for the elections in 2014. They also re-stated the EU’s commitment to strengthening civilian policing in Afghanistan, including beyond the transition period.
Southern Neighbourhood
In Baroness Ashton’s view, overall, the EU had responded to the Arab spring in a comprehensive way that underlined the strategic importance of the region, including through taskforces, enhanced financial support and close contact with civil society. I emphasised the need to continue to evaluate the effectiveness of our engagement, including via a rigorous country-by-country analysis. This would guide decisions on how to calibrate EU support. I welcomed the EEAS and Commission’s focus in their recent letter to the European Council on effective public messaging and enhanced co-ordination. The Commission’s sectoral DGs in particular should adhere more closely to the overall European neighbourhood policy framework.
Baroness Ashton also reported on her recent visit to countries in the region, including Egypt, Iraq, Jordan and Lebanon. This had left her particularly concerned at the prospect of major protests in Egypt on 30 June. She had urged President Morsi to reach out to the opposition.
Syria
On Syria, there was broad agreement on the need for the EU to focus on support to the Geneva II process. I set out how the G8 had agreed a strong statement in support of a political settlement, and welcomed the EEAS/Commission communication on the EU approach to Syria. The EU had stepped up by pledging €400 million as part of the overall G8 pledge of $1.5 billion for the UN appeal. But there was still a huge shortfall. Given the unprecedented scale of the humanitarian crisis, I urged the EU to raise that amount to $l billion, and for member states to match that with a further $l billion.
AOB
On Somalia, I raised last week’s terrorist attack on the UN compound in Mogadishu under AOB. The Somali National Security Forces and the African Union Mission in Somalia (AMISOM) had been a central part of the response, demonstrating the importance of continued EU support to AMISOM. I emphasised that the technical issues on funding needed to be resolved.
Also under AOB, Sweden raised the recent Arctic Council meeting and the EU’s efforts to become an observer.
Other business
Ministers agreed without discussion a number of others measures, including:
The Council adopted the agenda for the EU-Gulf Co-operation Council joint council and ministerial meeting, to be held on 30 June in Bahrain.
The Council adopted guidelines on the promotion and protection of all human rights of lesbian, gay, bisexual, transgender and intersex persons, on the basis of existing international legal standards in this area.
The Council adopted EU guidelines on the promotion and protection of freedom of religion or belief.
The Council allocated EUR 5 million from the EU budget in support of physical security and stockpile management activities to reduce the risk of the illicit trade in small arms and light weapons and their ammunition in Libya and its region.
The Council decided to suspend the application of the EU travel ban on Vladimir Makey, Belarusian Minister of Foreign Affairs, with a view to facilitating diplomatic contacts between Belarus and the EU and its member states. This does not imply any change in the EU’s policy of critical engagement with Belarus.
The Council amended regulation 881/2002 imposing specific restrictive measures directed against persons and entities associated with the al-Qaeda network. Changes were made to implement decisions taken at the UN.
The Council prolonged the mandate of Mrs Patricia Flor, EU Special Representative for central Asia, until 31 October 2014.
The Council extended the mandate of the EU Special Representative for the southern Mediterranean, Mr Bernardino Leon, until 30 June 2014.
The Council took note of the sixth implementation report of the EU action plan for Afghanistan, covering the period from March 2012 until March 2013.
The Council adopted the EU priorities for the 68th session of the General Assembly of the United Nations that will convene from 17 September 2013.
General Affairs Council
A provisional report of the meeting and conclusions adopted can be found at: http://www.consilium.europa. eu/uedocs/cms_data/docs/pressdata/EN/genaff/137614.pdf.
The 25 June GAC focused on EU enlargement and preparation for the 27-28 June European Council. There was also a discussion on a rule of law initiative.
In addition, there was a meeting with the President of the European Council, Herman van Rompuy, which also focused on the June European Council.
Enlargement
The FAC and GAC both discussed the good progress that Serbia and Kosovo had made in recent months, including in reaching and starting to implement the historic April 2013 agreement between the two sides. On the basis of this progress in meeting the conditions set out in December, the GAC recommended that the June European Council: agree to open accession negotiations with Serbia in January 2014 at the latest; agree a negotiating framework should be drawn up, which will also address the normalisation of relations between Belgrade and Pristina; and agree that pre-screening work on the acquis is started, particularly focused on justice and home affairs reform issues. The GAC also asked the Commission and HR/VP to report further on implementation of the April agreement by December to inform final decisions on the adoption of the negotiating framework and the start of accession negotiations. The GAC started procedures for member states to adopt the necessary texts to open negotiations on a stabilisation and association agreement with Kosovo.
Turkey
The GAC agreed in principle the EU’s common negotiating position on chapter 22, which looks at regional policy, but delayed the inter-governmental conference (at which the chapter will be formally opened) until the autumn. The presidency agreed to write to the Turkish Government to clarify the situation. They did so on 25 June.
Proposal for an initiative on Democracy, Fundamental Values and the Rule of Law
Denmark, Finland, Germany and the Netherlands sent a letter to the President of the European Commission, Jose Manuel Barroso, asking for a discussion on their initiative for a new mechanism to safeguard fundamental values of the Union in member states and a greater role for the European Commission in safeguarding these. At the GAC on 22 April further discussion was scheduled for this meeting.
Consequently in this meeting the signatories of the letter to President Barroso called again for the Commission to propose options for a specific mechanism.
I highlighted that this issue is already being discussed in the Justice and Home Affairs Council and there is a danger of confusion if the issue is pursued in separate Councils formations. There was also a risk of duplication with the work of the Council of Europe in relation to human rights so we should guard against setting up new initiatives that could be duplicative or otherwise unnecessary.
Preparation of the 27-28 June European Council
The GAC discussed the 27-28 June European Council with the President of the European Council, Herman Van Rompuy. Discussion focused on how to promote growth and tackle youth unemployment. There was also a discussion on strengthening economic and monetary union (EMU) which largely focused on the timetable for progress on this issue. I stressed that action on youth unemployment or otherwise should not prejudge the unresolved multi-annual financial framework (MFF) negotiations. We need to establish what resources will be available before committing to programmes that could be undeliverable. On EMU, I also emphasised that the rights of all 27 member states needed to be respected as work in this area progressed.
The GAC also approved the reports on the European semester and recommendations on national reform programmes.
The Multi-annual Financial Framework (MFF)
The GAC discussed the MFF with the President of the European Council, Herman Van Rompuy, following a presentation on the progress of the trilogue negotiations between Ireland (as President of the Council), the European Parliament and the European Commission.
I highlighted again that there was little room for further manoeuvre within the mandate agreed at the February European Council which any deal must respect.
Mitochondria Replacement
Care and Support System
(11 years, 4 months ago)
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The Minister of State, Department of Health (Norman Lamb)
On Friday 28 June, the Government published draft national eligibility criteria, as part of a discussion document describing eligibility in the context of the new care and support system and indicating the impact of setting the criteria in regulations. We hope this will inform debates on part 1 of the Care Bill. We will continue to engage with stakeholders and gather evidence to support the development of the draft regulations before a formal consultation next year.
The discussion document, including the draft regulations, has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.
The Government’s White Paper “Caring for our future: reforming care and support” set out our long-term programme to reform care and support. The introduction of the Care Bill into Parliament is a major step in taking forward these reforms, as it will modernise social care legislation and put in place a system that promotes people’s well-being.
One of the important new changes we are introducing through these reforms is establishing national eligibility criteria for adult care and support. These will set the minimum threshold for people’s needs for care and support which must be met by local authorities in all areas. This is to be achieved through the draft regulations which we propose will be made under powers in clause 13 of the Care Bill.
Lasting Powers of Attorney (Digitisation)
(11 years, 4 months ago)
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The Parliamentary Under-Secretary of State for Justice (Mrs Helen Grant)
In the response to the consultation “Transforming the Services of the Office of the Public Guardian”, published on 23 January 2013, the Government said that they would consult further on their proposals for changes to the process for making lasting powers of attorney. This is part of the Office of the Public Guardian’s commitment to deliver online services which maximise the benefits to customers of a simpler, clearer and faster service.
We are now considering the next phase of the OPG’s transformation programme and I am pleased to announce that the Department intends to publish a consultation paper shortly containing high-level proposals about how a fully digital process for creating and registering lasting powers of attorney might be achieved. Our intention is to make a final decision in 2014 on whether legislation to enable the making of a fully digital lasting power of attorney should be made.
As we develop these proposals further, the Department will engage with a range of interested organisations to ensure we address any concerns.
Criminal Justice System (Digitisation)
(11 years, 4 months ago)
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Te Minister for Policing and Criminal Justice (Damian Green)
On 28 June I published “Transforming the CJS: A Strategy and Action Plan to Reform the Criminal Justice System”. The action plan builds on recent criminal justice reforms and contains a number of steps for each part of the system to take to increase its efficiency, effectiveness, and transparency.
It also sets out how we will build on the innovation of recent years—for example, by completing the process of digitising the criminal justice system, transforming it from a fragmented paper-based system to a digital service which meets the standards the public rightly expect from a modern public service.
I have established a criminal justice board made up of senior leaders from across the criminal justice system who have provided their advice and support in shaping this plan, and who have collectively committed to its delivery.
Copies of the paper have been placed in the Vote Office and in the Printed Paper Office. The document is also available online, at gov.uk
(https://www.gov.uk/government/publications/transforming-the-criminal-justice-system).
Thameslink
(11 years, 4 months ago)
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The Secretary of State for Transport (Mr Patrick McLoughlin)
I would like to inform the House that a contract to design, build, finance and maintain a fleet of 1,140 new carriages for use on the Thameslink rail line has been awarded to Siemens plc and Cross London Trains, a consortium comprising Siemens Project Ventures, Innisfree Ltd and 3i Infrastructure plc.
Siemens expects the award of the rolling stock project will create up to 2,000 jobs across the UK supply chain in component manufacturing, the construction of two new depots and subsequent maintenance.
The deal is part of an overall circa £6 billion infrastructure and rolling stock upgrade to radically increase capacity on one of Europe’s busiest stretches of railway improving connectivity and reliability across the capital and the south-east.
The deal is expected to see the first new train running on the network by the start of 2016. The introduction of the full fleet by the end of 2018 will enable a 24 trains per hour service operating through the capital at peak times. A new interchange at Farringdon will give Thameslink passengers access to Crossrail for east-west journeys across London.
The new generation of electric commuter carriages will release existing carriages for use elsewhere on the network, particularly as further routes are electrified, for example in the north-west of England and the Thames Valley commuter lines.
The jobs created by the rolling stock project are in addition to those created by the Thameslink infrastructure works which are currently under way. At the peak of construction activity it is expected that around 3,000 people will be directly employed on the Thameslink programme infrastructure works with as many again employed in related jobs in the wider community.
Confirming the completion of this important deal is good for transport, good for the economy, and good for growth.
Pensions Charges
(11 years, 4 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I am pleased to announce that later today we intend to lay draft regulations to prevent the use of consultancy charges in automatic enrolment schemes. This will apply to both personal and occupational pension schemes providing money purchase benefits.
Under the draft regulations, a scheme with a provision allowing amounts to be deducted from a jobholder’s pension pot or contributions will not be an automatic enrolment scheme if that amount is to be paid to a third party under an agreement between the employer and the third party.
These draft regulations will not affect pension schemes where there was a legally enforceable agreement in place between an employer and a third party before 10 May 2013.
In my statement on 10 May 2013, I announced the Government’s intention to publish a consultation in the autumn following the publication of the Office of Fair Trading’s market study on charges in defined contribution workplace pensions. As part of this, I intend to consult on extending the prohibition on consultancy charges to all qualifying schemes. Regulations could be introduced using the power in clause 35 of the Pensions Bill, subject to the successful passage of the Bill currently before the House.
Work Capability Assessment
(11 years, 4 months ago)
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The Minister of State, Department for Work and Pensions (Mr Mark Hoban)
Today the Government will publish a call for evidence as part of the fourth independent review of the work capability assessment (WCA), carried out by Dr Paul Litchfield.
The first three independent reviews were carried out by Professor Malcolm Harrington, and published in November 2010, November 2011 and November 2012. In the third review, Professor Harrington noted that much progress had been made, and that significant and lasting improvements were being put into place.
This call for evidence will be one of several methods used to gather information during the review. Evidence submitted will be used to inform Dr Litchfield’s report to the Secretary of State for Work and Pensions, which will be laid before Parliament before the end of 2013.
As this is the fourth independent review, this year’s call for evidence focuses on the impact of previous reviews, seeks new evidence and establishes where further improvements are needed.
The call for evidence runs until 27 August 2013.
I will place a copy of the call for evidence in the Libraries of both Houses. It will also be available on the Government’s website (www.gov.uk/DWP) later today.
House of Lords
Leveson Report
(11 years, 4 months ago)
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Lord Soley
To ask Her Majesty’s Government whether they will publish, on a regular basis, the number of times since the publication of the Leveson Report the Prime Minister or other Ministers responsible for bringing forward legislation on its recommendations have met editors, owners or senior executives of newspapers, and what was discussed on each occasion.
Lord Wallace of Saltaire
My Lords, as was made clear in the Written Answer given to the noble Lord on 6 June, details of Ministers’ meetings with editors, proprietors and senior media executives are published on a quarterly basis and can be accessed on departmental websites on gov.uk.
Lord Soley
I am not sure whether I am grateful for that Answer. I tabled my Written Question in early May. It took four weeks to get an Answer, which came only after I had tabled this Oral Question. I cannot imagine how that happened.
I put it to the Minister that what is being suggested about looking at Cabinet documents is not in either the spirit or letter of the Leveson report, which says very clearly in recommendation 83 that these ought to be published on a quarterly basis and details given—not intimate details—of what was discussed and so forth. They are not there, nor are they likely to be. Frankly, more and more of us are taking the view that the press is so powerful that it can defy the will of Parliament.
Lord Wallace of Saltaire
My Lords, I have that section of the Leveson report in front of me. I note how much the fact and general nature of any discussion of media policy issues at these meetings raises questions of how far we go in that direction, including—as is discussed in my briefing—whether the exchange of text messages ought to be included in that. As the noble Lord will know, so far we have included the existence of meetings and the record of meetings between January and the end of March this year, which should be published within the next week.
Lord Fowler
My Lords, is not the position on Leveson that almost four months ago, in March, Parliament overwhelmingly agreed a way forward that protected the freedom of the press but also protected the public from the abuse of press power? Is the Minister aware that many people are suspicious of the long delay in implementing those proposals? We believe that we have had the debate and that, basically, we should now just get on with it.
Lord Wallace of Saltaire
My Lords, the Government are well aware of the strength of feeling on all sides. Some elements of the agreement of 18 March have now been implemented, as the noble Lord will know, including within the Crime and Courts Bill and the Enterprise and Regulatory Reform Bill. The noble Lord will also know that on 13 April the Press Standards Board of Finance petitioned the Privy Council with its own draft royal charter, which is now being considered. When it has been considered, the conclusions will be published, and the question of the submission of the Government’s own royal charter will come up again.
Lord Stevenson of Balmacara
My Lords, the Minister will be aware that there is a meeting of the Privy Council on 10 July. On 18 March, as has just been said, Parliament agreed to send the royal charter to the Privy Council in time for the May meeting. Could the Minister confirm that Parliament’s Leveson-compliant royal charter will be submitted to the Privy Council for approval on 10 July?
Lord Wallace of Saltaire
My Lords, my briefing says that it is not appropriate for the Privy Council to consider more than one royal charter at a time on the same issue. The noble Lord may consider that the Press Standards Board of Finance has therefore been extremely clever in what it has done and may draw his conclusions from that—and that accounts for some of the delay.
Baroness O'Neill of Bengarve
My Lords, in March, in the debate to which the noble Lord, Lord Fowler, has referred, there was an understanding that there was a cross-party agreement about the way forward on the Leveson recommendations. What is the state of that agreement now?
Lord Wallace of Saltaire
My Lords, there is a cross-party agreement on the way forward. However, as those who have lived through this debate in even more detail than I have will recall, we are attempting to build a much tougher self-regulatory principle of regulation for the press with the support of a royal charter. This is a very delicate process. Pulling the press along with a tougher system of self-regulation is not proving as easy as it might.
Baroness Bonham-Carter of Yarnbury
My Lords, since the DCMS consideration of consultation responses to the royal charter sponsored by the Press Standards Board of Finance has finished, when will my right honourable friend the Secretary of State publish her advice about whether that royal charter should go forward to the Privy Council? I should point out that no less a person than Sir Tom Stoppard has said that a free press needs to be a respected press. It is about time that that was so.
Lord Wallace of Saltaire
My Lords, we are well aware of the battle between the press and politicians, with deep and entrenched mistrust on both sides, which is not doing much good either for the reputation of the British press or that of British politics. I have to admit that the subtlety of the process whereby the Privy Council considers royal charters is something that I ought to have dug into much more deeply in preparing for this Question. I shall have to write to the noble Baroness on the timing of the consideration of both these royal charters.
Lord Grocott
May I gently suggest to the Minister that if he sees this as essentially a problem between the press and politicians, he misrepresents or misunderstands where the whole genesis of the Leveson inquiry came from? It came from a profound mistrust between the press and the public. Surely, the job of democratically elected politicians is to do their utmost, preferably on an all-party basis, to reflect the wishes and concerns of the public.
Lord Wallace of Saltaire
My Lords, the Government well understand the strength of feeling among the public on the misuse of press freedom in recent years. We have not yet reached the end of the story—we are still moving and there are some hiccups on the way.
Lord Low of Dalston
My Lords, what is the procedure for determining the precedence as between the two royal charters which are going before the Privy Council?
Lord Wallace of Saltaire
My Lords, the Press Standards Board of Finance submitted its petition to the Privy Council before the Government had presented their own royal charter. My understanding is that that therefore gives it precedence over the Government’s royal charter, but that the consideration of the draft royal charter nominated by the Press Standards Board of Finance should shortly be finished, and at that point we will consider how we move further.
Lord Forsyth of Drumlean
My Lords, will my noble friend explain how the Government got behind in the queue on the presentation? Will he also explain how they ended up second in the queue to the Privy Council on a matter of this importance?
Lord Wallace of Saltaire
My Lords, I suspect that it was the result of some very fast footwork by the press board.
Lord Richard
My Lords, is the noble Lord seriously telling the House that the order in which the Privy Council considers these matters is that in which they are submitted to that body? If that is so, it is the most incredible position. Anybody could submit an application sharpish, which would then hold up consideration of all the major issues which might be submitted by other people. Is there no way in which the Privy Council can draw up a list of priorities of what it wishes to consider first, or is it solely bound by the fact that whoever gets his head through the door first is considered first? That is ludicrous.
Lord Wallace of Saltaire
My Lords, the noble Lord expresses his amazement extremely well. I am very willing to take back the strength of opinion in this House and ask in more detail exactly what the procedure should be.
EU Treaties: Justice and Home Affairs Opt-Outs
(11 years, 4 months ago)
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Lord Foulkes of Cumnock
To ask Her Majesty’s Government when they expect to make a decision regarding Justice and Home Affairs opt-outs under Protocol 36 to the European Union treaties.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, the Government are carefully considering the block opt-out available to us under Protocol 36 to the treaties. On 15 October last year, the Home Secretary announced that the Government’s current thinking was to exercise the opt-out and then seek to rejoin measures that are in the national interest. Further information will be made available to Parliament in due course.
Lord Foulkes of Cumnock
My Lords, will the Minister confirm that the Government have been carefully considering this matter for months and months and that the all-party European Union Select Committee unanimously said that the proposal would be a danger and a threat to national security and would undermine our fight against international crime? According to the leaked memo to the Daily Telegraph, it is a fight between his party and the other party in the coalition. They cannot make up their minds. Surely the question of national security and the fight against crime should rise above these party differences. Will he use all his influence to get the members of the Government to think again about this important issue?
Lord McNally
My Lords, the passion of the noble Lord, Lord Foulkes, is explanation in itself of why the Government are taking such care and time to look at matters that he himself has acknowledged relate very much to national security and the national interest. That is precisely why the Government are taking their time in making these decisions.
Lord Hannay of Chiswick
My Lords, does the Minister recognise that the Government have already overrun the two-month period in which they are meant to respond to reports from your Lordships’ committees —in this case, the European Union Select Committee? If he does, can he say when they are going to respond? Will he perhaps reflect on the possibility that the national interest might be served best by following the advice given by the committee: namely, that there was no convincing case for triggering the opt-out at all?
Lord McNally
I agree with both noble Lords that the European Union Committee’s report was, as one would expect, extremely thorough and thought-provoking: hence the fact that the Government are studying it very carefully. We have written to the noble Lord to beg for a little more time to produce a response. Perhaps I may therefore give him a response with which I am sure he is well familiar: the response will be coming shortly.
Lord Marks of Henley-on-Thames
My Lords, in the event that the Government were to exercise the opt-out, what improvements to the European arrest warrant system in particular would in their view be desirable in order to opt back in, at least to the arrangements for combating serious cross-border crime?
Lord McNally
My Lords, that is a good example of why we are giving careful thought to this array of measures. The European arrest warrant has played an important role in speeding up extradition arrangements between countries and represents the type of practical co-operation that we should all support. However, despite its success, the use of the warrant for trivial offences has damaged its reputation with many, and lengthy pre-trial detentions have also caused problems in some cases. It is those areas of proportionality and practicality in using the warrant that we are trying to address, both in discussions with our European partners and in looking at the process as it affects our own dealings with this warrant.
Baroness Corston
My Lords, does the Minister accept that it does not require what he calls “careful time” to consider the European arrest warrant? Criminals are not fools. If we opt out, they will go and live in Spain, the way they used to years ago, beyond the reach of British law. Given that there is much greater pressure in view of international terrorism, why does it take any time at all to consider this issue?
Lord McNally
It takes time because it is part of a range of issues. Nobody is talking about jettisoning all these measures, but some of the proposals in the Protocol 36 decision were written when reference to the European Court of Justice was not in mind. There is a variety of technical reasons why careful study is warranted. I assure the House that the Government will continue, as they have done right through their period of office, to address opt-ins and opt-outs on the basis of national security and national interest. When we have our package to bring before the House, we will ask your Lordships to make decisions on that basis.
Baroness Smith of Basildon
My Lords, opting out of Protocol 36 means, as we have heard, opting out of the European arrest warrant. Last week, the Government had to make a Statement significantly revising their figures for the number of criminals who have successfully been returned to the UK under the European arrest warrant agreement. The figures have been wrong for the last three years. Does the Minister believe that we will be more successful or less successful in bringing criminals to justice if we opt out?
Lord McNally
Quite frankly, no. As I indicated in my answer to my noble friend Lord Marks, our assessment is that the European arrest warrant has many many benefits, which we want to profit from. However, in practice, in some places it has shown a lack of proportionality and in other places it has imposed on British citizens long periods of pre-trial detention. It is those matters that we are dealing with. This is not just a tick-box issue; it is a matter of carefully examining a range of proposals. We are greatly indebted to the Lords committee for its analysis, which will play an important part in the decisions that we make.
Baroness O'Loan
My Lords, if we do exercise the opt-out from the European arrest warrant, one consequence will be that we will have no extradition arrangements with a huge range of states, most of which have repealed the original extradition legislation. If the Government are contemplating an opt-out, are they currently in negotiation with those Governments to see whether their legislative programmes would enable the passing of legislation either to allow us to go it alone or to allow the lengthy period of negotiation that would be necessary to enter into another arrangement on an arrest warrant?
Lord McNally
The noble Baroness puts forward one of the very real problems of a total opt-out: that we would be left with a whole series of bilateral negotiations and no guarantee of success. The more this question has unfolded, the more we see the wisdom of the Government’s considered discussion and thought about what to bring forward to both Houses and that it is fully justified.
Iraq: UN Special Adviser
(11 years, 4 months ago)
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Lord Maginnis of Drumglass
To ask Her Majesty’s Government what discussions they have had with the United States, other allies, and within the United Nations, regarding the successor to Martin Kobler as UN Special Adviser in Iraq, and about that individual’s responsibility for Camp Ashraf.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, officials in New York and at our embassy in Baghdad have had informal discussions with international partners about the appointment of a new special representative of the Secretary-General for Iraq. The UN has a critical role to play in helping the Government of Iraq to address the challenges facing the country, and we hope that a new United Nations Secretary-General special representative will be appointed as soon as possible.
Lord Maginnis of Drumglass
My Lords, I do not know whether to be heartened or disheartened by that Answer. The reality is that Martin Kobler has been an absolute failure. He has been compromised by the fact that his wife is an ambassador to the Iraqi Government, and it appears that effectively no one—not the United Nations, the United States or the United Kingdom—is concerned about the sequence of attacks on Camp Liberty, condoned, it would appear, by the Iraqi Government. After moving people from Camp Ashraf to Camp Liberty, when are we going to see some compassion for the 3,000-plus Iranian refugees?
Baroness Warsi
I understand the strength of the noble Lord’s feeling on this matter, which is one on which we have had discussions in the past. We do not accept the criticisms of Martin Kobler. Indeed, in his latest report on Iraq, the United Nations Secretary-General made specific reference to and paid tribute to the work of Martin Kobler. We believe that a new representative needs to be appointed quickly and that a huge range of issues needs to be dealt with by the head of the UN once that appointment is made.
In relation to his comments on Camp Liberty, the noble Lord is aware that the UNHCR is overseeing Camp Liberty. It is its intention to ensure that various countries around the world accept these individuals from Camp Liberty. I understand that some countries have now come forward: Albania has offered to take 210 and Germany is relocating about 100. Of course, we are assessing certain individuals who in the past have been given refugee status in the United Kingdom.
Baroness Turner of Camden
Is the Minister aware that the residents who have been transferred to Camp Liberty from Ashraf have been subjected to missile attacks and other pretty awful conditions, which are so bad that they are seeking a return to Ashraf? The influence of Mr Kobler has not been exercised on their behalf and something should be done to assist these very unfortunate people.
Baroness Warsi
I am aware of two specific attacks; namely, one that took place in February of this year, which resulted in, I think, nine deaths, and one that took place in June of this year, which I understand resulted in the deaths of two residents. However, on both occasions, Iraqis outside the camps lost their lives as well. We have to see this in the context of, sadly, the rising level of violence in Iraq: for example, in May, 1,000 people lost their lives. I am also aware that responsibility for the attacks has now been claimed by the Mukhtar Army, which is an individual militia group and not the Government of Iraq.
Lord Eden of Winton
My Lords, surely we cannot accept the context to which my noble friend was referring as any form of justification for what has been taking place in Camp Liberty. Is there not ample evidence that there has been widespread abuse, violence and killings over a long period? How much longer will this go on before action is taken by the two Governments concerned—the United States and the United Kingdom—the United Nations and the Government of Iraq? Is it not to be condemned that the word of President Maliki is not to be trusted at all? He gave commitments, which he has not honoured. When will that happen?
Baroness Warsi
I hear the point that my noble friend is making. Noble Lords may be aware that there is a long history to this matter. The particular group, Mujaheddin e Khalq, which originally was in Camp Ashraf and was moved to Camp Liberty, is being assessed by the UNHCR for relocation. Concerns have been raised about the conditions within the camp—concerns about water, sanitation and electricity. This is not to justify the conditions in those camps but they are similar to, if not sometimes better than, some of the conditions that people face in Baghdad. It therefore has to be viewed in the context of the country in which we are operating.
Lord Clarke of Hampstead
My Lords, I am sure the Minister is aware that ever since the evacuation of people from Camp Ashraf to Camp Liberty, which I suppose is the most misnamed camp in the world— I have often described it as a concentration camp—we have had reports of these goings-on and the conditions that have been mentioned. The Minister just said that the Government are trying to advise the Iraqi Government so that they get credibility. Would they not get more credibility if they were to allow the media, lawyers and doctors to go into the camp, which has been denied to outsiders? There is no confidence in Kobler, whatever the Minister may say today. People outside who have been watching this situation know that the United Nations has been pretty poor. Will she please use her best endeavours to get the doors open to the outside world so that we can see what is going on and hear the truth?
Baroness Warsi
My Lords, because of noble Lords’ concerns I have raised this matter with officials, who I understand are currently in discussions with members of other embassies. This is a UN lead and it is important, therefore, that whatever we do we do in conjunction with other countries. I understand that they are now looking at potential dates when members of various embassies could go together to the camp. However, this has to be done in conjunction with the security concerns that there are in Baghdad at the moment.
Roads: Road Safety
(11 years, 4 months ago)
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Lord Colwyn
To ask Her Majesty’s Government what steps they are taking to improve road safety in the United Kingdom.
Earl Attlee
My Lords, we are taking forward the measures set out in the Strategic Framework for Road Safety. Parliament has approved a new drug-driving offence and we will consult on the relevant limits shortly. We intend to publish a Green Paper on young drivers later this year. Additionally, subject to parliamentary approval, we will introduce fixed penalties for careless driving such as poor lane discipline and tailgating.
Lord Colwyn
I thank my noble friend for that informative Answer to a wide-ranging Question. He talked about a new drug-driving offence. Does he have any information on the approval and availability of the new testing devices? May I tempt my noble friend to comment on safety for cyclists? I declare an interest as a regular cyclist and a member of the All-Party Cycling Group. I have been knocked off my bike by a white van and have had a near-death experience with a falling 12-foot plank when cycling under scaffolding at Millbank House. In view of the fact that cycle journeys are increasing, what more can be done to improve safety and what progress has been made with the introduction of cycle superhighways?
Earl Attlee
My Lords, I am pleased to say that, at last, the Home Office has approved the drug testing equipment which will enable the police to move on to requiring a blood sample to be given. This is in accordance with recommendations from the North report. The Government are extremely concerned about cycle safety. We are pleased to see the increase in the amount of cycling taking place. However, the difficulty is that we are seeing an increase in the number of casualties and we do not fully understand why that should be. There is an increase because of the rise in the number of cyclists and the amount of cycling, but the increase in casualties is still too much and we are working hard on it.
Lord Haskel
My Lords, in the announcement that the Government made last week regarding the infrastructure, I could find nothing to help with the safety of cyclists. Did I miss anything or was there something in that announcement?
Earl Attlee
My Lords, I do not think the noble Lord misses much at all. We have recently launched a Think Cyclist safety campaign and have made £35 million available to tackle dangerous junctions for cyclists across the country. The £35 million is part of the additional £107 million of investment in cycling that the Government have announced since February last year.
Lord Bradshaw
My Lords, in 2004 this House passed the Traffic Management Act, Part 6 of which was designed to enable local authorities to take action against matters such as cycling on the pavement, jumping traffic lights and all manner of moving traffic offences. That part has not been implemented by the Minister’s department. It languished under the party opposite and continues to languish now.
Earl Attlee
My Lords, as my noble friend Lord Colwyn said, this is quite a wide-ranging Question. I am afraid that I am not aware of that particular difficulty. However, I shall write to my noble friend about it.
Baroness Finlay of Llandaff
My Lords, in the light of the 10% increase in deaths and the 4% increase in serious injuries in the past year in cycle accidents, will the Government consider a 20 miles per hour limit in certain urban areas? What are the Government doing to work with border agencies on the issue of drivers coming from outside the UK whose mirrors are positioned so that they cannot see cyclists on the road? I refer in particular to the drivers of lorries coming from Europe.
Earl Attlee
My Lords, the department has made it simpler for councils to put in 20 miles per hour zones and limits and to install so-called Trixi mirrors to improve the visibility of cyclists at junctions. One of the problems is that sometimes a lorry driver cannot see a cyclist. I do not think that the problems with cyclists in London involve foreign trucks. There are issues with left-hand drive trucks causing accidents, particularly on motorways, but I have not been told that they cause problems for cyclists.
Baroness McIntosh of Hudnall
My Lords, taking into account what has just been said about the increase in casualties, will the noble Earl take a view on the fact that, so far as I know, cyclists are the only road users who do not have to undergo any kind of compulsory test? Would it not be in the interests of all road users, but particularly cyclists, if more effort was put into ensuring that those who go on to the roads on bicycles are properly trained?
Earl Attlee
My Lords, there is the Bikeability programme, the full details of which I do not have before me. The difficulty with a compulsory scheme is that it would probably have a negative effect on cycling. As the benefits of cycling are so great and far exceed the risks, we would not want to go down that route.
Baroness Oppenheim-Barnes
My Lords, can my noble friend tell the House how many cyclists have been prosecuted in the past year for going through red lights, for ignoring pedestrian crossings and for exceeding the speed limit?
Earl Attlee
My Lords, I am afraid I do not know the answer, but I know that it is a matter of great interest to your Lordships. It is for local police forces to decide how they police cycling offences.
Marriage (Same Sex Couples) Bill
(11 years, 4 months ago)
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Baroness Stowell of Beeston
That the amendments for the Report stage be marshalled and considered in the following order:
Clauses 1 to 4, Schedule 1, Clauses 5 to 10, Schedule 2, Clause 11, Schedules 3 and 4, Clause 12, Schedule 5, Clause 13, Schedule 6, Clauses 14 and 15, Schedule 7, Clauses 16 to 19.
Syria and the Middle East
(11 years, 4 months ago)
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Baroness Warsi
That this House takes note of the situation in Syria and the Middle East.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, I would like to start by thanking the House for hosting this important debate on Syria and the wider Middle East. I am aware that Syria is a topic which comes up regularly both in the Chamber and, indeed, with noble Lords outside the Chamber. It is an issue in which people have a deep interest and on which many noble Lords have specific expertise. The debate is therefore timely and important.
The conflict in Syria continues to worsen. As we speak, the people and the city of Homs are being subjected to a renewed and brutal onslaught. The humanitarian situation continues to deteriorate by the day, and the gulf between the regime’s priorities and those of the Syrian people grows ever wider. It is also clear that the murder, violence and repression with which demands for democracy and accountability have been met have serious implications not only for the country’s future, but also for wider regional and international security.
At least 93,000 Syrians have been killed, more than 1.6 million are refugees in neighbouring countries and 4.25 million, almost a fifth of Syria’s population, have been displaced within Syria itself. A year ago, 1 million people inside Syria needed humanitarian aid; the figure now is nearly 7 million. The UN assesses that, by the end of the year, some 15% of Syria’s population will have become refugees in other countries. Ordinary Syrians are facing an increasingly desperate plight at the hands of a brutal regime that has committed an ever-growing number of war crimes: from sieges on towns and cities across Syria to forced displacement and the use of chemical weapons.
All of this is having a profound impact on regional stability. The growing burden on Syria’s neighbours, above all Lebanon and Jordan, both of which are playing a vital humanitarian role in hosting hundreds of thousands of refugees, is becoming increasingly unsustainable. The intervention of increasing numbers of foreign fighters on the side of the regime has escalated the conflict and increased the risk of regional overspill. Individuals with links to the UK as well as from across the Middle East and well-known terrorist organisations have also been travelling to Syria to fight the regime and push their own agenda. Those organisations increasingly view the chaotic situation as an opportunity to further their own causes.
It is in the UK’s interest that these challenges to regional peace and stability are addressed, and our priority remains achieving a negotiated political solution to bring an end to the violence. Our efforts are therefore directed at actively supporting the US-Russian plan to convene an international conference in Geneva with both the opposition and the Syrian regime to seek a peaceful settlement. As my right honourable friend the Prime Minister has made clear, we are determined to overcome diplomatic differences and agree a way forward to help the Syrian people achieve the change they want. We used our G8 presidency to underline that efforts must be focused on the ultimate goal of a political resolution. That has not changed. This built on previous contacts between the Prime Minister and President Putin in Sochi, and with President Obama in Washington. They agreed that all our efforts must be focused on the ultimate goal of a political resolution. Strengthening an inclusive, credible and capable opposition is an important step towards laying the groundwork for a negotiated settlement. It can also contribute to saving the lives of ordinary Syrians and to ensuring accountability for human rights abuses.
The UK has been at the forefront of the international community in providing non-lethal support to the Syrian opposition, committing £20 million to date. Our assistance to the moderate opposition includes vehicles with ballistic protection, body armour, trucks and forklifts, solar power generators, and equipment to search for survivors in the aftermath of shelling. This has helped enable the national coalition to develop structures that allow it to operate more effectively on the ground and to deliver assistance to Syrians in need as it develops into a credible alternative to the Assad regime. Our practical assistance has also included training human rights activists to document human rights abuses and violations for a future accountability process, as well as building capacity for Syrian civil society.
At Lough Erne, we agreed with our G8 partners $1.5 billion of new money for humanitarian support for Syria and its neighbours in response to the recent UN appeal for $5.2 billion. We are committed to doing all we can to aid the millions of civilians in Syria in desperate need of humanitarian assistance and will continue to urge our international partners to do likewise. At the G8, my right honourable friend the Prime Minister announced an additional £175 million in humanitarian assistance, making this the largest single funding commitment ever made by the UK in response to a humanitarian disaster. Our total contribution now stands at £348 million.
This will build on our existing support, which is providing food for thousands of people, water purification supplies, repairs to infrastructure and medical consultations for the critically ill and sick. Over £100 million of this has been committed to addressing the needs of Syrian refugees and host communities in the neighbouring countries of Lebanon and Jordan, both of which have seen over 400,000 refugees cross their borders. The influx is increasing the political, economic and security pressures on both countries. There are now more than half a million refugees in Lebanon, equivalent to more than 10% of its population. In Jordan, the refugee camp at Zaatari is one of the largest in the world and is now equivalent to one of Jordan’s biggest cities.
Along with our international partners, including Russia, we continue to press for access for neutral humanitarian agencies inside Syria, including through assistance across battle lines and borders. This is important because the regime has shown that so long as it entertains hopes of military victory it is willing to accept any level of loss of life in Syria. We, along with other nations, are dedicated to halting the bloodshed, restoring international peace and security, bolstering those resisting the regime and promoting a transition in the process.
The agreement to lift the EU arms embargo for the Syrian national coalition sends a clear signal to the Assad regime that it has to negotiate seriously and that all options remain on the table if it refuses to do so. We are encouraging the national coalition to engage with the Geneva II process. We strongly welcomed the Syrian national coalition’s declaration on 21 April setting out its commitment to a free and democratic Syria and condemning all forms of extremism.
Let me be clear that no decision has been taken to provide lethal support to the opposition. As my right honourable friend the Foreign Secretary has made clear, if we were to pursue this, it would be in co-ordination with other nations, in carefully controlled circumstances and in accordance with our obligations under national and international law. He has also made clear that Parliament would be engaged before any such decision was put into action and that the House would not be denied an opportunity to make a decision on the issue.
As my right honourable friend the Foreign Secretary and Secretary of State Kerry agreed in Washington on 12 June, the situation in Syria demands a strong, co-ordinated and determined response by the international community. Our priority remains to see a diplomatic process in Geneva that succeeds in reaching a negotiated end to the conflict. However, we have to be prepared to do more to save lives, to pressurise the Assad regime to negotiate seriously and to prevent the threat of extremism and terrorism if diplomatic efforts are to succeed.
We are deeply concerned by the recent intensification of fighting on the ground, not least in al-Qusair, where the Syrian regime, backed by foreign fighters, launched a military offensive against the town, which, according to UN reports, led to 90% destruction of its infrastructure and the displacement of most of its civilian population.
Continued support to Assad’s regime, which allows it to kill and repress the Syrian people, is continuing to directly undercut the peace initiative that was announced by Secretary of State Kerry and Foreign Minister Lavrov. We condemn the intervention of militias and fighters from Iran and Iraq, who are escalating the violence and supporting repression by the regime.
We welcome the UN Human Rights Council’s resolution, adopted on 28 May, which strongly condemned the violations of international law by Syrian authorities and government-affiliated militias, in particular the regime’s use of ballistic missiles and other heavy weapons against the people of al-Qusair.
As events in Sidon in southern Lebanon last week have shown, Hezbollah’s intervention in the conflict has already had a detrimental effect on Lebanon’s peace and security. An escalation in the conflict is entirely contrary to the interests of Lebanon, which must not become another victim of this conflict.
The House is well aware that we remain deeply troubled by the growing body of persuasive evidence that the Assad regime has used chemical weapons, including sarin. The process of gathering more information is ongoing, and we have been working tirelessly with others to get more and better evidence. We agree with the recent US assessment that chemical weapons, including sarin, have been used by the Assad regime. Samples tested in France have also added to the body of evidence.
However, we recognise that there is more work to do. As part of the G8, we called on all parties to,
“allow access to the UN investigating team mandated by the UN Secretary-General, and drawing on the expertise of the Organisation for the Prohibition of Chemical Weapons (OPCW) and World Health Organisation (WHO), in order to conduct an objective investigation into reports of use of chemical weapons”.
Given the experiences of the past, it is important to have as independent a view as possible. We therefore welcome the UN Secretary-General’s decision to investigate allegations of chemical weapons use in Syria, and we support the work of the UN Human Rights Council’s commission of inquiry, which continues to gather evidence of human rights violations and abuses.
The commission’s latest report, published on 4 June, highlighted the new levels of brutality in the conflict, including documented cases of the use of chemical agents, enforcing sieges on ordinary Syrians trapped in cities and towns, in desperate need of humanitarian aid. The report also notes human rights abuses undertaken by armed opposition groups. We are deeply concerned by these reports and continue to urge the opposition to abide by international human rights obligations. This is why we welcomed the national coalition’s compact, announced on 20 April in Istanbul, in which it set out clear commitments on reaching out to minorities, guaranteeing the rights, interests and participation of all components of Syrian society and adhering to international human rights conventions.
We have continued to call on the Syrian regime to allow both the UN investigation into allegations of chemical weapons use and the commission of inquiry immediate and unfettered access to investigate all violations of international law by all parties. The UK remains at the forefront of international calls for the situation in Syria to be referred to the International Criminal Court.
We cannot understate the severity of the crisis in Syria. We are faced with the prospect of, on the one hand, an ever more savage conflict and military stalemate, producing an even bigger humanitarian disaster, greater radicalisation and deeper sectarian divisions, further massacres, and even the collapse of the Syrian state and disintegration of its territory; or, on the other hand, and what we must strive for, a negotiated end to the conflict that ends the bloodshed and leads to a new transitional Government, enabling refugees to return to their homes and extremism to be contained.
There are no risk-free options, but we remain convinced that the best way to end the violence and resolve the conflict must be through a negotiated political settlement. To maximise the prospects for success, we must continue to support the moderate opposition, increase the pressure on the Assad regime to make clear there can be no military solution and challenge extremists who do not represent the desire of the majority of Syrians for a more democratic and peaceful future.
I welcome this debate on the situation in Syria and the wider Middle East. It is vital that this House continues to discuss and examine this issue of critical importance to regional and international security. I value the opportunity to hear your Lordships’ views in this debate and I am keen that we in the Foreign Office should benefit from the considerable expertise and experience of Members of this House as we continue to make every effort to end the bloodshed, minimise the risks to the region and protect the security of the United Kingdom. I beg to move.
Lord Wood of Anfield
My Lords, I thank the Minister for this opportunity to debate the situation in the Middle East and Syria in particular. I pay tribute to her continuing concern for and commitment to the issues in the region, which I think is evident to everyone in the House.
I want to focus my remarks on Syria and the immediate region around it, and to look at four related issues: the state of the conflict; the case for arming the Syrian rebels; the spillover of the conflict into the wider region; and where the international community’s efforts should be focused.
The basic facts of this conflict make for grim reading: two years of violence and civil war; more than 90,000 people dead, with 5,000 now being killed each month; suggestions that chemical weapons have been used; 4 million people internally displaced; and 1.5 million refugees in neighbouring states, about half of whom are children. It is a situation that appals us all and demands our attention and engagement.
However, a response must start with an understanding of the country, of the region and of the conflict. It is a recent conflict, but one with deep roots. Thomas Friedman has gone so far as to say that what is happening in Syria, as in other Middle Eastern countries, is,
“the long-delayed consequences of the end of the Ottoman Empire”.
Syria, like Iraq, is an artificial state that was born after World War 1 inside lines drawn by imperial powers. The communities of Syria—Sunnis, Alawite/Shia, Kurds, Druze and Christians—were forced to live together under rules agreed by others, not by their own consent. As Assad’s authoritarian rule collapsed, Syria now looks more like Lebanon in the 1975-90 period: a fragmented, sectarian country, with continuing violence between communities, and a central state that has neither the might nor the legitimacy to bring order to the whole country. This is a conflict whose resolution demands some fundamental reconceiving of the kind of country that Syria is and the social contract that underpins it.
The conflict is marked by three dominant features. First, the civil war is becoming more entrenched, with no prospect of decisive military victory for either side. Optimism about the prospects for a victory for the Syrian rebel forces has subsided in recent months. Assad’s forces have better armoured equipment and significant air power strength. They have gained confidence from recent captures of rebel strongholds, and have successfully consolidated in recent months the main population centres and the routes that connect them—from Homs to the coast, from Damascus to the Jordanian border. They have stopped the flow of senior defectors, and have trained a militia of 60,000 to guard positions formerly held by the Syrian military. Any strategy based on a prospect of military defeat for the regime at this point looks highly unrealistic, to put it mildly.
Secondly, the conflict is characterised by the involvement of multiple foreign powers on all sides, the overwhelming preponderance of which is escalating violence. The regime is benefiting from weapons, technical assistance, surveillance drones and help in monitoring internet traffic from Iran. Hezbollah and Iran have built a 50,000-strong militia to support Assad’s forces. On top of this, Assad benefits from significant Russian assistance, with multiple active arms contracts between Syria and Russia, and an S-300 air defence system about to be delivered to Syria from Moscow—the announcement of which was made just after the Foreign Secretary vetoed the EU arms embargo.
On the rebels’ side, foreign fighters are coming from a range of Arab countries through the Jordanian and Turkish borders to fight Assad. Extensive support continues to be provided by Saudi Arabia and Qatar, the latter having allegedly spent $3 billion funding the rebel forces and offered $50,000 to every Syrian army defector and his family. Qatar has sent 70 military flights to Turkey with arms and equipment. According to American intelligence sources, and despite the expressed concerns of the Obama Administration that such weapons may fall into the hands of militant Islamists, Qatar has shipped Chinese-made shoulder-fired missiles to be used against Assad’s air force.
Foreign power intervention in Syria on both sides not only makes the conflict more entrenched but makes the securing of peace more complex. The outgoing head of the Syrian national coalition, Moaz al-Khatib, said shortly before leaving his post:
“The people inside Syria have lost the ability to decide their own fate. I have only become a means to sign some papers while hands from different parties want to decide on behalf of the Syrians”.
I would be interested to know what conversations with the Qataris and Saudis, in particular, the Government have had about the extent and form of support which they are providing to the rebels, and whether the Minister shares the concerns of many about the effects of that support.
The third feature of the conflict that stands out is the fragmented nature of the rebel movement. One expert described it as a “bewildering array” of groups: defectors, Kurdish groups, volunteers, local militias, Islamist groups such as Jabhat al-Nusra, foreign fighters and the official Free Syrian Army brigades. Many of them are fighting for a reformed, democratic Syria, but some of the Sunni militias are becoming increasingly radicalised, aligning with groups such as al-Nusra and Ahrar al-Sham, who have called for a jihad against the Alawites and want an Islamic state. At least one al-Qaeda-affiliated group, the Islamic State of Iraq, has proclaimed an affiliation with the Nusra front and in April, al-Qaeda in Iraq boasted that it was reinforcing al-Nusra with experienced fighters and about half of its budget.
The rebels are brave and committed to ending Assad’s cruel rule, but they are a diverse, fluid and unstable collection of groups whose agendas and interests compete with one another as well as reflecting the interests of foreign powers. The character of the rebel movement becomes a crucial consideration when we turn to the question of the wisdom of the UK collaborating in supplying it with lethal military support. I note that, following the lifting of the EU arms embargo in May, the Foreign Secretary said:
“We haven’t taken any decision about funding”—
arming the rebels—
“but we don’t rule any option out”.
I understand that, but it is a statement that raises the question: what exactly is the justification for arming Syrian rebel forces? Is it that it would help bring a decisive victory? If so I fear that that is heroic given the facts on the ground. Would it level the playing field? If so, it does not seem a strategy likely to reduce violence, but rather to prolong it. As the Foreign Secretary himself said:
“There is no purely military victory available to either side without even greater loss of life”.
Is the case that tilting the balance would be more likely to lead to a military stalemate so that Assad would agree to come to the negotiating table? If so, how realistic is that, given that Assad seems to be doubling down in his military strategy, given that he continues to receive extensive support from other countries, and given that the insistence that Assad cannot be part of a post-conflict transition—whatever the wisdom of that position—is unlikely to make him want to put his weapons down? Or perhaps the case is that arming the rebels makes a palace coup in Damascus to depose Assad more likely? If so, that is a highly speculative basis for such a consequential strategic decision.
Given the state of play of the conflict, I am not convinced that arming the rebels can plausibly be thought to be part of a strategy that reduces violence rather than fuels it. There is a second consideration: what assurances do we have that any weaponry given would stay in the hands of moderate rebels rather than Islamist rebels? The Foreign Secretary has said that non-lethal equipment has already been given to the rebels and that there is no evidence it has got into the wrong hands. With respect, that is insufficient reassurance, for many reasons. There are reports of clashes between rebel groups over resources such as oil already. The market for lethal equipment is significantly different to that for non-lethal equipment; and the consequences of it falling into the wrong hands are much more severe. The absence of systems of monitoring is therefore considerably more concerning in the case of lethal assistance. The Minister alluded to the possibility of Syria becoming a failed state. How do we know that the weapons will even stay inside the borders of Syria?
There is also concern about the compatibility between a strategy of opening up the possibility of arming rebels and the credibility of a commitment to a negotiated solution. Does the Minister agree in retrospect that it was perhaps short-sighted for the Government to use the run-up to the G8 summit spending so much time talking about the case for arming the rebels, rather than how to secure a start date for the Geneva II conference? Is there not a danger that offering more weapons might encourage the rebels to seek a military victory rather than resolution in a negotiated settlement?
Overall, concerns about the coherence of the rebel forces, the security of the destination of weapons, the improbability that making more weapons available would bring a quick end to the conflict and the tension between moving towards Geneva II and making more arms available all combine to suggest that arming the rebels would not be a move likely to help to reduce violence and promote stability.
I turn to a further reason why we should be reticent about increasing the supply of arms inside Syria. The conflict is fast spilling over into the wider region; in Iraq, for example, it is having a seriously destabilising effect. Sectarian tensions are growing as Sunni minority protests in favour of reform combine with growing Shia angst that a pan-national Sunni counteroffensive is mobilising across the region. In Turkey, border incidents such as the bomb that killed 50 people on 11 May reflect the porous frontier across which insurgent groups pass every day. Turkey’s relations with Iraq, Syria and Iran have degenerated spectacularly, while domestic political unrest is increasing.
Lebanon is perhaps of most immediate concern in the fallout zone. It is the country that is first in line for contagion, but also a metaphor for the fragility of the entire region. Although it has a population of only 8 million it has taken more than 500,000 refugees. It is divided internally on Sunni-Shia lines and has a weak central state and porous borders. It is very close to major population centres in Syria, and Hezbollah operates as a state within a state. In recent months Lebanon has delayed elections and lost a Government, while in June, fighting between the Lebanese army and radical Sunni groups and Alawite-Sunni tensions have led to violence and death in different parts of the country.
Given Lebanon’s fragility and importance as a nexus of conflict for the entire region, it deserves our attention, even though it has traditionally fallen into the francophone area of influence. Will the Minister explain what we are doing to support the Lebanese Government and their army at this crucial time? What more could we do directly to ensure that some sort of stability is maintained in the crucial coming months? In particular, is the Minister alive to the perception some in Lebanon have that the West talks only to Sunni and not Shia groups, and to the destabilising potential that such perceptions may inadvertently have?
The danger that the Syrian conflict will trigger conflicts among neighbours with porous borders should make us think twice before embarking on a strategy of providing more weapons. However, contrary to what is sometimes suggested, the alternative to supporting military action is not inaction. Although we are a long way from being the major influence on the region, there is much we can and should be doing or even leading on in the international community to improve the situation. In the short term we can prioritise working with Governments in the countries most at risk of spillover, to shore up the legitimacy of internal state structures. We should prioritise ensuring that G8 countries honour their commitments to supporting humanitarian assistance to refugees, and should lead the case for pressing for greater and safer access for aid agencies. We should focus our engagement with the rebels on unifying them, rather than arming them, and should spend diplomatic capital on urging other actors in the region not to take action that escalates the conflict from either side.
However, we should also make it a priority to think about the format, structure and terms of the negotiations that—one day—will be the only means to a stable solution. A central issue is to understand whose participation will be needed in those negotiations if their outcome has a chance of ending the violence. The noble Lord, Lord Williams of Baglan, who has considerable experience and wisdom in matters of international diplomacy, has remarked:
“Negotiating with friends and allies is never the challenge. The real diplomatic challenge has always been negotiating with those with whom we are diametrically opposed”.
The question of whether any stability can be secured in Syria without engaging with Iran in particular is a serious and very difficult one. We stand side by side with the Government in their stance towards Iran, on both the nuclear security issue and in condemning their sponsorship of violence and terrorism outside Iran. However, the election of President Rouhani last month seems to offer tentative grounds for some cautious optimism about a change of stance in Tehran. Of course, it is very early days, but to hear President Rouhani promise “constructive interaction” with the world through a moderate policy, pledge that Iran is,
“ready to show more transparency”,
and that it will build a new relationship with the international community marks at least a rhetorical departure from his predecessor’s posturing. In light of this, and with the genuine full understanding that we must wait for change to become more than a promise, will the Minister tell us whether there are plans to engage in a different way with Iran under President Rouhani, and whether she thinks that Iranian participation in any Geneva II conference is either possible or desirable?
The sad truth is that an end to the Syrian civil war seems a long way off. Only by facing up to the fundamental facts of the conflict—that there is no prospect of decisive victory, that the conflict has started to destabilise the wider region, and that a number of external powers have become actively engaged—will we gain a proper perspective on the likely consequences of any further intervention of our own.
Baroness Falkner of Margravine
My Lords, I, too, thank the Minister for giving us the opportunity to debate this important issue today. In his book A Choice of Enemies: America Confronts the Middle East, Professor Lawrence Freedman comes to a bleak conclusion:
“The continuity in many of the problems facing the Middle East suggests that they must be managed or endured; they are too rooted in the institutional structures, power balances, and cultures of the region to be solved”.
Freedman is a historian who can see the weariness of US policymakers over a span of half a century when power, politics and events conspired to defeat well intentioned forays into the Middle East. It is not surprising that we in the United Kingdom see events in a similar light; after all, it is nearly 100 years since the Balfour Declaration and the suffering of the Palestinian people still sits alongside the insecurity of the Jews. Ironically, both still look to the West for a solution, to a greater or lesser degree.
It is our responsibility to the people of Syria that I want to concentrate on today, as this is our most urgent priority. In so doing, I put on record my gratitude to Professor Nigel Biggar, Regius Professor of Moral and Pastoral Theology at the University of Oxford, who has proved a most thoughtful sounding board. However, before I set out my own personal position, it is important to acknowledge two things. First, the brutality of the civil war and the suffering that endures today are of concern to those on all sides of the House. We on these Benches have regular and constant discussions about the way forward. Today, I suspect that we will be coming from different perspectives on the way to proceed. Secondly, our different perspectives on how best to bring an end to the suffering of the Syrian people do not diminish from our common goal, which is for a negotiated and speedy end to the civil war and an outcome that brings an end to the armed conflict so that solutions to the coexistence of the different sides can be explored and developed. Whether that is though an international conference or through the UN Security Council finding the unity and the will to stop the carnage, we are united in believing that our country must do what it can to end the suffering.
My own views are coloured by my long engagement with and affection for Syria. I first went there in 1973 and, 40 years later, I can only be grateful that I saw again and again the history, culture and dignity of the people in better times. Were I to adapt John Rawls’s “veil of ignorance” to this kind of conflict situation—that is not what he intended it for but nevertheless I think it applies—I do not believe my views on where we are today and what we should be doing would be any different had I never set foot in Syria. With 93,000 dead and many millions displaced internally and externally, living in the most appalling conditions, it is only right that here in the United Kingdom the Government have sought to prepare for a future arming of the Free Syrian Army through the lifting of the EU arms embargo on Syria. This decision has, rightly, been debated extensively within government and, indeed, in both Houses—“rightly” because, if arms are supplied, it presages an intervention by our country that many will doubt can lead to any good.
There are those across this House who will argue that adding more arms into an armed conflict cannot possibly reduce the killing; indeed, we have heard that case from the noble Lord, Lord Wood of Anfield. I can only envy him his certainty. There are also those who feel that in arming the opposition we cannot know with whom we are dealing, who these people are and where our weapons will end up. Then there are those who might believe that we have no business taking sides—that it is a sectarian struggle between Shia and Sunni, and we are best out of it. Finally, there are those who believe that the mere act of arming one side will suck us into a full-scale intervention, with our own troops in the line of fire. All are perfectly reasonable questions, but I would seek to answer them differently.
I shall start with the view that where there is killing, providing more arms cannot reduce the killing. If this view was a morally held one which applied to all times and all eventualities, it could not stand the scrutiny of our own history. Leaving aside for now the First and Second World Wars, again and again, the United Kingdom has intervened in other conflicts after killing has commenced in order to stop the killing. We have done so in recent times in Kosovo, Sierra Leone, Afghanistan and Libya.
Specifically with regard to lifting the arms embargo, we have the example of the Spanish civil war. In the 1930s, Britain and France maintained an arms embargo, while the USSR gave support to the republicans, and fascist Italy and Germany supported the nationalists. Russian support enabled the communists to dominate the divided republicans and fascist support enabled the nationalists to defeat the divided republicans and win the war, with the fate of the Spanish people under Franco all too well known and still, to some extent, unatoned for in modern Spain.
It is also true that we can have no cast-iron guarantee that the arms we deliver to the Free Syrian Army will remain in its control through the exigencies of running combat day to day. There is no guarantee that were we to give weapons they would not end up in the hands of Assad’s forces, or indeed with Jabhat al-Nusra and its al-Qaeda fighters. However, the test that one should apply here is whether by arming the forces of the Free Syrian Army to the point that Assad is brought to the negotiating table, we are likely to succeed. If the answer—after assessing the risks properly as to what arms we should supply, to whom and with what level of training—is a likely yes, we should take the risk that some of our weapons might fall into the wrong hands. At the moment, we have a situation whereby the Free Syrian Army is suffering from shortfalls even of rounds of ammunition. If we can bring more symmetry into the equation, alongside the assurance from General Idris of the Free Syrian Army that his men will account for the weapons delivered and will seek to return them to us when all is said and done, then when we feel more secure in those assurances, we should move to arm it.
It may also be true that we do not know the different factions well enough or understand their motives to be able to make judgments as to who we might befriend. If that is the case, I am all for holding back, but as this war progresses, we know more and more who we do not trust. It is clear to me that Assad cannot any longer be part of the solution. I suspect that there would be consensus in this House that al-Qaeda in the form of Jabhat al-Nusra will not be a force for good in Syria, her neighbours or indeed the West. Our engagement must be based on our assessment of which side best reflects our interests.
Since our interests are reflected in freedom, the defence of minorities and their rights and upholding human rights in a future stable, peaceful and pluralist Syria, I feel that we are capable of working though which of the different factions can best deliver those values. Ultimately, this has to be an assessment that is laden with risks, but there are risks equally in turning our backs. There is a strong view, and has been for nearly a century in the Middle East, that the West engages with the region only in its own interests. What good then will western passivity have in this situation? What will we have demonstrated other than cold moral relativism? To the young Arab, it will simply prove the jihadi/al-Qaeda narrative that we do not give a damn about the suffering of Muslims because they are the other.
I am equally clear that a Government who use biological and chemical weapons against their opponents and are as ruthless as we have witnessed in the past two years cast themselves open to international action under the norm of responsibility to protect. If we have not arrived at that situation today, we may nevertheless have to prepare to do that in the future. Existing international law may impose that obligation upon us, through the Geneva conventions, if not the responsibility to protect. Given that the Labour Party has so clearly sets its face in opposition today, what would it do then, I wonder?
In conclusion, I reflect that we need to be clear about what the doctrine of non-intervention holds for us today. We cannot argue for multilateralism on the one hand, when the forces of globalisation, climate change or international terrorism call for us to work with others to solve problems, yet turn away when the most fundamental crisis arises: that of significant human death and destruction. In saying this, I am not saying that we must intervene. It is possible that our intervention, limited as it might be to supplying arms, might not succeed in our objective to bring Assad to the negotiating table. If we are clear that intervention at this stage will not achieve that objective, we should not do it. Whether we intervene or not, there will be consequences for us. Today affords us an opportunity to reflect on what those might be, although we do not have sufficient clarity. The Government are right to prepare for what might have to come.
Lord Williams of Baglan
My Lords, I welcome the debate. It has been an extraordinary period in the history of the Middle East and this weekend was no exception, with huge demonstrations in Cairo pressing for a more inclusive Government less dominated by the Muslim Brotherhood, and seeming progress in the Middle East peace process following talks between Secretary of State John Kerry and President Mahmoud Abbas of Palestine. We must hope that Prime Minister Netanyahu will respond positively in the coming days.
At the heart of the matter is the civil war in Syria, which threatens the fate not only of that nation but of the whole region. After more than two years of war and 100,000 dead, we are no nearer a solution. Despite the Prime Minister’s brave efforts at the Lough Erne G8 summit last month, all that could be achieved was a reaffirmation of the conclusions already reached in Moscow in the talks between Secretary Kerry and Foreign Minister Lavrov in May. As things stand there seems little hope of progress until the UN General Assembly meets in the third week of September in New York.
To say the least, a more urgent diplomacy is needed, one that seeks an agreement on an immediate ceasefire, the deployment of UN observers, unimpeded access for the international humanitarian agencies and elections in the next six months, supervised by the United Nations. These are the elements that the international community should try to come together on. As the gaps between the P5 seem so substantial, the Secretary-General, Ban Ki-Moon, must assume the responsibility of seeking to make progress towards an agreement for the sake of the Syrian people and for the region, including engaging with the new Iranian Government, to be led by President Rouhani, who by the way was responsible for the only decisive freezing of Uranium refinement in 2003.
Wars can be won only in two ways: either through the victory of one party over the other or by a negotiated settlement. In the case of Syria, the former is neither desirable nor probable at this stage. I believe it was the great German statesman Otto von Bismarck who said that making peace was like making sausages; you do not want to look too closely at the ingredients.
There are some who reject any contact, let alone a potential agreement, with the Assad regime. Hateful and vicious as that regime is in many ways, there is no alternative. I remind the House that in the 1990s in Bosnia, peace came through the Dayton agreement, and that we negotiated with Slobodan Milosevic and Radovan Karadzic. A few years later, we did so again with Milosevic over Kosovo. In the first UN mission in which I served, in Cambodia, the UN implemented the Paris peace agreement of 1991, agreed by the Security Council, which recognised the Khmer Rouge as a key party in the country’s future. Absent meaningful western military intervention, which we are ill fitted for after Iraq and Afghanistan, a negotiated settlement is the only way forward in Syria.
Despite temporary victories such as that at al-Qusair, President Assad cannot win back or reverse the erosion of his domestic and regional legitimacy. However, this cannot mean that his Government should not be a party to the talks that will eventually define the future state of a truly representative Syrian Government. Like it or not, his army remains the dominant military force. Moreover, it still has substantial domestic support.
The opposition, sadly, has lacked political and military coherence. Even if supplied with any amount of arms, it will not overcome these shortcomings. With notable exceptions such as George Sabra and the veteran dissident Michel Kilo, it is drawn almost wholly from the majority Sunni community. Not only the Alawite community but Christians, Druze and Kurds have not been drawn in any substantial numbers into the opposition.
I turn to Lebanon, where I served between 2008 and 2011 as UN special representative. Lebanon is the country most affected by the Syrian contagion, and one of its major political forces, Hezbollah—probably the most heavily armed non-state actor in the world—is substantially and overtly a party to the Syrian civil war. That reckless action cannot but have profound consequences for Lebanon and for the sectarian divisions that are now so raw throughout the Middle East. In Egypt only last week we saw the brutal lynching of four Shia villagers in a hamlet on the outskirts of Cairo.
What of the Lebanon? Sadly, the country is now an integral part of the geography of the Syrian civil war. The authority of its Government and institutions, never historically robust, has been undermined by the civil war in Syria. Hezbollah’s increasing involvement has inevitably raised sectarian tensions in Lebanon. This is seen most clearly in the second city of Tripoli, where the country’s only Alawite community has been involved in clashes with its Sunni neighbours, which have claimed tens of deaths over the past months. Even more serious were the clashes the weekend before last in the city of Saida between the army and an Islamist group, which claimed 35 lives.
I urge the noble Baroness, Lady Warsi, to keep a close eye on the travel advisory for Lebanon. There are few exits from the country. In the 2006 war between Hezbollah and Israel, most British and other foreign nationals were evacuated along the international highway to Damascus. Clearly, that option is no longer open. The one airport in Beirut is close to the Hezbollah suburb of Dahiyeh and is easily closed with one telephone call from Hezbollah. I am concerned that Lebanon could—I pray it will not—descend into widespread civil strife in a matter of hours.
The Lord Bishop of Truro
My Lords, I, too, am very grateful to the noble Baroness for introducing this important debate. I thank her for her wide-ranging and helpful speech. The Foreign Secretary was right when he recently described the situation in Syria as the worst crisis affecting the world today. It is a truly wicked conflict. This wickedness is illustrated both by the scale of the human tragedy and by the complexity that has thwarted efforts to resolve it.
I am also grateful for the noble Baroness’s mention of the Prime Minister’s G8 announcement of a £178 million emergency package, which is very welcome. However, we should not deceive ourselves into thinking that it will suffice. As other speakers have mentioned, the crisis has so far driven more than 1.5 million Syrian refugees into neighbouring countries, and thousands more pour across Syrian borders every day. Sadly, as the noble Lord, Lord Wood, mentioned, around 50% of these refugees are children. This is a truly desperate situation, and I hope that the Minister will be able to say something more about the efforts to tackle the growing phenomenon in Lebanon, as we have just been hearing, where innocent and traumatised children are sold into prostitution through temporary marriages.
With every passing month, the conflict generates 200,000 new refugees that impact on Syria’s fragile neighbours. If current trends persist, we can expect that over 3 million Syrians will have left their home country by the end of the year. This situation threatens to become a Sword of Damocles hanging over the host countries and host communities, which lack the capacity to absorb increases of up to 10% of their local populations.
Will the noble Baroness assure the House that the Government will continue to respond generously to this humanitarian disaster, which threatens to unsettle the delicate confessional and political balance of neighbouring states, not least Lebanon itself? I am sure the noble Baroness would agree that, even if obstacles have yet to be overcome in resolving this conflict, the international community should not shirk its responsibility in containing it. What steps are the Government taking to ensure that donors’ pledges are fulfilled without delay and that additional funds are provided to meet short-term and longer-term needs? I would like also to mention here the indigenous Syrian Arab Christians, who are especially vulnerable when outsiders from elsewhere in the region, who know or care little about the honoured place that Christians have held in the nation from earliest times, seem to be influencing events so greatly. All of us who are Christian leaders are extremely concerned about the two abducted archbishops from Aleppo, Boulos Yazigi and Mor Yohanna Ibrahim. We are all in solidarity with the faithful Christian communities of Syria.
The wickedness of this humanitarian catastrophe is matched only by the paucity of our political efforts to resolve the conflict. The absence of any real political progress on Syria at Lough Erne last month is a truly regrettable blight on an otherwise successful G8 summit. The Government have to date wisely resisted the temptation of military intervention, but it remains a real concern to members of this Bench that the Government hold to the assumption that only by correcting the asymmetry of military power can President Assad be cajoled into serious negotiations with the opposition. Is this right? Will arming the opposition—or it might be better to say “oppositions”, in the plural—make the situation for the Syrian people better, or will it merely lead to more bloodshed and accelerate spillover to the wider region?
I accept that there might be a time when it is necessary for the international community to police any peace settlement, but we are clearly a very long way from that point and, as it stands, the ongoing debate about the arming of Syrian rebels serves merely to distract attention from finding a diplomatic solution to the crisis. Surely now is the time to intensify our diplomatic efforts. Diplomatically, the West appears locked into a political mindset that assumes that a solution needs to be agreed by external powers and then imposed from outside without any consultation. Is this the right strategy? Even if the capacity and coherence of the Syrian opposition can be developed sufficiently ahead of Geneva 2, are the Government being fanciful in thinking that a group of Syrian exiles can be parachuted in as the opposition transition government implant to assume command of the army and security forces in Syria?
The Government need to move beyond the narrative that this is a liberational struggle against a nasty and brutish regime. This might have held true in the conflict’s early months, but it has long since mutated. It is high time that the conflict was analysed in its own terms rather than by reference to the transformations going on in other parts of the Middle East and north Africa. Will the Minister accept that the political position taken in the embryonic stages of this conflict—namely, that Assad must go—has now become an obstacle to resolving the conflict? Will she accept that Assad’s fate must be a question for the transition process and not a precondition, and that Iran, as has been said, must play a role in the diplomatic process?
This is a truly wicked conflict but, when all we see is good or evil, light or dark, we are in danger of overlooking the shades of grey that give this conflict its multilayered complexity. Unless we recognise this complexity, any intervention, military or political, is going to be bluntly ineffective and at risk of compounding the situation. That would be a tragedy, not least for the people of Syria and the surrounding region.
Lord Howell of Guildford
My Lords, more than a year ago, Lakhdar Brahimi said that the choice for Syria was between his plan, which at that time was for some kind of transitional government, and hell. His plan was completely rejected and now we have hell. Syria is descending into total fragmentation, with a hideous death toll and oceans of human misery, as we have heard in several very eloquent and penetrating speeches. The costs to date are estimated at anything between $50 billion and $100 billion, perhaps far more: one can hardly put a price on these things. Prices in Syria have risen 100% in the past year and are heading for hyperinflation and the point where money dies. Unemployment has quadrupled and many feel that the country is getting ready to split up, possibly with an Alawite statelet, as under French rule in the 1930s.
Meanwhile, in Jordan, Hashemite rule is under pressure. As we heard in the eloquent speech of the noble Lord, Lord Williams, the state of Lebanon is threatened, although I am not quite as gloomy as he is about the miraculous way in which that state has somehow survived so far, given the amazing pressures since its own civil war. Even Turkey is destabilised, and there is clearly a feedback into a worsening situation in Iraq, which we sometimes overlook as being one of the world’s biggest oil producers.
Meanwhile, on the ground, the rebels seem to have captured Deraa and have plenty of anti-tank weapons. Every day, Qatar and Saudi Arabia run arms runs with massive supplies of weapons, and while these are perhaps not all the rebels want there are a great deal of them, so there is a stalemate already. There is no hope of a new force arising—as someone said the other day, a new Zenobia—to unite Syria. Nothing of that is in sight. It was a non-sectarian battle to start with and could have been handled much more wisely, but it was not, and now all sorts of jihadists have joined in, as we heard from the noble Lord, Lord Wood. It is now becoming a civil war between Islamic sects. The pessimists could say that when we had a similar religious division in Europe, it lasted 100 years and involved unbelievable atrocities.
It is hardly surprising that in all this appalling scene, where terrorist-inclined organisations are fighting each other on both sides, we are all very reluctant to intervene. That is understandable, but—there is a “but”—we cannot do nothing when not merely a whole house but a whole neighbourhood is on fire, and the fire is spreading. This kingdom is supposed to be a responsible and powerful contributor to the network of world peace and stability, and I believe that we are as long as we do not lose confidence in ourselves. We live in a totally interdependent world. Even those who sometimes hanker after different versions of independence when we talk about other issues do not seem to understand that the whole system is now totally connected. Interdependence obliges us to proceed on certain courses. In this case, we simply cannot opt out. However, in not opting out and deciding how to proceed, we must not allow this to turn into an old-fashioned Cold War, East/West issue, which I am afraid it is rapidly sliding towards. Indeed, that is my worst fear of all. We hear more and more talk of line-up and the West must do this and Iran, Russia and China must do that. That is the stance that many of us thought we had seen for the last time with the fall of the Berlin Wall and the old world of the divided Communist Cold War. To bring it back and to act as though it had never gone is a great mistake.
I concede that there are enormous hurdles to proceeding in any direction at all. Diplomacy has become decoupled from the facts on the ground. There is a weak and divided Syrian national council, now the national coalition. It is very hard to know who is in charge. The Russians, although they have talked big about legitimate regimes and remaining behind Bashar al-Assad, have totally failed to influence him. Their diplomacy, which they proclaim very loudly, has not been a success. The mechanism of dialogue is extremely unclear and the past aspiration of all nations to develop the concept of responsibility for moving in and protecting against hideous atrocities and killings has been blocked at the United Nations by Russia and China.
In these circumstances, we have to be completely realistic and recognise that China and Russia are the key to any change. Without them, any measures taken will produce counter-reactions and escalate the problem. There should be a common responsible global approach, without which there will be no effective approach. The good news in all this gloom is that the UK has very recently mended its fences with China, and that positive move is understood and welcomed on both sides. My right honourable friend the Foreign Secretary, William Hague, has held detailed talks with the Russian authorities and Mr Lavrov. Of course, my right honourable friend and the Prime Minister have had sessions with Mr Putin in the past few days at Lough Erne and no doubt elsewhere.
If one were to look for a third chink of light in this otherwise horrific situation, there could be some change, as the noble Lord, Lord Williams, suggested, now that Mr Rouhani is in charge in Iran. However, it is much too early to say anything on that. It is only in the new global context that one can start carefully to decide what kind of intervention can be pieced together, whether it is arms, assistance on the ground or any other kind of assistance to one side or the other.
What can be done to bring the two giant powers, Russia and China, to a more responsible and constructive position? In a way, China is in need of much more discussion and dialogue. The Chinese talk about intervening only peacefully, and have used the phrase the “peaceful rise” of China. That is questionable because the Chinese have not always been peaceful. However, the plain fact facing them is that the bulk of their country’s oil imports now come from the Middle East. Most oil resources from there go eastwards, not westwards. It is estimated that by 2030 95% of all oil and gas will go east to China and the great rising powers of Asia. Syria and Iran are therefore China’s problem, and there is no future for China in stoking the Syrian conflict.
The reality that even the Chinese must face is that power now lies as much in the networks of the street and the totally connected world system as it does in the hands of any individual country. We have only to watch what is happening in Brazil, Turkey or Egypt, where digital network power and the street are challenging the traditional tools of government, to see where the real forces lie. We should therefore engage with these great powers that think that they can play superpower politics in the age of the networked world. We have to engage much more closely with China’s think tanks and continue our discussions with the Russians to make them realise that in the end we all share the same responsibility and that the dangers of failing to combine together will affect us all, whether it be the Chinese, Russians, Europeans or Americans.
We have no choice in this age of total connectivity but to make a firm contribution to the common cause of trying to halt the Syrian horror. However, there must be a genuinely common cause to which to contribute, and this, frankly, does not yet exist, so the prime task is to establish this common approach. I believe that we in Britain are well placed to make a contribution in seeking that goal, and we should strongly support my right honourable friend William Hague in his efforts in that direction. That is where the solution, if there is one, to this horror lies: in a common global approach. Without a common global approach, any attempt unilaterally or on behalf of the so-called West will fail.
Lord Turnberg
My Lords, I thank the noble Baroness, Lady Warsi, for introducing this debate in her usual balanced way.
The complexity of the situation in Syria is such that the seemingly simple question of whether to arm or not to arm cannot be answered without the prospect of provoking more harm than good. What sort of arms are we talking about and whom should we give them to, given that there are over 100 different factions from Islamic extremists to small local militias? And how do we in the UK fit into the grand scheme in which Russia and Iran, together with Hezbollah, are busily arming the ruling party and Saudi Arabia and Qatar are pouring in weaponry for various Sunni groups? It sounds to me like a situation we would be better off keeping out of, apart from offering humanitarian aid, frustrating as that might seem. Needless to say, I agree with my noble friend Lord Wood of Anfield, and I resonate very much with the wise words of the noble Lord, Lord Howell of Guildford.
I should like to focus my remarks on a slightly different area: the impact of what is going on in the Middle East in the Israeli-Palestinian so-called peace process. There is little doubt that Israel is regarded as the number one enemy across most of the rest of the Middle East, and the anti-Israel and anti-Semitic rhetoric in those countries is sometimes pretty horrific.
However, the problems that those nations face now are clearly nothing at all to do with Israel or the Palestinians. In most of them, what starts out as a popular uprising of oppressed people seeking to topple a dictatorial regime and gain a better life, and perhaps democracy, ends up with a vacuum rapidly filled by a vicious Sunni-Shia conflict, fuelled by clerics each denouncing the other as infidels. This is the case in Syria, in Lebanon and in Iraq, while in Egypt the Muslim Brotherhood has taken a shaky power in a struggle with the more secular elements. In Iran, as they spin their centrifuges and their leaders spin their web of deception, their primary objective is to become the dominant force in the Middle East, leading to the prospect of an arms race with Saudi Arabia and Turkey. I find it difficult to imagine that any of what is going on in those countries can be laid at the door of Israel. Israel is a useful scapegoat, but using it as a reason for their miseries does not bear close examination.
Of course, a peaceful, secure two-state solution is desperately needed by both Israelis and Palestinians, but even if we reach that nirvana it will make not a jot of difference to the struggles elsewhere in the Middle East. However, it is the influence on those two of what is going on elsewhere that is a major barrier. There is of course strong pressure from the USA in the shape of John Kerry to restart negotiations, as well as his offers of billions of dollars to Mahmoud Abbas for West Bank developments. Furthermore, surprisingly, if somewhat belatedly, Mr Netanyahu has recently reiterated several times his offer of talks without preconditions. He is even rumoured to have offered to stop settlement-building and the release of Palestinian prisoners as inducements to the Palestinians to resume negotiations. One hopes that that may be true. Mr Abbas has so far remained resistant and there is no doubt that there is considerable mistrust and cynicism on both sides, despite the fact that the outline of a potential two-state solution is not too difficult to make out. However, it is events elsewhere in the Middle East that might determine progress in the peace process.
Israel is distracted by the Iranian threat and events in Syria. It is hardly comforting for it to see what is going on in Syria with a potential change from one implacable enemy to another. At least with Assad it knew what it was getting, so it can hardly be a comfort to know that a change to an opposition possibly dominated by Islamic jihadists is in the offing.
However, it is the effect of those developments on the Palestinians where the most significant impact may be felt. Mr Abbas is likely to be very concerned that any move to reconcile his differences with Israel, the sworn enemy of the rest of the Middle East, will earn him few friends there. He will be looking over his shoulder at what impact a peace deal would have on his relationship with Hamas at home and on Hezbollah, Syria and Iran in his neighbourhood. He may see that his arm could be strengthened by a victory for either Assad or the opposition in Syria and so will feel that he is better off delaying any deal. He could hope that one or other of these victors could turn their attentions to attacking Israel with or without the threat of nuclear force from Iran. It might seem to him like signing a suicide note if he makes peace with Israel and at the same time makes enemies out of Hamas and much of the Arab world. He might feel that, just now, procrastination is the best option. Against this background of instability elsewhere his reluctance to negotiate could be more understandable.
Of course, events might turn out differently: a moderate power might take over in Syria, Hezbollah might go home with its tail between its legs as it loses Syrian support, Iran might become more conciliatory or more isolated and weakened, and the Muslim Brotherhood in Egypt might become less dominant, all of which might give greater courage to Mr Abbas. However, despite American pressure and support from Saudi Arabia, he might think that the buzzing, angry wasp’s nest to his north makes it preferable to wait than to gamble. He has, of course, the additional task of dealing with Hamas in Gaza and in the West Bank. Its hard line of non-collaboration in any peace deal means that he can speak for only a proportion of Palestinians. Furthermore, his stability is further compromised by the recent resignation of two Prime Ministers in quick succession, and that cannot help either. A strong leader is needed in any negotiations, so it is difficult to remain optimistic for the immediate future as so much depends on events elsewhere. There are little glimpses of hope here and there, but that depends to a very large extent on what happens in the rest of the Middle East.
Lord Ashdown of Norton-sub-Hamdon
My Lords, it is a privilege to follow the noble Lord, with many of whose views I profoundly agree. I also join others in thanking the Minister for giving us the chance for this debate. Who among us would not wish to seek to stop this bloody Golgotha of the innocents in Syria? I am not sure whether you can use the word Golgotha in relation to an Islamic country but I suppose it is appropriate here. Who among us would not wish for something to be done, if it can be? But here is the question, the paradox: what if the thing you want to do does not make things better but makes them worse? That is the conundrum to which we must now seek an answer.
It is not the case that I am against intervention—far from it. I suppose I was one of the first to push for intervention in the Balkans, in Bosnia and again in Kosovo. When I returned I wrote a book, which is still available no doubt in all the best bookshops at a remarkably cheap price, about how we might intervene more successfully than we have in Iraq and Afghanistan. I happen to believe that, in an increasingly turbulent world, the capacity of the international community to intervene to preserve the wider peace will be one of the instruments that determines whether the decades ahead are more or less turbulent and more or less bloody.
However, it is sensible to intervene only when it is sensible to intervene. When it is not sensible to intervene, it is very stupid to intervene indeed. For reasons I shall explain, I am afraid it is not sensible if by intervention we mean either military force taken by Britain or the West, or the provision of arms. The case is so difficult, so tragic and so potentially catastrophic for the wider peace that it behoves us to try to put forward a suggestion other than intervention which it might be possible to follow. I shall seek to do that, too.
There are two departure points on which we can agree. First, we desperately hope that Geneva II succeeds. Frankly, I rather doubt it will. We must all hold hands, cross our fingers, wish it a fair wind and hope for the best. Secondly, until President Obama decides to announce what he wants to do, we ought not to say that what he wants to do is foolish until we discover what it is. He has been remarkably timid in following up the statement one felt that he was dragged to some weeks—or was it months?—ago that he wanted to assist the rebels. He may want to do something which is largely humanitarian. He may want to create a humanitarian corridor or a humanitarian safe zone. Those options, too, would not be without their complications and dangers. As we saw in Bosnia, safe zones can easily become safe zones for the rebels, for those who do not want peace and prosecute instead violence and war. Safe corridors can easily become corridors for more arms, with more activists, rebels and fighters coming in. However, until President Obama announces, we all should wait and listen with interest.
There are things we could be doing—I shall touch on them in a moment—but, in my view, lifting the arms embargo is not one of them. Let me explain why. The Government have got themselves into a difficult spot having been so enthusiastic towards that proposal. It was put forward first by François Hollande and we followed the French in saying to the European Union, “Let us lift the arms embargo”. I sense they would now like to withdraw from that position. I hear it in the weight of opinion in your Lordships’ Chamber today.
There are four basic reasons why, in this instance, lifting the arms embargo would not be a wise move. First, the rebels do not need arms. It is an unchallenged fact that 3,500 tonnes of arms have been shipped in by way of Croatia with the assistance of—the noble Lord, Lord Wood, mentioned the Americans—the CIA. That, too, is unchallenged. This is funded by the Saudis and the Qataris and is going almost exclusively to the more jihadist groups, the Wahhabists and the Salafists, who, though they do not love each other, are fighting together in Syria.
I know where those weapons are coming from. I have seen them stacked up in the underground arms factories in Bosnia. Tito created those arms factories precisely because he did not know who was going to attack him—would it be the West or the East? They are the weapons left over from the Bosnian war. They are being shipped out in large measure through Croatian ports and airports, and they are making vast sums for the corrupt forces in the Balkans who are used to these things.
They do not need more weapons; they have more than enough. They have been provided with the assistance of the CIA and, above all, funded—foolishly in my view—by the Qataris on the one hand and rich businessmen in Saudi Arabia on the other. The arms may not be provided by the Saudi Arabian Government, but they could stop it if they wished. Noble Lords may wish to reflect on the fact that the rich businessmen who are funding the supply of weapons are the same rich businessmen who, by and large, funded Osama bin Laden in the early days for reasons which, as we discovered later, were not to our advantage.
The second reason for not lifting the arms embargo is that the so-called rebels in Saudi Arabia are not fit and proper people for us to provide arms to. Some—maybe even a majority—of this fractured, diverse, uncontrolled group are as casual about killing and disregarding human rights as those they oppose. There is not much to differentiate between the revolting acts committed by both sides. I am not happy that we may well be contributing to that process and that we may provide weapons which we give to the right people but which end up in the dominant faction, as weapons always do in times of conflict, who are the wrong people.
Thirdly, with great respect to my noble friend Lady Falkner, I know of no case anywhere where the provision of external weapons has created more peace. I was opposed to it in the Bosnian war for exactly the same reasons. There are occasions, of course, when the West can intervene, and Bosnia/Kosovo is an example of that. We were prepared to come in and suppress the conflict using our weapons and our forces, but handing over weapons, supplying them to a chaotic situation run by rebels, is different. Frankly, I know of no occasion when one of the routes to peace was to provide more weapons. In fact, it almost always seems to point in the other direction.
The biggest and most powerful reason for not doing this is that Syria is not what we think it is. Syria is not the conflict; it is the front line in a wider conflict that is no longer about the great Satan of the West but is now about the great heretic in Tehran. What we are seeing being built up now is a determined attempt, funded by the Saudis and the Qataris, to create a powerful, radicalised, jihadist Sunni element that can capture the community of the Sunni as a preparation for a wider war against the Shia. I do not say that that will happen, but there is a risk of it doing so. That is the intention behind the provision of these weapons. What we see in Syria is connected to what we see in Lebanon in ways that have been very well described. It is connected to what we see in Egypt, it is connected to what we see in Tunisia, it is connected to what we see in Libya and it is connected to what we see in Mali. As I say, this is not about the great Satan of the West; this is about the preparations that some are deliberately making to have a wider regional religious conflict, just as my noble friend Lord Howell said earlier. Do we really want to stimulate that?
In this, it is important that we understand the position of Russia. We believe that Russia is in favour of Assad because he is Russia’s last man in the Middle East. However, there is a deeper reason that we should understand. The Russian Islamic republics of Dagestan, Chechnya and so on are being infected by exactly the same movement. They know that the jihadisation of the Sunni umma is affecting their stability. If they are not very careful, it is in danger of dividing the Russian Federation, or at least causing great instability. So we have this terrifying situation of the West being instrumentalised on one side in favour of the Sunnis, and the Russians being instrumentalised on the other side in favour of the Shia in what runs a grave risk, although not a certainty, of widening into a much broader religious conflict that will engulf the Middle East. Mao Tse-Tung once referred to the Second World War as the European civil war. Perhaps it was a civil war but it had global connections, and those global connections in today’s interconnected world mean that a regional war can have much wider consequences.
Our policy in the Middle East has been attended by the law of unintended consequences. We piled into Afghanistan and provided weapons for Osama bin Laden because our enemy’s enemy is our friend, is he not? However, he turned out to be our primary and most potent enemy. We piled into Iraq because we wanted to get rid of Saddam Hussein. We supported a Shia majority and now we find that the border of Iran has effectively moved 400 miles to the west. The law of unintended consequences is likely to apply in Syria more than in any other recent circumstance and I really do not believe that this would be a wise step forward.
However, there is one thing we could do. Why do we want to pursue the issue of arms when there is an issue of diplomacy still open to us? I repeat the question I asked the Minister the other day. If it is the case that Saudi Arabia and Qatar are today funding the very jihadism against which we are fighting—the jihadism, by the way, that has killed French troops in Mali—why are we not using international pressure in the form of the United States and the European Union to persuade Saudi Arabia and Qatar to stop and thus prevent this? The moment we do that, we will create the circumstances in which the Russians may well have common cause with us. We will begin to create a diplomatic space that can be widened and we will be assisting the rebels in another way. I do not understand why we are rushing to lift an arms embargo when there is a serious diplomatic route that would take the steam out of this conflict by persuading our friends in Qatar and Saudi Arabia to stop providing the money that is spreading the very jihadism that we know is the greatest threat we now face. We should not stumble towards arms when there is diplomacy still to be played out.
Lord Hylton
My Lords, stop the killing in Syria. I follow the noble Lord, Lord Ashdown, at least on that. The need is obvious but we must work at it until it happens. Surely the past 27 months have proved beyond possible doubt that none of the many sides can achieve military victory. A complete ceasefire is therefore in the interests of all, whether they are combatants or neutrals. One hundred thousand lives will have been lost in vain if efforts are not made now to prevent more deaths. A ceasefire would give space for local, national and regional negotiations and would allow some at least of the displaced people to return to their homes.
How may we reach a comprehensive ceasefire? A conference, whether in Geneva or elsewhere, is probably the most likely means. We should take heart from the 2012 conference on Somalia held in London. That has not, I agree, resolved all problems, but at least the situation there is very much better than it was. We should note that some British jihadis were fighting in Somalia, just as they are now in Syria. It is therefore in our interest that fighting should stop and, even more so, in the interest of the beleaguered civilian population. Meanwhile, will Her Majesty’s Government allow the hospitals in our sovereign bases on Cyprus to treat urgent cases from Syria?
If a ceasefire can be achieved, it would need to be verified. Satellites, drones, manned aircraft and ground observers should all be used. The machinery of war should serve the cause of peace. All existing or potential suppliers of arms should be involved in preventing further violence. That means Russia, Iran and the Gulf states in particular. A ceasefire must not become just a pause before war begins again. Every effort should be made to involve the religious authorities and leaders, first in securing and upholding a ceasefire and then in negotiations for permanent peace.
I turn now to Iran, which I once visited for a holiday in 2010. I disclaim all special knowledge, but I do commend to our Government the article by Major-General Shaw in the Tablet of 29 June. He writes with authority as a former Assistant Chief of the Defence Staff and as a former commander of the Multi-National Division in Basra. He rightly points out that Iran is the only major Shia state in existence and that Britain has never suffered a terrorist attack from Shia Muslims.
I would go further and suggest that the recent Iranian elections and the reported release of some —or maybe all—women prisoners give grounds for re-examining our policy towards Iran. Will our Government restore at least low-level diplomatic relations? Full relations could be tied to co-operation over Syria, the treatment of minorities everywhere and progress on nuclear issues. Iran should not be seen as a necessary enemy or as part of any axis of evil. The United States has understandable memories of the kidnapping of its diplomats. Saudi Arabia and Israel, for their different reasons, are likely to wish to prevent detente between the United States and Iran. I trust that we will be more statesmanlike than that, as was suggested by my noble friend Lord Williams of Baglan. We should also remember that Iran could be constructive over Afghanistan and that it has its own Kurdish minority population.
There is a theory that Syria is a purely Arab matter. The Arab League, alas, has not been able to bring peace. Non-Arab states such as Turkey, Iran and Israel are inevitably involved. Israel could help enormously in at least two ways. First, it could declare its willingness to negotiate peace and the future of the Golan with a Syrian Government ruling with the consent of its people. Secondly, it could indicate that it is satisfied to own some 78% of pre-war Palestine, without coveting complete control over the remainder.
If international guarantees are necessary, they must be given. Israel, however, should prepare to take its place alongside its neighbours and to play the part in the whole region for which it is uniquely qualified. Decades of hostility and mistrust have to be overcome. To do so, Israel should work its passage and prepare its own citizens for peace. Is that in line with Her Majesty’s Government’s policy? I hope so.
I conclude with a brief mention of Palestinian refugees in Syria. There were half a million of them. They tried at first to be neutral but, alas, Syrian government forces have destroyed two camps: at al-Ramleh, near Latakia, and Deraa, near the border with Jordan. Many have now fled into Lebanon and Jordan. Will Her Majesty’s Government earmark specific funds for the urgent needs of those Palestinians?
Lord Sheikh
My Lords, I welcome this debate but I am extremely regretful of the circumstances that have triggered our discussions. I thank my noble friend the Minister for introducing the debate.
Today we are focusing on the Middle East as a region but there is no doubt that the appalling situation in Syria is currently taking centre stage. I am horrified on a daily basis at the news reports of both the escalating conflict and, more importantly, the humanitarian crisis resulting from it. Tensions were high at the initial outbreak of violent protests in 2011 but few could have predicted that two years later 93,000 people would have lost their lives and that the death rate would still be accelerating.
The potential for a large regional sectarian war between Sunni and Shia Muslims is now dangerously high and the bloodshed and political divide could spiral even further out of control. I am very worried about the rift between the Sunnis and Shias, which unfortunately is growing. As a Muslim, this disturbs me, but I feel that everyone should be concerned about how the situation is developing.
I share the wider desire to see President Assad’s regime brought to an end, and was excited at the increasing prospect of such an outcome late last year. About three years ago I visited Syria with other parliamentarians and we spoke to President Assad at some length. He seemed a reasonable man at that time but his attitude and behaviour are now totally unacceptable.
However, as we should have learnt so very well by now, true victory will not be won for the people of Syria, or indeed any country, if the overthrowing of evil is not accompanied by a good and stable substitution. I know that many colleagues share my concerns at the rather fragmented make-up of what we sweepingly refer to as the “opposition forces”. I appreciate the efforts made with the formation of the national coalition last year, but we must acknowledge that the coalition is beset by its own problems, perhaps most notably the resignation of its own leader in March, and remains generally fractious and divided. It is also unable to assert proper command over many of the rebel groups and has been unable to develop or offer any substantial support in respect of the humanitarian crisis.
What I find of great concern is that its principle is not to engage in any dialogue or negotiations with the regime. In reality, this illustrates a continued desire to fight this battle through sheer physical force, despite the incalculable pain and suffering that the conflict has already caused to millions of people. While I abhor the grotesque practices and governance of President Assad, I also find myself unable fully to support a group which exists by this philosophy.
With the coalition’s ideologies for the future of Syria so varied, in some cases even contradictory, and with no will to engage in negotiation with its enemies, it simply cannot be right for us or any other country to pledge unyielding support to it in the wider sense unless the various factions can get together and be a more cohesive force.
I am very supportive of the non-lethal assistance that we have so far provided. Such technical advice, training and basic equipment will help the opposition forces better to protect themselves and other civilians. I was pleased to hear the Prime Minister commit to doubling this assistance by the end of this year.
However, the decision that some are calling for—for us to put our own powerful weapons, designed to cause maximum damage and often death, in the hands of people lacking a true unified ideology—carries with it many concerns. It would be dangerous, costly and, frankly, a substantial risk to both the Syrian people and the opposition members themselves.
We also cannot be sure where such weapons will actually end up once distributed on the ground. I know that the Foreign Secretary has made it clear that, if arms were provided, they would not be allowed to fall into the hands of extremists, but I would like a little further clarity on exactly how we can guarantee such a claim.
In addition, we must consider what will happen to such arms when the conflict finally comes to an end, whatever the outcome. One has only to cast one’s mind back to the Libyan crisis and the subsequent, exhaustive efforts made by the West in sourcing and retrieving the plethora of weapons that were lost in the post-war chaos. Supplying arms would seem to be a slightly contradictory move, in that it poses a threat to the very long-term stability that some believe we can achieve by arming the rebels in the first place. We are making these decisions in the interests not just of the conflict’s outcome but also of the safety and security of the Syrian people, who continue to suffer so greatly.
In May this year, I was privileged to be invited by His Majesty King Abdullah II of Jordan to visit his country with a party of British politicians. Back in April and before our visit, I spoke briefly in your Lordships’ House on the subject of refugees fleeing Syria, in particular those who have crossed the border into Jordan and are now settling there. I should like to make a reference to this once more.
During our five days in Jordan, our delegation had the opportunity to discuss many of the political, social and financial challenges facing that country. One of the most significant impressions that we were all left with was that of the plight of refugees fleeing across the border from Syria. About 400,000 Syrian refugees have fled to Jordan and, of those, nearly half arrived in the first quarter of this year.
As the crisis in Syria deepens, the pressure on neighbouring countries such as Jordan becomes ever harder to address. For example, Jordan anticipates a large number of Syrians seeking refuge there during the remainder of this year. Refugees in dedicated camps, as I was able to witness during my visit, are being well looked after and cared for in the circumstances. The Zaatari camp alone provides home for 140,000 refugees, and the total refugee population at present makes up about 6% of the entire Jordanian population. The situation will be aggravated by the influx of other refugees.
Jordan is a country which has experienced a slowdown in economic growth, and its budget deficit is already creating a challenge. Jordan’s ability to address that fiscal issue is hampered by the chaos in Syria; it needs more help to address the costs of the crisis.
In the medium term, there are also grave implications for public services in Jordan. Jordan is allowing Syrian children to register in schools at no cost, and 80 new schools are anticipated to be needed in the coming year. Similar pressures are to be found in healthcare: there is a crisis of resources and hospital expansions will be necessary to provide for the needs of a growing refugee population.
Last year, the crisis cost Jordan about $251 million. The cost this year is projected to be a staggering $851 million. Jordan is an impressive country, but it is finding it difficult to cope with the situation, and there are severe pressures inflicted on the country. As an international community, we have a duty to see that more should be done so that the costs are not born by Syria’s neighbours alone.
The UK is one of the largest bilateral donors to the Syrian crisis. We have provided £171 million on vital assistance for refugees who have fled the Assad regime. That includes £26 million for support to Jordan. The Prime Minister announced at the recent G8 conference that further amounts will be provided. Our funding is providing food, as well as clean drinking water. The UK has also provided clinical care and counselling to the refugees. I commend our Government for the valuable support and help that we have provided and continue to provide to the countries affected by the Syrian crisis.
It is clear that a long-term solution to the conflict is some way off. The Government are to be congratulated for what they have done to seek to engage diplomatic pressure for an effective international response. The Secretary of State has shown real leadership and the Prime Minister has worked really hard.
I welcome the Government’s efforts to achieve peace and bring various parties to the negotiating table. I hope that we will see the proposed Geneva II conference taking place. In my opinion, the only solution will be a properly negotiated political settlement, one that involves Russia and, if possible, Iran. Only by bringing the interests of everyone to the table will we be able to make progress that is comprehensive enough to make a difference that will actually endure.
I feel that military action alone will not resolve the crisis in Syria. I also fear that if we increase military support to the opposition forces, Russia will augment its support to President Assad, and the crisis will spiral further. Different parties must talk to one another and arrive at an acceptable solution. We achieved the right results in Libya by military intervention, but circumstances are very different in Syria. We would of course all like to see a freer, more accountable Middle East with Governments who are more democratic and engaging with their people.
Lord Morris of Aberavon
My Lords, last Thursday the noble Baroness, Lady Warsi, to whom I am grateful for opening this debate, was asked point blank by the noble Baroness, Lady Falkner of Margravine, whether—I paraphrase—given the assurances of the Prime Minister in the House of Commons, there would be a vote prior to any decision to give arms to the Syrian opposition, and what would be the arrangements in the Recess. I regret to say that the briefing of the Minister of State did not deal adequately with the situation. She said that the House of Commons would,
“have the opportunity to discuss the issue”—[Official Report, 2706/13; col. 859]—
and that she would consult on what would occur if Parliament was not sitting. Today she was much clearer. She said—if I have the words correct—that Parliament “would be engaged”, and I think she said that Parliament would have to agree.
On 19 June the Prime Minister said that we have,
“a big commitment to come to the House, explain, vote and all the rest of it, but obviously Governments have to reserve the ability to take action swiftly on this or other issues”.—[Official Report, Commons, 19/6/13; col. 909.]
Of course, in the development of what I believe is now a convention for parliamentary approval, there has to be such a reserve power for speedy action if the country is in danger. However, this is not that kind of situation. The Government must make abundantly clear their commitment to a vote of approval—I hope that they already have, but perhaps they could repeat it—and spell out what will happen in the Recess.
It used to be said that going to war did not need parliamentary approval. Technically, for a whole host of legal reasons, we have not declared war since declaring it against Siam in 1942. The most usual scenarios today are armed conflict or the commitment of troops. In the past, Governments were able to act under the royal prerogative—what Churchill deemed “the people’s prerogative”—but all that is changing. Parliamentary approval for the war in Iraq broke new ground.
If one couples that with a report of your Lordships’ Constitution Committee in 2006—to which the noble and learned Lord, Lord Mayhew, and I gave evidence as former Attorney-Generals—one sees that the convention on the need for parliamentary approval is firmly developing. I find it difficult to visualise a situation short of an extreme crisis where armed conflict would be undertaken without parliamentary approval. I would argue that the supply of arms, with the possibility of mission creep, comes very near to engaging in armed conflict, and that there is a need there, too, for parliamentary approval. Indeed, I would like to hear the argument for why it would not be covered by the growing convention.
Not for the first time, the Security Council is paralysed. There is no Security Council resolution that I know of that would permit the supply of arms. Arming the rebels could be seen as an illegal use of force contrary to Article 2(4) of the UN charter. I note that in May 2013 the European Union lifted its arms embargo, which means that the transfer of arms, subject to certain conditions, could be legal under European law. There could be at least five legal objections to supplying arms after the lifting of that embargo. Even the arms trade treaty signed in June of this year, which is yet to be ratified, requires states to abide by the UN charter.
I would counsel a close examination of the United Kingdom’s vulnerability at international law if it implemented the European Union’s lifting of the ban. Much as we are enjoined and have a duty as Ministers, politicians and the Armed Forces to obey international law, there are precedents in certain circumstances where there is an overwhelming humanitarian disaster for acting in the absence of an appropriate Security Council resolution.
In 1991 my predecessors as law officers enunciated the germination of, and indeed blessed, the doctrine of intervention in the absence of a Security Council resolution to provide for a no-fly zone to protect the Kurds and the Marsh Arabs in Iraq. As the Attorney-General, I was faced with a similar impasse in the case of Kosovo, where I had to hone and develop that doctrine and provide what I believed in those particular circumstances was a legal basis for Ministers and the Armed Forces to act. Representing the United Kingdom, I had to defend our stance for five long days in the International Court of Justice at The Hague. It is possible, whatever my views about non-humanitarian intervention at all, that it may have to be prayed in aid in the circumstances of Syria if parliamentary approval is obtained.
I shall set out briefly what I believe are the necessary requirements following Kosovo. First, there has to be convincing evidence, generally accepted by the international community as a whole, of extreme humanitarian distress on a large scale requiring immediate and urgent relief. I have no doubt that this is satisfied. Secondly, in all the circumstances there is no practical alternative to the use of force, if lives are to be saved. This is much more difficult; it depends on the action proposed, and judgment has to be exercised. Thirdly, the proposed use of force—in this case, the supply of arms—is necessary and proportionate to the aid proposed, which is the relief of humanitarian need, and is strictly limited in time and scope to that end; that is, it is the minimum necessary to achieve that aim. I argue that the supply of arms could be deemed to come under what might be called the rubric.
The doctrine is not without controversy. Some distinguished academics, perhaps from the comfort of their ivory towers, find the doctrine unacceptable. I respect them. They did not have to face the overwhelming humanitarian disaster that I had to face, or to advise my colleagues. Others take the same view. Having set out what I believe are the legal grounds that might justify acting, given the history of intervention in Afghanistan and Iraq, I would nevertheless counsel against any intervention until we were satisfied that there was very wide acceptance of whatever action we took and we were confident that our actions both were right and would work to bring peace to these long-suffering communities.
Wars used to last for five years; now 10 years, and more, go by very quickly. As a relatively small nation in economic terms, is it in our national interest to embark on such interventions without much broader unanimity across the world?
Lord Alderdice
My Lords, the noble and learned Lord, Lord Morris of Aberavon, began his intervention by quoting the question that my noble friend Lady Falkner of Margravine asked the Minister quite recently about whether, if the Government were minded to provide weapons to the opposition in Syria, your Lordships’ House would have an opportunity to express a view. As the noble and learned Lord has made clear, the Minister was unable to give a full and clear reply. She seems to have moved things forward a little today in her introductory speech. I thank her for that, as have other noble Lords, and for the opportunity for today’s debate. However, it seems clear even at this stage in the debate that there is very strong resistance to the idea that the Government should arm the rebels or should participate in arming the rebels, so I seek specific assurance from my noble friend that were the Government at any stage minded to move in that direction, today’s debate would not be regarded as an appropriate calling in of advice from your Lordships’ House and that there would be a subsequent debate, as has been undertaken for the other place, whether or not your Lordships’ House is in recess.
This is a major issue, and I wish to say why I think it is so. When the Berlin wall came down and the Cold War drew to a close, we all rejoiced at the opportunity for a change in the world order we had grown up with, a world order in which it seemed clear that there were the good guys and the bad guys and we were the good guys. In a very interesting and important speech, the right reverend Prelate the Bishop of Truro advised us against regarding foreign policy as best conducted on the basis of good and evil, and when a right reverend Prelate tells us to be careful about regarding things on the basis of good and evil, we would be wise to pay attention.
I think the right reverend Prelate was right because at that time the possibility arose of a new world order constructed on a different basis, a multipolar world where there would be various kinds of arrangements and engagements, but we failed to achieve that. We paid attention to a long-term intervention in Afghanistan when perhaps something much shorter and sharper would have been appropriate, if anything was. We got ourselves embroiled in Iraq in a completely inappropriate way. I supported the intervention in Libya, but we must accept that there have been untoward consequences in other countries apart from the situation in Libya. The most important thing is that in failing to create a multipolar and robust new world order we left a vacuum of power structures, and nature abhors a vacuum, so when the Arab awakening arose, it arose without any kind of structure that could enable people to move forward in appropriate ways and we find something much more destructive, regressive and chaotic.
Borders no longer provide a structure, not only because the people who live in those countries do not regard them as borders that they created but because they see themselves principally not as members of nation states but as people whose responsibilities and relationships are far outside the nation state and depend much more on tribal, religious and other transborder responsibilities and relationships.
When I look at the situation in Syria, I fear that having had the opportunity of moving to a new world order that was not based on one side and the other—good and evil, black and white—we are falling back into precisely that, perhaps with many of the same actors. It does not seem to me that it is simply a question of Mr Assad and his colleagues against the Syrian rebels. I see Russian warships in the eastern Mediterranean lining up and saying to Mr Obama, “I’m sorry. We draw a line”. Although it is the case, as noble Lords have said, that Mr Assad is seen as Russia’s man in the region, Mr Putin is saying to the United States, “Stop recurrently operating without Security Council resolutions; stop taking it upon yourself to decide what you and a coalition of your willing colleagues will do. That is not international law. That is not an international order that we will accept, so we are drawing a line, and we are going to support Mr Assad, whether he is a good guy or a bad guy, because there is a bigger question here of whether you are going to respect some kind of order or whether you will be the determinant of order”. I think Mr Obama realises that and is a little cautious. It would not be a good thing for this country to be liaising with Senator Kerry to push President Obama into some kind of intervention.
It is easy to pillory President Assad. I remember the first time that I went to Damascus, some years ago, specifically because I felt that Syria was an important area and I wanted to meet the Foreign Minister to see whether there was any possibility of an agreement between Israel and Syria at that time. There were indications that there was a preparedness to engage. Indeed, the Syrians said, “Yes, we would like to find a way of engaging and finding a peace agreement, because we believe that peace in the region would be worth while. Are the British Government prepared to engage?”. Well, the British Government did engage, but they did so with a finger-wagging diplomacy which said, “If you do not do what we say, it will be worse for you”.
I returned again, this time to meet President Assad. Unfortunately, his brother died just the day before I arrived, so I went again to meet with Walid al-Moallem, the Foreign Minister. Still there was a preparedness to engage. That opportunity was not taken up either.
We therefore find ourselves with everything deteriorating and much blood being spilt. People can say with ease, “These are the good guys and this is the axis of evil”. In truth, however, some of those whom we regard as our allies have been contributing to some of the difficulties in the region. My noble friend Lord Ashdown has pointed out that weapons are coming, if not from the Saudi Arabian Government, then at least from Saudi Arabian businesses’ pockets, and from the Qataris.
We need to be cautious, but not about engaging; on the contrary, we need to be energetic. When a problem of this kind threatens to blow out all over the place, we need to help to create some security in the region. We need to be more energetic in helping to sustain the stability of Jordan and Lebanon. Certainly, when I was in Lebanon recently, I was much more disturbed when I came away than before I went. It was clear that things were deteriorating very quickly indeed. Even Turkey, which we thought was a relatively stable country, is no longer as stable as it was on its eastern borders; even within the country itself, difficulties are arising. Of course, we have not contributed to an entirely stable Iraq; that much is clear. I do not say that we should be staying out of the problem. We have relationships and an understanding of the region which is substantially greater than many other countries. We should use that relationship and that understanding of the history of the region.
Secondly, we should be doing all that we can to encourage others to assist in the stability of countries such as Jordan, Lebanon, Iraq and Turkey. Their humanitarian problems are enormous—by the way, not all the refugees arriving there are unarmed; let us bear that in mind. We must understand that the outcome in Syria may or may not leave Mr Assad in place. We do not know. I have often heard Governments, including those in London, saying that they would never negotiate with this, that or the other rascal—only to find themselves doing exactly that five, 10 or 20 years later. I remember saying that we would have to talk with the Taliban, and was told I was a naive fool who was on the wrong side. Well, now we are negotiating with the Taliban when it is far too late, when it knows perfectly well that it has only to sit tight for a few more months and watch us depart, tails between our legs. Had we negotiated with it at the right time, there might have been some possibility—I put it no stronger than that—of a different outcome.
We must be a little careful, but we should be energetic, not sitting back or avoiding getting involved. We should not be providing weapons in a situation where there are more than enough, but be energetically involved in trying to persuade our allies, and those with whom we differ, that the future is to be found in trying to stabilise the region. If not, I fear that my noble friend Lord Ashdown is right: we may be looking at the beginning of a bloody Sunni/Shia civil war across the whole of the region. By the way, it will affect us here. I have already had colleagues at the other end of the Building telling me about Shia constituents who are worried about what is going to happen when some of their Sunni counterparts in London constituencies start to take these things on to the streets here. This is not just about far away places, or far away problems. We should therefore be energetic in our engagement in diplomacy, not in providing weapons.
Lord Hannay of Chiswick
My Lords, the opportunity to debate events in the Middle East could not be more timely or more necessary. I fear that this will not be the last occasion on which those words or their equivalents will be uttered, given the near certainty that we face a long period of instability in the Middle East region. The rumbles of thunder from Tahrir Square last night are a reminder of that.
While it may indeed be true, as a number of commentators have observed, that Britain’s capacity to wield influence in the Middle East is on the decline, and while it is certainly true that our capacity to exert influence there by acting alone has all but disappeared, we should not ignore the uncomfortable reality that the Middle East has a continuing and perhaps growing capacity to influence us, whether in respect of our energy security, the threat of terrorism, the rising flow of refugees and asylum seekers or the risk of spreading hostilities on Europe’s doorstep. Neither complacency nor hand-wringing inertia is likely to be the best way to promote and defend our national interests.
I will focus my remarks on three topics: the civil war in Syria, the prospects for negotiations with Iran following its recent presidential election, and that well known oxymoron, the Middle East peace process. During the two and a half years since Syria began its slide into civil war, no party has emerged with any credit, and none has achieved any of its objectives in a sustainable way. While the regime of Bashar al-Assad has hung on by the skin of its teeth, it has lost all legitimacy and has committed horrendous war crimes, for which one must hope that it will one day be held to account. The insurgents, while controlling substantial parts of the country, have not yet rid themselves of the Assad regime, have not achieved a convincing degree of unity and have not reassured minorities that they would be secure in a post-Assad Syria. The insurgents have also undoubtedly committed a number of human rights abuses themselves.
The international community has been prevented by a series of Russian and Chinese vetoes in the UN Security Council from fulfilling its responsibility to protect Syria’s civilian population from a regime that has seen fit to bombard them with Scud missiles, cluster bombs and, in all probability, poison gas. It is frankly a sorry story, and one that should discourage us from thinking that more of the same policies will bring about results. Having listened to the right reverend Prelate the Bishop of Truro speaking about good and evil—about which I am sure he is a better judge than I—I still assert that what the Assad regime, father and son, have done to Syrian civilians is evil.
The longer the civil war continues, the worse the outcomes are likely to be for all concerned. Signs of regional instability spreading beyond Syria’s borders are there for all to see, in particular in the Lebanon. It is in that context of abject failure that one needs to judge the Government’s decision to prevent any extension of the EU’s arms embargo on Syria. I think that they were entirely justified in doing so. The analogy is not so much with Bosnia in the 1990s but—as the noble Baroness, Lady Falkner, said—with the Spanish civil war of the 1930s, when the democracies, Britain and France, imposed an arms embargo while the dictators, Germany and Italy, poured in arms and soldiers. Now, Russia and Iran play that role, and Russia is preparing to send to Syria the S300 weapons system, which will have major regional destabilising results. The Spanish story did not end terribly well, and nor would an extension of the EU’s arms embargo on Syria have done so.
Since the decision was made to drop the EU arms embargo, a debate has raged in this country—and in this House this afternoon—over whether or not to arm the insurgents. The debate has focused on that issue almost to the exclusion of all other aspects of the Syrian crisis, when we should surely be taking a wider look at the challenges we face. Amid all the denunciations of arms supplies, the gold medal for hyperbole and opportunism must surely go to the Mayor of London. Not all the arguments deployed against supplying arms seem terribly convincing. Will refusing to supply weapons make us less vulnerable to terrorist attacks in future? I doubt it. Will the likelihood that some of the weapons will fall into the wrong hands put us directly at risk? Our soldiers in Afghanistan are not being killed by arms that the West supplied in the 1980s but by improvised explosive devices. Is enabling the insurgents to hold their ground better against Assad really contrary to our interests? I doubt that, too.
Here, then, are three elements of a wider strategy, which we might consider pursuing. First, we should put much more effort and emphasis into the earliest possible convening of a negotiating conference and seek to underpin that conference with a robust UN Security Council resolution based on the ideas of Kofi Annan and Lakhdar Brahimi for a transition. Secondly, instead of haggling with the Russians over whether Assad’s forces have already used sarin and other poison gases, we should concentrate on preventing any further use of it by tabling a UN Security Council resolution requiring Assad to admit UN chemical weapons inspectors and give them unfettered access to any sites where past or future allegations of use are made. Thirdly, we should seek to agree with the Russians and Chinese that none of the five permanent members of the Security Council would send any weapons or ammunition to Syria during the period up to and including the negotiating conference—a self-denying ordinance that could be extended if all parties were negotiating a transition in good faith. This would underline the crucial role of the conference in future decisions about the supply of weapons.
On Iran—I hope that the Minister will fill the lacuna in her opening statement about that country when she replies to the debate—it is no doubt wise to be cautious about overstating the significance of last month’s presidential election. We have yet to see what sort of negotiating hand the new President will be given by the supreme leader, but the fact that an election with genuine elements of democracy occurred and was accepted in place of the travesty of 2009 must surely be welcome, as must be the shift from the raucous populism of Ahmadinejad’s public pronouncements. So when negotiations with the 3 plus 3 resume, there could be a genuine opportunity—and it could be just about the last one on offer as Iran’s nuclear programme advances.
That grand master of modern diplomacy, Henry Kissinger, advocated that, in negotiations with obdurate adversaries—he was, of course, talking about the North Vietnamese—it worked better to put a substantial package of compromises on the table rather than to proceed with an incremental approach of small steps, which is what the 3 plus 3 have tended to deploy up to now. That would seem sage advice at the present juncture with Iran. Should we not now be ready to accept that Iran can continue with a programme of low-level enrichment so long as intensive international monitoring through the IAEA’s additional protocol, and probably other special inspection mechanisms, are put in place? Would it not be wise for us to encourage the US to open up in parallel a direct channel of communication with the new President of Iran?
In conclusion, and very briefly, I shall say a word about the Middle East peace process. However discouraging the auguries, this is surely no time to subject the new US Secretary of State, who seems to be rolling up his sleeves with a will, to a deluge of cynical disparagement, as so many commentators are doing. Rather, we, too, should be thinking of ways in which to help the process forward. Should we not be thinking of imaginative ways in which Israeli settlements on the West Bank could remain within a Palestinian state and Israeli Arab citizens could find a more secure place within an Israeli state? It is a long time since any new element was introduced into that longest running dialogue of the deaf, and I wonder whether it is not time to think a bit wider than we have done hitherto.
Lord Bates
It is a privilege to follow the noble Lord, Lord Hannay, who is always very thought-provoking. The only point with which I slightly take issue is more a moral one than a foreign policy one about the line between good and evil. Far too often we hear portrayed in public discourse, particularly in regard to foreign policy, that there are unblemished good people and despicable bad people. We align ourselves with the good but, when we intervene, we find out that they were not quite as good as we thought and the bad were not quite as bad as we thought. I am reminded of The Gulag Archipelago by Alexander Solzhenitsyn, in which he reminded us that the line between good and evil runs not through religious groups or nation states but through each and every human heart. That is something we need to bear in mind as well.
I pay tribute to my noble friend Lady Warsi for introducing the debate. The noble and learned Lord, Lord Morris, reminded us that she was on duty in this House on Thursday last week, replying to a Question, and here she is again today. Over the intervening weekend, she was in Afghanistan, Pakistan and, I think, Kazakhstan. She has amazing energy and dynamism. If there was ever an award for value for money on the part of Her Majesty’s Ministers, she would come top of the list in my view.
Like most people, I have been deeply moved by the scenes we have seen every day in Syria. Last year, during the Olympics and Paralympic Games, I could not quite bring myself to celebrate this great party in London when many of the parties to it were actively engaged in a humanitarian disaster in Syria. Therefore, I went to Lebanon, probably fairly naively in many people’s view, to try to offer humanitarian assistance, and ended up in the Bekaa Valley, where I saw the wonderful work that organisations such as World Vision were doing.
One of the hopeful things which struck me was that I had expected to see mass refugee camps in the Bekaa Valley but did not do so. When I asked where they were, I was told that such is the generosity and hospitality of the people in that region that they had taken all the refugees from Syria into their homes and the humanitarian aid was being distributed to the people who had taken them in. I was moved to find out that they would literally give the refugees their last cup of flour or their last glass of water.
After a couple of days, we went to Zahlé, a Christian town overlooking the Bekaa Valley, where one evening I went to the home of a very gracious academic from Damascus who had been exiled to Zahlé with his family. As is the wont of politicians, I wanted to know what the quick fix was and what needed to be done. In a fairly heavy Arab accent, he said, “You need to understand history.” When I replied, “Tell me about it”, he said, “No, you need to understand your history in our history.” Again, I did not quite understand, so he patiently explained to me that the best thing I could do was not necessarily to be there in that situation but to go back and learn more about our country’s history in that region.
I did not go back to London but to Beirut. Thanks to a backstage pass at the American University of Beirut, I managed to get access to a comprehensive reading list and sat in café-bars in Hamra reading up on what had happened. I was frankly amazed because there was much of the history that I had not appreciated. It stretched back to 1798 and the Napoleonic invasion of Syria, which then led the British to consider that their line of supply to India, the jewel in the crown of the Empire, was potentially under threat. We immediately decided to invade Afghanistan and had the first Anglo-Afghan war because that country was to be a buffer state. We did not like the person in charge there, so we changed him and put in someone we thought was more favourable to us. They did not last long and we were back 30 years later, involved in the second Anglo-Afghan war, this time with a larger force to back up a despotic leader who mercilessly oppressed his people. However, in exchange, he allowed his foreign policy literally to be dictated by the British. That situation continued for a while.
The Russians also had interests in and wanted to make moves towards India, and expressed a desire for a greater stake in Afghanistan. That led to a carve-up between Russia and Britain—no Afghans were involved—along the Durand line. If history tells us one thing about British foreign policy, it is that the one area in which we are deficient is drawing lines on a map. We do not have a particularly good track record in that regard, whether it was Radcliffe in India, Pakistan and East Pakistan, Durand, or Sykes-Picot in Syria. We made those and further agreements that culminated in the collapse of the Ottoman Empire, which the noble Lord, Lord Wood, mentioned in his excellent speech. The area was also divided up under the Mesopotamia mandate. I read writers such as Gertrude Bell, TE Lawrence and Aubrey Herbert and my eyes were opened to what had been happening.
I realised afterwards how important it is to understand how we are viewed in that region. Therefore, when we come in with thoughts about arming one group or another, or intervening in a particular area, it can be misconstrued. I have noticed that there are three historians in the Foreign Office, and my right honourable friend the Foreign Secretary, as a historian, is keen to expand our historical access in the Foreign Office. The current historian there has remarked that some of the people of Helmand think that the British are there today to avenge the defeats of the first, second and third Anglo-Afghan wars—I forgot to mention the third. Therefore, understanding history is crucial to all this. It was Edmund Burke who said:
“Those who don’t know history are destined to repeat it”.
If we can understand more about how we are perceived, we might draw a few conclusions. The first is that we do not have the basis or moral authority to act alone in that region. Going back 200 years is one thing, but I have to say that the past 10 or 20 years have not been too distinguished either. We need to be very conscious of that. The only legitimate means by which we can engage in the Middle East is through the United Nations. The fact that we cannot do more through the United Nations is in many ways a result of what happened when the Chinese and Russians felt that they were duped by certain resolutions relating to Iraq and Libya. Therefore, the first thing we could do would be to repair those relations with China and Russia so that we get a unified voice.
I do not think there is any doubt that the future of the Middle East lies in the hands of the people of the Middle East. They have to resolve this matter themselves. Part of our contribution to that will be to acknowledge that, whether it was the Russians during their imperialist time, the French during their imperialist time, the Germans with the whole episode of building the Berlin to Baghdad railway before the last war, the British or, more recently, the Americans, far too often we have seen the Middle East as something of a plaything or an instrument to be tackled.
I end with a quotation from George Curzon, a British Foreign Office Minister who went on to become viceroy of India. He categorised that whole period of 19th-century intervention in the Middle East as the “great game”. He said:
“Turkestan, Afghanistan, Transcapia, Persia—to many these names breathe only … utter remoteness … To me … they are the pieces on a chessboard upon which is being played out a game for the dominion of the world”.
We have a history in that region that is part of the problem in that region. Being honest and open about that and seeking to engage with people, encouraging them to make their own future without foreign intervention, is the only way forward.
Lord Judd
My Lords, it is always good to hear the noble Lord, Lord Bates, in our debates. He brings a real sense of deep humanitarian commitment, of learning and of analysis informed by human reality. Those are great assets in our deliberations, for which all sides of the House should be grateful.
At the end of last week, I was in Israel and Jordan, where I had a wide range of very interesting conversations. As I listened to the noble Baroness introducing the debate, I thought that what she was saying related very well to the preoccupations in those conversations. However, what was telling during the few days that I was in that part of the world was the almost total preoccupation with Egypt. I think that this House must take what is happening in Egypt extremely seriously. If what is happening there deteriorates and things spiral still further out of control, it is not impossible that that will put a different perspective on our current preoccupations, because we will be absolutely consumed with the implications of what is taking place. Clearly, the issue is highly complex and it affects the stability of the whole region.
I was challenged by the very interesting contribution of the noble Lord, Lord Ashdown. I think that in future I shall refer to it as the “Ashdown analysis”. That, too, has to be taken very seriously. What is really going on and what really is the strategic situation in which we are caught up? It is worth looking at some illustrations of that: the pressure on Turkey and how that interplays with domestic politics within Turkey; the involvement, to which the noble Lord, Lord Ashdown, referred, of Iran, and the game that Iran is probably playing; the destabilisation, again, of Lebanon—just in the past 10 days there have been serious casualties in northern Lebanon, with the possibility of another collapse of order in Lebanon—and tension on the border with Israel.
A new factor is the expansionist ambitions of Hamas, which has been thwarted in its attempts to become part of the Middle East peace process and to have a presence in the deliberations on the future of that particular Palestinian-Israeli conflict. In my view, that has strengthened the militant elements within Hamas, which are leading it into dangerous expansionist experiments.
Only a few weeks ago there were great celebrations in the Foreign Office at the conclusion of the arms trade treaty. This was seen as a triumph of bipartisan, consistent work by a lot of officials and Ministers, who had brought about a satisfactory solution. However, I found it quite extraordinary that virtually at the same time the conversation was beginning to develop about the possibility of sending arms to the rebels in Syria. I just could not reconcile such a proposal with all the satisfaction that had been taken in concluding the arms trade treaty. Obviously, we all know that weapons are very dangerous, and central to that treaty is that weapons in the wrong hands are very dangerous indeed. Therefore, their use is a consideration that must always be borne in mind in relation to the export of arms. It is important to ask in whose hands the arms will finally end up, how they will be applied and what the objectives are of the people into whose hands they may ultimately land. Also central to the arms trade treaty is a preoccupation with human rights. How could we talk about exporting arms to people who—although obviously not on the scale of the Syrian Government—are too involved in the crude abuse of human rights? I have never heard those two contrary elements of our situation reconciled to my satisfaction, and I wonder whether we can hear more about that before the debate ends.
I want to say a word or two about humanitarian assistance. The first point to make is that humanitarian agencies in this country are desperate to get access to all parts of Syria and are very anxious that the Government should pursue this with all possible vigour, not least in the Security Council in trying to bring the Russians on board, at least on this. Everyone—rebels and government—should be pressurising all parties to the conflict to make access by humanitarian agencies a possibility. Of course, there is a role for the UN Security Council in that context. Great credit should be given to the British Government for what they have done and the lead they have given, but there is still a tremendous amount to be done in getting the world to face its responsibility of fulfilling the pledges that it has given. It is cruelly cynical to be at conferences at which great amounts of assistance are pledged but do not materialise. The current UN appeal is to last for only for six months, and in June only 28% of the $5.2 billion needed had been subscribed.
In Syria, 6.8 million men, women and children are in desperate need of assistance. Since the conflict erupted, more than 1.5 million people have fled to neighbouring countries. One has only to think of Jordan, where I was last week. There is a huge burden on Jordan. In one camp alone, the Zaatari refugee camp, there are 150,000 newly arrived Syrians. That is on top of the 550,000 refugees from Syria in Jordan as a whole and the 600,000 Syrians who were already living in Jordan. If one needed an illustration of the destabilisation within the Ashdown analysis, as part of the Ashdown scenario being played out, we should think of that.
We like to feel that whatever our profound reservations about human rights in Jordan, it is a relatively stable country. But for how long will Jordan remain stable? Some have estimated that within a very short number of years, 25% of the population of Jordan will be refugees. How does one sustain stability and security in that context? Perhaps I may add that it also puts our own preoccupations about the movement of people, immigration and refugees in a very different light when one sees what the Jordanian people are absorbing and carrying, the burden on them and the effect on their economy and well-being.
All this makes a settlement of the Israeli-Palestinian issue more urgent than ever, and not less. I absolutely agree with the noble Lord, Lord Bates, that lasting, enduring solutions have to belong to the people in whose name they are being reached. They cannot be imposed on the people because they would not last. A settlement has to be rooted in a conviction across a wide cross-section of the population that it is something that they want and believe in. Last week, I had conversations with the Speaker of the Knesset, Mr Edelstein, and others. I also had a very good conversation with President Abbas of the Palestinians.
I do not belong to the ranks of those who despair of any movement in the situation. Tantalisingly, there is some chance of progress but if there is to be progress one thing is absolutely clear. We have to increase the number of Palestinians and Israelis being exposed to each other not as a problem, as analysis or in a stigmatised sort of way, but as people who are encountering each other, who are hearing each other’s perspectives and sharing each other’s agonies and professionalism. At a very interesting conference in which noble Lords were involved, there were hydrologists from both communities. They were fascinated by the work that they talked about together. That is essential because only in that way will we create the space around the negotiators for them to become more flexible and imaginative. I was very glad to hear that among the Knesset and the Palestinian leadership there was an understanding that this was a useful thing to do. I was there as chairman of the IPU’s Middle East committee and I hope that this is a matter on which the IPU may be able to help.
Lord Wright of Richmond
My Lords, in the light of many of the interventions made in the House today, including the very powerful arguments of the noble Lord, Lord Ashdown, I hope that the Minister can assure us that the Government will now urgently reconsider whether it is right, sensible, necessary, safe or effective to supply lethal arms to the Syrian opposition. I have seen, as presumably the Government have also, conclusive evidence that arms supplied to the Free Syrian Army by Saudi Arabia have ended up in the hands of Jabhat al-Nusra, closely allied as it is with al-Qaeda. It is evidence that must call into question the noble Baroness’s claim, in answer to the noble Baroness, Lady Symons, last week, that the Government have been,
“incredibly cautious about ensuring that”—
any—
“equipment … does not get into the hands of extremists”.—[Official Report, 27/06/13; col. 858.]
The Minister has told us again today that no decision has been made to send weapons to the Syrian opposition. However, a recent meeting in Doha, at which HMG were represented, is reported to have agreed to provide urgently,
“all necessary material and equipment”,
to the Syrian rebels. The Minister has argued that one purpose of arming the rebels would be to put pressure on President Assad to come to the negotiating table. However, President Assad has told his Russian allies that he is ready to negotiate. We may not believe him but he has said that. As far as I know, no single element of the Syrian opposition has agreed to negotiate.
It is an oversimplification to describe this conflict, as I have often, as a Sunni-Shia or Arab-Iranian war. In fact, it started as an uprising, mainly by the majority Sunni population, against a brutal regime dominated by the minority Alawite sect, of which Bashar al-Assad is a member, and exacerbated—this is not often mentioned—by widespread deprivation in Syria caused by five years of drought. It has now become a regional conflict between Sunni and Shia forces, backed on the one side by Saudi Arabia and Qatar, and on the other by Iran, Russia and Hezbollah. The escalation of this proxy war, increasingly involving non-Syrian fighters on both sides, is a threat to the whole region and beyond. It is not a conflict in which Britain has a direct stake. What we do have is an interest in working energetically—as the noble Lord, Lord Alderdice, has argued—for peace in an unstable area.
HMG are not alone in having consistently underestimated the extent to which President Assad and his Government can survive this externally fuelled onslaught. The military strength that Bashar al-Assad inherited from his father has also been underestimated. Of perhaps equal importance, so has the degree of support which the regime still enjoys from Syrian minorities and, indeed, from a significant proportion of the Sunni business community. The Prime Minister has claimed that we are trying to help form a transitional Government in Damascus which will respect the rights of Christians and other minorities in Syria. Perhaps I may remind the House of a book by William Dalrymple called From the Holy Mountain, in which he concluded that Christians in Syria in the late 1990s enjoyed greater freedom of worship and absence of discrimination than any other Christian community in the Middle East. We should not underestimate the very real fear of Christians in Syria, now much diminished in number but which until recently included a large number of Syrian exiles from Iraq, of any likely successor Government in Damascus. The same fear must be shared by the Druze and other minorities, including the very small Jewish and Yazidi communities. I am reminded of the couplet by Hilaire Belloc:
“always keep a-hold of Nurse
For fear of finding something worse”.
There has been regular, and sometimes strident, criticism of the Russians’ support for President Assad and his Government, both in the Security Council and over their supply of weapons for the Syrian armed forces. However, we should remember that the Russians are scared, as they should be, of the impact which a fundamentalist Sunni Government in Damascus would have on Russia’s own Muslim communities in Chechnya and elsewhere in central Asia, and indeed on the large Russian and Orthodox community in Syria. As the Russian Foreign Minister put it in an interview on 20 June:
“We need to [preserve Syria’s] territorial integrity, sovereignty, multi-ethnicity and multi-religious nature”.
We should also bear in mind the long strategic relationship which Russia has had with President Bashar al-Assad and his father. In the latter case, as I remember well, the Soviet Union had long had a treaty of friendship, dating back to the 1970s.
I would argue that the time has come urgently to reconsider our support for, and recognition of, a deeply divided and dysfunctional Syrian opposition, closely allied with Islamic terrorist movements. I believe that we should now try, with our European and American partners, to resume contact with what I have previously described in this House—I do not expect my noble friend and former colleague Lord Hannay to agree—as the legitimate Government in Damascus.
At its meeting on 22 June, the Friends of Syria Core Group, in which the Foreign Secretary took part, said that it,
“supported reaching a political solution … and affirmed their prior commitments … in favour of negotiations”.
I hope that the Minister can assure us that the Government still support the efforts of Ambassador Brahimi and will concentrate now on encouraging and supporting attempts by the Russians and the Americans to convene an international conference at which some end can be negotiated to this tragic and appalling conflict.
Whatever its effectiveness on the political track, we must also hope that a conference can help to raise desperately needed assistance for the refugees on a much more sustained and monitored basis. I would be interested to hear the Minister’s assessment of the current prospects for such a conference. I hope that we can also use our diplomacy to persuade our friends in the Gulf to think likewise, since it is they who will be more influential than any of us in dictating what happens in Syria in the coming months.
Lord Risby
It is always a great pleasure to hear from the noble Lord, given his considerable experience of the Middle East and of Syria in particular. I join all those who have spoken today in applauding the Minister for the comprehensive way in which she set out her speech today.
This debate is indeed timely as we grapple with the horrors of Syria, the instability in the Middle East and the Maghreb and a feeling that something must be done. However, in common with the citizens of France, the United States and others, there is a widespread revulsion in this country against any kind of involvement. Young British lives have been lost in Afghanistan and Iraq because of some poor political and logistical judgments that have dismayed the British people, and we have seen an echo of these problems on our streets.
My first visit to Syria was after leaving university in the 1970s. In 2000, President Hafez al-Assad died and the then Foreign Secretary asked me to join him to attend the funeral of the President in Damascus and to meet his son, Bashar, who had become President because of the death of his brother. It is worth remembering that there was a mood of optimism at the time that this young man, who had worked as an ophthalmologist in London, who was secular and married to a British-born wife, could somehow transform and modernise his country. Indeed, there were substantial improvements in the economy and rising prosperity—to a large extent Syria is self-sufficient in food—and, as the noble Lord has just pointed out, there remained the extraordinary and unique ability of the different communities to co-exist happily there, as Gertrude Bell observed 100 years ago. It is worth reminding ourselves of the tragedy of the two archbishops, by contrast, who have been kidnapped—one of whom is a long-standing friend of mine—and the Syrian Catholic priest who, in the most grotesque circumstances, was killed only last week.
I subsequently became a director of the British Syrian Society and so visited the country often and met President Assad many times. However, when the protests there started more than two years ago and the Syrian Government reacted appallingly, I immediately resigned, and I have been active in trying to assist in humanitarian efforts to that tragic country ever since.
Put simply, we have a weak man trying to be tough. His father, who really was a tough man, would never have landed the country in this tragic situation. Unless the situation in Syria is contained, the consequences are potentially horrendous for other countries.
Let me deal with some of the external aspects, which have been touched on a number of times today. The stability of our good friend Jordan is now clearly at risk; it is fragile at the best of times. There are perhaps more than 1 million Syrian refugees out of a population of 13.2 million. It is a small country lacking in resources, notably water. Most refugees are concentrated in the north. Syrians are competing—this is very difficult—with Jordanians for low-paid jobs, school places and healthcare. Rents have gone up but tourism has collapsed. The financial and humanitarian situation is dire for Jordan and its very existence is under pressure. It would be a great loss to the stability of the region.
As the noble Lord, Lord Williams, so graphically pointed out, the situation in Lebanon is, if anything, worse, with perhaps 1 million refugees comprising a sizeable proportion of the population. There will be no traditional Arab tourism this summer. The country has suffered in living memory, as we all recall, from a grotesque civil war, an Israeli invasion and in effect a Syrian occupation. Having gone through all this, intercommunal tensions and violence are now tearing at the country’s delicate social fabric. Turkey, of course, has a huge problem too with numbers, and that grows every day.
However, over-reaching this, as the noble Lords, Lord Ashdown and Lord Sheikh, said, are the daily eruptions of violence and murder between Sunni and Shi’ite—as spillover in part from what is happening in Syria—in Pakistan, Iraq, Egypt and Lebanon. The social fabric of Lebanon and Jordan directly, and the coherence of other countries in the region, are now at risk because of these splits of a ferocious religious variety.
I simply pose this question: whatever the difficulties, are the risks of supplying selected weaponry and training to chosen anti-Assad rebel groups greater than the potential immolation of the entire region—because that is what we are seeing? One hundred thousand have already been killed, millions have been displaced, either internally or externally, and Iran and Russia continue to supply sophisticated weaponry. My right honourable friend William Hague and my honourable friend Alistair Burt have worked tirelessly to find a way forward, as has the Prime Minister. We have been energetic in humanitarian relief and other support. However, we have the obvious situation—there is no point in being in denial about this—that again and again President Assad has simply refused to consider a political track, whether it has been initiated by the United Nations or the Arab League. For him it is quite simply regime and personal survival. That will not change if he thinks his superior weaponry will prevail.
We all hope for a Geneva II—our Government are certainly helping actively in this pursuit—and that it can provide an opportunity for the new Iranian President to be road tested. However, what really needs to emerge is a blueprint—at least in embryonic form at first—that gives some assurance to the Syrian people that their rights, and particularly their minority rights, will be constitutionally protected as part of this process of dialogue, and that if necessary there will be an international force to oversee this. I perfectly accept that it is counterproductive to call for President Assad to go now, ahead of any possible dialogue, whatever the justification—and there certainly is a great deal of that.
In a totally imperfect situation, the risks of declining to consider the supply of sophisticated weaponry and even additional basic equipment such as body armour will actually make the dialogue less likely, and some sort of declaration of constitutional intent should be formulated. The alternative that is now evolving before our eyes risks the collapse of at least two of the neighbouring countries right next door to Syria and a religious war of medieval proportions.
Lord Desai
My Lords, we are having a very rich debate. My noble friend Lord Wood started by mentioning the collapse of the Ottoman empire. We were then treated to very good historical accounts by the noble Lords, Lord Howell and Lord Ashdown, while the noble Lord, Lord Bates, gave us a flavour of what he has been reading. I could have spared him the trouble had he read my book, Rethinking Islamism, where I do it in 100 pages.
Let me put it this way. I see the Syrian civil war as just one chapter in a 40 year-old crisis of Islamic society in the Middle East. It started in 1973 after the third defeat of the Arab armies by Israel and of course the quadrupling of the price of oil. The secular socialist alternative in all the countries of the Middle East lost its prestige and a lot of people in the region turned to religion as the answer to their problems. If we follow that trail—we could go back to the Sykes-Picot affair, but let me stick to past 40 years—in country after country, and between countries, there has been a revival of religion, a hardening of Sunni and Shia identities, and among the Sunnis the revival of Wahhabism and Salafism, which has been encouraged partly because the Saudis got lots of money from the rise in oil prices.
The Iran-Iraq war lasted for eight years. It was one of the biggest wars in the Middle East, but none of us intervened. We may have supplied arms, but we did not intervene. Saddam proceeded to destroy as much as he could all the Shias’ means of livelihood in Iraq. I supported the Iraq intervention, not because of weapons of mass destruction but because I considered Saddam to be a danger to his own people. We have to think further along those lines. We now have a much more explicit chapter in the Shia-Sunni conflict in the Middle East and it is not going to stop. Whether we intervene, whether we have a Geneva II or a Geneva VI, the conflict will break out in another location, because this is a deep crisis in the Muslim society of the Middle East that has not yet been resolved as it has to confront modernity and its own weak position in the Middle East and to reconcile religion and civic life. We have here something that we ought to take a much broader view of.
If we do not intervene now, we will intervene later. I assume that it is going to go on and I do not think that we have the choice of not intervening. Sooner or later we shall intervene because this war is not going to come to an end any time soon. If we consider this to be a long-running Shia-Sunni conflict, we have to ask what the dangers are. In this case, and for the first time in 40 years, there is a serious danger of this war becoming much more general across the Middle East than any previous war has done, such as that between Iran and Iraq.
Noble Lords have already mentioned that Lebanon, Turkey and Jordan have been affected. Very soon, Israel will be affected. Given the strategic weapons that the Russians are giving the Syrians, it will not be much longer before there is a general war in the Middle East. It has nothing to do with whether we intervene or not; the dynamic of the war is such that there will end up being a general war across the Middle East. Whether we do or do not give any weapons, we will end up with Sunni terrorist groups or Shia terrorist groups. It is true to say that we are watching a general conflagration in the Middle East, and unless we understand its full dimensions we will be too preoccupied with our own particular, narrow and local role in this conflict to see the more general picture.
We ought to be thinking about this in the following terms. Would an intervention on our part now bring about all the unintended consequences that the noble Lord, Lord Ashdown, told us about? There are always unintended consequences following any action, so that is nothing new. Obviously we will do some things wrong, we will get into a mess and it will take a long time, but eventually some good may come out of it. There is one good thing that we would like to come out of any intervention, whether an armed intervention or a diplomatic one: a lessening of the probability of this crisis continuing for another 40 years. It would have to be a general confluence of all the Middle Eastern countries, not just Syria. The Israel-Palestine question would have to be a part of it. Unless we take a view on the very comprehensive nature of what is going on here, we will not be effective in our intervention. Obviously if there is an armed intervention, it would be better if we had friends to come along with us, but it is more important that we get along with them and take a comprehensive view of where we can intervene so that the next chapter is not even bloodier than this one already is.
Let me make a couple of points that are perhaps more controversial. The two subsequent big questions are going to be Iran and the problem of Israel-Palestine. I have not actually understood why Iran cannot have nuclear weapons. If India, Pakistan and Israel can have them, why cannot the Iranians? Pakistan is a very unstable democracy; or rather, not even a democracy at all. The more countries that have acquired nuclear weapons since 1945, the less the probability that anyone will use them. Indeed, nuclear weapons are among the few weapons that have not been used since their invention, unlike gunpowder. We ought to take a much broader view of what we object to in the Iranian plan for nuclear weapons. Obviously there is the fear that if Iran has nuclear weapons, the existence of Israel will be threatened. Therefore, any general and comprehensive dialogue on the Middle East has to include Iran’s ability to have nuclear weapons while at the same time guaranteeing that the Israeli nation will survive and is not threatened by anyone in the Middle East.
That leads to the Israel-Palestine problem, which a number of noble Lords have talked about. I do not believe that the two-state solution has any future, but I am old enough, and I have been a member of the Labour Party for 40 years, to recall that a long time ago the party had a one-state solution: a single, secular, multifaith state in which Muslim Arabs, Jews and Christians could live together. That will not happen and we will never be at peace.
Baroness Afshar
My Lords, I thank the noble Baroness, Lady Warsi, for this very timely debate. We all seem to have heard different things in the Minister’s statement. I got the impression that the Government were intent on negotiations and that the idea was that there should be quiet diplomacy before any kind of action. If I have heard right, I would applaud that and am very grateful because that was what I was going to suggest at the end of my speech.
The most important consideration about intervention in the Middle East is whether it would help yet another “fundamentalist” group of religious people. In my experience—both as a teacher of Islamic law and of courses on the Middle East, and as someone born and raised in Iran—it is when religion rather than citizenship becomes the badge of identity that death, destruction and the complete misuse of faith become evident.
I do not recognise the presentation of these borderless countries in the Middle East where people do not know their identity and they wonder about modernity. I had the good fortune to be born and raised in Iran in the century when modernisation and secularism were very much part of people’s experience. Not only was I raised as a secular person, with my religion accepted, but so were my mother and grandfather. In our family there are at least three generations, going back to the very beginning of the century, of accepting secularism without undermining faith. I grew up as a Muslim and used to fast with my one non-secular grandmother, who was very religious, but at the same time I was sent to a Catholic school run by the sisters of St Vincent de Paul. I was then sent to a Protestant school in the UK and subsequently went to a secular university at York. At no time did I ever feel defensive about my religion or the lack of it. When I was growing up, our life was patterned by Islamic feast days and fast days but, at the same time, by the Persian new year, which dates back 6,000 years to the Zoroastrian era. Muslims, Christians, Jews and Zoroastrians—people of any religion and none—lived, worked and intermarried. They had no problems—so much so that I learnt a great deal about Christianity through my aunt’s sister, who is a nun in the UK and has headed a convent. It seems to me that celebrating diversity, at least in Iran, goes a very long way back.
I also fear that I will have to disagree with the noble Lord, Lord Desai, who I admire greatly. It seems to me that the Iran-Iraq war was not about religion but was very much about borders and fear of religion. That fear of religion is exactly what we are seeing right now in Egypt. Egyptians are beginning to realise what fundamentalism, or any “ism”, means. I would suggest that Islamism, as experienced in Saudi Arabia, Iran and elsewhere, and Zionism, as experienced in Israel and elsewhere, have nothing to do with the teachings of the holy books. They have everything to do with grasping an identity, misinterpreting the texts and imposing a climate of fear, including fear of the other—those who do not have our religion. I had no idea who was a Shia or a Sunni and I still do not among all the Muslims with whom I work, and work very effectively, in a country where—thank heaven—Muslim women can sit in the House of Lords and be Ministers. I would like to wish very much the same thing for much of the Middle East.
That is where any intervention on the part of the Government that would advantage any religious group—Sunni, Shia or whatever—is going to be highly counterproductive and would actually cause more damage than not intervening at all. It seems to me that much of the Middle East is waking up to the fear of Islam and of what it can do. That is why the Turks are in the streets and why the Egyptians are in the streets. There is a real uprising from among the people themselves. They do not need to be told and certainly do not need intervention that would help a particular religious group and give it any kind of advantage. The situation in the Middle East is tumultuous enough and things are going from bad to worse. The very last thing that we need as Middle Easterners is for any Government to help one group rather than another. Of course negotiations are difficult and of course it is not easy to be peacemakers but, in my experience, what the British are fantastically good at is quiet diplomacy. That is where they are sans pareil. There is no other group I know who can work so effectively under the radar.
The experience of Afghanistan shows that, after years of war, we finally have to sit down with the Taliban and talk to it at a time when it seems impossible. There is no such thing as impossible in diplomacy. What is needed is quiet undercurrents of help, assistance and conversations. Please do not arm yet another group of fundamentalists. That, I think, would be a mistake.
Baroness Morris of Bolton
My Lords, it is always a pleasure to follow the noble Baroness, Lady Afshar, and I, too, thank my noble friend Lady Warsi for giving us this opportunity to debate this important and timely issue. There have been some exceptional and powerful speeches, which will merit rereading, I suspect, for some time to come.
It is now two and a half years since the tragic death of a street vendor in Tunisia, Mohamed Bouazizi, which triggered the astonishing train of events across the Arab world. These past 31 months have witnessed uprisings, the overthrow of regimes, the death of dictators and the election of new Governments; quickly followed by disillusion with those Governments as they failed to meet the expectations of their citizens. These months have also witnessed the deaths of tens of thousands of men, women and children in Syria. What started in Syria as a political uprising in March 2011, as many noble Lords have said, is now increasingly religious. As the conflict enters its third year, Syria’s tragedy is that sectarian divisions and religious hatred are fuelling the conflict, pitting Syrian against Syrian.
We can be certain when we say that Bashar al-Assad is a brutal dictator but we must also acknowledge, and condemn, the barbarous acts of cruelty perpetrated by some of the rebel groups; the kidnap of Christians, the wanton killing of Shia and the gruesome and public murder last month of 15 year-old Mohammad Qataa in Aleppo by Islamic jihadists. These factors should inform our judgment when we consider arming the rebels, some of whom are only one or two steps away from al-Qaeda. Syria, like whole swathes of the Middle East, is awash with weapons, as my noble friends Lord Ashdown and Lord Alderdice have explained. If we add to these weapons, we can have no guarantee that they would not be exchanged, stolen or fall into the hands of extremists. I fear the belief that the weapons would somehow stay in the hands of secular, pro-western forces, or that they can be tracked, simply would not hold true in the fog of war, with the utter unpredictability and fast changing dynamism of events on the ground.
Having said all that, I completely understand and am in no way critical of those who call for the arming of the rebels, and my noble friend Lord Risby is persuasive in his argument. The natural reaction of anyone observing such appalling bloodshed, with the death toll approaching 100,000, is to want to do something. However, I question that arming the rebels is the something that we should do.
We cannot just sit on our hands and do nothing. Our actions should be guided by what we can do—energetically, as my noble friend Lord Alderdice said—and not what we would like to be able to do. We can and must continue to intervene with humanitarian assistance. UNICEF reports that 1.6 million refugees have now fled Syria to neighbouring countries; as we have already heard, half of these terrified, displaced refugees are children.
I need to declare a number of interests: I am a former trustee of UNICEF UK; I chair the Conservative Middle East Council; I am president of Medical Aid for Palestinians; and I am the Prime Minister’s trade envoy to Jordan and the Palestinian Territories.
Last year, on a visit to the Palestinian refugee camps in Lebanon, I met and spent some time with families who had fled Syria. They were Turkmen, but had ended up in the Palestinian camp of Ain el-Hilweh. Their new homes comprised a tin roof and walls made from the cardboard packaging that protects washing machines and fridges. These walls might have afforded some protection in September 2012 but as I witnessed one of the coldest winters in the Levant on my television screen, I often wondered how those kind, hospitable but bewildered families were surviving.
Across the border, the Hashemite Kingdom of Jordan, with its customary generosity, has once again opened its heart and country to the dispossessed victims of man’s struggle against man. In a recent interview with the al-Sharq al-Awsat newspaper, His Majesty King Abdullah II said:
“How can we close the border in the face of a woman carrying an infant and fleeing under shelling?”.
But he went on to say that he fears Jordan finding herself in a difficult situation and not being able to provide relief for her Syrian bothers and sisters seeking a safe haven.
The international community must not for one minute underestimate the situation the neighbours of Syria find themselves in. I am proud that Britain has already spent £348 million on providing critical assistance to Syria’s refugees, making this the UK’s largest ever response to a humanitarian disaster. But there is much more to do. As the intensity of the crisis increases, 53% of all the Syrian refugees in Jordan have entered since the beginning of 2013. As of 15 June, there were 545,694 Syrian refugees in Jordan. That is 9% of the total population of Jordan. Translated into UK terms, it is as if a refugee population equivalent to the number of people living in Scotland had arrived in our country and become our responsibility. That would be massively destabilising to us—just imagine, as the noble Lord, Lord Judd, invited us to do, the impact on the Jordanian economy and public services, not to mention the scarce resource of water. We must do all that we can to support Jordan and all the other countries that have so generously and selflessly opened their borders to the dispossessed, and we must strive with all our diplomatic strength for sanity to prevail.
Before I finish, I wish to turn to another conflicted area where sanity also needs to prevail: Palestine. While the world, rightly, concentrates on the savagery of events in Syria, we must never forget, nor diminish our efforts to find a solution to the occupation and the oppression of the Palestinian people. The time is rapidly running out for a viable two-state solution, and with it Palestinian hope for the normality of life that we all take for granted and which is a vital component of the stability of Israel. There is much good work going on to build up civil society and encourage trade but all efforts now should be on a political solution and I am very pleased that Secretary of State John Kerry is seized of this. I hope that the British Government are employing some of the “quiet diplomacy” of which the noble Baroness, Lady Afshar, spoke.
Palestine and Syria both need the determined will of the international community. As in all conflicts, there cannot—and will not—be any outright victor, only a just solution that isolates the most extreme and works to ensure that everyone feels they have a stake in the future.
Lord Anderson of Swansea
My Lords, the subject today is the situation in Syria and the Middle East. Naturally, the focus has been on the tragedy of Syria but in the Middle East itself the foundations are shaking and all is connected.
There was apparent stability five years ago, with long-existing autocratic regimes in Egypt, Syria, Tunisia, Libya and Yemen. Today, only the monarchies are relatively untouched: Morocco is certainly untouched; Jordan is still relatively stable, although I refer to what the noble Baroness said about the very generous reception of the refugees by the King and people of Jordan. However, the long-suffering Palestinians in the camps in Syria will find the door closed in Jordan because of the fear of destabilising further the kingdom.
Of course, in most countries the human rights of minorities—particularly but not only Christians—are more threatened than before. Our view of recent events in the Middle East has changed radically. Today it is less fashionable to refer to the Arab spring. The mood of euphoria in Tahrir Square a year or two ago has been replaced by the demonstrations of yesterday against President Morsi, the new pharaoh. His supporters can counter only that he won the election, as if winning elections is sufficient for any democracy. The dilemma, as one experienced analyst wrote of Egypt, is that:
“With the Muslim Brotherhood the transition will be difficult: without them it will be impossible”.
The term “Arab uprising” is now more frequently used—although I understand that the US State Department is known to refer to “the Arab thing”—but all these terms suggest some uniformity in the several countries, when, as we know, one cannot attach one label to so many different national events. However, constant themes are the search for dignity, the loss of deference and the readiness to challenge authority. We refer to the current phase as transition but are puzzled as to what. This search for dignity, this loss of deference, refers not only to the Middle East but to adjoining countries such as Turkey and even, as we have seen, to Brazil.
Honest horizon-scanners should recognise that they cannot see beyond the first curve and that they failed to see the turbulence rising prior to 2008. Yes, there were fine analyses of the problems in the Arab world, such as the search for modernity; for example, successive UNDP reports on human development in the Arab world in the mid-2000s. However, the forecasters did not see the speed of events, just as they failed to see the Iranian revolution prior to 1979. This suggests that our policy planners should proceed in a spirit of humility and that we should have a certain scepticism about the likely scene in the Middle East in, say, five years’ time.
Middle East borders have become more fluid. I enjoyed the article by the noble Lord, Lord Williams of Baglan, in a recent World Today about the fluidity of those borders, which are perhaps even more artificial and certainly more recent than the borders in Africa after the Berlin Conference. But are we creating a new Turkish sphere of influence in the region? We think of the position of the Kurds, dealt a bad hand by history and now with a new dynamic not only from the Kurdistan regional government in Erbil in northern Iraq but from Turkey’s opening to the PKK. Perhaps this will ultimately be an attempt to recreate the old Ottoman Empire. Even in the previously stable Syria there is talk about an ultimate split with the Alawites perhaps retreating to their former, short-lived, post-First World War entity.
There is a danger also that conflagration may spread over national boundaries and engulf the whole region. The obvious example is Hezbollah’s incursion into Syria as a potential game-changer there and its impact on an already unstable Lebanon. There are skirmishes around the Golan Heights. President Assad may ultimately, in desperation, try to involve Israel in the conflict, but Israel has, so far, shown a masterly restraint.
It was the received wisdom up to, let us say, five years ago that Israel and Palestine were at the heart of all conflicts in the Middle East, but that dispute is surely hardly related to the current turmoil. No Israeli flags were burnt in Tahrir Square. Perhaps this is a good time, therefore, to attempt to restart negotiations. Secretary Kerry has been extremely active in his pre-negotiation phase and there are rumours of an Israeli settlement freeze—again—and the freeing of some Palestinian prisoners, but Palestinian divisions remain, as do the giant obstacles of refugees and, above all, Jerusalem. It would be interesting to have the judgment of the Government on the current prospects for the peace process.
I have said that forward planning is generally difficult; it is nowhere more so than in Syria. Commentators refer to a sea change having taken place over the past year. A year ago, the rebels were largely nationalists, secular and DIY. They have been replaced by more professional and more hard-line force, including international jihadists—hence the problem of arms supply, which so many noble Lords have touched on. It is rumoured that the US may begin to supply lethal arms within a month. The Prime Minister and the Foreign Secretary give the impression of wanting to follow and are edging in that direction.
The blunt truth is surely this: the readiness to intervene for humanitarian purposes is cyclical. It arose after the Chicago speech of Prime Minister Blair in 1999 and followed through with some successes in Sierra Leone and Libya, but then we had Afghanistan and Iraq and, as a result, there is no appetite now in our Parliament or in the country for such intervention. I concede, however, that the mood could change if there were a major use of chemical weapons by the regime. If we arm the rebels, we will do so by proxy and, of course, it is most unlikely that arms supply would necessarily shorten the conflict, as the Russians and Iranians would possibly only step up their own supply in response.
Amid the swirling uncertainties, what is the appropriate response of the UK and the West, with paralysis at the UN Security Council and a relative stalemate on the battlefield? The starting point is surely recognition that we have a limited influence on events. No longer can we intervene and redraw boundaries as we did under the Sykes-Picot accord. It is, I concede, hardly a moral stand to stand on the sidelines with one’s arms folded, but we must have a more cautious agenda and search for ways where we can positively help at the margins.
It is of course the humanitarian crisis which is of most immediate concern. Jordan, as has been said, is in danger of being overwhelmed by refugees. My understanding is that the UK Government have responded most impressively. It would be helpful to have an update on the extent to which other countries have failed to live up to the obligations which they undertook at Kuwait and afterwards. In the short term, the refugee crisis is likely to worsen, as the government forces appear to have a new momentum after Qusair.
Consistent with our values, we must help in democracy-building and in the protection of minorities—Christians are clearly the major losers in this conflict. Finally, at the political end, we should seek to mediate in a region where a spirit of “winner takes all” prevails; it is an existential threat for President Assad. We must recognise the interest of, and work with, both Russia and Iran, and reject the French attempt to exclude Iran from Geneva II. The latest news from Geneva is disappointing in the extreme, as Assad perhaps seeks to improve his negotiating position on the battlefield. I accept that extreme dilemmas face us in responding. I have an awful feeling that the situation will get worse before it gets better; that the Syria that emerges will, even if it is united, be more unstable; and, overall, that the Middle East will pose a greater risk to ourselves and to the interests of the West.
Lord Luce
My Lords, I cannot quite make up my mind whether it is an advantage or disadvantage to speak at this stage in the debate—I shall probably discover by the time I sit down—particularly after so many remarkable speeches. I am very glad to follow the noble Lord, Lord Anderson, who has a great feel for foreign policy, not least in the Middle East, and always has something distinctive to say on these matters.
It was 66 years ago when, aged 10, I first went to the Middle East. I landed on the Nile by flying boat and went down the river by steamer to my parents in Khartoum. I had always hoped, when I had the privilege of being sent here, to be able to use the title “Luce of Khartoum” but Gordon unfortunately beat me to it.
In those 66 years, we all know how the Middle East has been a theatre of continual conflict—the Arab-Israel wars, the western interventions in countries such as Iraq and the civil wars of many of those countries. Today, however, we face a highly toxic cocktail of very dangerous proportions. One might almost think, in terms of Syria, of a poisonous Molotov cocktail—a great cross-fertilisation of several developments, starting in 2011. The Arab spring-type uprising started the challenge to the Assad dictatorship and was followed by repression, civil war and challenge to the secular regime. This developed into, as we have heard so often in this debate, a sectarian, religious conflict, principally but not wholly between Sunni and Shia, exacerbating the Sunni-Shia tensions in the region as a whole. Take Bahrain, for example, where tensions were already very strong between the Shia and the Sunni; this conflict has exacerbated the tensions there.
Those who are historians will know better than me that, in the 16th and 17th centuries, the Ottoman Empire and the Iranian Safavid Empire, one Sunni and the other Shia, fought each other for a long time and it had an extremely debilitating effect on both those areas, just as religious wars in Europe had done the same; for example, the Roman Catholic and Protestant feuds in Northern Ireland and so on.
On top of that, we have exploitation by proxy support, as we have heard today, with Russia and Iran, supported by Hezbollah, in favour of Assad—here, I pose a question: have we rather underestimated the determination of Russia and Iran to give their backing to Assad?—and, by contrast, Saudi Arabia and Qatar supporting the official, and not just the official, Syrian opposition.
Thus, as we have heard again so often today, Syria, with more than 100,000 deaths, is awash with arms. Goodness, we do not need to talk about arms in the Middle East; it is flooded with arms. There is the danger of fragmentation of that country and exploitation by extremist offshoots of al-Qaeda, producing in turn a massive humanitarian crisis, with more than 7 million people in desperate need, following from that to the destabilising of the neighbouring regimes, particularly Jordan, Iraq and Lebanon and Turkey.
Then, on top of that, there are the ambitions of the Iranian theocracy, which is flexing its muscles, trying to establish itself as a big power in the region and to have more influence—dreaming, perhaps, of former great Persian empires—and with very deep mistrust of the United States and the United Kingdom, developing nuclear capability as a symbol of its virility and seen, quite understandably, by Israel as a serious threat. That is balanced, however, by the one positive sign, which has been spoken about today: the election of Rouhani as president. He is, of course, a solid supporter of the Supreme Leader but, we hope, a little more flexible. Encouragingly, he said the other day:
“I have a key, not an axe”.
We have to live in hope.
Then we add to that, in the Middle East as a whole, the important Arab nations such as Egypt, which is struggling to find its way towards some kind of democracy, with serious tensions between the secular political leaders and the Muslim Brotherhood and with the army sitting in the background. Meanwhile, Palestine-Israel simmers and stagnates. There is no will or leadership on either side to find a solution. It is becoming more and more potentially explosive, with Palestinians failing to unite and Israelis settling on more Palestinian land, making the two-state solution more and more difficult.
To add one more issue in the region, there is a rapidly changing influence of outside powers. Obama is now understandably reluctant to get involved in any more Middle Eastern quagmires. The European Union is divided. The United Kingdom wants to punch above its weight against its gradual loss of weight. In Russia, there is a Putin who is under threat, flexing his muscles both metaphorically and actually, wanting to demonstrate Russia’s power and to protect its interests in Syria and its energy interests in the Mediterranean. Finally, as the noble Lord, Lord Howell, put across so strongly, there is China, becoming more and more dependent on Middle Eastern oil and, therefore, more and more an important power in the Middle East.
In those circumstances, what should we be doing? We must start by accepting that we can play a role, but that it is more modest and selective than it has been in the past. Like almost every other speaker, I am not convinced that sending arms to the official Syrian opposition would do anything other than help to escalate the conflict and the fighting. I believe that there is no military solution whatever to this Syrian problem. Therefore, we should concentrate on one thing which I believe that the Government are doing extremely well, which is humanitarian support on a large scale. Secondly, where we can, with our allies, we should shore up and stabilise the neighbouring countries, especially Jordan and Lebanon. Thirdly, like others, I agree that we should give strong support to a political negotiation leading to a transition and what we hope will be an achievable and realistic post-conflict political resolution, learning, if we can, the lessons of Iraq and using all our skills in diplomacy and our experience.
We should engage fully and strongly with our friends in the Gulf, whom we will need, and we should engage if we can with Iran. We cannot ignore Iran. It has an important role to play in the Middle East; it is better that it should be constructive. I hope that Iran will take part in Geneva. Therefore, we should use our soft power and skills as well as possible to engage with Iran, as the Prime Minister is doing with Russia, and much more fully with China to try to find a way forward.
Finally, I agree with my noble friend Lord Hannay: we should do what we can to support Mr Kerry, the Secretary of State, in his efforts in Palestine and Israel to move towards a two-state solution and find a more secure future for the Palestinians and the Israelis. That is becoming all the more important because of the crisis in Syria. I take the view that we must play our part, draw on all our experience in the Middle East but be realistic about our post-imperial role in the region.
Lord Dobbs
My Lords, it is a privilege but also a little daunting to be the Back-Bench tail-end charlie in this debate, particularly as I lack the colourful upbringing of the noble Lord, Lord Luce.
The first thing to say is that doing nothing in Syria is simply not an option—not with so many dead and with so much at stake. We have a humanitarian interest in seeking a solution and we have a very great self-interest in a solution. We also have a responsibility. We played a direct role in so many of the emerging problems of the region, where the frontiers were drawn with a remarkably unbending ruler in London and Paris. We used to pursue a policy of divide and rule and, in recent years under Prime Minister Blair, we seem to have pursued a policy of meddle and muddle. We armed Saddam Hussain; then we deposed him. We even armed Osama bin Laden, when he was fighting the Soviets. We were great friends once with the Iranians and then we became great enemies. So it went on.
We have a pretty awful track record of picking winners, and we have no more prospect of being able to pick a winner from among the maelstrom of opposition groups in Syria than monkeys have of writing Shakespeare. That is why arming rebels on our own or as part of an exclusively Western coalition is hopeless: blind optimism of an order worthy of Mr Blair. We need a broader coalition with vision broad enough to recognise that although many of us distance ourselves from the former Prime Minister’s fixation with remodelling the Middle East, much of the rest of the world sees no such distinction and simply sees an old imperialist country still up to its wicked tricks, as my noble friend Lord Bates so colourfully illustrated earlier.
We keep drawing lines in the sand—and what do we find when we cross them? Nothing but more sand. Yet past failures—and there have been so many—do not mean that we should do nothing. If there is no solution to be found by entering the lottery of Syrian opposition groups, neither is there any solution in simply washing our hands.
Syria is not an isolated case. This debate is right to set it in the context of the wider Middle East, which inevitably brings us to the issue of Israel and Palestine. Here, I take a slightly different view from the noble Lords, Lord Turnberg and Lord Anderson. That conflict is connected in as much as it helps to ignite extremism throughout the Middle East and hugely inflames the distrust of the West.
Future generations will look in bewilderment at how we allowed that situation to continue. Let me take just one small example: the Gaza Strip, a territory so small that my noble friend the Minister and I could walk around it in a day. It is 25 miles long and, for most of its length, only three and a half miles wide. We could make every inhabitant rich beyond their wildest dreams for a fraction of the treasure that we have wasted in trying to resolve this problem. However, the situation still grows worse, deliberately made worse by men of evil intent.
On the other side of that equation, Israel is our friend—we support it. However, we watch as Palestinians are beaten and kicked from their homes to enable Israeli settlers illegally to occupy further stretches of Palestinian territory. I read that the new American Secretary of State is optimistic about moving forward on a settlement on that issue, yet I also read that hopes for a two-state settlement are rapidly fading. We shall see—nothing is simple.
We have a right to be involved in such issues. After all, we had a role in causing the problems in the first place. Therefore, while again supporting the absolute and inherent right of Israel to security and peace, can my noble friend in her response assure us that if Israel were to retreat from a two-state to a one-state solution, the British Government would deem it absurd and unacceptable if that solution was sought on any other basis than one man, one vote?
If we are to push for stability and moderation in the Middle East, we must expect our friends in Israel to listen to us, too. We have a right to be involved in such issues, so while once again supporting that inherent right of Israel, we must also expect common sense and balance from her. We will need to talk, not only to Israel but to our other friends in the Middle East and to those who are not our friends—those we dislike and those we openly distrust. We must talk not only to our friends in the Gulf states and elsewhere, to Arab League nations, to Israel, Saudi Arabia, Qatar, Turkey, Russia and China—there is such a long list of them—but also to the extremists, and even to some who we regard as terrorists; even, as the noble Lord, Lord Williams, suggested, to Assad himself. After all, if we can talk to the Taliban, is anyone off limits?
In these exceptionally challenging circumstances, the Prime Minister is doing an exceptional job. He is clearly cautious about sending arms to Syria, and should remain so. He is increasing our humanitarian aid, travelling far and wide in search of common ground, and I am sure that he will keep a very close eye on developments in Iran. As the noble Lord, Lord Howell, suggested in his fascinating remarks, it is time to bring Russia and China in from the cold. I am sure that the Prime Minister will take great note of what the noble Lord said. Most of all, I trust that the Prime Minister will look at security at home in the sobering knowledge that although past Governments’ policy in the Middle East was built on the overriding objective of making this country safe, so far it appears to have failed.
There is so much to say and so little time in which to say it, and I do not want to stretch the patience of the House. I will, therefore, make a closing plea. Syria must not be more of the same. It should mark a new and more mature understanding of what we in this country might achieve. There is no exclusively western solution to this crisis. There might be a regional solution, but that would require the support and understanding of a variety of powers from around the world—a multipolar solution in a multipolar world. In that we might just find not only a formidable and daunting challenge but a liberating opportunity.
Lord Triesman
My Lords, I thank the noble Baroness, Lady Warsi, for facilitating this very timely debate. Her strong statement on humanitarian aid was particularly welcome, although like the right reverend Prelate the Bishop of Truro I am concerned about the effectiveness of such aid and want to ensure that it is completely effective—a point that was also emphasised by the noble Baroness, Lady Morris of Bolton.
The extent of the geography and the differences of analysis were always going to make this a diffuse debate, in which it is perhaps hard to find a focus save for the inevitable focus on Syria. I will start by endorsing in straightforward terms the words of my noble friend Lord Wood at the beginning of this debate about arms to rebels. That topic was analysed in some detail and with great insight by the noble Lord, Lord Ashdown; I will say for simplicity’s sake how strongly I agree with him, even if that causes him discomfort. As my noble friend Lord Wood also said, we need to understand the history of the region. I share the sense of urgency of the noble Lord, Lord Williams of Baglan, and the view of the noble Lord, Lord Howell, that we are not in a position to do nothing—a view that was repeated a moment ago by the noble Lord, Lord Dobbs. I also encourage the Minister to respond to the comments made by my noble and learned friend Lord Morris of Aberavon on some of the legalities, which should be addressed tonight. However, I am in the same position as my noble friend Lord Anderson: I aim for perhaps a wider regional appraisal. I apologise in advance to my noble friend Lord Turnberg if I do not focus tonight on Israel and Palestine. This is a similar starting point to the one taken by the noble Baroness, Lady Afshar.
It is striking that across Syria, through Lebanon, in Iran and still more in Iraq, through several of the Gulf states on both sides of the Horn of Africa, across north Africa, deep into the Sahara, and north of and in Mali we are witnessing a harsh sectarian war within Islam—or fronts in a war, as the noble Lord, Lord Ashdown, described it a short while ago. The noble Lord, Lord Sheikh, has also focused on this, and the noble Lord, Lord Hannay, quite rightly focused on how these events have demonstrated some of the United Nations’ failures in getting a proper grip on it in the Security Council. Of course, the great paradox is that historically Islam was a religion marked by greater pluralist tolerance than a great many others were. However, now we see on many fronts a widespread war between Sunnis and Shia and subsects within each of those great traditions.
Tragically, the sectarian divide in some places now takes the form of sectarian barbarism. In Syria the Shia Alawites target Sunnis, with the undeniable help of the Iranian Shia, including the Revolutionary Guard and Lebanese Hezbollah. In Egypt, Sunnis launch lynch mobs against small Shia communities, encouraged by Salafist clerics, and attack Shia people as infidels. Extreme Salafists have entered Syria. The Syrian opposition ranges in a bewildering way from secular groups to al-Qaeda affiliates. Similar confrontational fronts can be seen right across the region. However, surely it is not adequate to see this as just a series of theological clashes—a point that was made earlier.
It is also clear that in several states minority clans have exercised or exercise power to the exclusion of the social, economic and religious rights of majority clans. Assad, Saddam and the Bahraini al-Khalifas oppress whoever constitutes the majority. In some cases, such as with the Egyptian and Saudi majority Sunnis, they oppress smaller Shia minorities. Almost all now also oppress Christians and members of other religions, across the Middle East, in north and west Africa and in some senses as far away as Pakistan. However, lest this is thought simply to be something happening within Islam, there seem to be similarities with the Buddhist oppression of Muslims and other minorities in south-east Asia.
This cannot be a contest over obscure or ancient disputes of religious legitimacy. For venal leaders, holding on to power is about holding on to power. For wider populations blighted by poverty, illiteracy and untreated disease, struggling for scarce power and resources and for a sustainable existence, religious difference becomes a symbolic sheen to legitimise brutal struggle. The enemy is far more easily stereotyped as the other. It is a dreadful but handy way of designating people, even neighbours, as enemies in life’s harshest competition, treating them as subhumans who get in the way of the fulfilment of particular groups’ aspirations—modern aspirations in some cases, but even the aspirations of some people to go back to premodernity.
How do we make sense of it, and what should we aim to do about it? Perhaps we should start with an unashamed question for us in the United Kingdom, and in effect the Minister opened with this proposition: what is the United Kingdom’s interest? Like the noble Lord, Lord Luce, I am keen to understand whether we are confident in answering that question, particularly in our assessment of Russian positions. The answer for the United Kingdom should never be cynical or neglect the interests of people where we share an explicit United Nations duty to protect, a duty that we share with others but where we have the highest expectation of ourselves and our allies. Our first interest, the precondition for the best, is assisting countries to become stable, making them less likely to morph into failed states harbouring people who in turn mean us harm. The analysis by the noble Lord, Lord Howell of Guildford, of the extent of the instability is one that I share.
Of course we prefer the fully fledged path to democracy, social inclusion and the rule of law, however tortuous those paths. Today Egypt comes back to the top of our agenda, or certainly should do. At 4.07 pm today, while we were debating, the Egyptian army announced that it will sort things out within 48 hours, confirmed at 4.53 pm as an ultimatum. In a previous debate in your Lordships’ House, I started by saying that it was risky to speak at all or to guess what would happen even in the duration of the speech. I was given a note halfway through that debate saying that Mubarak had gone. Who knows what the rest of today holds for that important and complex country—huge demonstrations, deaths at the storming of the Muslim Brotherhood headquarters, the prospects that I have just related of what might be a coup?
First, it is clear that steps towards economic regeneration have not been taken as promised. Unemployed youth, an underemployed middle class and a poor risk profile for investment are signals of failure. Things take time, but there needs to be evidence of a route map and milestones. Secondly, while few may want democratic elections to be routinely overturned, as may be happening at the moment, President Morsi surely has to grasp that he cannot rule exclusively for the Muslim Brotherhood and generate viable economic conditions if he does so.
Thirdly, he cannot aim to dominate all state and many non-state institutions. I shall give the House what I think is a non-trivial but strange example: Mr Morsi ruled in the past few days that he would field, and if necessary impose, Muslim Brotherhood candidates for the boards of all the major football clubs, starting with those in Cairo, snuffing out even the most elementary pluralism. That has resulted in a petition for his resignation attracting 15 million signatures, 2 million more people than voted for him a year ago. We are seeing perhaps a return of Mubarak’s authoritarianism with an anti-secular twist.
With the exception of a few organisations, I fear that there is little attempt to encourage civic participation and strength and civic society. Economically, no investment is going to come in, according to the World Bank, which states baldly that the ease of doing business in Egypt is that it is a bad place to start any business, as tax reform, protectionism and state control shackle all prospects. This is in sharp contrast in many ways with Tunisia, which has begun to develop those economic prospects in a serious way. Do the Government plan to host or participate in any conferences to create the right economic conditions that might stimulate the prospects of those countries?
It would be futile in the course of a debate today to range over Libya, where there may be rather more promise, or indeed Mali, which for several days was the absolute focus of attention in this House but has scarcely been mentioned ever since. We see in every one of these cases the need for an economic platform to be developed and for the opportunities for pluralism to go alongside it. Briefly, of course, I have to return to Syria against the backdrop of the huge caution that has been expressed in this House about what to do, given the complexities. The prospect is simply of a failed state on the borders of the United Kingdom’s closest allies in the region—Turkey, Israel, Jordan and, potentially, Palestine, at the very heart of the Middle East. Strategically, we need a stable transition from Assad’s dictatorship, and so do the Syrian people. I fully acknowledge the long-term reflections on this by the noble Lord, Lord Risby, and his analysis of Mr Assad’s present position.
The risks, so far as we have judged them until now, have outweighed intervention. We have responded with caution. We recognise that the fragmented opposition is exclusively a Sunni club, and not one that is capable of a balanced Syrian settlement. We are witnessing a death spiral into chaos; uncontrolled fragmentation means unending civil war, and of course that is unsustainable for everyone. It has already spilt over, as many noble Lords have said, into its neighbours; it knows no borders. It emboldens Iran, which may or may not be in a state of change—I share the hopes of the noble Lords, Lord Hannay and Lord Luce, but who knows?—and Hezbollah, to everyone’s strategic detriment. Lebanon is now absolutely and directly involved in the war. Al-Qaeda has one of its most potent fighting machines embedded in the region.
This is not Bosnia—of course it is not—but there are some comparisons. President Clinton finally intervened when 100,000 Bosnian men, women and children had died, more or less the figure that we see in Syria today. UN and Arab League forecasts are now that 100,000 deaths are likely to occur just in 2013 if Assad proceeds with impunity. A more active policy is therefore inevitable, and doing too little will simply grow the crisis to too great a proportion. President Putin, plainly unimpressed by what the Canadian Prime Minister called the G7+1 summit, must surely work urgently with Secretary Kerry to create a national platform, bringing together all the legitimate ethnic and religious leaders. The noble Lord, Lord Howell, said that a common global response was what was needed, and that is plainly what they must work for. The process needs Russia, China, Turkey and the key Arab and European states, and consideration, as my noble friend Lord Wood suggested, is needed about whether Iranian involvement would help.
We must consider first how to protect civilians, minorities, the vulnerable and the country’s neighbours. We must get control of the chemical and other unacceptable weapons. We must design transitional governance and justice, and safeguard humanitarian work.
I doubt that preconditions, even about a tyrant like Assad, are likely to appeal to President Putin. His help is crucial. The noble Lord, Lord Williams, was right: it is not a risk worth running to exclude Russia or to suggest to the Russians that we have taken no account of them, particularly, as the noble Lord, Lord Ashdown, said, given the preoccupations that they will have with their own southern borders and the character of the struggles there.
To me, success would look like security sector reform, disarmament, the reintegration of combatants, improved governance, a date for elections, economic recovery and reconstruction scheduled to start. In this, I draw on Richard Holbrooke’s experience before and during Dayton: the least worst outcomes, even if they artificially create within the country smaller but secure and economically viable entities, may be the only solution with which people can live with some prospects. The opposition may indeed have indulged in terrible violence—I believe it has—but that can no longer be any kind of excuse for anyone, including for President Assad. A murderous regime has to understand that there is no victory that is followed that way by impunity, no freedom to bomb civilians to extinction.
The Security Council, or certainly its permanent members, should provide no further means to fly or to protect flights until Geneva II has been called, has negotiated and has concluded. There should be no long-term recognition of any regime that simply proceeds by violence. I say this because priority must be given to the negotiations, and no negotiation is an unthinkable course of action. That means that there can be no one-sided flow of weapons, and even with credible monitoring I suspect that that would be a huge difficulty. We might as well be candid about that, because I suspect that there is no control over events on the ground in a way that would be tolerable for us.
The priority for the United Kingdom Government, our allies and our interests is how we can promote Geneva II urgently. How can we add to the pressure not just for Geneva II but for the background work that is essential to make it successful? What process do we envisage as the urgent consequence of the G8 at the United Nations and elsewhere? Country by country, it is measurable goals of political and vital economic progress that will build the United Kingdom’s security in that region.
Baroness Warsi
My Lords, I am grateful to the House for hosting this timely and important debate on the situation in Syria and the Middle East, and I will try to answer the many questions in a timely way. I am grateful for the insightful and moving contributions made over the course of our discussions, including those from the opposition Front Bench, but especially for the contributions of the noble Lord, Lord Wright of Richmond, and my noble friends Lord Risby and Lord Dobbs, and the broader contributions on faith, identity and international impacts from the noble Lord, Lord Desai, and the noble Baroness, Lady Afshar. My noble friend Lady Morris is right that many interventions merit a reread, and I will certainly be encouraging those of us at the Foreign Office dealing with Syria and the wider region to do that. It is important that this House continues to consider the deteriorating situation in Syria, its wider regional impact and how the UK has responded. We are privileged in being able to draw on the extensive experience of so many noble Lords here today, and we have enjoyed a wide-ranging discussion on the Motion.
The noble and learned Lord, Lord Morris of Aberavon, asked whether the House would have a say before any decision was made about arming the opposition. Let me repeat what the Foreign Secretary said in a Statement in the Commons on 18 June:
“We certainly would not want to pursue any aspect of our policy on this issue against the will of the House of Commons. That is neither feasible nor desirable, so of course we have made clear that there would be a vote. I have also made it clear that we would expect it to be before any such decision was put into action”.—[Official Report, Commons, 18/6/2013; col. 746.]
I can tell my noble friend Lord Alderdice that I have asked officials for options in the event that this House is in recess. I will ensure that his comments are considered in that process and, as ever, I am grateful for his clarity on this issue. I will report back to the House in writing or at the Dispatch Box when a decision is taken.
As the Minister with responsibility for Foreign Office business in this House, I have been particularly focused on these issues, and I felt it was important to gauge your Lordships’ views and to keep the House informed. I thank noble Lords. I thank the noble Lord, Lord Hannay of Chiswick, for his wide and in-depth contribution and my noble friend Lord Bates for his kind comments. It is amazing how coffee can keep you going, even after Afghanistan and Pakistan.
I shall take a few moments to recap the Government’s policy towards the complex situation in Syria and the Middle East, and the types of assistance that we are already providing to the Syrian people. Syria remains at the top of the Government’s foreign policy agenda. We are firm in our belief that the conflict and the suffering of the Syrian people will come to an end only through a negotiated settlement. We have therefore continued to escalate our assistance in order to achieve that goal.
In response to the dire humanitarian situation faced by Syrians displaced inside Syria and as refugees in neighbouring countries, we have set out our largest ever funding commitment for a humanitarian disaster. I can assure the right reverend Prelate the Bishop of Truro that we will remain committed. Our total contribution now stands at £348 million, which sends a clear signal to the Syrian people that they can count on the UK’s continuing support. At the same time, we have used our platform as host of the recent G8 summit to urge our international partners to commit to humanitarian assistance on a similar scale and to pay funds that are committed. The noble Lord, Lord Anderson of Swansea, asked about countries failing to make a contribution. The UN humanitarian appeal is for £5.2 billion. It is its largest appeal in history. The UK, US and the EU have been the largest contributors to that appeal, but we agree that others need to do more. That is why the Foreign Secretary urged Ministers at the Friends of Syria meeting on 22 June to increase their contributions to the UN appeal, including lobbying Saudi Arabia, Qatar and the UAE.
We have also committed large amounts of assistance to Syria’s neighbours, who are experiencing great economic strains and political tensions due to the conflict spilling over. Regional peace and security are important in containing the conflict, reducing the threat of extremism and ultimately helping to bring the conflict to a close. I can tell the noble Lord, Lord Wood, that Jordan and Lebanon are playing a vital humanitarian role and we are providing assistance to help alleviate not only the humanitarian crisis but the side effects too. We are supporting projects to help maintain stability in the region.
A political solution to the crisis would allow millions of civilians who have fled across the border to escape the conflict to return to their homes safely. However, the Syrian regime continues to block humanitarian agencies seeking access to deliver relief in government-controlled areas as well as to prevent the UN commission of inquiry investigating the human rights situation on the ground. Alongside our international partners, we will continue to call upon the Syrian regime to allow humanitarian agencies and investigative bodies immediate and unfettered access.
My noble friend Lord Ashdown gave us the benefit of his extensive experience. He focused on arms and diplomacy. I can assure him that the UK is fully committed to a political process. We are putting all our weight behind the US/Russia/UN-convened Geneva II conference. He and the noble Lord, Lord Wood of Anfield, asked what efforts are being put in place. I can assure noble Lords that huge efforts are being put in place to bring people to the negotiating table, to get a coherent and representative opposition, to ensure that we work with an opposition that abides by international human rights standards and to get like-minded people around that table to move this process further. We believe that a political solution is the best—indeed, the only—way forward. This matter will not be resolved on the battlefield.
Lord Ashdown of Norton-sub-Hamdon
I thank the Minister for that answer, which was extremely helpful—not that I thought it would not be. I asked a specific question about Saudi Arabia and Qatar. Is anything being done, either bilaterally or multilaterally through the EU and with our American friends, to try to persuade them to desist arming the jihadists?
Baroness Warsi
I have made notes further down and will come to that in a few moments.
My noble friend Lady Falkner, the noble Lord, Lord Wood, and my noble friend Lord Ashdown spoke about considerations in relation to arming the opposition. Our practical assistance so far as been entirely non-lethal, and we will continue to support the moderate opposition and Syrian civil society wherever possible as they develop into what we believe is a credible alternative to the Assad regime. However, the lifting of the EU arms embargo gives us greater flexibility to act if action is needed. Noble Lords can rest assured that any decision will be put to a vote in the other place, and we would not want to pursue any aspect of this policy against the will of the House. Our policy sends a clear signal to the Assad regime that it must negotiate seriously and that we will do all we can to ensure that the forthcoming Geneva II conference is successful in trying to bring the conflict to an end.
In relation to the conditions if we were to consider sending arms to the opposition, when the Foreign Affairs Council agreed to end the EU arms embargo and return decisions on arms provision to member states on 27 May, Ministers also agreed a framework of safeguards to guide those member states that might decide to provide arms. Arms can be sent to the national coalition only; they should be intended for the protection of civilians; there should be safeguards to ensure delivery to the right hands; and existing obligations under the EU common practice for arms exports remain in place. Legal constraints, such as the United Nations Security Council resolutions in relation to, for example, al-Qaeda, remain in place, preventing the supply of equipment to known terrorist organisations.
I repeat that the Government’s position remains that the only way to achieve a solution is via a negotiated political settlement. However, it is for the Syrian people to negotiate how that transition happens and to agree the make-up of a transitional Government who can win the consent of all Syrians. We are therefore working closely with the opposition and urging them to commit to and prepare for Geneva II as a way of pursuing their goals and achieving political transition. It is a bold and difficult decision for the opposition to make, but one that merits that risk.
The noble Lord, Lord Williams of Baglan, spoke about representation in the opposition. We have recognised the Syrian national coalition as the sole legitimate representative of the Syrian people. The coalition is committed to expanding its membership. This was recently discussed, with representation from all groups within Syria. I welcome the noble Lord’s expertise, and will ensure that officials feed into planning his concerns about Lebanon and a potential evacuation.
A number of noble Lords raised the issue of Saudi Arabia, Qatar, Iran, China and Russia. I will try to address these. My noble friend Lord Howell of Guildford asked about bringing Russia and China to a more constructive position. It is no secret that China and Russia have differing views on how best to handle the situation in Syria. We all share fundamental aims: to end the conflict, to stop Syria fragmenting, to let the Syrian people decide who governs them and to prevent the growth of violent extremism. We are intensifying our diplomatic efforts with all members of the UN Security Council. As the conflict escalates, the threat to regional and international security increases. As the Prime Minister and President Putin discussed at the G8, we and Russia are on the same page on the need to end the conflict. However, as we near a peace conference in Geneva, we will step up our engagement with Russia and China to ensure that the process stands the best chance of a successful outcome.
The noble Lord, Lord Wright, asked whether the differences were insurmountable and about the prospects for success at the conference. Intensive efforts are ongoing on the details of what could be decided at that conference. There will inevitably be challenges, but the UN Secretary-General has stressed that the three parties are committed to convening the conference as soon as possible. We continue to engage actively and support the efforts of Lakhdar Brahimi, the UN-Arab League peace envoy. The Foreign Secretary spoke to Mr Brahimi last month about preparations for the Geneva conference and reiterated our strong support for him and for his office.
My noble friend Lord Ashdown and the noble Lord, Lord Wright, asked about countries that could be providing funds that could get into the hands of extremists. We are working alongside the US and the allies through the Friends of Syria core group, which includes Saudi Arabia, Qatar and Turkey. At the most recent meeting, attended by the Foreign Secretary in Doha on 22 June, core group Ministers expressed concerns over the growing sectarian nature of the conflict in Syria and the radicalising risks that accompany such developments in regional and international security. Ministers from all those countries agreed at that meeting the urgent need to support and build the capacity of the moderate Syrian opposition, including supporting the national coalition and its supreme military council in efforts to save the lives of ordinary citizens.
Noble Lords may be aware that the Friends of Syria group was created in response to the Russian and Chinese veto on the Security Council resolution. Its first meeting took place in Tunisia last year in February. At various times, 114 nations have now attended the Friends of Syria meetings, but the core group of 11—including the UK, the US, Egypt, France, Germany, Italy, Jordan, Qatar, Saudi Arabia, Turkey and the UAE—meet on a much more regular basis. The concerns raised by the noble Lord, Lord Ashdown, and others are discussed there.
The noble Lords, Lord Wood and Lord Luce, and others asked about Iran’s participation in negotiations. It was anticipated that those who participated in Geneva I would participate in Geneva II. Of course, Iran did not. However, no decision has been made and we are still working through the details of the Geneva II conference with international partners.
My noble friend Lord Howell and the noble Lord, Lord Hylton, raised the change of President in Iran. The Government of course hope that, following Dr Rouhani’s election, Iran will take up the opportunity of a new relationship with the international community by making every effort, for example, to reach a negotiated settlement on the nuclear issue; and, of course, to adopt a more constructive position on Syria. We will keep an open mind, but we will judge Iran by its actions, not its words.
The right reverend Prelate the Bishop of Truro asked about Assad’s departure. As the Foreign Secretary has said, Assad’s departure is not a precondition for the Geneva talks. However, when considering a transitional Government that could win the consent of all Syrians, it is hard to imagine how Assad could be part of that. The UK position on Assad is that he has lost legitimacy and must therefore step aside if we are to get a solution into which the Syrian people can buy. However, it is ultimately for the Syrian people to negotiate how transition happens and agree the make-up of a transitional Government that can win their consent.
The noble Lord, Lord Ashdown, and my noble friend Lord Risby had concerns about the national coalition. We have those concerns, too, which is why we raised them. On 20 April, the national coalition declared its commitment to democracy, to ethnic and religious pluralism and to the rule of law, as well as its concerns about discrimination and extremism. It also declared that it would guard against the proliferation of any supplied lethal equipment and would return such equipment at the end of the conflict, and confirmed that the supreme military council operates under the civilian authority of the coalition. Allowing supply of equipment to an organised body that adheres to acceptable values lowers the risk of diversion and misuse in comparison to a more general lifting of the arms embargo. Clearly, however, we must ensure that the national coalition makes good on its commitments.
The noble Lords, Lord Turnberg and Lord Anderson, raised the Middle East peace process. We welcome Prime Minister Netanyahu and President Abbas’s clear commitment to a two-state solution, and to working to achieve peace for the Israeli and Palestinian people. We believe that both leaders are genuine partners for peace and we have seen no evidence that the Syrian conflict has affected President Abbas’s commitment to peace. It is vital that both show the bold, decisive leadership that allows the efforts of the United States to succeed. The events of the Arab spring, particularly the threat posed by the conflict in Syria, make the need for progress even more pressing. The consequences of the current efforts not succeeding, for Israelis, Palestinians and the wider region, could be severe. Of course, we continue to support the efforts of Secretary Kerry.
The noble and learned Lord, Lord Morris, asked a question that was repeated many times: are we confident that any action that we take is right, and is a step towards peace? I assure noble Lords that all our efforts are focused on reaching a political solution. There are no easy decisions, but the international community cannot stand still in the face of what is happening in Syria. Our policy must move forward to prevent loss of life there. This is not a choice between diplomacy and practical assistance to the opposition. The two efforts are interlinked, in order to bring about a political transition. As we move towards more active efforts to save lives, we will co-ordinate our response with international partners and will consider the risks of all options before moving forward.
In conclusion, our priority must be proactively to pursue a political solution to bring this terrible conflict to a close. The millions of Syrians who are now refugees as a result of the conflict constitute an urgent humanitarian crisis. A negotiated settlement would help to alleviate this crisis, which continues to deteriorate. We must be proactive in responding to an increasingly desperate humanitarian situation by continuing to push a political settlement that would allow millions of refugees to return home, reduce the growing threat of extremism to the UK and stem the tide of spreading regional instability. We will work in every way we can to ensure that the perpetrators of human rights violations and war crimes are held to account.
It is clear that there are no risk-free options ahead from which to choose. However, I strongly believe that an inclusive Syrian-led political process is the best way to bring an end to the bloodshed and minimise the threat to peace and security in the wider region.
Syria, and our response, is an issue with which we grapple every day in the Foreign and Commonwealth Office. We take each step with much consideration, looking at all potential options. On a personal level, my own historic anti-war positions are no secret. However, every day, I learn that holding a “Stop the war” banner and shouting from outside King Charles Street is much easier than sitting inside, grappling with decisions over the least worst option. I thank noble Lords for informing my thinking.
Europol Regulation: European Union Opt-In
(11 years, 4 months ago)
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Lord Hannay of Chiswick
That this House agrees the recommendation of the European Union Committee that Her Majesty’s Government should exercise their right, in accordance with the Protocol on the position of the United Kingdom and Ireland in respect of the Area of Freedom, Security and Justice, to take part in the adoption and application of the Proposal for a Regulation on the European Union Agency for Law Enforcement Cooperation and Training (Europol) and repealing Decisions 2009/371/JHA and 2005/681/JHA (document 8229/13) (2nd Report, HL Paper 16).
Lord Hannay of Chiswick
My Lords, I beg to move the Motion standing in my name on the Order Paper in my capacity as chairman of the European Union Committee’s Sub-Committee on Home Affairs, Health and Education, which prepared the report now before your Lordships for endorsement. As the House will know, when we consider reports of the EU Committee, this is normally on a Motion that the House simply takes note of the report. In the case of this report, the Motion invites the House to agree with the committee’s recommendation that the Government should opt in to the negotiations on the Commission’s recently proposed Europol regulation. The reason is that the report deals with a draft measure falling within the area of justice and home affairs, which will apply to the United Kingdom only if the Government exercise their right under a protocol to the EU treaties to participate in its negotiation, adoption and implementation—in other words, to opt into it. They have to do this within three months of the proposal being presented to the Council, which in this case means before 30 July. The committee believes that the Government should opt in, and the Motion invites the House to endorse that view.
In 2011, the Government repeated an undertaking given by the previous Government that time would be found to debate opt-in reports well before the expiry of the three-month period. I am most grateful that they have honoured the undertaking on this occasion by making time available for the debate early enough for them to be able to take into account the views of the House when reaching a decision on whether to opt in.
As many of your Lordships will know from earlier EU committee reports, most recently from the joint report of Sub-Committees E and F on the block opt-out under Protocol 36 to the Lisbon treaty, Europol—the European Police Office—is a vital weapon for co-ordinating the European fight against serious organised crime, drug trafficking, money laundering, cybercrime and terrorism. It was originally established in 1995 as an intergovernmental body, and became an EU agency in 2009, following the adoption of a Council decision to that effect. Europol has no executive or coercive powers to conduct investigations or make arrests in the member states, and the Commission’s proposal before your Lordships does not seek to change this. Europol supports the work of member states’ law-enforcement authorities by gathering, analysing and sharing information and by co-ordinating operations.
CEPOL, the European Police College, aims to encourage cross-border police co-operation by bringing together senior police officers from across the EU in training and exchange programmes, among other things. It was established as an EU agency in 2005, following the adoption of a separate Council decision. It is currently based at Bramshill in the United Kingdom, alongside the English and Welsh College of Policing.
The draft regulation we are debating would supersede both the pre-Lisbon Council decisions: the one dealing with Europol and the one dealing with CEPOL. It proposes to merge CEPOL with Europol in the latter’s existing headquarters in The Hague. The new regulation would also enhance some of Europol’s existing powers, in particular regarding the collection of data from member states and its ability to analyse the data more effectively. The Government have expressed concerns in their Explanatory Memorandum about the introduction of a stricter obligation on member states to provide data to Europol. I understand that in fact—this is a point of some interest—law enforcement agencies in the United Kingdom already share, voluntarily, a greater volume of information with Europol than do the agencies of other member states.
Doubts could also arise about Europol’s ability to cope with large volumes of information if it were to be copied in to all bilateral exchanges, as the regulation seeks to make mandatory. I would welcome the Minister’s thoughts on how the Government would address these concerns during the negotiations if they were to opt in to the proposal. The committee’s view, which we expressed in our report, was that the Government would be most effective in pursuing these concerns by participating in the negotiations. In doing so, I would hope that they would bear in mind, in dealing with our own concerns, our clear interest in other member states providing more information to Europol than they do at present. As always, there are two sides to the coin.
With regard to the proposed merger of Europol and CEPOL, your Lordships are probably aware that it has generated a degree of opposition, not least from both the agencies concerned. While the committee accepts, in general terms, the desirability of merging EU agencies if this will produce cost savings without a loss of effectiveness, it did not believe that the Commission had yet made a sufficiently convincing case for the merger in terms of reducing duplication, achieving efficiency savings and increasing effectiveness.
While the Government also appear to have concerns about the proposed merger, they somewhat counterintuitively appear to be unconcerned about the possible relocation of CEPOL to The Hague, following their announcement that the agency’s lease at Bramshill will come to an end in March 2014. I will ask the Minister for further information about the possible relocation of CEPOL, including whether any efforts have been made to retain the location of this agency in the United Kingdom. It now looks more likely that the two agencies will be kept apart, because there is strong opposition not only from the agencies but from quite a number of member states, as expressed in the recent Justice and Home Affairs Council and also in the European Parliament, where the LIBE Committee, which is a kind of opposite number to my sub-committee, is strongly opposed to the merger. Therefore, the likelihood is that CEPOL will be looking for a new home.
Concerns have been raised in the past about the limited parliamentary oversight of Europol. This has been addressed to a degree by the increased scrutiny of the non-operational functions of this agency, as well as of CEPOL, by the European Parliament since the entry into force of the Lisbon treaty in December 2009. In 2010, the Commission instigated discussions about how national Parliaments could be involved in the process of scrutiny and oversight in order at the same time to increase accountability at member state level, thus recognising the shared competences in the justice and home affairs field. I will explain that point. I think that everyone understands that this will be an area of mixed competence as far as the eye can see. It is not even conceivable that member states will hand all that over to the European Union. It is certainly not desirable that they should do so—and it is not going to happen. That means that in an area like this, where there is mixed competence and the issue of parliamentary scrutiny and oversight arises, the only sensible way to proceed is to try to avoid a food fight between the European Parliament and national Parliaments, and to see whether we can get some sort of system in which they operate together on the basis of equality.
My committee and I have played an active role in those discussions from the outset, and have pushed for the development of existing structures to this end, rather than for the establishment of new ones. There are regular meetings of the European Parliament LIBE Committee and the national Parliament Home Affairs Committee. If we build on them, we will avoid the potential costs and duplication that a more freestanding structure could entail. Other national Parliaments have tended to follow our lead in taking this view, and I will continue to state the case in Brussels and elsewhere. In that respect, we find the provisions in the draft regulation extremely welcome. They would increase parliamentary scrutiny of Europol, and its accountability both to the European Parliament and to national Parliaments, and would do so with a light touch, as we have recommended.
Our position on a number of other provisions in the regulation is set out in the report. Some are technical, and I will not weary the House with them. However, there is one to which I should draw attention. It arises in the context of the committee’s recent consideration of the Government’s 2014 block opt-out decision under Protocol 36 to the Lisbon treaty—about which I fear your Lordships will hear a lot in the coming months when we come to debate the committee’s report on this matter, which came out at the end of the previous Session, and when we receive the Government’s response to that report, which the noble Lord, Lord McNally, stated was coming “shortly”. “How short is a piece of string?” is perhaps the same question as, “How long is a piece of string?”. We will find out in due course.
Our witnesses for the Protocol 36 inquiry, the Home Secretary included, were almost unanimously positive about Europol’s role, including the significant benefits it provided for the United Kingdom’s law-enforcement agencies in terms of access to information, analysis, intelligence, co-ordination and support, as well as the efficient and cost-effective arrangement of having access to 40 countries in one place rather than co-operating through a network of bilateral arrangements.
The potential value of Europol has recently been enhanced by the establishment of a Cybercrime Centre within it, in response to the real challenges that cybercrime presents to all of us. If the Government choose to opt in to the regulation that we are debating today, the two Council decisions establishing Europol and CEPOL will simply drop off the list of measures that will be caught if the Government decide to trigger the block opt-out decision. However, four other measures on that list, which Europol informed the committee were “directly connected” with the Council’s Europol decision, will remain on the list. Do not ask me why this has happened or whether it is sensible that it has happened—but it has happened. Can the Minister clarify which of the existing measures are subject to repeal by the new regulation and how would handling any other relevant decision affect handling the block opt-out decision? Are the Government mindful of the need to opt back in to any Europol measures not so repealed, so that no question of lack of coherence arises? Of course, that will occur only if the Government agree to opt in to the Europol regulation, but it is worth going over that ground because there is a potential trap there, which it would be unwise for us to fall into.
My sub-committee plans to keep the present draft regulation under scrutiny. At this stage, only one matter is for decision by the House—whether or not the Government are recommended to exercise the United Kingdom’s opt-in by the end of July. For the reasons I have given, the committee is firmly of the opinion that the Government should do so, in part so that they can play a full and effective role in addressing the concerns that they have expressed, some of which we share, during the negotiations. It would be good to hear from the Minister at the conclusion of the debate whether it is the Government’s intention to opt in to the new Europol regulation. I understand that a parallel debate on this issue in another place has been postponed from the scheduled date of 3 July. Can the Minister say why that has happened and when the debate will be reinstated, presumably before the other place rises on 18 July? Can he assure the House that when a decision is taken on the opt-in, it will be communicated to this House? I beg to move.
Lord Sharkey
My Lords, I start by thanking the noble Lord, Lord Hannay, for the way in which he chaired the committee in the production of the report which forms the basis of this evening’s debate. I also thank the committee’s clerk, Michael Torrance, for his invaluable input into the report.
The noble Lord, Lord Hannay, has set out forcefully the case for agreeing to our committee’s recommendation that the Government should opt in to the new Europol regulation. They have four weeks to do that. I shall not repeat the noble Lord’s arguments in detail, but I want to re-enforce the argument about Europol’s importance to this country’s national security and crime-fighting efforts and to speak about where the clear balance of advantage lies in this debate.
Europol, with its outstanding British director, is a success story for the United Kingdom. In 2010, Operation Golf, a joint operation between Europol and the Met, led to the arrest of seven individuals in the UK and 126 individuals in total for trafficking children; 28 children in the UK were released as a result and 181 children in total. Operation Rescue, a three-year operation launched by the Met and co-ordinated by Europol across 30 countries, led to the discovery of the world’s largest online paedophile network; 670 suspects were identified, 184 arrests were made and 230 sexually exploited children were protected. Operation Veto, an investigation led by Europol across 13 European countries, uncovered an extensive criminal football match-fixing network. A total of 425 match officials, club officials, players and serious criminals from 15 countries are suspected of involvement.
There are other successful case histories. However, Europol’s critical role in helping the UK can be summed up in the words of ACPO, which said:
“Much of our international crime and transient criminals come from Europe and membership of these organisations”—
Europol and CEPOL—
“makes it easier to target them. Removing ourselves from these measures and putting ourselves in the position of having to re-negotiate 26”—
it will now, presumably, be 28—
“treaties on each and every topic, would be a massive step back for UK policing that would benefit no one”.
Lord Foulkes of Cumnock
My Lords, as a member of your Lordships’ European Union Select Committee, I rise to support the Motion of my noble friend Lord Hannay and to follow the eloquent and powerful arguments put forward by him and the noble Lord, Lord Sharkey. They are experts in this area.
I wish to start by reading one of the committee’s recommendations on page 10, which states:
“If the Government were to opt in to the draft Europol Regulation and also exercise the block opt-out we urge them to opt back in to the Council Decisions which fall within the scope of the opt-out and which are connected with Europol’s continued operations, should this prove necessary”.
I do not quote that to criticise the committee, quite the reverse. However, this process of opting in, opting out and opting in again is like hokey-cokey politics in which the Government are indulging. They are dancing to the tune of UKIP and the Eurosceptic right in their party and putting our national security and the fight against crime in jeopardy as a result.
The Europol matter that we are discussing is complicated by the threatened block opt-out, as I said at Question Time today and as the noble Lord, Lord Hannay, mentioned. The noble Lord, Lord McNally, was rather coy earlier when speaking about the differences of view between the two sides of the coalition in the discussions on this matter. We have a Conservative Minister replying to this debate and it will be interesting to hear his response. However, we get a very clear view of the position from the documents that were leaked to the Daily Telegraph, and I wish to quote briefly from one or two of them. A number of measures were binned, where we agreed not to seek to rejoin, which must cause concern.
I say to the noble Lord, Lord Sharkey, that one of the documents refers to,
“37 measures identified by DPM”—
that is, the Deputy Prime Minister—
“as being of less importance”.
One of the measures that Mr Clegg identified as being of less importance was:
“Joint Action … on cooperation between customs authorities and business organizations in combating drug trafficking”.
How can that be identified as being of less importance? Then we come to measures that are undecided. The document states:
“48 measures for Immediate Discussion (Differing Views in the Coalition on Rejoining)”.
There were differing views on whether it should rejoin those measures, having exercised a block opt-out on 133. Should we rejoin the measure on combating child pornography on the internet? Is there any doubt about that? Why is there any discussion about it? Why does one side of the coalition think that we should opt in and another that we should opt out?
Another measure mentioned by the noble Lord, Lord Sharkey, concerns,
“security in connection with football matches with an international dimension”,
where we have seen that police forces acting together have been very effective in passing on information about known troublemakers so that they can be dealt with on the spot. British police officers can go out to matches abroad and offer their help and police officers from other countries can come here and help with identifying troublemakers. However, all this is being put in jeopardy by what the coalition is considering doing because of the pressure of the 133 opt-outs. It is dancing to the tune of UKIP and the Eurosceptic right, which I know the Minister is not part of. I hope that he will take the opportunity to make that clear again today.
I now wish to consider the measures in detail. We are told—the noble Lord, Lord McNally, used this excuse earlier today—that each of them is being looked at and the reason the Government have taken so long to consider the other report of our Select Committee on the opt-out is that the measures are all very complicated. He also said that each one has to be looked at in the national interest. I always get a wee bit worried when the coalition talks about the national interest. It seems to me that it is often a case of what is in the best interests of keeping the coalition in power rather than what is in the national interest. When pressed to explain their thinking, Ministers have said that they look at the measures on a case-by-case basis as far as the national interest is concerned.
There are two key problems with the Government’s plan of action. The first is the cost to the United Kingdom of permanently opting out of some of the measures, with Europol a particular concern, as the report rightly says. The report expresses the view that,
“none of the concerns expressed by the Government … outweigh the benefits to the UK of Europol’s assistance to national police and law enforcement agencies in the fight against cross-border threats (including terrorism) and serious organised crime”.
Therefore, we are putting the fight against terrorism and serious organised crime in jeopardy through this opt-out. Rarely has an all-party report, unanimously agreed by all the members of the sub-committee and the committee, been so damning of the government line.
The second problem is the cost of what the Government hope to retain. Opting back in is not a straightforward process. The noble Lord, Lord Williamson, having been secretary of the European Commission, will know only too well exactly what has to be done. There is no guarantee that negotiations to opt back in would be successful. We might find ourselves locked out permanently of key crime-fighting tools. Ensuring that this does not happen will require a large and wholly avoidable expenditure of diplomatic capital. Our experienced diplomats would have to spend their time persuading the other 27 countries of Europe, now that Croatia has joined, that we should be allowed back in.
The rewards that the Government hope to win by such a policy are largely intangible. The measures they hope to scrap are mostly technical points relating to the definition of certain crimes. What is really driving this agenda is the streak of destructive Euroscepticism that runs through some of the Tory Back Benches. In this instance, it is clear what they mean by the national interest. As I said, the national interest is the interest of a small, bullying minority. David Cameron is trying to paint himself as a national champion, but in fact he is having his arm twisted. It is a clever piece of political spin but it is a disastrous piece of policy that could leave all of us in the United Kingdom dangerously exposed to crime and terror. I hope that the Minister will indicate that the Government will have second thoughts in light of the unanimous report from our Select Committee.
Lord Judd
My Lords, I am very glad indeed to follow the noble Lord, Lord Foulkes, as I find myself in a great deal of sympathy with the argument that he has put forward.
It always seems to me that if one set out to design a nation that was dependent on its relationships with the world in almost every sphere of our significant life in Britain, it would be difficult to think of a better example than the United Kingdom. We live in a totally interdependent world. I believe strongly that the test of political leadership in our country is to demonstrate that we are determined to look to the well-being of the people of these islands of the United Kingdom, but that that can best be done only if we are in a network of international co-operative relationships, of which the European Union is one. It is not a romantic debate about whether one is a European or a Briton; it is hard-headed practical common sense about how we look to the well-being of the British people. Certainly, as far as I am concerned, any thought that we should retreat into being a sort of free-floating raft off the mainland of Europe in the turbulent world in which we live, and that we will somehow then look better to the interests of our people, is a betrayal of the British people and should be dismissed as such.
These matters of security and international crime and the rest are paramount examples of this. We all know that crime is now internationalised on an almost unimaginable scale. We all know that security and terrorism and threats of this kind operate on an international basis. All the new technology at the disposal of the human race makes all this more acute. There is no way in which we can look to the security of the British people without the maximum co-operation of those who are seeking the same objectives for their people in Europe as a whole. Indeed, that should always be a stepping stone to maximum international global co-operation, because that is ultimately the indispensible solution that we must find.
Baroness Smith of Basildon
My Lords, this has been a short but interesting and illuminating debate. Perhaps I may say at the outset how grateful I am to the committee. I found this report and the previous report on the opt-out to be extremely useful, and it should have a much wider audience than only Members of your Lordships’ House. Any debate around European issues is often led by emotion and those with strong views. It often becomes one of those public debates whereby those with strong views seek to persuade others why they are right and it becomes difficult to make a balanced and dispassionate contribution. I have thought for some time that what many people want is for politicians to stop telling them what they should think and why they should agree with them but be given hard facts in a reasoned way and be allowed to make their own judgments. What are the benefits and problems, as well as the potential benefits and potential problems? Both reports are excellent and need a wider audience because they address just those issues in a dispassionate and thoughtful way. Certainly when preparing for today’s debate I found both reports hugely valuable.
It feels slightly odd to be debating an opt-in when so much of the debate and political discussion between now and next May, when the final decision has to be made, is all about the Government’s proposed block opt-out. That will be a much wider opt-out than the decisions on Europol before us today. I have to agree with my noble friend Lord Foulkes that when I was looking at this, “political hokey-cokey” were exactly the words that came into my mind. As he indicated, it is a very expensive hokey-cokey and there is no guarantee that once you have been in and come out you can go in again. For that reason, this is a slightly confused debate to which the reports bring a great deal of clarity.
I have a few questions for the Minister, which developed as I prepared for the debate. I should be interested to know how many other measures are awaiting an opt-in decision by the Government and whether any have been delayed because of the discussions regarding the opt-out. In our discussion on the first report last week on the opt-out, there was some suggestion that there were other opt-in measures that would address some of the concerns that the Government have raised around issues such as the European arrest warrant, but no action has been taken. Because there is an opt-out decision to be taken, proper consideration is not being given to potential opt-ins.
Perhaps I may restate the valid point made by the noble Lord, Lord Hannay of Chiswick, on the other issues connected to Europol that would remain on the Government’s opt-out list, even if the Government opted in. It sounds more like the hokey-cokey all the time, does it not? Even if the Government opt in on the Europol measures, other connected measures would be on the opt-out list. I feel like a character in a play, somewhere between Alice Through the Looking Glass and “Yes Minister”. However, it would be helpful to have some clarity from the Minister on those points. These reports help to make sense of the decision to be made this month and set the issue in a wider context.
The first duty of any Government is the safety and well-being of the public and national security. Over the past decade, we have seen an increase in serious and organised crime that can and has caused severe harm, poses great risk to victims and causes inevitable economic damage. I take note of Europol’s Serious and Organised Crime Threat Assessment made earlier this year, which stated:
“Serious and organised crime is an increasingly dynamic and complex phenomenon, and remains a significant threat to the safety and prosperity of the EU”.
The assessment goes on to state that as society and business become more global, so do the nature of the threat and the risk, particularly regarding the use of new and emerging technology.
The value of Europol as described by other noble Lords is widely accepted. The value of the range of EU police and criminal justice measures is also widely accepted as being of huge benefit in the fight against organised and serious cross-border crime, which is made more dangerous and more complex by its cross-border nature. The noble Lord, Lord Sharkey, illustrated some of that in the cases he mentioned. Dealing with drug trafficking, people trafficking, abduction, money laundering, cybercrime and of course national security and terrorism relies on co-operation, both Europe-wide and nationally.
We have already heard about the main changes proposed by the draft regulation that the UK is being asked to opt into. I do not wish to repeat the detail but in summary, first, are the new commitments around data sharing and enhancing the role of Europol as a hub for information exchange. Second are the proposals for a more robust data protection regime, alongside structural changes in data management and processing, to make better use of the data that are held. Third is improved governance and increased parliamentary scrutiny by national Parliaments and the European Parliament, and proposals for greater accountability. Fourth are the changes to the existing structures by merging Europol and CEPOL; although my reading of the proposed regulation is that it is more of a takeover than a merger.
On the first issue, data sharing is essential. There is little point in co-operation between states if information is not up to date and relevant. However, we understand the concerns that have been raised by the new wording. I should be interested to hear from the Minister the exact reasons for the Government’s concerns on this. The Government consider that information should be shared on a voluntary basis, if I understand their position correctly. That is not unreasonable but is there likely to be an imbalance in information supplied from different countries? The Government have responded that they have concerns about the feasibility. Can the Minister be more specific about what he means by “feasibility”? Perhaps we can have some more detail on that. The committee’s recommendation on this issue seems eminently sensible, given that there are concerns, but I am keen to understand exactly what they are. The committee’s recommendation on negotiation is helpful but I wonder how effective we as a country can be in negotiations, given the Government’s commitment to a block opt-out. That must be a real worry for those negotiating on our behalf in addressing any concerns that the Government have. Obviously, if others around the table think that we are likely to opt out, it is harder to reach agreement. The Government will need to convince them that we are serious about real engagement. That might be a challenge for any negotiators. Paragraph 20 of the report is helpful in seeking to tread through this minefield and makes a very robust recommendation on the course of action that the Government should take in respect of Europol if they decide to exercise the block opt-out.
On the second matter of data protection and better analysis of data, both proposals are welcome but I agree that there is a lack of clarity about the data protection provisions, and that uncertainty will remain until later this month when the directive is to be agreed. The Commission’s document refers to the current legislative set-up preventing Europol being fully effective and equipping member states with the necessary, complete and up-to-date tools. From the report, this appears to be in relation to forensic and operational support and criminal analysis. It also seems that this regulation is needed to tackle the remaining barriers to full co-operation. I certainly welcome the proposals to strengthen the current data protection regime, including those intended strictly to limit the holding of personal information, as well as proposals on the individual’s right to access information held and the availability of compensation for unlawful data processing. It would be helpful to know the Minister’s views on this and whether the Government are satisfied with those proposals.
However, it is the merger of Europol and CEPOL that is perhaps most contentious. Listening to comments from noble Lords around the House this evening, there seems to be little confidence that this will go ahead in the proposed form. As I have already said, it seems to be more of a takeover than a merger, and I am not surprised that both directors have opposed it. That, in itself, would not be the sole basis on which to oppose change but they have raised strong issues of concern. I share the concerns about the financial implications and effectiveness. The Government are wise to be sceptical about the prediction of savings. They themselves know from their mergers of quangos and cuts in organisations that the savings realised on paper are often not so evident in the real world.
We have previously made points in debates in your Lordships’ House about the creation of the National Crime Agency and the dangers that the Government face in not providing transitional costs. We often hear that changes in administration or bureaucracy are going to realise great savings. Obviously savings can be made, but when the rationale for structural change is just to save money, too often there then follows a hunt for cuts to realise the savings that have been promised, while at the same time the process of change swallows up money that could be used to provide services.
The Government’s Explanatory Memorandum provides an assessment of the benefits. It certainly appears that there are good reasons for greater co-operation between the two bodies, although it is worth noting Appendix 2 of the committee’s report, in which the director of CEPOL states that the synergies and co-operation between the two agencies are already excellent. He takes the strong view, with some evidence, that money is not being wasted by duplication. The directors of both agencies raise concerns about the supposed financial savings and the implications of a merger in terms of efficiency.
The second area that the Commission identifies as being made more effective is that of identifying and responding to training needs. Having read the report, the Explanatory Memorandum and the regulations, I share some of the concerns that have been raised about training, not just in terms of the budget but in terms of guaranteeing the quality of training and the priority given to training. This is a dangerous area in which to risk losing effectiveness. I know that the Government have some concerns but I hope that they will not be used as a way to try to derail progress. Perhaps the Minister can confirm that the Government will enter into negotiations on this and report back to your Lordships’ House as those negotiations progress.
One aspect on which I should like to understand the Government’s position is the development of EU centres and the provision of training to fight specific crimes. Looking through the regulations and the other material, I wonder whether the Government have considered or explored with the Commission the possibility of a specialist centre being based in the UK. I would have hoped that the Government would enthusiastically embrace the opportunity of having one of these EU centres in the UK—we already have CEPOL at Bramshill—to further develop and share high-level expertise. Bramshill is a former police college and it has had international respect but it is being sold off. I hope that that does not blind the Government to what could be a real opportunity to extend our influence and share our expertise in policing Europe-wide.
Again, the Minister will have to consider that any negotiations to seek changes in the details of the memorandum and regulations could be damaged by the Government’s intention to seek an opt-out in 2014. I appreciate that having to look at this issue in the shadow of the block opt-out makes such discussions very difficult for the Government, but I would hope—and other noble Lords have echoed this in their comments this evening—that the importance of this issue would focus the Government’s attention on the opportunities of sharing and improving UK law enforcement and policing. There are also some very welcome comments on scrutiny, accountability and good governance.
At the beginning of this debate, I said that a Government’s first duty is to the security and well-being of their citizens. Crime does not stop at Calais. The policing methods of “Dixon of Dock Green” are no longer enough to tackle the complex and intelligent web of serious and organised crime, where the benefits of, and skills derived from, modern technology sit alongside the old-fashioned criminal masterminds. Police officers today are highly trained and they will have to co-operate across borders if we are to be effective in bringing to justice the drug dealers, money launderers, child abusers and all those who traffic in human misery, as well as fighting terrorism and protecting national security.
The decision before the Government is whether to opt in to the new Europol regulations. A very interesting aspect of tonight’s debate has been that there is real support from noble Lords across the House for European and national co-operation to effectively tackle these issues. However, not a single voice has been raised this evening in support of the Government’s proposed block opt-out. I should have thought that, if there were to be such a contribution on this issue, it would have been heard this evening.
As the noble Lord, Lord Hannay, indicated, it is impossible to see this debate in a vacuum. We have to set it against the announcement that the Government want to opt out of all policing and criminal justice measures and then, in the hokey-cokey, try to opt back in to some of them, but we do not know which ones and how many or what the priorities are, and we do not know what the costs will be. As I have made clear, there are very real concerns about the Government’s position and perhaps, more importantly, the way that they have handled this issue. It undermines confidence and weakens our negotiating position when there are very real and serious issues that have to be addressed.
I look forward to the Minister’s response and hope that he can give us some clarity and reassurance on the issue. However, I greatly welcome this debate and, again, pay tribute to the whole committee for its thoughtful, insightful and very readable report.
The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach)
My Lords, I am grateful to the noble Lord, Lord Hannay, and the European Union Committee for calling this debate. I am pleased that we have had such a wide-ranging discussion, although some noble Lords have made a little bit of fun with expressions such as “hokey-cokey”. At bottom, the debate has been firmly rooted in the issues that the Government are having to consider and deliberate on. I think that noble Lords have taken their cue from the report and I am therefore extremely grateful to the noble Lord, Lord Hannay, and his committee for the clarity with which the report presents the issues before the Government.
I must say right now that the Government have not decided whether to opt in to the measure at this stage. The arguments are finely balanced. I do not feel that this decision has been overshadowed by any other decision which is also before the Government at this time. The point made in the committee’s report is that Europol and its future is an entirely separate issue. The noble Lords, Lord Judd and Lord Foulkes, referred to the importance of Europol in the fight against cross-border crime.
We also need to protect the independence of our own law enforcement agencies and there are elements in the draft measure which cause us concern. We therefore need to decide whether it would be better to opt in at this stage and use our vote in the negotiations to try to improve the proposal or to stay out for now and reconsider our position once the final text is agreed. Both options are open to us.
In saying that, I want to be clear that we strongly support Europol as it currently operates. As noble Lords have pointed out, we work very closely with it in tackling many serious offences, such as people smuggling and online child abuse. My noble friend Lord Sharkey gave some detailed examples of where Europol has been important in tackling cross-border crime affecting this country. Indeed, the noble Baroness, Lady Smith, also recognised that point of view. Europol provides real benefits to our law enforcement agencies. It is an effective and well run organisation with strong leadership. Indeed, as noble Lords have pointed out, with a Briton as its director, the UK plays an important part.
However, we are worried that some aspects of the new proposals may risk making our law enforcement agencies accountable to Europol, which would be a different thing. Policing is a core function of a sovereign country and must remain a member state responsibility. Perhaps I may illustrate this with an example. I refer to the proposals on police training. I am pleased that the European Union Committee shares our concerns about the proposed merger between the European Police College and Europol. The noble Lord, Lord Hannay, confirmed that in his opening speech. However, the Commission’s proposals go beyond the merger. They would give the Europol academy a much broader role than CEPOL currently has in police training, significantly expanding the EU’s responsibilities in an area that really should be left to member states.
We also have concerns about the stronger obligation to give Europol data, to which I shall perhaps return later in response to contributions. We accept of course that Europol needs good-quality intelligence from member states if it is to do its job properly. This country has a good record in that respect. But the new regulation goes far beyond specifying exactly what must be shared and in what circumstances. It does not allow us to withhold information that would threaten national security or harm an ongoing investigation. That worries us because it seems to undermine the control of member states over their law enforcement intelligence. Another factor we perhaps need to bear in mind is that it also risks overwhelming Europol with data provided by member states without regard to its quality simply to avoid being taken to the European Court of Justice.
Another concern is the provision that allows Europol to ask member states’ law enforcement agencies to carry out investigations. Europol already has some powers in this area but the new regulations strengthen them, which suggests a presumption that a member state will comply with Europol’s request. Any reason for not complying could be subject to challenge before the ECJ. Indeed, my noble friend Lord Sharkey acknowledged that this was a risk. We would have real concerns if that led to the European courts judging our policing priorities.
The committee has argued that we should opt into the text and negotiate out these provisions. That is an option, especially as opting in before 30 July would give us a vote in the negotiations. However, the proposal is subject to qualified majority voting, so if we did opt in we could still be out-voted. We would then be bound by the outcome even if we did not get the changes we were seeking.
It is right to bear in mind that the decision to stay out at this stage will not necessarily exclude us from Europol for ever. We would remain involved in the negotiations and would have another chance to take part once the measure had been adopted. That would give us the advantage of knowing exactly what the regulation would require of us before we signed up to it but with the offset of having no vote in the negotiations.
Lord Foulkes of Cumnock
My Lords, while the Minister is going through these arguments, perhaps he could explain why he has had no support from his own Back-Benchers and why none of the people who gave evidence to the sub-committee supported his point of view? Why has he not been able to persuade anyone inside or outside this House?
Lord Taylor of Holbeach
I am seeking to explain this particular case solely to those who are listening to me at the moment. As I have said, we are not coming to this debate with a set point of view. We are here to listen. We have had the opportunity of considering the report and we will continue to do so. The noble Lord will know that this debate will be looked at and the points made in it will be considered as part and parcel of the Government’s decision on whether to opt-in to the proposal or leave the decision and let the negotiations take their course. That is the Government’s position at this stage: that is what we are considering. This debate is very important because it will help to inform the Government’s decision. I have not come here with a point of view that will determine the outcome of those considerations.
Lord Judd
I am rather confused by what the Minister is saying. Do the Government agree that we best look to our interests on international crime and terrorism by being in an arrangement which ensures maximum European operational effectiveness? If they do agree that that is the case, how will we make sure that the regulation is what it should be if we sit on the sidelines, wait until others have decided and then make up our minds as to whether or not we want to join?
Lord Taylor of Holbeach
I have clearly said that we are not determining whether we will be in the negotiations or sitting and observing them. We are not likely to be passive—this Government are not inclined to be passive—and we shall certainly not be passive on an issue in which this country plays an important part, such as the future of Europol.
I am trying to be even handed on the issue. The Government have not made up their mind. We recognise that there are differences. That is why I have made clear that there are advantages in being a party to the negotiations having opted in, but I also pointed out the disadvantages that we might not achieve what we want to achieve through those negotiations and we would not have the freedom to negotiate from outside if we did not opt in. That is a reasonable position to present and I hope that noble Lords will accept it. There are strong arguments either way and the Government have not yet decided which option they will take.
Let me now deal with some of the points raised by the committee in its report. We agree that the data protection provisions in the regulation should take full account of the draft data protection directive and regulation. We also support appropriate scrutiny of Europol by the European Parliament and national Parliaments, a point made by the noble Lord, Lord Hannay. However, we would need to know how the proposals to disclose classified information to the European Parliament might work.
The noble Lord, Lord Hannay, said that US information is higher than other member states. I can confirm that the UK is currently in the top three countries that provide data. As I have indicated to noble Lords, whether or not we opt in, we will fully participate in negotiations and work closely with member states to seek the necessary amendments to these draft proposals. In response to the question put by the noble Lord, Lord Hannay, on retaining CEPOL, following the announcement of the closure of the Bramshill site, the Government’s priority is now to relocate the College of Policing so that it will be put on as strong a footing as possible to support policing in the UK. Other member states have expressed an interest in accommodating CEPOL, and there seems little point in insisting that it should stay in the UK just for the sake of it. We expect that the new proposal will repeal and replace the existing Europol Council decisions, although this does remain subject to negotiation. No final decisions have been made as to whether the Government will seek to rejoin as part of the wider 2014 opt-out decision. That decision has not been determined.
The noble Lord also asked why the debate scheduled for 3 July in another place was postponed and whether it will be reinstated. In truth, the debate was postponed to give the Government more time to consider the important voice of the opt-in and to reach a final view on it. The noble Lord will be aware that opt-in debates in another place are held on a Motion setting out the Government’s position. As I said earlier, we have not yet reached a decision on what that position will be. However, the Government are clear about their intention to hold a debate on this matter in another place, and such a debate will take place.
Baroness Smith of Basildon
My Lords, I apologise to the noble Lord because he has been generous in giving way. He has said that time will be made for the other place to debate this issue once the government decision has been made. The decision has to be taken by 30 July, which is the last sitting day in your Lordships’ House before the Summer Recess. However, the other place will finish around two weeks earlier. Can I have an assurance that, if the decision is taken between the other place rising and 30 July when this House rises, the noble Lord will make an Oral Statement so that we can debate the issue on the basis of the decision that is made, not the theory of the decision?
Lord Taylor of Holbeach
I imagine that I will be able to tell noble Lords that it is highly probable that a decision will be made before the other place rises, rather than before 30 July. The business of this House is a matter for the usual channels and I place myself in their hands. However, I would want to communicate any decision of this importance to the House and, indeed, to Parliament. I am sure that that will be acknowledged by my noble friends who occupy the usual channels.
My noble friend Lord Sharkey is correct to say that there are numerous examples of good co-operation. He illustrated the virtues of Europol and why, notwithstanding the discussions on whether to opt in or to let it run and then negotiate, it is such an important institution and we support it. I am aware that we share common ground with other member states on some issues, but there are no guarantees. The issues are subject to qualified majority voting and there have not been any detailed negotiations that have allowed us to gain a clear idea of how much support we have for our concerns. Should we not succeed in amending it, we would be bound by the final text, and that is a matter of concern to the Government.
Perhaps I may respond to the noble Lord, Lord Foulkes. I should like to highlight that there are two separate issues here: the block opt-out and the Europol negotiations. The two issues are not being confused and this debate is about the Europol regulation, not the opt-out.
Lord Taylor of Holbeach
If the noble Lord will forgive me, I am going to run out of time.
Lord Foulkes of Cumnock
My notice said that the House would rise at 10 pm, so we have an hour and a half. I wonder if the Minister will think again because the two issues are related. The recommendation I read out indicates that they are related. If you opt in and there is a block opt-out, and then you have to opt in again, there must be a relationship between the two.
The Minister and I know a little about another member state of the European Union, la belle France. The French are just as concerned about their national interest, their policing and the other concerns that he has expressed. Why does he think that they do not have the same anxiety that this Government seem to be expressing?
Lord Taylor of Holbeach
That is exactly the point that I have been trying to lay before the House and why the Government are deliberating carefully on this. It is a matter of common interest across European countries and of measuring that common interest. This is all a worthwhile endeavour but it requires the national interest to be taken into account. That is the background against which the Government are making this decision. Of course, there is a big issue about the general opt-out but this decision stands alone and is being considered by the committee and by the Government on its own merits. I have tried to demonstrate that this is an even-handed consideration of the issue.
I say to the noble Baroness that, whatever our decision, negotiations are important for us in ensuring the operational independence of law enforcement agencies and the security of our citizens. We expect there to be some common ground among member states, such as la belle France, if the noble Lord, Lord Foulkes, was referring to the interests that a number of noble Lords in the Chamber at the moment have. We are committed to ensuring the best possible outcome from these negotiations. We will need to consider the proposals in detail as the negotiations progress but we agree that strong data protection, for example, is important. The regulations here will need to reflect the data protection provisions being negotiated elsewhere. None is likely to change during the negotiating position. The noble Baroness asked how many other measures are awaiting an opt-in. I know of no others but will seek to find out and let her know if there are any.
This good-natured and deep-thinking debate, despite the hokey-cokey allusions, has considered the seriousness of this issue. As the noble Lord, Lord Judd, said, the security of the country requires us to make sure that law enforcement agencies have the co-operation they need from other European countries. I stress that the Government still have an open mind on the issue. We will of course consider the view of your Lordships’ House and the arguments made by noble Lords here tonight very carefully before we make our decision. I assure the House that the Government will ensure that this House, and Parliament are kept informed about that decision.
Lord Hannay of Chiswick
My Lords, this has been a relatively brief debate, and I hasten to assure those faithful few still here that I do not intend to apply Professor Parkinson’s law and use all the time available to wind it up. I think that the common point among all noble Lords who participated was the recognition that serious crime is an international problem now and that we need a great deal of co-operation to deal with it. That really was agreed by everyone. The noble Baroness, Lady Smith of Basildon, said that crime does not stop at Calais. I sometimes think that some of the Government’s supporters believe that crime starts at Calais, but we can leave that on one side. The fact is that it occurs on both sides of the Channel and the perpetrators are more and more imaginative about their use of technology and very rapid and easy travel, and all the other tricks of the trade, and that is why we need this sort of co-operation to deal with it.
I thank the faithful members of the sub-committee that I chair, the noble Lords, Lord Sharkey and Lord Judd, for having participated in this debate. The noble Lord, Lord Sharkey, very helpfully drew our attention to some of the practical consequences of Europol co-operation. Sometimes our debates must seem a bit theoretical, but he brought us firmly back to earth. The noble Lord, Lord Foulkes, who is on the EU Select Committee, was also very convincing.
Even I find this opt-in and opt-out business pretty confusing sometimes. We should remember, if we find it infuriatingly confusing, that it is entirely of our own making. No other member state goes through these agonies. This is an exercise in sadomasochism. I am not contesting it because I know how it came about. The various previous Governments who negotiated these rather complex arrangements were justified in doing so, in my view, but the complications are of our own making, so we should not get too irritated by them even though they are difficult to understand.
To answer a question asked by the noble Baroness, Lady Smith—the noble Lord did not answer it—first, there is the directive on the proceeds of crime, which your Lordships’ committee recommended the Government should opt into. The Government did not opt in, but they have not excluded opting in at the adoption stage. That is the position which the noble Lord described in relation to Europol. Rather more seriously, there is the European surveillance order, in which the Government do not have an opt-in or an opt-out; they have simply failed to implement a piece of European legislation which they agreed to. It came into force throughout the European Union in December last year.
The European surveillance order is actually rather important for British citizens because it provides the possibility for someone who is subject to a European arrest warrant to be bailed in their own country: that is, to stay in this country and avoid being taken to, say, some insalubrious jail in Greece where they are kept while awaiting trial. My own view, and that of everybody who participated last week in the very good seminar in which the noble Lord’s colleague, James Brokenshire, participated very positively, is that it is unconscionable that we have not opted into this. Apparently the reason is that the Government did not wish to pre-empt the view they were going to take on the European arrest warrant, but as a result of that decision there are British citizens who are not able to make use of the European surveillance order and be bailed in this country. That number will grow as the delay grows.
Turning to the purpose of the debate—the Europol regulation—I am most grateful to the noble Lord, Lord Taylor, for his habitually calm and friendly presentation of his position. I think I understand the complexities of the timing in the other place. The window of opportunity is rather modest, since the other place goes away on 18 July. It is the normal practice to give it one week’s notice of a government Motion, which takes us to 11 or 12 July, but after all that will be after 5 July, and we all know what is happening on 5 July in the other place on matters European.
I thank the noble Lord for his very helpful response about how he would keep the House informed of a decision by the Government. I am sure that it can be done in a light and easy way. Of course, there is no question of another debate of this sort, but if he could find a way of doing that, it would be really helpful, and I accept his undertakings on that with great thanks.