House of Commons

Tuesday 9th July 2013 Commons Chamber

Tuesday 9 July 2013

The House met at half-past Eleven o’clock

Prayers

Tuesday 9th July 2013 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 9th July 2013 Commons Chamber

The Deputy Prime Minister was asked—

[Anas Sarwar (Glasgow Central) (Lab)]

1. What effect the measures announced in the 2013 spending review will have on social mobility.

[The Deputy Prime Minister (Mr Nick Clegg)]

The spending review protected spending in key areas that will promote social mobility, including the schools budget, £2.5 billion for the pupil premium, 15 hours a week of free early education for the lowest-income two-year-olds and an additional £200 million to support the most troubled families.

[Anas Sarwar]

Child poverty fell by half under the previous Labour Government, but it is forecast to rise by 500,000 by 2015 under this Government. The Deputy Prime Minister has cut the national scholarship programme, the Sure Start programme and working tax credits for families. Are not the only beneficiaries of social mobility since the general election the Deputy Prime Minister and Lib Dem Ministers?

[The Deputy Prime Minister]

It is under this Government that we have given over 20 million people paying the basic rate of tax, particularly those on low incomes, a significant tax break so that they keep more of the money they earn. It is under this Government that we are taking close to 3 million people out of income tax altogether by raising the starting point at which it is paid to £10,000. It is under this Government that for the first time ever, from this September, two-year-old toddlers from the poorest families will get 15 hours free pre-school support. Relative child poverty is now at its lowest level since the mid-1980s, and the proportion of children living in relative poverty was lower in the past two years under this Government than it was in the last two years under the hon. Gentleman’s Government.

[Caroline Dinenage (Gosport) (Con)]

Gosport schools receive pupil premium funding, particularly because there are so many children from armed forces families. Does the Deputy Prime Minister agree that that underlines the Government’s commitment to education as one of the keys to improving life chances?

[The Deputy Prime Minister]

I agree with my hon. Friend. Only yesterday I attended the pupil premium awards ceremony, which was for teachers and head teachers who have made best use of the additional money, which will be £2.5 billion extra going to those schools that are educating children from the most disadvantaged backgrounds. It was a wonderful occasion, because it really showed, much as the schools in her constituency have shown, what good can come from good use of the pupil premium.

[Andrew Stephenson (Pendle) (Con)]

2. What assessment he has made of the role of campaigning by bodies other than political parties in elections.

[The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith)]

At the 2010 general election, the Electoral Commission registered 30 so-called third parties, which between them spent nearly £3 million. The Government are introducing sensible and necessary improvements to the controls on third parties to ensure that they are fully transparent and not allowed to distort the political process.

[Andrew Stephenson]

Given the scandal involving Unite the Union in Falkirk, and the leaked internal document showing that it is now trying to influence selections in 40 other constituencies across the country, including Pendle, does the Minister agree that there is huge public demand for complete transparency on the influence of trade unions on our political system?

[Miss Smith]

It is high time this is looked at. I think that the examples my hon. Friend has just given demonstrate that these are by no means isolated cases. It is the same old Labour party, which Len McCluskey still bankrolls, still rigs selections for, still controls and still chooses the leader for.

[Sadiq Khan (Tooting) (Lab)]

The Minister talks about transparency in the political system. She will be aware of the huge concern in March last year when it was first disclosed that multi-millionaires were getting privileged access to No. 10 Downing street and potentially influencing Government policy. It is about more than just elections; it is about influencing Government policy. Does she think that those millionaires will have more of an impact or less of an impact at the next general election?

[Miss Smith]

I think that the right hon. Gentleman is just treading time until his leader gets up to speak. Perhaps the leader is as weak as he is.

[Lorely Burt (Solihull) (LD)]

3. What consideration he has given to changing the regulations concerning voting by UK citizens living overseas.

[The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith)]

UK citizens resident overseas can register to vote in UK and European parliamentary elections provided that they have been registered in the UK in the past 15 years. We are extending the electoral timetable for UK parliamentary elections, which will make it easier for people overseas to use their postal votes, and the Government are also removing the requirement for an initial application as an overseas elector to be attested by another British citizen abroad.

[Lorely Burt]

I am grateful for that answer. As we know, many UK citizens living overseas are eligible to vote but are not registered. What steps can we take to ensure that British people living overseas are enfranchised?

[Miss Smith]

The Government will certainly explore all possible ways, in discussion with the Electoral Commission and other interested parties, to encourage registration among overseas electors, as we do, of course, for any eligible elector who seeks to be registered. As I say, the measures that we are taking in the context of moving towards individual electoral registration will help. I urge the hon. Lady and all those here in the House to take this issue very seriously, because very many more overseas electors ought to be registered.

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

Does the Minister agree that, given the importance she puts on this, the immediate priority must be the 6 million people in this country who are already eligible to vote but are missing from the register? What is she going to do about that?

[Miss Smith]

I have an entire programme of activities on individual electoral registration, about which I have always been happy to brief the House; in fact, I will do so again shortly by invitation to all right hon. and hon. Members. When it comes to deciding which voters are more important than others, all voters are equally important.

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

Is consideration being given to the possibility that residents of the Falkland Islands will be given the right to vote in British elections in the same way as the French give people living on the island of Réunion the right to vote in French elections?

[Miss Smith]

There are various categories of eligibility depending on the status of the country in question—for example, the rules that relate to Commonwealth voters who are resident in this country. I would be happy to take a further look into that question in the light of any changes that my right hon. Friend might be referring to.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Does the Minister have any concern that a number of local authorities are cutting the money that is dedicated to electoral registration? If so, what is she going to do about it?

[Miss Smith]

The hon. Gentleman will have been eagle-eyed and read my written ministerial statement last week announcing £4.2 million to deal with exactly that.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

4. What assessment he has made of the work of the Commission on Devolution in Wales.

[The Deputy Prime Minister (Mr Nick Clegg)]

The Government are grateful to the commission for its hard work and for engaging widely across Wales. We have been carefully considering its recommendations on the financial powers of the Assembly, and we intend to respond shortly. The commission is now undertaking a thorough review of the broader devolution settlement for Wales, and I look forward to seeing its report next year.

[Simon Hart]

The Chief Secretary to the Treasury has said that funding improvements to the M4 are largely connected with the recommendations of the Silk commission. Given that Welsh businesses have already suffered two delays, will the Deputy Prime Minister ensure that they do not suffer a third as a result of delayed negotiations?

[The Deputy Prime Minister]

As my hon. Friend knows, the Chancellor recently confirmed that we would respond to part 1 of the Silk commission’s report shortly. It is a complex area of work. There are 33 recommendations that touch on various complex areas of fiscal and taxation policy. We are endeavouring to respond as soon as possible, including on the issue of infrastructure investment that he raises.

[Mr David Hanson (Delyn) (Lab)]

Will the Deputy Prime Minister give me a guarantee that, as a Member of Parliament representing a constituency in Wales, I will still be able to vote and speak in this House on matters that affect my constituents who use health services, transport and employment in England?

[The Deputy Prime Minister]

Yes, I think that is an assurance that I can give the right hon. Gentleman; I am not quite sure what he is driving at. The process of devolution across the United Kingdom is not incompatible with making sure that the House acts as one where we need to do so, but also, as the McKay commission examined, that we explore the possibility of ensuring that where matters apply only to England that is somehow reflected in the procedures of this House.

[Stephen Lloyd (Eastbourne) (LD)]

Will the Deputy Prime Minister update me on what discussions have taken place with the Northern Ireland Executive on the further devolution of powers to the Executive?

[The Deputy Prime Minister]

There are of course ongoing discussions. I was in Northern Ireland myself just a few weeks ago. As my hon. Friend may know, one of the main topics of discussion has been the proposal for the devolution of corporation tax to Northern Ireland because of Northern Ireland’s rather atypical economic position given its significant land border with the Republic of Ireland. We are giving very serious consideration to this. We will not make a final decision until after the referendum on Scottish independence next year.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Last night we were legislating on some of the recommendations of the Parliamentary Commission on Banking Standards, 13 days after it published its final report. It is eight months since Silk finished the first phase of his report. Why are the UK Government treating the people of Wales with such contempt, when all the polls indicate strong support for official powers for Wales?

[The Deputy Prime Minister]

Of course I acknowledge the fact that the success of the Silk commission is that it has mobilised such cross-party consensus and support in Wales. That is why, far from treating the recommendations with contempt, we are treating them with a great deal of seriousness. I accept that that is taking a little longer than the hon. Gentleman might want, but when we announce our response to the 33 recommendations I hope he will be pleasantly surprised at our forthcoming and forward-leaning approach.

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

Does the Deputy Prime Minister agree that it would be utterly wrong to allow yet further powers to be given to the Welsh Assembly before we have resolved the problem of what we do about English devolution?

[The Deputy Prime Minister]

I do not think one should seek to be too neat about these things. Of course I accept that there is an issue with how English votes on issues that affect only English constituencies are dealt with in this House. The McKay commission examined that, and we are now reflecting on its recommendations, but that does not mean that we should somehow freeze in time an ongoing process of devolution to other parts of the United Kingdom.

[Jonathan Lord (Woking) (Con)]

5. What recent representations he has received on the role of trade unions in the funding of political parties.

[The Deputy Prime Minister (Mr Nick Clegg)]

The cross-party funding talks during 2012 and 2013 included discussions on reform of donations, spending, and how to deal with affiliate bodies such as trade unions. In my written statement to the House last Thursday I expressed my disappointment that, as on previous occasions, the talks were not able to reach agreement on beginning party funding reform in this Parliament.

[Jonathan Lord]

I welcome the Damascene conversion of the Leader of the Opposition to the merits of trade union members opting in to the political levy, but does the Deputy Prime Minister agree that it is way past time for trade union members to be able to decide to which political party they donate?

[The Deputy Prime Minister]

I agree with my hon. Friend and think that, as on so many other matters, the vast majority of the British people would also agree with him rather than the Labour party. If Labour Members want to turn their leader’s words today into action, we are prepared to work with them and use the forthcoming party funding Bill—[Interruption.] That is a serious suggestion and offer to turn the principle of an opt-in on the political levy into law, and indeed to give trade union members the right to support other parties, if that is what they wish. I hope Labour Members will take that opportunity, because it is time to turn words into actions.

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

Would not the Deputy Prime Minister speak with more credibility about political funding if his party returned the £2.5 million given to it by a convicted criminal, Michael Brown? That money was stolen. Why not return it?

[The Deputy Prime Minister]

I know that things must be difficult for the hon. Gentleman at this time and that he wants to spread mud around the place, but the fact is that the issue in British politics today is how on earth it is possible that the Labour party—a so-called progressive party—is funded to the tune of £11 million by Unite, which hand-picks its parliamentary questions and its parliamentary candidates. That is why I repeat my sincere offer to use forthcoming legislation to turn the promises being made by his leader into action.

[Stephen Mosley (City of Chester) (Con)]

Given the scandal engulfing the Labour party, is it not time that my right hon. Friend offered the Leader of the Opposition a helping hand and introduced a £50,000 cap on donations to political parties, which would stop big-money trade unions buying parliamentary seats?

[The Deputy Prime Minister]

I should point out to my hon. Friend that the donation cap did not find favour among various parties in the recent cross-party talks. The issue of the day is: are parties in this House free of vested interests—yes or no? I do not think it healthy for the Labour party or, for that matter, the trade unions to have this dysfunctional relationship. I welcome what the leader of the Labour party is saying today and offer legislation on behalf of the coalition Government to turn his words into action.

[Wayne David (Caerphilly) (Lab)]

On the funding of political parties, in recent years donations to the Conservative party from hedge fund managers, bankers and others associated with the City of London have doubled to nearly £43 million. They obviously like the half-baked regulatory measures being introduced by this Government. What measures does the Deputy Prime Minister plan to take to ensure full transparency, so that these donations, to use his own words, are not allowed to distort the political process?

[The Deputy Prime Minister]

All parties in this House, if we are candid with each other, have had problems with the way in which big money circulates in politics. That is why I remain a keen advocate of a cross-party approach to getting big money out of political donations and why I am disappointed that the recent cross-party talks did not lead to fruition. We can make progress, which is why we are about to table a Bill on third party funding to limit the influence of non-political parties in the democratic process. I repeat what I said earlier: given that the Labour party finally seems to have had a change of heart over the way in which it organises its dysfunctional relationship with its financial backers, I hope that it will work with us to reflect that in law.

[Jeremy Corbyn (Islington North) (Lab)]

6. What steps he is taking to ensure a high level of voter registration by young people.

[The Parliamentary Secretary, Cabinet Office (Miss Chloe Smith)]

The Government, politicians, political parties, electoral administrators and others in society have a role to play in encouraging people, including young people, to register to vote. As I have mentioned, the Government are making available up to £4.2 million this year to maximise the rate of voter registration ahead of the transition to individual electoral registration in 2014. That will be targeted at groups of people who are under-represented on the electoral register, including young people.

[Jeremy Corbyn]

Does the Minister not accept that under individual registration there will be the serious problem that a lot of young people who lead slightly dysfunctional lives because they are away at college or working away, or for all kinds of other reasons, will not be at an address when a registration form arrives, will not be able to register, and consequently will not be able to vote? Will this system not end up disfranchising a large number of young people who ought to be enfranchised in our system?

[Miss Smith]

As the youngest Minister in Her Majesty’s Government, I could not agree more on the importance of enfranchising young people. However, I disagree entirely that IER will lead to what the hon. Gentleman describes. There are multiple points at which electoral registration officers will make contact; it is not a case of just one officer turning up. I stand strongly by the principle that it is right in a modern society for people to have an individual right, and indeed a responsibility, to register.

[Mr Philip Hollobone (Kettering) (Con)]

Given that voter registration is straightforward and free of charge, why do the Government not require all public sector organisations, whenever they come into contact with anybody—young, middle-aged or old—to ask whether they are on their local register, and if they are not, to tell them how to register?

[Miss Smith]

My hon. Friend makes a helpful point. Many opportunities to achieve the ends that he sets out are afforded by having more public services online. We are introducing digital registration in 2014, which will be very helpful in achieving that shared aim.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

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

[The Deputy Prime Minister (Mr Nick Clegg)]

As Deputy Prime Minister, I support the Prime Minister on the full range of Government policy initiatives and I have responsibility for the Government’s programme of political and constitutional reform.

[Debbie Abrahams]

In this flatlining economy, nearly 1 million young people are unemployed. In my constituency there has been a 10% increase in youth unemployment. Most worryingly, there is a disproportionate impact on young people from black, Asian and minority communities. One in two young black men is unemployed, compared with one in four young men in the white community. Why are the Government not addressing that appalling inequality?

[The Deputy Prime Minister]

I am sure that all Members from all parts of the House will agree that it is important that we give young people more opportunities to get into work. That is why we have massively expanded the number of apprenticeships that are available to young people, on a scale that dwarfs anything the previous Government had planned, and why we have made available £1 billion for the Youth Contract. I urge the hon. Lady, if she has not done so—[Interruption.] She says that it is not working. It offers funding for 250,000 new work experience places, which is a great way of getting young people into work. If she worked with us, she could explain to employers in her constituency that wage subsidies are available under the Youth Contract so that if a local employer takes on a young person, they get paid for doing so by the Government.

[Mr Speaker]

Order. Members need to be much briefer if we are to get through the questions.

[Laura Sandys (South Thanet) (Con)]

T2. Will the Deputy Prime Minister update the House on the development of single pot funds and on what that will mean for east Kent in respect of the access to devolved money?

[The Deputy Prime Minister]

The Chancellor announced recently that we will start with a so-called single pot, as proposed by Lord Heseltine, of just over £2 billion. That is just the start of the process. Local enterprise partnerships across the country will be able to bid for at least half of that money and the rest will be distributed on a formula basis.

[Ms Harriet Harman (Camberwell and Peckham) (Lab)]

Does the Deputy Prime Minister agree that people do not like the fact that MPs can earn tens of thousands of pounds, sometimes even hundreds of thousands of pounds, from second jobs? Will he work with us to clamp down on MPs having second jobs?

[The Deputy Prime Minister]

I am not sure if I agree with the right hon. and learned Lady that we should stop—or clamp down on, as she puts it—MPs having additional employment. What is important is for that to be as transparent and accountable as possible. People expect their MPs to work for their constituents: that is what we are here for, and that should remain the principal purpose of all MPs elected to this place.

[Ms Harman]

It is important to have transparency, and we have transparency, but we need to do more. It is the amount of money that people see MPs earning that they do not agree with. The Deputy Prime Minister mentioned that he will introduce a Bill. Will it make provision for companies to consult shareholders before they are allowed to make donations to political parties?

[The Deputy Prime Minister]

Dare I say it, it is interesting that the right hon. and learned Lady is raising detailed points about reforming party funding now, when her party singularly failed to do so in the cross-party talks that, unfortunately, have just come to an end. We see the consequences in the headlines: the Labour party has failed and failed and failed to address the fact that it is at the beck and call of major vested interests in British society. That is not healthy for the Labour party. That is not healthy for trade unions. That is not healthy for democracy.

[David Mowat (Warrington South) (Con)]

T3. In the event of a no vote in the Scottish referendum next year, there is some discussion that further devolution, sometimes called devo max, will be offered. Will the Deputy Prime Minister confirm that before we go ahead with anything along those lines, there will be clarity on how many fewer MPs from Scotland there will be in this place?

[The Deputy Prime Minister]

It is for each party to explain how it wants to see the process of devolution continue in the wake of next year’s referendum. Let us first settle the question of whether Scotland will remain a part of the family of nations that makes up the United Kingdom, and then decide as different parties. Speaking on behalf of my party, we will always be at the forefront of arguing for greater devolution within a United Kingdom.

[Ian Murray (Edinburgh South) (Lab)]

T5. The Deputy Prime Minister said, in launching his party’s 2010 green manifesto, that the Tories“talk the talk on green issues only to align themselves with climate deniers”.Will he explain to the hundreds and hundreds of constituents who contacted me why he and his party voted against the decarbonisation target in the Energy Bill?

[The Deputy Prime Minister]

As the hon. Gentleman would know if he followed the debate, we will be taking powers to introduce a decarbonisation target when the next carbon budget starts. There are different opinions on this. Some Members suggested recently that we should abolish the Department of Energy and Climate Change—indeed, that we should abolish my office, too—and any mention of climate change. Needless to say, I think they are wrong on all counts.

[Karl MᶜCartney (Lincoln) (Con)]

T4. Given the success of the Deputy Prime Minister’s political and constitutional reform agenda to date, what other plans might he have to reform party political funding and allow Opposition Members to voice their opinions free from the yoke of union oppression?

[The Deputy Prime Minister]

As the hon. Gentleman knows, unfortunately, after numerous meetings bringing together representatives of the main parties in the past year or two, once again a cross-party consensus on party funding appears to have eluded us. I remain ready at any time to take up cross-party discussions. We need to reform party funding for the sake of all political parties, but the party in the spotlight today is the Labour party and its dysfunctional links with the trade unions. We will make available Government legislation to turn their words into action.

[Rosie Cooper (West Lancashire) (Lab)]

T6. Does the Deputy Prime Minister agree that paying the same fee to lawyers whether there is a guilty plea or a not guilty plea risks undue pressure being placed on defendants to plead guilty even though innocent, leading to miscarriages of justice? Does he also agree that the legal aid proposals from the Justice Secretary are half-baked?

[The Deputy Prime Minister]

The Justice Secretary has made it clear that he cannot and will not escape from the need to make just over £200 million of savings from the significant amount of money invested in our legal system. He will remain open-minded, as he reflects on the results of the recent consultation on his proposed legal aid reforms, on exactly how those reforms should be implemented, as long as the savings are achieved.

[Fiona Bruce (Congleton) (Con)]

T12. Will the Deputy Prime Minister join me in welcoming this week’s news that after talks South and North Korea have reached agreement to reopen the jointly run Kaesong industrial complex, and does he not agree that this shows that dialogue into North Korea makes a difference and that consideration by the BCC World Service to start transmission into North Korea should be given priority?

[The Deputy Prime Minister]

I pay tribute to my hon. Friend for all her work on this vital issue, which is of huge significance not just for the region, but for world stability. I agree that the agreement reached—thankfully—on the use of the Kaesong industrial site is a significant step forward, given where we were just a few weeks and months ago, and yes, I agree that the role of the BBC World Service in projecting our values is immensely important.

[Sheila Gilmore (Edinburgh East) (Lab)]

T8. In answer to my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams), the Deputy Prime Minister did not seem to be aware that the chief executive of the Recruitment and Employment Confederation said that virtually none of its members had taken up the wage incentive. What is he going to do about this, and does he now regret having fully endorsed so quickly the abolition of the future jobs fund?

[The Deputy Prime Minister]

The problem with the future jobs fund, as I hope the hon. Lady will acknowledge, was that, although it moved young people into jobs, often it did so only temporarily, and the point of the Youth Contract is to learn from those mistakes to ensure that the jobs created for young people last. The evidence, both from our huge expansion of apprenticeships and the parts of the Youth Contract giving young people opportunities, is that they are staying in work, and not simply being provided with temporary work, which is what happened under the future jobs fund.

[Greg Mulholland (Leeds North West) (LD)]

The Deputy Prime Minister has been hugely helpful in helping to secure Government funding for the Tour de France in Yorkshire next year, but less helpful has been the response I have had to the “be inspired, get involved” initiative. With the anniversary of London 2012 coming up, will he meet me in the next 10 days to discuss the matter?

[The Deputy Prime Minister]

Of course, I am happy to meet my hon. Friend at any time to discuss that. I strongly agree that having the start of the Tour de France in Yorkshire is a wonderful opportunity not just to show off the virtues of Yorkshire, but to put Britain on the map, once again, for this great, global sporting event.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

T9. The Deputy Prime Minister lauds the success of the Youth Contract, but let me give him a hard fact: one third of businesses recently surveyed said they had not even heard of it. What is he going to do about it?

[The Deputy Prime Minister]

I hope that the hon. Gentleman will join me in explaining to employers in his constituency that this payment of just shy of £2,300 is available to employers under the wage incentive in the Youth Contract where they take on young people. I hope he will also be aware that the Youth Contract consists not just of those 160,000 wage incentives, but of a funded increase in the number of work experience places—a quarter of a million of them—and a significant increase in funding for apprenticeships aimed at young people.

[Dr Julian Lewis (New Forest East) (Con)]

How much have the Deputy Prime Minister and his Cabinet Office colleagues cost the public purse in conducting a study of alternatives to Trident that has taken more than two and a half years to show that there are indeed no alternatives to Trident as the basis of our nuclear deterrent?

[The Deputy Prime Minister]

My hon. Friend must be a soothsayer if he can tell what is in a report that has not been published yet. As he knows, the confidential version of the report has been provided to the Prime Minister and me, and we hope to publish the unclassified version shortly, when he will see that options are available to us. I have always argued against the idea that a total, like-for-like, exact replacement of Trident on precisely the same basis is the only option available to us as a country.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

T10. Does “shortly” mean before the summer recess? Given that the Deputy Prime Minister’s report will show that his grand idea of a mini-deterrent was always a complete fantasy, why should anyone take him seriously if he now says that Britain could be adequately protected with a part-time deterrent?

[The Deputy Prime Minister]

We have another psychic telling us what is in a report that he has not seen yet. We hope that the report will be published shortly; we hope to publish it before the recess, but of course we need to check that the unclassified document is properly vetted in all respects, which is what we are doing at the moment. The simple point is: does the hon. Gentleman believe that a weapons system designed to be fired at the push of a button, at any minute of any hour of any day, 365 days a week, to flatten Moscow in a cold war context, is the only weapons system available to us? That is the question he needs to answer.

[Mr David Nuttall (Bury North) (Con)]

Will the Deputy Prime Minister set out the occasions on which he or any other Liberal Democrat Minister met Derek Webb and what was discussed at those meetings?

[The Deputy Prime Minister]

I will happily write to the hon. Gentleman. I am afraid I cannot answer that question right now.

[Mr David Hanson (Delyn) (Lab)]

T11. What explanation does the Deputy Prime Minister give for the fact that since the Youth Contract was launched, 11,600 more young people have been unemployed for over 12 months than before?

[The Deputy Prime Minister]

As the right hon. Gentleman knows, headline figures for youth unemployment have, thankfully, come down. I have seen that in the city for which I am an MP, where youth unemployment has come down by 8%, but of course we need to do more. He also knows that, of the headline figures, around 300,000 or 400,000 are in education, but we need to do more. That is what the Youth Contract is about. I accept that there is a challenge to communicate with employers so that they take up the bit of the Youth Contract that will be of help to them.

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

In the interest of victims of press intrusion and many others, will the Deputy Prime Minister confirm that the charter for press regulation agreed by this House and all parties will be put to the Privy Council at the earliest possible opportunity for agreement?

[The Deputy Prime Minister]

Of course I can confirm that we will do so at the earliest possible opportunity, but first we need to respect the processes of the Privy Council, as my right hon. Friend knows. Another, rival charter has been submitted for consideration at the Privy Council. We need to ensure that it is properly examined objectively and is not subject to undue interference. That process is now under way. He, like many people who voted on 18 March for the cross-party royal charter, is impatient to get on with it. I understand that. Our support for the royal charter voted for on 18 March remains, but we must also ensure that things are done objectively and reasonably in the Privy Council.

[Chris Bryant (Rhondda) (Lab)]

But Ministers tabled a motion on 18 March stating that the royal charter would go to the May Privy Council. Did they not know that they would be beaten to it by the press barons of this country? Why can it not go to the July meeting of the Privy Council? If not in July, why can the Deputy Prime Minister not have a special meeting in August or September, or whenever? The House decided. Why should others circumvent the will of this House?

[The Deputy Prime Minister]

I hear the hon. Gentleman’s frustration, but he will recall that on 18 March there was only one royal charter in play: the royal charter that we adopted on a cross-party basis—

[Ian Lucas (Wrexham) (Lab)]

The one we voted for.

[The Deputy Prime Minister]

Yes, with an overwhelming majority in this House. I certainly stand by my support for that, as I think everyone does across all sections in the House. However, another royal charter has since been put forward for consideration in the Privy Council. Whether the hon. Member for Rhondda (Chris Bryant) likes it or not, we must allow objective consideration of that additional royal charter.

[Chris Heaton-Harris (Daventry) (Con)]

When the Deputy Prime Minister last stood in for the Prime Minister at Prime Minister’s questions, he not only gave my hon. Friend the Member for Wellingborough (Mr Bone) the jitters but provided me with a helpful answer about the Special Olympic games being held in Bath in August and spreading the Olympic legacy. Alas, not too much has happened since. Will he look at that answer again and see what can be done?

[The Deputy Prime Minister]

I will look at the issue again and speak to my right hon. Friend the Secretary of State for Culture, Media and Sport to ensure that my hon. Friend gets a full answer.

[Ian Lavery (Wansbeck) (Lab)]

I am a proud trade unionist. I am proud of the fact that the trade union contributions to donations come from hard-working people up and down the country, who should not be smeared by Government Members. Will the Deputy Prime Minister consider legislation to ensure that the shareholders of big businesses that wish to donate to any party will be consulted and will have to agree to any such donation?

[The Deputy Prime Minister]

As I said before, I am up for a cross-party consensus to reform party funding across the piece. We had the opportunity to do that over the last two years, but the hon. Gentleman’s party singularly failed to step up to the mark in those cross-party discussions. Now that it has been revealed for the whole country to see that the Unite union is hand-picking parliamentary candidates, funding the Labour party to the tune of £11 million, suddenly the Labour party has belatedly discovered an enthusiasm for reform. We will make Government legislation available to make that happen.

[Simon Wright (Norwich South) (LD)]

May I urge my right hon. Friend to look into how a city deal for Norwich would help to create new jobs by capitalising on the economic growth of the world-class institutions at the Norwich research park?

[The Deputy Prime Minister]

My hon. Friend is getting active support from the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Norwich North (Miss Smith), who is sitting to my left. As he knows, Norwich is one of the 20 cities and towns that are in the process of securing a second wave of so-called city deals, following the first wave for the eight largest cities outside the south-east. I met representatives from Norwich and the other 19 places recently, and I am optimistic that we will be able to make an announcement in the autumn or winter.

[Lindsay Roy (Glenrothes) (Lab)]

According to a recent Hansard Society survey, only 12% of 18 to 24-year-olds are committed to voting in the next general election. Why does the Deputy Prime Minister think that is the case, and what steps does he intend to take to improve participation?

[The Deputy Prime Minister]

As the Parliamentary Secretary, Cabinet Office explained earlier, a number of steps are being taken to ensure that young voters understand how individual voter registration will work and that they take the opportunity to register themselves individually so that they can participate fully in future elections.

[John Cryer (Leyton and Wanstead) (Lab)]

Will the Deputy Prime Minister now answer the question put by my hon. Friend the Member for Wansbeck (Ian Lavery)? Does he or does he not think that shareholders should be consulted before donations are made to a political party?

[The Deputy Prime Minister]

There is a whole bunch of things we need to do to reform party funding, for the sake of all the political parties. It is a bit rich for Labour Members to assume this rather pious tone when it is their problems that are once again disfiguring the way in which money circulates in politics in this country.

[Ian Lucas (Wrexham) (Lab)]

On third-party donations, will the Deputy Prime Minister confirm that his party received a donation of £350,000 from the Joseph Rowntree Reform Trust before the last general election? Does he think that Joseph Rowntree would be pleased to see his money being used to prop up a Tory Government?

[The Deputy Prime Minister]

If the hon. Gentleman is concerned about being progressive, I do not know what is progressive about the sight of a major political party that is at the beck and call of a vested interest. I do not think that it is healthy for the trade unions, either. Over the past three years, his party has shown itself to be incapable of progressive political reform. It has blocked House of Lords reform, failed to campaign actively for the alternative vote and failed to deliver cross-party political funding reform. I think Joseph Rowntree would have been very disappointed by that.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I have been saving up: I call Mr Barry Sheerman.

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

I am sure that the Deputy Prime Minister will share my concern about young people not voting. If so, why, as a member of the coalition Government, is he standing by as citizenship training disappears from our schools up and down the country?

[The Deputy Prime Minister]

I hope that the hon. Gentleman has had time to look at the national curriculum, which was published yesterday by the Secretary of State for Education and the Prime Minister. It places laudable emphasis on ensuring that citizenship is properly taught in schools. We also have a programme of schools outreach, and we will be looking for organisations to deliver a set lesson framework, Rock Enrol, which is being developed and piloted by Bite the Ballot in a number of schools across England and Wales. Those are good initiatives.

The Attorney-General was asked—

[Nick Smith (Blaenau Gwent) (Lab)]

1. What recent assessment he has made of the performance of the Crown Prosecution Service in procuring and outsourcing services.

[The Attorney-General (Mr Dominic Grieve)]

The Crown Prosecution Service has a good record of procuring and outsourcing services. The Department utilises pan-government contracts for goods and services and has extensive arrangements for outsourcing services including advocacy, information technology and facilities management. These arrangements save many millions of pounds a year, protecting front-line jobs and front-line service delivery.

[Nick Smith]

The Crown Prosecution Service has a pilot contract for interpreters at four witness care units, but it has been dogged by delay. What is going to happen now at witness care units across the country?

[The Attorney-General]

The use that the CPS makes of those services is actually fairly limited. The information that I have does not suggest that the difficulties experienced by the service more generally have caused the CPS a problem.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

2. What recent assessment he has made of the reliability and punctuality of the Crown Prosecution Service in court proceedings.

[The Solicitor-General (Oliver Heald)]

Conviction rates are high and punctuality is good.

[Stella Creasy]

I am surprised by the Minister’s answer because last year the CPS failed to comply with nearly half the court orders on time—at great expense to the public purse. Just what do Ministers intend to do about this so that justice delayed is not justice denied?

[The Solicitor-General]

The hon. Lady raises an interesting point. Hot off the press today, we have had the annual report of Her Majesty’s Crown Prosecution Service Inspectorate, which looked at this issue and concluded that compliance with court directions was improving, as was monitoring. Looking at the overall picture, which is what the hon. Lady’s question was about, there are 800,000 cases a year—

[Chris Bryant (Rhondda) (Lab)]

Answer the question!

[The Solicitor-General]

I have answered the question, which is that there has been an improvement in compliance. I would like to point out, if I may, that conviction rates are at 86% and that with ineffective cases the Crown Prosecution Service is not ready only in 1.5% to 2% of cases.

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

I declare an interest as a defence solicitor, but I mention the interest of taxpayers and justice, too. How can we hold the Crown Prosecution Service to account when it fails during a criminal justice case that is in process, particularly given the lack of wasted costs orders applying to legal aid cases?

[The Solicitor-General]

As my hon. Friend will know, there are measures in place, such as the right of review and complaints system, which allow complaints to be made. More generally, it is worth looking at the annual report of the HMCPSI, which concludes that against a background of reducing costs there has been an improvement in almost all areas.

[Keith Vaz (Leicester East) (Lab)]

It is not just a case of turning up to court on time; it is a case of processing cases quickly. I wrote to the Attorney-General yesterday about a young woman who was killed exactly a year ago—Elena Fanaru—and it took the CPS a year to bring the person responsible to court. The hon. and learned Gentleman cannot accept that that is a good deal for the victim, as it causes additional stress to victims’ families and others concerned in these cases.

[The Solicitor-General]

The right hon. Gentleman is absolutely right to take up the case with my right hon. and learned Friend and he knows that the matter will be looked at carefully. On a day such as today, however, when the HMCPSI annual report has just come out showing progress in all areas, it is worth reflecting on the fact that, although we often rightly talk about individual cases in this place, there are high levels of convictions and very good results on punctuality overall. We are also seeing overall decision making on charging improving, assessment of case work quality improving, compliance with Crown court directions improving and the processes of dealing with disclosure—an extremely difficult issue—improving. Hon. Members are right to take up these issues.

[Mr Philip Hollobone (Kettering) (Con)]

I think the Crown Prosecution Service does a good job, especially in Northamptonshire, but I was surprised to receive a written response from the Solicitor-General, saying that the CPS

“does not maintain a central record of the number of times an application to remand a defendant in prison has been refused.”—[Official Report, 8 July 2013; Vol. 566, c. 11W.]

I think the public would like to know that information and I think the CPS would find it useful; we could then see where the problem lies—with the CPS or with the courts.

[The Solicitor-General]

The CPS, of course, keeps quite a range of different management information, but that is not one of them. I am certainly happy to consider whether it would be possible, but against the background that we do not want to clog up the system with a lot of over-reporting and regulatory concerns at a time when we are reducing costs.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

I am concerned about the Solicitor-General’s complacency on this issue, particularly in the light of what has happened in the last three weeks. Crown court judges across the country, from Bristol to Warwick and from Warwick to Croydon, have said publicly what all those working in the criminal justice system have been saying privately for some time—that the CPS is dogged by delays and disorganisation, that trials are being put at risk and that there is a danger that people charged with very serious offences such as murder and rape will walk away scot-free. I have written to the Director of Public Prosecutions about this, and I would ask the Solicitor-General to acknowledge these problems and tell us exactly what it is that he is going to do about them.

[The Solicitor-General]

The hon. Lady has written a letter to the Director of Public Prosecutions, citing three cases out of 800,000—and they are not what they seem. For example, in one case, the advocate for the prosecution fell ill at court; the judge was not aware of that and made some comments about the way in which the case was being conducted, but at the time—

[Emily Thornberry]

It was a murder case.

[The Solicitor-General]

It was indeed a serious case, but when that advocate fell ill, he was replaced by another, and a conviction followed.

I do not think that picking three instances, all of which involve special circumstances, is the right way of dealing with this. The HMCPSI report examined 2,800 cases, reviewing the files in detail, and they presented a promising picture.

[Mr Marcus Jones (Nuneaton) (Con)]

3. What assessment he has made of the level of public understanding of the legal framework applicable to the internet.

[The Attorney-General (Mr Dominic Grieve)]

Since taking office, I have brought a number of successful proceedings involving contempts committed online. The Crown Prosecution Service has also prosecuted numerous offenders who have used the internet to commit criminal offences, and recently issued new guidelines to prosecutors on the handling of cases involving social media. Many of those cases have been widely reported in both national and local media, and I trust that they have increased public awareness of the fact that misconduct online has consequences.

[Mr Jones]

Does my right hon. and learned Friend agree that public awareness has been increased by, for example, the successful prosecution of jury members who do not keep to the rules and who research the details of a case during the course of a trial using the internet?

[The Attorney-General]

I trust that it has. If we wish to preserve trial by jury, it is extremely important that judges’ directions to juries not to conduct research are properly observed. If they are not, trial by jury will not survive. I have brought a number of cases against jury members; they have been reported, and I hope that as a result of my bringing them, I shall have to bring far fewer in future.

[Kerry McCarthy (Bristol East) (Lab)]

When the footballer Ched Evans was convicted of rape last year, his victim was named more than 6,000 times on Twitter. She has been forced to accept a new identity and relocation package. I understand that only a handful of people have ever been held to account for naming her, and that they have merely been ordered to pay compensation. Should we not send a much stronger signal to people who indulge in such behaviour?

[The Attorney-General]

The hon. Lady has raised two separate points The first relates to the way in which the CPS has gone about prosecuting these cases. It has obviously been selective. Cases have to be brought to its attention, and it seeks to deal with those cases, particularly cases involving those who have initiated such comments. I think that that must be the right way of going about things. As for the hon. Lady’s point about penalties, she must understand that they are not a matter for the CPS. If Parliament wishes to make the penalties more severe, that is a matter for legitimate debate in the House of Commons.

[Dr Julian Huppert (Cambridge) (LD)]

The Attorney-General referred to the new guidelines from the Director of Public Prosecutions on social media. They are very welcome, but does he agree that in some cases the law is not clear, and is being brought into disrepute? I am thinking of, for example, the Twitter joke trial under section 127 of the Communications Act 2003.

[The Attorney-General]

The principle of the Malicious Communications Act 1988 places a higher threshold on prosecution than an ordinary abusive comment, but it must be shown that, in the circumstances, the comment was grossly offensive. I hope that the guidelines issued by the CPS—I am grateful to my hon. Friend for his appreciation of what they have done—will provide a framework that shows clearly what is and what is not acceptable, but there are bound to be areas that present some difficulty. The basic rule must be that the fact that someone is operating on social media does not give that person immunity from the criminal law.

[Mr Gregory Campbell (East Londonderry) (DUP)]

As one who, some time ago, was the subject of a specific death threat on a social media site—which, thankfully, resulted in a successful prosecution—may I ask the Attorney-General to reassure the public that people’s perception of their own anonymity on a keyboard will be dispelled, and that those who break the law on line will be rigorously pursued?

[The Attorney-General]

I agree with the hon. Gentleman. I think that some individuals have come in for a rude surprise when they have been prosecuted despite having believed that they enjoyed anonymity. While of course there may be circumstances in which prosecutions cannot be brought—there can clearly be no prosecution when material is placed on the internet from abroad—I am generally satisfied, on the basis of what I have observed, that both the police and the CPS have responded proactively. They take offences of this kind seriously, and are keen to convey the message that this is not an area in which people can behave with impunity.

[Diana Johnson (Kingston upon Hull North) (Lab)]

What discussions has the Attorney-General had with the Department for Education about ensuring that young people fully understand the legal framework of the internet, and, more important, know how to keep themselves safe on the internet?

[The Attorney-General]

The hon. Lady raises an interesting and important point. We have had no formal discussions about that, but I know it has been discussed informally because I have done so myself. She might wish to ask the Secretary of State for Education that question, as the way in which young people can be brought up to understand their rights and responsibilities is an important part of the new curriculum.

[Kwasi Kwarteng (Spelthorne) (Con)]

4. What benefits he expects will be achieved by the continued merger of departmental legal advisers into the Treasury Solicitor’s Department.

[The Solicitor-General (Oliver Heald)]

Sharing legal services brings considerable benefits, including greater flexibility and resilience, more efficient deployment of legal resources, more opportunities for savings and improved knowledge-sharing, which in turn supports consistency.

[Kwasi Kwarteng]

I am grateful to my hon. and learned Friend for his answer, but what steps is he taking to ensure that TSOL actually does provide value for money, and how will the Government’s legal bill be reduced as a consequence of this merger?

[The Solicitor-General]

This is part of the civil service reform plan, and bringing services together at TSOL has, for example, meant it has become a centre of excellence in employment law. TSOL also has a good record of reducing cost, with 40% efficiencies from its shared litigation service.

[Valerie Vaz (Walsall South) (Lab)]

Will the Solicitor-General assure the House that public money will not be wasted in transaction costs between Departments and that we will not end up with more finance officers chasing invoices than lawyers doing the work?

[The Solicitor-General]

It is true that clients in the Departments are billed by TSOL, but this is a lean process and fees are being kept down at a reasonable level.

[Ian Mearns (Gateshead) (Lab)]

5. Whether the Crown Prosecution Service is always informed when an undercover police officer has been involved in an investigation that leads to a prosecution.

[The Attorney-General (Mr Dominic Grieve)]

The CPS should always be informed. The CPS signed a memorandum of understanding in June 2012 with the Association of Chief Police Officers, the Serious Organised Crime Agency and Her Majesty’s Revenue and Customs, which ensures investigators and prosecutors work closely together when covert operations are embarked upon where there is clear potential for a prosecution.

[Ian Mearns]

The former police Minister said undercover police officers could have sex with suspects if abstaining would blow their cover. Does the Attorney-General agree with the Northumbria police and crime commissioner and former Solicitor-General, Vera Baird, that the sexual activities of some of these undercover officers when they enter into a relationship with protestors may fall within the definition of rape?

[The Attorney-General]

I think the hon. Gentleman is asking me for a legal opinion, which I do not think I am in a position to provide across the Floor of the House. That was the thrust of his question, but what I can say is that the CPS takes very seriously the fact that if there is covert police activity it must be informed about it, because it is highly relevant to the conduct of any prosecution.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

May I tempt my right hon. and learned Friend to state whether it will be appropriate for police officers in those circumstances to be prosecuted if they are deemed to have broken the law and overstepped the mark in their undercover operations?

[The Attorney-General]

Nobody is immune from the law, and if a police officer acting undercover breaks the criminal law of this country, they make themselves liable to prosecution.

[Caroline Lucas (Brighton, Pavilion) (Green)]

There seems to be complete chaos in understanding what the police are, and are not, allowed to do when undercover. Given that a number of legal cases have been dropped or put at risk because of the involvement of undercover police officers, is it not high time there was a proper judge-led public inquiry so we get to the bottom of this and make sure we know what the rules are in the future and what the judgments are for the past?

[The Attorney-General]

I certainly acknowledge that the hon. Lady is right, and the consequence of the Ratcliffe-on-Soar power station case was that a review was carried out by Sir Christopher Rose, and the CPS took the issues in that very seriously, but any question of a wider inquiry or review does not lie within the remit of my Department.

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

7. What recent discussions he has had with the Director of Public Prosecutions and the director of the Serious Fraud Office on the feasibility of introducing an offence of reckless management of a financial institution.

[The Solicitor-General (Oliver Heald)]

None.

[Grahame M. Morris]

In view of the recent announcement on this, I wonder whether the Minister can give us any indication of which prosecuting agency would be responsible for enforcing the new offence of reckless mismanagement of a financial institution, and what steps are being taken to ensure that the agency has sufficient resources to tackle what are likely to be complex cases?

[The Solicitor-General]

As the hon. Gentleman will know, this Government set up the commission on banking which has come up with the recommendation that there should be such an offence. The Government have accepted that recommendation and the drafting process is in hand. I cannot go further than that, but he will see the draft when it is ready.

[Greg Mulholland (Leeds North West) (LD)]

In two constituency cases I have been told, “It is not in the Serious Fraud Office’s remit and the police will not look at the corporate fraud because they do not have the money.” So how do we get these corporate fraud cases properly looked at?

[The Solicitor-General]

The hon. Gentleman raises an important point about fraud. The National Crime Agency is setting up, as we speak, with an economic crime command that will have a focus on fraud. The aim is to tackle exactly the problems he mentions. In the meantime, Action Fraud is one good place to make a complaint to and, of course, the City police have a particular role to play in this area.

[Julie Hilling (Bolton West) (Lab)]

8. What recent representations he has received from the legal profession on the effect on the criminal justice system of the Government’s planned legal reforms.

[The Attorney-General (Mr Dominic Grieve)]

The Solicitor-General and I have attended meetings of and with the Bar Council and the Bar Standards Board at which the Government’s proposed legal aid reforms have been discussed. We have also seen responses to the Ministry of Justice’s consultation about these proposals from the Bar Council, the Law Society and others, and have corresponded with panel counsel about the proposal.

[Julie Hilling]

In 2004, the right hon. and learned Gentleman told the Law Society Gazette:

“There are ideas creeping into the system that treat legal aid as if it is just about the economic provision of a service. That approach will lead to problems with lowered standards.”

Now that his Government are slashing £220 million from the budget and making so many other changes, is he even more worried?

[The Attorney-General]

The key issues then were, as I dare say they are now, the maintenance of choice, achieving value for money and, above all, maintaining professional standards of representation in court. I note that the Lord Chancellor has already indicated that he is going to keep a choice of solicitors, and he is also keeping advocacy fees separate. Those things are in response to the current consultation, and I have no doubt that, building on that, there will be further possibilities to have a very important debate so that we can reach a conclusion where we have a viable system of criminal legal aid that can be maintained in the long term.

[Nigel Mills (Amber Valley) (Con)]

9. What recent assessment he has made of how effectively appeal cases have been handled by the Crown Prosecution Service.

[The Solicitor-General (Oliver Heald)]

The CPS is providing a first-class service to the senior appellate courts.

[Nigel Mills]

I am grateful for that answer. Will the Solicitor-General please explain to the House how he can satisfy himself that the CPS is indeed conducting those cases effectively? Does it compile and analyse any data on how it is performing?

[The Solicitor-General]

Yes, the detailed schedule of cases comes to the Attorney-General each month, and we have discovered that more cases are being dismissed without leave to appeal being granted, which suggests good CPS presentation; up to 57% of cases are now dismissed without leave.

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

But what is happening on how the CPS and the Serious Fraud Office deal with highly complex financial scandals, where there is a great reliance on the accountancy profession, which has been shown to be very unreliable in the evidence it gives?

[The Solicitor-General]

The hon. Gentleman makes the point in his own way, but the advantage of the SFO is that it has in-house experts and can also draw on outside expertise to ensure that these cases are very well prepared. Although we have had some problems, as he knows, in many cases the SFO is able to do an exceptional job.

[Tim Loughton (East Worthing and Shoreham) (Con)]

10. What special measures he is considering to help vulnerable minors give evidence in child sexual exploitation cases.

[The Attorney-General (Mr Dominic Grieve)]

The Government have announced that they will pilot the video pre-recording of the cross-examination of witnesses, as outlined in the Ministry of Justice’s “A Strategy and Action Plan to Reform the Criminal Justice System”, published on 28 June. The strategy and action plan includes other important measures, including reviewing how we might reduce the distress caused to some victims by cross-examination, particularly where multiple defence barristers are involved. On 11 June, the CPS published, for consultation, its new interim guidelines on prosecuting cases of child sex abuse, which set out a new approach, including challenging myths and stereotypes, if raised in court, about how the victim behaves.

[Tim Loughton]

I congratulate my right hon. and learned Friend and the Director of Public Prosecutions on the way in which they have enacted the child sexual exploitation action plan to make it more sympathetic and sensitive to witnesses who are often vulnerable and traumatised. Does he agree that one of the most intimidating processes is where multiple barristers act for gang members, as we have seen recently, re-traumatising very vulnerable victims by getting them to go through all their processes over and over again? Will he tell us specifically how he thinks we can still make sure that justice is done, both to the victim and to the defendant?

[The Attorney-General]

My hon. Friend raises an important issue, which is very much a matter of two things: professional standards on the part of the advocates; and proper case management by the judge. Judges need to be proactive in these cases. In addition, The Advocate’s Gateway, which has been introduced, makes clear the responsibilities that lie on counsel in approaching cases of this kind. I am confident that we will make a lot of progress in this area, and I think the rules will be progressively tightened to achieve the impact and result he desires.

[Several hon. Members]

rose—

[Mr Speaker]

I am sorry to disappoint colleagues but we really must now move on.

Petition

Tuesday 9th July 2013 Commons Chamber

Jeremy Lefroy (Stafford) (Con)

- Hansard - - Excerpts

I have the great honour and privilege to present this petition to support services at Stafford hospital which, along with other petitions on similar terms, has been signed by 50,346 of my constituents and those of neighbouring colleagues. The petition expresses the deep concern of a community whose hospitals face the threat of a downgrade following the appointment of the trust special administrators and proposals by the contingency planning team to remove services from the hospitals. The petition has been collected by volunteers across the community.

The petition reads:

To the House of Commons.

The Petition of residents of Stafford and surrounding area,

Declares that the Petitioners believe that the Trust Special Administrators, Jeremy Hunt and any other individuals responsible for the future of Stafford Hospital should support the hospital and save its acute services.

The Petitioners therefore request that the House of Commons urges the Department of Health to ensure that Stafford Hospital retains a 24/7 A&E department, level 3 critical care and emergency service and full maternity services.

And the Petitioners remain, etc.

[P001194]

Treaty on the Functioning of the EU

Tuesday 9th July 2013 Commons Chamber

12:34

[The Secretary of State for the Home Department (Mrs Theresa May)]

With permission, I would like to make a statement on the decision whether the UK should opt out of those EU police and criminal justice measures adopted before the Lisbon treaty came into force.

As hon. Members will be aware, this is a stand-alone decision that the Government are required to make under the terms of the Lisbon treaty by 31 May 2014, with that decision taking effect on 1 December of that year. It covers about 130 measures, some of which it is clearly in our national interest to remain part of, but if we wish to remain bound by only some of the measures, we must exercise our opt-out from them all en masse and seek to rejoin those that we judge to be in our national interest.

The Government have committed to a vote in this House and the other place before formally deciding on the matter. We shall honour that commitment in full. Next week, hon. Members will have the opportunity to debate and vote on this approach. Following our discussions in Europe, another vote will be held on the final list of measures that the UK will formally apply to rejoin.

Let me briefly set out the rationale by which the Government have approached the decision. We believe the UK should opt out of the measures in question for reasons of principle, policy and pragmatism and that we should seek to rejoin only those measures that help us co-operate with our European neighbours to combat cross-border crime and keep our country safe.

On principle, I am firmly of the belief that the UK’s international relations in policing and criminal justice are first and foremost a matter for Her Majesty’s Government. In policy terms, the UK has and will continue to have the ability to choose whether it should opt in to any new proposal in the field of justice and home affairs. It is therefore right that we take the opportunity to consider whether we wish to retain the measures that were joined by the previous Government and to decide on a case-by-case basis whether we are willing to allow the European Court of Justice to exercise jurisdiction over them in future.

Finally, the Government are being pragmatic. I have said before that we will not leave the UK open to the threat of infraction and fines which run into many millions of pounds by remaining bound by measures we simply cannot implement in time. That would be senseless. In a number of areas, the measures relate to minimum standards in substantive criminal law. Even before their adoption, the UK already met or exceeded the vast majority of these standards and will continue to do so whether or not we are bound by them.

As people have become more mobile in recent years, so too has crime. The Government have sought and listened carefully to the views of our law enforcement agencies which combat it. We understand that some of the measures covered by this decision are important tools that they need to protect the British public. The Government have identified 35 measures which we will seek to rejoin in the national interest.

That set of measures, on which we propose to begin our discussions with the European Commission and other member states, is laid out in Command Paper 8671, which is published today. I want to be clear: what must happen next is a process of negotiation with the European Commission and other member states, and those negotiations will determine the final list of measures we formally apply to rejoin. But we promised that we would set out these measures clearly and give hon. Members time to consider them before asking them to vote—and that is what we have done.

One of the measures we will seek to rejoin, and on which I know many hon. Members have strong views, is the European arrest warrant. I agree with our law enforcement agencies that the arrest warrant is a valuable tool in returning offenders to the UK. Its predecessor, the 1957 European convention on extradition, had serious drawbacks. The arrest warrant has helped us to secure and accelerate successful extradition procedures, as shown by the case of Osman Hussain, one of the failed London bombers of July 2005, who was extradited back to the UK from Italy in less than eight weeks. More recently, Jeremy Forrest, the teacher who was sentenced last month for absconding to France with one of his pupils, was extradited back to the UK less than three weeks after his arrest.

Since 2009 alone, the arrest warrant has been used to extradite from the UK 57 suspects for child sex offences, 86 for rape and 105 for murder. In the same period, 63 suspects for child sex offences, 27 for rape and 44 for murder were extradited back to Britain to face charges. A number of these suspects would probably have not been extradited back to Britain without the arrest warrant. We owe it to their victims, and to their loved ones, to bring these people to justice. However, the European arrest warrant has its problems, too, as hon. Members have eloquently explained in this House. The last Government had eight years to address these concerns, and did nothing; this Government have taken action. I am today proposing additional safeguards to rectify these problems and increase the protections offered to those wanted for extradition, particularly British citizens.

A number of hon. Members have explained how European arrest warrants have been issued disproportionately for very minor offences. I will address this by amending the Anti-social Behaviour, Crime and Policing Bill, which is in Committee, to ensure that an arrest warrant can be refused for minor crimes. This should stop cases such as that of Patrick Connor, who was extradited because he and two friends were found in possession of four counterfeit banknotes.

We will also work with other states to enforce their fines and ensure that in future, where possible, the European investigation order is used instead of the European arrest warrant. This would allow police forces and prosecutors to share evidence and information without requiring the extradition of a suspect at the investigative stage.

Other hon. Members have expressed concerns about lengthy and avoidable pre-trial detention. I will amend our Extradition Act 2003 to ensure that people in the UK can be extradited under the European arrest warrant only when the requesting state has already made a decision to charge and a decision to try, unless that person’s presence is required in that jurisdiction for those decisions to be made. Many Members, particularly my hon. Friend the Member for Enfield North (Nick de Bois), will recall the case of Andrew Symeou, who spent 10 months in pre-trial detention, and a further nine months on bail, in Greece, only to be acquitted. The change that I am introducing would have allowed Andrew Symeou to raise, in his extradition hearing, the issue of whether a decision to charge him and a decision to try him had been taken. It would likely have prevented his extradition at the stage he was surrendered—and, quite possibly, altogether. We will also implement the European supervision order to make it easier for people such as Mr Symeou to be bailed back to the UK.

Other hon. Members are concerned about people being extradited for conduct that is not criminal in British law. I will amend our law to make it clear that in cases where part of the conduct took place in the UK, and is not criminal here, the judge must refuse extradition for that conduct. I also intend to make better use of existing safeguards to provide further protections. I will ensure that people who consent to extradition do not lose their right not to be prosecuted for other offences, reducing costs and delays. We propose that the prisoner transfer framework decision be used to its fullest extent, so that UK citizens extradited and convicted can be returned to serve their sentence here.

Where a UK national has been convicted and sentenced abroad, for example in their absence, and is now the subject of a European arrest warrant, we will ask, with their permission, for the warrant to be withdrawn, and will use the prisoner transfer arrangements instead. This change could have prevented the extraditions of Michael Binnington and Luke Atkinson, who were sent to Cyprus only to be returned to the UK six months later.

To prevent other extraditions occurring at all, I intend either to allow the temporary transfer of a consenting person, so that they can be interviewed by the issuing state’s authorities, or to allow those authorities to do that through such means as video conferencing while the person is in the UK. Where people are innocent, this should lead to the extradition request being withdrawn. These are all changes that can be made in UK law, and that could have been made by the Opposition during their time in government. Co-operation on cross-border crime is vital, but we must also safeguard the rights of British citizens, and the changes that we propose will do that.

Before I conclude, I am conscious that hon. Members want to know our approach to the new Europol regulation. I fully recognise the excellent work of Europol and its British director, Rob Wainwright. Hon. Members may recall Operation Golf, a joint operation led by Europol and the Metropolitan police, which cracked down on a human trafficking gang operating in llford, and which led to the release of 28 trafficked children and the arrest of 126 suspects. It is for such reasons that we propose rejoining the existing Europol measure.

On the new proposal, the Government have today tabled a motion that will be the basis of a Lidington-style debate on the Floor of the House next week, following the debate and vote on the plan that I have outlined today. That motion states that we should opt in, post adoption, provided that Europol is not given the power to direct national law enforcement agencies to initiate investigations or share data that conflict with our national security.

For reasons of policy, principle and pragmatism, I believe that it is in the national interest to exercise the United Kingdom’s opt-out, and rejoin a much smaller set of measures that help us to co-operate with our European neighbours in the fight against serious and organised crime. I also believe that Her Majesty’s Government must strike the right balance between supporting law enforcement and protecting our traditional liberties. What I have outlined today will achieve both those goals, and I commend this statement to the House.

12:44

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

So, after three years of briefing and trying to brandish her anti-European credentials, the Home Secretary has been forced to admit the truth: Britain does need the European arrest warrant, it does need joint investigation teams, Europol, the exchange of criminal records and help to tackle online child abuse. Why, then, did she and Members of her party all vote against all those measures just four weeks ago? Why has it taken the Home Secretary three years to realise that we do not want to go back to the days of the costa del crime, when British criminals could flee to Spain or European criminals could find safe haven here?

Last year the Government briefed The Sun that they would opt out of the European arrest warrant, opt out of the European evidence warrant and opt out of action against counterfeiting. Now the right hon. Lady admits that she needs them and she is going to do the opposite. The Prime Minister described the European arrest warrant as “highly objectionable” and the Fresh Start group wanted to stay out of everything, but the Home Secretary has had to admit what we and the police have argued from the start—we need the European arrest warrant in the fight against crime. We agree with reforming the European arrest warrant to make it proportionate, but as she has just shown, she does not need to opt out of working with Europe in order to do that.

The Home Secretary said very little in her statement about what she wants to opt out of or why, so let us look at the detail. Some of those measures have been replaced already, some do not operate any more, some we have never used anyway and do not have to, and others are just agreements to co-operate and we will carry on co-operating anyway. She is opting out of a directory of specialist counter-terror officers, which no longer exists anyway; a temporary system of dealing with counterfeit documents, which has been replaced anyway; a load of rules applying specifically to Portugal, Spain and Croatia, which do not apply in the UK; and a directory of contacts of extradition experts in each country. This is hardly a triumph of repatriation.

The Home Secretary has tried to play Britannia, clothing herself in the Union Jack, parading powers that she is repatriating from Brussels, but where is the substance? The truth is that she is not wearing a flag; it is simply a fig leaf. As for next week’s vote, she told the House that this was

“an important decision, and not one that we should rush into lightly”—[Official Report, 12 June 2013; Vol. 564, c. 421.]

Yet she wants Parliament to vote on her proposals in six days’ time. She promised the European Scrutiny Committee and the Home Affairs Committee that they would be able to scrutinise the list and she has given them three working days to do so. She has been thinking about it for three years.

We will look at the right hon. Lady’s list and her motion for next week, but this is the wrong strategy—the wrong way to make serious policy on crime and justice. Where are the guarantees that we will be able to opt back into the serious measures we need, even the 35 measures that she supports? Where is the guarantee that we will be able to opt back into the European arrest warrant, the data sharing and the criminal records that she has now admitted we need? Presumably she has those guarantees. She told the House that she was starting negotiations with the Commission last October, so given how much is at stake in the fight against crime, I presume she has done a deal with the European Commissioner that we will definitely be able to opt back into those measures. Where is it?

Ministers have said that this will be a difficult negotiation, and we must not put those important powers at risk for the sake of opting out of a few contact lists. We must not make it easier for European criminals to hide here if we lose the European arrest warrant. We have just spent eight years trying to get rid of Abu Qatada. We do not want to make it easier for European criminals to stay here, so let the Home Secretary answer just two questions: will we be able to opt back into the European arrest warrant? Has she got a guarantee that we will be able to do so, and if we do not get that guarantee, will she ditch her whole opt-out plan? Without those guarantees this is a dangerous strategy that puts the fight against crime at risk.

The Home Secretary is putting politics before the fight against crime, but this is not a game. Crime does not stop at the channel. This is about whether we can stop dangerous criminals fleeing abroad and whether we can send foreign criminals back to face justice at home. This is about whether we can work with Europe on trafficking and child abuse, so where is the guarantee that this Home Secretary is not putting that serious fight against crime at risk?

[Mrs May]

Oh dear, oh dear. The right hon. Lady had an opportunity to come to the House and enter into a serious exchange about our ability to operate on a cross-border basis, catch criminals, and keep British citizens safe. She also had the opportunity to indicate whether the Opposition believe it right that we give greater safeguards and protections to British citizens in the operation of the European arrest warrant. Instead, we got a rant that did nothing other than expose the considerable confusion that lies at the heart of the Labour party on this issue.

The right hon. Lady asks whether we have guarantees for the negotiation, and complains about the negotiation process. Who negotiated this opt-out in the Lisbon treaty? It was not either of the coalition parties; the Labour party negotiated the opt-out, so any failings in how it operates are entirely down to the previous Labour Government—[Interruption.]

[Mr Speaker]

Order. Mr John Robertson, I do not know whether you consumed a high-energy breakfast or something, but you seem to be in hyperbolic mode. What we want is your statesmanlike pose. Calm yourself, man, and get a grip.

[Mrs May]

The right hon. Lady referred to a motion tabled by the Opposition in an Opposition day debate, and identified seven measures that she said it was necessary to rejoin. What about measures such as the European supervision order or those to do with removing criminals’ assets? Are those powers not important as well? They are on our list, but they were not on that of the right hon. Lady.

Finally, I failed to hear in the right hon. Lady’s comments whether those on the Labour party Front Bench support the decision to opt out—a decision available only because her Government negotiated it in the first place. We believe it is absolutely right to exercise that opt-out, and to negotiate and rejoin those measures that are important for cross-border operations and co-operation between our police forces. Labour Members may come to the House and the right hon. Lady may stand up, foam at the mouth and rant at the Government about these measures, but it is high time she put her position on the line and made clear what her party will do in the debate next week.

[Mr William Cash (Stone) (Con)]

My right hon. Friend’s statement simply aggravates concerns that the European Scrutiny Committee has expressed since her October statement. Why has the Committee been consistently denied the information and consultation that it, the Justice Committee and the Home Affairs Committee were promised? We have been given neither proper time nor opportunity to consider these matters. We shall be meeting tomorrow and considering those questions in line with Standing Orders, and we shall then decide what action to take.

[Mrs May]

We brought the proposals forward now because it is right that we have time to negotiate with the European Commission. As I indicated in my statement, there will be further opportunity for the House to consider the list of measures that we negotiate with the European Commission. I say to my hon. Friend and to other right hon. and hon. Members who chair the Committees to which he referred that the total list of measures has been available for those Committees to consider for some considerable time. The Government are indicating today which measures we wish to seek to rejoin. There will be a debate next week in the House and an opportunity to vote on that. As I have indicated, there will be further consideration and a vote at a later stage.

[Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)]

To coin an immediate phrase, “Oh dear, oh dear”—a statement today. In view of the Home Secretary’s remarks about the criminal justice system being primarily for this House—I cannot disagree with that in the light of the judgment at Strasbourg today on a measure that I took to make life mean life—is it not appropriate, as has just been requested, to give Members more time to consider what she has said before holding the debate scheduled for next week? Or is this just a straight political ploy, rather than a statesmanlike approach to an important issue?

[Mrs May]

This House will have time to consider the opt-out and the measures we seek to rejoin. Not only will there be a debate next week, but there will be further opportunity to comment on and discuss in the House those measures we are negotiating to rejoin with the European Commission.

[Dr Julian Huppert (Cambridge) (LD)]

I congratulate the Home Secretary on her statement; it is good to hear her being so positive about the benefits of key measures such as Europol, Eurojust and the European arrest warrant, and she is right to opt back into those. I was also pleased to hear about the implementation of the European supervision order. Will she let the House know the timetable for that and say whether it can be introduced in the Anti-social Behaviour, Crime and Policing Bill?

[Mrs May]

The European supervision order is one measure we will seek to rejoin, but there must be a negotiation process with the European Commission and other member states before it is possible to ensure that we are able to rejoin the measures we wish to rejoin. I am afraid the Anti-social Behaviour, Crime and Policing Bill will not be a vehicle for the European supervision order.

[Keith Vaz (Leicester East) (Lab)]

Yesterday I joined others in elevating the Home Secretary to sainthood over the Abu Qatada decision, but I am afraid her halo has slipped a little. There is nothing wrong with a pick-and-mix Europe as far as the justice and home affairs agenda is concerned, but I agree wholeheartedly with the Chairman of the European Scrutiny Committee, the hon. Member for Stone (Mr Cash): I think it shows disrespect for the Committees of this House, and for Parliament when we do not have the opportunity to consider which measures the Government wish to opt in or out of.

It is not sufficient to say there will be a debate next Monday. We have been waiting for five months for this decision. Five Chairs of Select Committees wrote to the Home Secretary and the Minister for Europe and we received nothing until today. I urge her to delay the decision to hold a vote on Monday, and to allow the Committees to examine the issue carefully. She is due to appear before the Home Affairs Committee on Tuesday, so let us scrutinise this issue properly. I am sure she will get the result she wants because I am sure she will be able to make the arguments. Rushing this decision when she has more than eight or nine months in which to make it and inform the Commission is too hasty.

[Mrs May]

I recall the remarks made by the right hon. Gentleman yesterday when I made the statement about Abu Qatada’s deportation. I also recall that I said it was most unusual for the Home Office to receive such praise, and that I assumed normal service would be resumed quickly, as indeed it has been. Let me say to the right hon. Gentleman what I said to my hon. Friend the Member for Stone (Mr Cash), who chairs the European Scrutiny Committee. There will be an opportunity to debate this issue next week, and a further opportunity for the House to consider the measures we seek to rejoin. All Select Committees of this House have known the list of measures that the Government have been considering, and they have had the opportunity to look at them and give an opinion.

[Mr Peter Bone (Wellingborough) (Con)]

I thank the Home Secretary for coming to the House and making this statement, and for taking on board the views of the all-party group on human trafficking about the requirement to have joint investigation teams, and for highlighting Operation Golf in her statement. I am struggling with the rush to which the right hon. Member for Leicester East (Keith Vaz) just referred. Will we have a first bite of the cherry next week with a debate, and then consider individual measures later after the Select Committees have reported? If not, I am not entirely sure—it appears that the Executive are bouncing Parliament.

[Mrs May]

I apologise; I referred to this in my answer to my hon. Friend the Member for Stone. The reason for coming forward now is that we are able to start formal negotiation with the European Commission and other member states on those measures we seek to rejoin. Had we not been doing that, we would have significantly reduced our ability in time terms to hold those negotiations with the European Commission.

[Nia Griffith (Llanelli) (Lab)]

My constituents are particularly concerned about the 90% of prisoners repatriated from the UK under the European arrest warrant who are foreign nationals. Will the Secretary of State make a categorical assurance that under the arrangements she proposes there will be no delay in repatriating those foreign nationals from our prisons? We understand there have been considerable delays recently, and that numbers of those going have not been as good as they should have been.

[Mrs May]

The hon. Lady refers in general to the question of foreign national prisoners and their removal from the UK. Of course, that covers those who are EU citizens and those who are from outside the EU. With regard to EU citizens, the prisoner transfer framework decision gives us the opportunity to work with other member states on a bilateral basis to ensure that we can repatriate UK citizens to serve their sentences here and remove their nationals from the UK to serve their sentences abroad. That is what we intend to do.

[Mr Christopher Chope (Christchurch) (Con)]

The Home Secretary asserts that rejoining the 35 measures will be in our national interest. Where is the evidence for that? Is there a cost-benefit analysis? How does that fit in with the balance of competences review? Will we be asked next week to endorse that approach, rather than just receiving the information?

[Mrs May]

I have published today in the Command Paper the explanatory memorandum, which sets out the measures we are looking to rejoin—it refers to the others as well—and explains what each is about. The debate will be about the Government’s position of opting out and then seeking to rejoin the 35 measures. That will enable us to enter into proper negotiations with the European Commission and other member states. I believe that it is right that we seek to rejoin measures that enable us to co-operate on a cross-border basis in dealing with cross-border crime and keeping people safe.

[Dr William McCrea (South Antrim) (DUP)]

Is there strong support across the coalition Government for the Home Secretary’s proposal to opt out? If the decision to opt out is finally taken, will that apply to the whole United Kingdom, including Northern Ireland?

[Mrs May]

The Under-Secretary of State for the Home Department, my hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire), has spoken with the Minister for Justice in Northern Ireland and we have started discussions on the implications for Northern Ireland.

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

The Home Secretary hopes to change how the European arrest warrant operates by amending our domestic law, but will she confirm that under her policy it is ultimately the European Court of Justice that will decide?

[Mrs May]

My hon. Friend is right in that rejoining measures means that they will come under the jurisdiction of the European Court of Justice, which is why we have given such careful thought and consideration to the list of measures we are seeking to rejoin, but it is possible for this Parliament to make decisions in UK law that change the way the European arrest warrant operates and give us some of the safeguards that many Members of this House feel other EU member states have had, for example in relation to proportionality. As I said in my statement, I am only sorry that the previous Labour Government did not do that when they had the opportunity.

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

The Home Secretary referred to Operation Golf and the human trafficking operation, which was carried out by some individuals in Ilford. Will she take this opportunity to make it absolutely clear that it is essential that we remain within Europol and that any move to take this country away from the European Union would damage that co-operation?

[Mrs May]

As I am sure the hon. Gentleman is aware, the European Commission has brought forward a proposal for a new regulation relating to Europol. We propose to opt back into the current Europol regulation. The new regulation would allow the possibility that Europol could in future direct police forces across Europe, and notably our police forces, in order to undertake investigations, so they could be mandated by Europol at the centre. We believe in operational independence for our police forces here in the UK and are not prepared to see Europol being able to mandate them.

[John Howell (Henley) (Con)]

The decision to which the Home Secretary referred today in her welcome statement was made under the terms of the Lisbon treaty. How do those relate to the wholesale renegotiation of our relationship with the EU that a Conservative Government are pursuing?

[Mrs May]

I am grateful to my hon. Friend, because he enables me to answer the earlier question from my hon. Friend the Member for Christchurch (Mr Chope) on the balance of competences work. We absolutely have the opportunity to take this decision on the pre-Lisbon justice and home affairs measures, but of course that is separate from the wider negotiation that the Conservative party is guaranteeing to undertake leading up to the in/out referendum, on which many Government Members voted after last Friday’s debate on the private Member’s Bill. A further negotiation will look at the wider issues, based on the balance of competences work currently being undertaken.

[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

I very much welcome the Government’s decision to opt out en masse and then decide item by item on whether to opt back in, which I see as a rejection of ever closer union, but how will we deal with the matters post negotiation? If there are 35 items that the Government propose to opt back into, will we vote item by item, because the Government might well succeed in their objectives in some of them but not in others? Rather than simply having a vote on a lump, would it not be much better to give us individual choices, and would that not also strengthen the Home Secretary’s position?

[Mrs May]

The decision on the form that any further vote will take in relation to these matters post negotiation is yet to be taken by the relevant House authorities and business managers. I welcome the hon. Gentleman’s opening remarks. Perhaps he might like to try to persuade his Front Benchers to be as clear in their position on the opt-out.

[Jacob Rees-Mogg (North East Somerset) (Con)]

I wonder whether my right hon. Friend has forgotten the coalition agreement, which states:

“We will ensure that there is no further transfer of sovereignty or powers over the course of the next Parliament.”

Anything that we opt back into comes under the European Court of Justice, the European Parliament and might be subject to qualified majority voting. All those three items are a surrender of sovereignty, and therefore her statement is disappointing to many people.

[Mrs May]

I merely remind my hon. Friend that the matters we are seeking to rejoin are ones to which we are currently not party. I recognise that we will be seeking to rejoin them post Lisbon treaty, but we have not suddenly plucked them out of thin air.

[Pete Wishart (Perth and North Perthshire) (SNP)]

The Secretary of State will know that there is great unhappiness in Scotland among the Scottish Government and Police Scotland about the opt-out. The Scottish Government have expressed their disappointment about the lack of consultation and raised concerns about the uncertainty and instability it will cause. Why should Scotland’s safety be compromised because of this Government’s Euro-obsession? Can the Scottish Government opt out of this Government’s moves to opt out of this European measure should they wish to do so?

[Mrs May]

As with Northern Ireland, my hon. Friend the Under-Secretary has been in touch with the Minister responsible for Justice in Scotland and is discussing with him the implications for Scotland. It would appear that the Scottish National party’s only answer to everything is to opt out, to be separate and different and not to be part of anything. In fact, as we know, the measures that we have decided to seek to rejoin are of benefit to the whole United Kingdom.

[Nick Herbert (Arundel and South Downs) (Con)]

I support my right hon. Friend’s stance in relation to the European arrest warrant, which is an important tool in fighting serious crime, although clearly, as the Government recognise, it needs amendment. If the test relates to the national interest and the stance on supranational institutions, does she share my concern about today’s decision by the European Court of Human Rights in relation to whole-life tariffs, which will take away from this House of Commons and our own courts the decision on the crucial matter of whether life should mean life?

[Mrs May]

My right hon. Friend is absolutely right. Not only Members of this House but the public will be dismayed at the decision that has come from the Grand Chamber of the European Court of Human Rights on whether it is possible for life genuinely to mean life. It is also a surprising decision, given that last year the Court decided in a number of extradition cases that it was possible to extradite on the basis of potential life sentences without parole—so today’s judgment is contrary to the decision it took last year.

[Naomi Long (Belfast East) (Alliance)]

Fighting organised crime and terrorism in Northern Ireland is important. Extradition from the Republic of Ireland is now entirely reliant on the European arrest warrant. I understand that Irish domestic legislation to allow extradition to the UK has been repealed. Can the Secretary of State confirm that the Justice Minister in Northern Ireland and, indeed, his counterpart in the Republic of Ireland are extremely concerned about the impact that this opt-out will have on the fight against crime and terrorism in Ireland in general?

[Mrs May]

As I have said, we have already started discussions on this issue with the Justice Minister in Northern Ireland, and I have had previous discussions with the Minister for Justice and Equality in the Republic of Ireland about the exercise of the opt-out. On the hon. Lady’s specific point about extraditions being subject to the European arrest warrant, we are proposing to opt back into that, albeit with safeguards for British citizens so that we can ensure that the problems that have arisen in the exercise of the EAW do not arise in future.

[Martin Horwood (Cheltenham) (LD)]

Surely everyone who is concerned about cross-border crime should welcome the Home Secretary’s announcement, including members of the Lords EU Committee, who, like the rest of us, have had plenty of time to consider these issues. Will she endorse the statement made by Rob Wainwright, the director of Europol, when he said to that Committee that

“It would increase the risk of serious crimes…going undetected…in the UK”

if the UK were not a member of Europol?

[Mrs May]

I have made our position clear on Europol. We value the work that it does. Rob Wainwright is a very good director of Europol. We will opt into Europol as it currently exists. However, we also value the operational independence of our police. I do not think it right that the new regulation could lead to a situation where Europol would be mandating British police officers to investigate certain matters and to share certain data that could compromise our national security. We will make it clear that we will opt in post-adoption of the Europol measure provided that those concerns have been dealt with.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

What happens, in practical terms, to requests for extradition, particularly for serious offences, during the period of the opt-out and the attempted opting back into the European arrest warrant?

[Mrs May]

Any change in the situation does not kick in until 1 December 2014, so in the interim there would be no change in the operation of the European arrest warrant. It will be necessary for us, as part of our discussions with the European Commission, to discuss the transitional arrangements. Of course we will want to ensure that, where we are opting back into a measure, the transition is as seamless as possible.

[Richard Drax (South Dorset) (Con)]

Would the safeguards that the Home Secretary has proposed concerning the European arrest warrant have protected my constituent, Michael Turner, who spent four months in a Hungarian jail without charge after his business closed owing £18,000—a case that in this country would have been handled in the small claims court?

[Mrs May]

I believe that the measures that I intend to put through in the amendments to the Anti-social Behaviour, Crime and Policing Bill would indeed have dealt with that situation, because we would have made it clear that where the requesting state had not taken the decision to charge and to try an individual, that individual would not be extradited unless their physical presence was necessary in order to charge and try them. In many of the cases that we have seen, individuals would not have needed to be extradited to the requesting country.

[Alex Cunningham (Stockton North) (Lab)]

May I give the Home Secretary another opportunity to answer the question from my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe)? If the European Commission says that we cannot opt back into the European arrest warrant in the way that she would like, will she ditch her blanket opt-out?

[Mrs May]

The hon. Gentleman and the hon. Member for Birmingham, Selly Oak (Steve McCabe) seem to be suggesting that we are putting conditions on to our opting back into the European arrest warrant. We will request that we can negotiate to opt into a number of measures, including the European arrest warrant. We can make the changes that we are making to the European arrest warrant in UK law, and that could have been done by the previous Labour Government had they chosen to do so.

[Mr Dominic Raab (Esher and Walton) (Con)]

This is a major strategic decision for Britain, and a lot of hard work has gone into it, which is very welcome. However, expecting Parliament to vote on it next week is unrealistic for hon. Members and Committees, given the need to look not only at individual measures such as the very important EAW safeguards that she proposes but at the package as a whole. May I urge her to allow consultation over the summer and to have Parliament debate and vote on it when we return in the autumn?

[Mrs May]

I recognise my hon. Friend’s interest in this issue and his expertise on these matters. It is right for us to be able to take a decision such that we can start the more formal negotiations with the European Commission and with other member states. I believe that it is in our interests to be able to rejoin a number of measures, and starting the negotiations now will enhance our ability to do so.

[Mark Durkan (Foyle) (SDLP)]

Some of us are trying to work out whether there might be an element more of figment than fig leaf about what we have just heard. Can the Secretary of State help us to understand the difference between the opt-out measures and the opt-in measures by explaining whether, when Northern Ireland citizens find themselves detained by Spanish police at an airport, only to be confronted by MI5 officers making nefarious propositions with menaces, those actions are covered under opt-in measures or under proposed opt-out measures?

[Mrs May]

I find it a little difficult to see the situation in the terms in which the hon. Gentleman has described it. If he would like to write to me about the issue that concerns him, then I can respond.

[Michael Ellis (Northampton North) (Con)]

I congratulate the Home Secretary on the statement and on her decisions on this matter. Can she confirm two things? First, is not this the first time that 100 measures are being clawed back to the United Kingdom, rather than giving powers over to Europe, thanks to her decision and this Government’s decision? Secondly, is it not right that the European arrest warrant, which I have criticised in the past, is now able to be supported because her decision to make these fundamental changes will make it a totally different thing from what it is now, and people will not be able to be extradited for stealing a wheelbarrow? [Interruption.]

[Mrs May]

I thank my hon. Friend, who is absolutely right about the European arrest warrant. That is the whole point about bringing forward the amendments to the Anti-social Behaviour, Crime and Policing Bill. I hope that the Opposition will support those amendments. They have indicated that they would be willing to see reform to the European arrest warrant, but we wait to see what their position will actually be.

On my hon. Friend’s first point, yes, taking the decision on the opt-out from nearly 100 measures is important. It is part of the approach that this Government have taken. The Prime Minister exercised the veto for the first time. We have committed to work on the balance of competences, and of course as the Conservative party we are committed to a much wider renegotiation. [Interruption.]

[Mr Speaker]

Order. I fear that the hon. Member for Rhondda (Chris Bryant) suffers from CCD—compulsive chuntering disorder.

[Chris Bryant (Rhondda) (Lab)]

That is true.

[Mr Speaker]

It is true.

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

The Home Secretary gave some good examples of how the European arrest warrant has worked very effectively in bringing people to justice in the UK, and that is what the public will be concerned about. However, I understand that the European Commission has said that there is a risk that her proposals will be

“complex, time-consuming, leave a lot of legal uncertainty and a lot of problems.”

What does she say in response to those criticisms? May I press her again on the balance of what is best for the UK? If her negotiations prove unsuccessful, will she drop her plans for the blanket opt-out?

[Mrs May]

The Government have made a very clear decision that we will opt out from these measures and seek to rejoin a number of them, the list of which is with the Command Paper that I have published today. Yes, we will have to go into negotiations with not only the European Commission but with other member states. I believe that other member states are keen to see the United Kingdom as a part of certain of the measures that we are proposing to rejoin, but we will be entering those negotiations over the coming months.

[Henry Smith (Crawley) (Con)]

May I seek assurances from my right hon. Friend that the United Kingdom will not opt into any Eurojust measures that would lead to a European public prosecutor having competence in this country?

[Mrs May]

I am very happy to give my hon. Friend that assurance. Indeed, our original coalition agreement states that we would not be a part of measures that led to a European public prosecutor.

[Wayne David (Caerphilly) (Lab)]

I am pleased that the Home Secretary has, at long last, recognised the importance of a European arrest warrant and, indeed, other measures. I am glad, too, that she has had the strength to stand up to her Eurosceptic Back Benchers. However, I take the point that we need to have a reasonable discussion in this House with a proper amount of time—a commitment given by the Minister for Europe some time ago.

[Mrs May]

The Minister for Europe committed to a debate in this House and there will be a debate in this House.

[Mr David Nuttall (Bury North) (Con)]

I take the view that this House should be sovereign in all these matters, but on those measures that it is proposed we opt back into and be subject to EU control, does the Home Secretary agree with the evidence given last year to the Sub-Committee of the European Union Committee in the other place that the practical effect of the European Court of Justice gaining full jurisdiction in this area is that the European Court of Justice may interpret these measures expansively and beyond the scope originally intended?

[Mrs May]

The fact that measures will be subject to the European Court of Justice is one of the main issues that has led to our very careful consideration of which we propose to seek to rejoin. It is important that the Government’s position is to look practically at those matters that we believe to be in the national interest with regard to ensuring that we can continue to fight cross-border crime and keep people safe. It is on that basis that we propose to seek to rejoin some measures.

[Lady Hermon (North Down) (Ind)]

I am sure that the Home Secretary will be aware of the excellent working relationship between the Police Service of Northern Ireland and the Garda Siochana across the border in the Republic of Ireland, particularly in tackling serious criminal activity such as terrorism and fuel laundering. Is she able to give guarantees that that excellent working relationship will not be damaged in any way by the measures that she has announced?

[Mrs May]

The hon. Lady is absolutely right to refer to the excellent working relationship between the Garda and the PSNI, which has resulted in many benefits over recent months and years. There is absolutely no reason why the Government’s decision on the 2014 opt-out should do anything to damage that relationship. Indeed, I am sure that the decision that we wish to rejoin the European arrest warrant will be welcomed.

[Chris Heaton-Harris (Daventry) (Con)]

I welcome the Home Secretary’s statement. I have been lobbying very hard for the block opt-out to be enacted, but does she understand the concerns of some of us on the Back Benches about the activist nature of the European Court of Justice? We have only to consider the Metock case in Ireland, which led to that member state having to change its immigration rules domestically, to understand why there is such concern. I look forward to taking part in the debate.

[Mrs May]

I thank my hon. Friend, who is absolutely right, and I recognise the concerns that he and other Members have raised about the European Court of Justice. Of course, it is not just another member state that has to abide by the implications of the Metock judgment; we all have to abide by them. There has been an increase in sham marriages following that judgment—it related to the rights of those married to EU nationals—and we now have to deal with that issue. One of the reasons we have considered these measures very carefully is the question of the operation of the European Court of Justice. As I have said, however, the measures that we wish to rejoin are those that will be of benefit and I believe that they are in our national interest.

[Jim Shannon (Strangford) (DUP)]

I, too, thank the Home Secretary for her statement. The Abu Qatada situation is very much in the news and is a good reason why we cannot subscribe to European regulations. Does the Secretary of State share my concern and that of many other Members that opting into some of the EU crime measures may give scope for some people to play the system and for more European interference in national security, which cannot be tolerated?

[Mrs May]

We are absolutely clear that it is not in the competence of the European Commission or the European Union to interfere in matters of national security. Those are sovereign matters that remain with the member states. I think it is right, however, that on those measures where cross-border co-operation will help us in the fight against crime—as has been the case with some of them—we should seek to continue to be part of them.

[Bob Stewart (Beckenham) (Con)]

Would greater involvement in the European Court of Justice result in longer delays in the repatriation of European criminals under sentence in this country to their country of origin?

[Mrs May]

No, the jurisdiction of the European Court of Justice should not lead to that. The European arrest warrant in itself, of course, enables people to be extradited rather more quickly than under the previous arrangements. What is crucial with regard to the measures that I have outlined today, and those that I will outline in the amendments that will be tabled to the Anti-social Behaviour, Crime and Policing Bill, is that we should give British citizens the protections and safeguards that will enable the European arrest warrant to be operated in such a way that it overcomes the problems that Members have identified in the past.

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

Will Ministers meet Andrew Symeou and his family—constituents of my hon. Friend the Member for Enfield North (Nick de Bois), who is away with the Justice Committee—and ensure that the EAW safeguards pass the Symeou test to ensure that UK citizens are not thrown into European jails for months on end on the basis of such flimsy evidence?

[Mrs May]

Yes, I would be happy to do that. Home Office officials have looked very carefully at the Andrew Symeou case to ensure that our proposals in the Anti-social Behaviour, Crime and Policing Bill meet the concerns resulting from it. I have discussed the measures with my hon. Friend the Member for Enfield North and, as I have told him and I am now happy to tell my hon. Friend the Member for Enfield, Southgate (Mr Burrowes), we would be happy to meet the family to go through them.

[Mr Philip Hollobone (Kettering) (Con)]

The Home Secretary will know that there are almost 11,000 foreign national offenders in our prisons, many of whom come from EU countries. One of the very few really good things to come from the European Union was the EU-wide compulsory prisoner transfer agreement enabling us to send these people back to their country of origin. Sadly, only 14 of the 28 member states have signed up to it. Will the Home Secretary do all she can to encourage other countries to sign up, especially Romania and Bulgaria before the transitional controls are ended at the end of this year?

[Mrs May]

I can give my hon. Friend the assurance that I and my right hon. Friend the Justice Secretary are both very keen to be able to use the prisoner transfer agreement to the maximum possible extent. Indeed, as I have indicated with regard to some aspects of the European arrest warrant, I think it is right that we use the prisoner transfer agreement, for example, to bring UK citizens who have been sentenced elsewhere in the EU back to serve their sentence here. We will work to ensure that we can increase the number of agreements with other member states for the transfer of prisoners.

Business of the House

Tuesday 9th July 2013 Commons Chamber

13:27

[The Leader of the House of Commons (Mr Andrew Lansley)]

With permission, I would like to make a short business statement following the statement made by my right hon. Friend the Home Secretary.

The Home Secretary announced that the Government have committed to a vote in this House and the other place before formally deciding on the United Kingdom’s opt-out decision pursuant to article 10 of protocol 36 to the treaty of the functioning of the European Union.

It will assist the House to know that we intend to schedule that debate and vote to take place on Monday 15 July. As a consequence, the Second Reading of the Defence Reform Bill, provisionally announced at the most recent business questions to take place on that day, will now take place on Tuesday 16 July.

As announced in the earlier statement, the House will also have the opportunity to debate the new Europol proposal, as set out by the Home Secretary in her statement, on Monday 15 July, following the opt-out debate that I have just confirmed.

I will be pleased to answer any questions on the management of business when I make my usual weekly business statement on Thursday.

13:28

[Angela Smith (Penistone and Stocksbridge) (Lab)]

I thank the Leader of the House for giving me early sight of his statement.

It would be incredibly helpful if the Leader of the House told us when the motion for the debate will be published. The Government must have known for some time that they were going to schedule this business for next Monday, yet there is no clear indication of what the motion will look like. Will the Leader of the House commit to ensuring that the motion will be published before the close of today’s business, and will he confirm that it will be amendable?

Is the Leader of the House prepared to guarantee the time that will be available for debate on Monday? Yesterday we heard two major statements which, taken together, seriously curtailed the time available for debate on the main business of the House. Will he therefore guarantee the time that will be available for the debate on this important topic on Monday?

May I go one step further and ask why the debate on this topic has been scheduled so quickly, especially given that the Home Affairs Committee was promised that it would have the chance to scrutinise the proposals before a decision was taken? We will not have the benefit of the views of the Home Affairs Committee on the proposals before we debate and vote on them on Monday.

Will the Leader of the House confirm that he will guarantee the time available for the debate, and explain why there is such urgency and why the Home Affairs Committee has been denied the opportunity to scrutinise the proposals before the House debates them?

[Mr Lansley]

As I have just announced the business for Monday, the motion will be tabled in good time so that the House may consider it.

On the timing of the debate, the business on Monday will relate to the justice and home affairs opt-out and opt-in measures and the subsequent Europol measure. There is no other business, so there will be a full day’s debate on those related issues.

On the Select Committee issue, the hon. Lady will have heard what my right hon. Friend the Home Secretary said and I completely endorse that. The Home Secretary was very clear about the Government’s intentions in October. In today’s Command Paper, we have been very clear about the principle behind what the Government are setting out to do. The House will have an opportunity to debate that and to vote on a substantive motion on Monday, which gives rise to the opportunity for amendment. We have been very clear that that is required so that my right hon. Friends the Home Secretary and the Justice Secretary may lead negotiations with the Commission and other member states. That process will lead to another vote in 2010. I am absolutely clear that we are giving the House the opportunities to debate and vote on these matters as we have promised.

[Mr Peter Bone (Wellingborough) (Con)]

I am grateful to the Leader of the House for making an emergency business statement, but he has not explained why there is such urgency. I heard what the Home Secretary said, but I was not convinced that the matter needs to be rushed through now. I ask the Leader of the House to consider two options. Preferably, he will put the debate off until September. At the very least, he should put it in the last week before the recess.

[Mr Lansley]

I inadvertently spoke of a further vote in 2010. I meant 2014.

My hon. Friend the Member for Wellingborough (Mr Bone) should always trust in what the Home Secretary says, as I do. She is right about this matter. I know from our discussions that it is important that she has the backing of the House as her negotiations with the Commission and other member states accelerate and acquire substance. That must be available to her at the earliest possible time.

[Chris Bryant (Rhondda) (Lab)]

The very fact that this is an emergency business statement suggests that this is an inappropriate way of doing business on a matter that is of substantial national security interest. If the Leader of the House were honest, he would listen to the voices across the House that are suggesting that emergency business is not a wise policy to adopt for next Monday. He has not replied to the specific question of whether the motion on Monday will be amendable.

[Mr Speaker]

Order. I hope, for the avoidance of doubt, that the hon. Gentleman is not suggesting that the Leader of the House is other than honest.

[Chris Bryant]

No.

[Mr Speaker]

I am grateful.

[Mr Lansley]

I am grateful for that, Mr Speaker, because I might have imagined otherwise from what the hon. Gentleman said. I am always honest with the House. This is an emergency business statement because it is not a business statement in the normal course of events. The structure of the business will give the House the opportunity to debate and vote on these issues in the way that we had anticipated.

[Mr Christopher Chope (Christchurch) (Con)]

May I press my right hon. Friend on when the motion will be tabled, because if it is tabled tomorrow it will enable Members on both sides of the House who are concerned about this issue to see whether we can reach an agreement about an amendment?

[Mr Lansley]

When my hon. Friend looks at the Command Paper that is published today by my right hon. Friend the Home Secretary, he will see what will be the substance of the debate on Monday. That is what it will focus on. The motion will be published in good time. He can take it that the effect of the motion will be to support the Government’s proposals, as set out in the Command Paper.

[Wayne David (Caerphilly) (Lab)]

This is probably the most important European question that we will have to decide on in this Parliament. According to the treaty of Lisbon, a decision has to be taken before 2014. The Government have known from the time the treaty was signed that a debate would be needed with proper time, as the Minister for Europe promised, before the end of this year. Surely it would make sense to have a reasonable period of discussion on this extremely important issue. A number of Members have expressed concerns and reservations on which they want clarification. Let us have a proper debate.

It is particularly important that Select Committees have plenty of time to reach their conclusions. We have heard from the Chair of the European Scrutiny Committee that his Committee needs to give these matters proper deliberation.

I hope that the Leader of the House has second thoughts. I am sure that he would not want to give the impression that the Government want minimal debate because they do not want to expose divisions in the Conservative party. I am sure that that is not the reason.

[Mr Lansley]

That question was longer than my statement. I know that the hon. Gentleman was in his place last Friday, but he did not take part in the vote, unlike some of his hon. Friends. I am making an emergency business statement today because I thought it proper not to wait until Thursday once my right hon. Friend the Home Secretary had made it clear that a debate was in prospect. It is clearly not possible to debate the substance before the Government’s proposals have been fully set out.

[Mr Speaker]

I think that the hon. Member for Caerphilly (Wayne David) thought momentarily that he was speaking from the Front Bench rather than the Back Benches.

[Mr Philip Hollobone (Kettering) (Con)]

Trusting that the Leader of the House is an honest fellow who is sensitive to the mood of the House at all times and given the comments that have been made today, may I urge him to reconsider his decision and to hold the debate and vote in September? Given that most of Europe, and especially the European Commission, goes on holiday in July, August and early September, I am sure that a delay until our September sittings would do no harm at all to our renegotiation prospects.

[Mr Lansley]

I hope that my hon. Friend knows how sensitive I am to the views of the House. I have frequently amended what we have planned to do for that reason. In this instance, the case seems straightforward. When the Government have reached a policy decision and the basis of that decision has been published for the benefit of the House, it is very often in the best interests of the House to have a debate as soon as possible. That will provide a good basis on which Ministers can take forward the negotiations, as I have described. As a consequence of those negotiations, there will of course be a further vote in 2014.

Post Office - Horizon System

Tuesday 9th July 2013 Commons Chamber

13:38

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

Yesterday evening, an interim report into alleged problems with the Post Office’s Horizon computer system was published. The report was commissioned by Post Office Ltd from external forensic accountants, Second Sight. The Horizon system records all transactions conducted at every post office counter across the country. The Government welcome the publication of the interim report and the Post Office’s statement in response.

Although Post Office Ltd is 100% owned by the Government, the company operates at arm’s length as an independent commercial business. The Government do not play any role in operational matters. It is important to note that the issues in the report have no impact on Royal Mail, which is an entirely separate business. It is also important to be clear that, contrary to misleading media reports, the review explicitly confirms that

“we have so far found no evidence of system-wide problems with the Horizon software”.

The very small number of sub-postmasters who have experienced issues with the Horizon system are a minute proportion of the tens of thousands of people who have been successfully using the system across the network of 11,500 branches on a daily basis since 1995. Out of 68,000 users, only 47 cases have been put forward to the review.

I want to emphasise that the interim report makes no comment on the safety or otherwise of any conviction of a sub-postmaster for fraud, theft or false accounting. Equally, even if it had, the Government cannot intervene in the legal process to review or appeal past convictions. These matters can properly be dealt with only by the relevant judicial authorities. The interim report published yesterday analysed four cases. It found that there was scope for the Post Office to improve aspects of its support and training for sub-postmasters, and it has already taken steps to do so. The Post Office has further proposed a number of measures to build on some of the points made in the Second Sight report on support and training for sub-postmasters. I welcome those initiatives as, I understand, does my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot), who has played a key supporting role in identifying cases for examination in the review.

The Post Office statement issued yesterday welcomed the broad thrust of the report’s findings and outlined three initiatives to deal with the issues raised. First, it will set up a working party to complete the review of cases started by Second Sight, and will consider all 47 cases brought forward by the Justice for Subpostmasters Alliance—the JFSA—and MPs. The JFSA has been invited to join the working party. Secondly, an independent figure will chair a review to determine how best to adjudicate disputed cases in future. The JFSA and other stakeholders will also be invited to take part in this process. Finally, a new branch user forum will provide a channel for sub-postmasters and others to raise issues at the highest level on business processes, training and support. The company will take forward the proposals as an urgent priority. I commend this statement to the House.

13:41

[Ian Murray (Edinburgh South) (Lab)]

I thank the Minister for the advanced copy of the statement and for coming to the House.

This is a disturbing affair. At a time when sub-postmasters’ income is being squeezed, the last thing they need is to lose confidence in the system they use to operate their businesses. The people in the post office network are the lifeblood of our communities and must be supported in every way possible. A recent National Federation of SubPostmasters survey found that operating costs were rising while personal drawings were falling, and that one in four sub-postmasters take no salary from their businesses. Most sub-postmasters earn little or no income from either financial or Government services, the two areas that Ministers identify as having real growth potential for post offices. The NFSP removed its support for the Postal Services Bill on the basis of the abject failure of the Government to deliver the “front office for Government” services they promised at the previous election. That is what makes today’s revelations on the Horizon system all the more worrying.

I welcome the steps taken by Post Office Ltd to investigate the concerns raised by the Justice for Subpostmasters Alliance and the right hon. Member for North East Hampshire (Mr Arbuthnot). Its website has a case-by-case analysis of sub-postmasters who did nothing wrong, but for whom alleged defects in the system had resulted in problems with cash reconciliation and processing payments. Press reports this morning say that the Post Office has admitted to software defects in the Horizon system, but the Post Office press release would have us think that this is a mere training problem.

Second Sight, the independent company employed by the Post Office to investigate these issues, said that while there was no fundamental problem with the Horizon system, there were bugs in the system that resulted in it identifying defects resulting in a shortfall of up to £9000 at 76 branches. The Post Office has recognised, however, that the report raises questions about the training and support being offered to some sub-postmasters. This raises wider questions on the current network transformation programme. Training concerns have been consistently raised by Opposition Members, the Select Committee on Business, Innovation and Skills and Consumer Futures, but the move to a Locals model could result in fewer fully-trained staff in our post offices.

If post office services are merely being administered from the front counter of a newsagent or shop, can we guarantee that the servers will be fully trained to ensure that the issues with the Horizon system do not arise in the future? The Minister did not address that question in her statement, and the National Federation of SubPostmasters has raised this issue time and again. It responded today by welcoming the Post Office statement, but also said

“We are encouraged to see that Post Office Ltd (POL) concedes that there is scope for improvement in its training and support programmes—issues which the NFSP has raised repeatedly with POL.”

This is all at a time when Crown Post Office staff are in industrial action, the transformation programme is struggling to be delivered, sub-postmasters’ incomes are dropping, there is a dispute with Royal Mail on the segregation of mail payments, the future of the inter- business agreement is unclear due to Royal Mail privatisation, and Post Office senior management have awarded themselves bonuses of more than £15 million.

What processes will be put in place to compensate sub-postmasters and former sub-postmasters who have been disadvantaged, fined, lost their businesses, homes or even jailed, as a result of the problems with the Horizon system? The Minister said that the interim report makes no comment about any convictions, criminal or otherwise, but will those serious issues be dealt with? When did the Government know about this investigation and the problems with Horizon? How will she ensure that all staff are adequately trained in the transfer to a Locals model? Can she confirm or deny recent reports that there are ongoing talks to change the voluntary Locals network model to a compulsory model, due to the slow take-up of the transformation?

[Jo Swinson]

I thank the hon. Gentleman for his wide-ranging remarks and questions. He is right to say that it is important for people to have confidence in the post office network. In terms of tone, I understand that the remit of Opposition is to ask questions and to be challenging, but it is important that we do not talk the Post Office down. Members on both sides of the House recognise the vital role that post offices play in our communities, that they are doing an excellent job and that there can be a bright future for the Post Office. This Government have stopped the decline in the numbers in the post office network under the previous Government. The hon. Gentleman will be aware that the Post Office has won 10 out of 10 Government contracts recently. We want more income for Post Office Ltd to come through Government services. It has a good record of winning contracts.

The hon. Gentleman mentioned the bugs in the system that have been reported in the media. It is important for the House to have clarity on this, because there are two separate issues. The Post Office itself identified issues on two occasions: through a routine systems check and as a result of a query from a sub-postmaster. That led to a small number of transactions being queried across 76 branches. Post Office was proactive in identifying and rectifying those problems so that no sub-postmaster was out of pocket. That is a separate matter from the issues considered in the report, and which were raised by the JFSA and Second Sight. No system-wide software issues were found. There were issues relating to the interface for dealing with multiple computer systems. The training on offer, and the helpline that sub-postmasters can call if they have a problem, were identified as areas for improvement.

The hon. Gentleman asked specific questions on compensation. There is no new evidence of further problems. Where the Post Office has identified defects, sub-postmasters have already received compensation to right underpayment. On convictions, it is up to individuals to go through the usual judicial processes if they are concerned about the safety of a conviction, and that can be done through the Court of Appeal. Clearly, if any evidence were to come to light that had an impact on the safety of convictions—I stress that that has not happened as a result of this interim report—Post Office Ltd would have a duty to look further at those issues as a prosecuting authority to ensure that convictions remain safe.

The report was commissioned by Post Office Ltd, but the Government were aware of it and there have been meetings with MPs in the House at various points in the past couple of years. On the transfer to the Locals model, I confirm that proper training will be in place. Customer satisfaction in the branches that have already gone through network transformation is significantly higher, and the experience that customers have is important. We are looking to ensure that network transformation continues and is successful, but any discussion on its future will be done in conjunction with the National Federation of SubPostmasters to ensure that we move ahead with a plan in which everybody has confidence.

[Mr James Arbuthnot (North East Hampshire) (Con)]

I thank my hon. Friend for making this valuable statement to the House. Does she accept that the Post Office, which has acted highly commendably in commissioning this independent review, has a conflict of interest—or, rather, a conflict of duty—in both looking after its sub-postmasters and protecting public money, and that the review has shown that it has fallen too far on the asset recovery side of that conflict? Does she agree that it is essential that the work that needs to be done is not only independent, but seen to be independent of the Post Office? Does she also agree that some sub-postmasters would never have been prosecuted, sued or disciplined had the new procedures now in place or proposed been in effect earlier, and that we must look after them and try to provide them with redress, perhaps through the Criminal Cases Review Commission?

[Jo Swinson]

I sincerely thank my right hon. Friend not only for his question and comments, but for his work acting as a collecting point for some of the concerns. Importantly, it ensured that cases could be looked at anonymously and confidentially, meaning that nobody had to fear bringing them forward. That has played an essential role in this process.

Post Office Ltd is the guardian of large amounts of public money, and it is important that it is properly looked after, but that does not mean it cannot also support sub-postmasters in ensuring that their systems work properly and ensure that there is reconciliation and that things tally up. In fact, I would argue that those are complementary duties, because ensuring that sub-postmasters are well supported helps the Post Office with its role in looking after public money.

It is important that any further work is not only independent, but seen to be independent, and clearly the role of Second Sight in that is important, as is the role of the JFSA. I would not go as far as my right hon. Friend, however; there is no evidence to suggest that any convictions would have been different had these processes and training systems been in place, particularly given that in most of the prosecutions dealt with in the report—not all 47 cases in the report resulted in a prosecution—the sub-postmaster pleaded guilty in the first place. It is difficult to second guess when somebody has entered a guilty plea.

[Mike Wood (Batley and Spen) (Lab)]

I thank the Minister for her statement. She stresses the need for independence in the continuing process of looking at the outstanding queries and issues, and no doubt she is mindful that when the Post Office talks about Horizon, it does not just mean the software in the computer system; it means the wider issues, including the interface between that system and other systems; training staff how to use it, and so on. Given that she has made a commitment on the need for independence, will she assure the House that if we are to move to a working party to continue the process, Second Sight, which has done such good work up to now, will be part of it?

[Jo Swinson]

I shall happily give the hon. Gentleman that assurance. The continued input of Second Sight is incredibly important, given its familiarity with the case so far and the fact that it enjoys the confidence of many of those involved. It is also important to recognise, however, that to date this system has handled more than 45 billion transactions and that there have been issues with only a tiny, tiny number of them. As the report itself found, the vast majority of sub-postmasters in branches were at least reasonably happy with the Horizon system. I suspect that Members would say that, where IT systems are concerned, “reasonably happy” is probably as good as we are going to get. Generally, it is working well, but we need to ensure that the further work on cases where there are outstanding queries is independent.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

Clearly, it has now been ascertained that the Horizon system has problems, even if, as the Minister says, they are not systemic. Does she not feel that that is unacceptable, however, given the delays from Post Office Ltd in working out what went wrong? This matter has meandered on for years, resulting in serious reputational damage risks to sub-postmasters. Will she give us her views on whether that is acceptable?

[Jo Swinson]

It is to the Post Office’s credit that it has commissioned this independent review, which has been transparent and accountable, as my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) also said. It is easy for organisations to say there is not a problem and to try to sweep these things under the carpet, but Post Office Ltd decided to be open about it and to ensure that the report was published. In fact, its newsletter to all branches contained an article encouraging anyone who had difficulties or queries they wanted to raise to ensure they were put into the Second Sight review.

The Post Office has taken significant steps to ensure that there is transparency and accountability and that people’s concerns are taken forward. Clearly, sometimes these issues take time, and of course there are lessons to be learned. Improvements will be made to ensure that when queries are raised, they can be investigated more thoroughly, but again I highlight the context: we are dealing with a system that processes billions of transactions, so it is very complicated and it cannot be expected that nothing will ever go wrong; what is important is how the organisation responds when things do go wrong.

[Mr Kevan Jones (North Durham) (Lab)]

Being a Minister allows the hon. Lady not only to ask questions but to right wrongs. To dismiss cases such as that affecting a constituent of mine, Mr Tom Brown, as minuscule does not change the fact that he has lost his livelihood, his wife has died, his name has been dragged through the local community and he is stilling awaiting an outcome from the Post Office. He was arrested by the police, but they did not take the case forward; the Post Office did. His good name is now being questioned, he has had to sell his house and is still waiting for the Post Office to produce the evidence. I am sorry, but the Minister’s statement has done none of the things she could have done to put right some of these wrongs.

[Jo Swinson]

I appreciate the situation that the hon. Gentleman’s constituent finds himself in—it is important that he is speaking up for him—and I understand that this has had a massive impact on those involved. When I referred to “minuscule”, I meant the number of transactions queried out of the overall number of 45 billion. I do not know the details of the individual case, so I hope he will appreciate that it is therefore difficult for me to comment. What is important is that we have an independent procedure to get the answers that people such as his constituent are looking for, and everyone involved must have confidence in that procedure. I know that there have been meetings of MPs and that the JFSA is involved; getting those answers is important, but it is also important to stress what the report shows, rather than to suggest that it contains things that it does not.

[Mr Robin Walker (Worcester) (Con)]

I welcome the Minister’s statement, particularly the commitment from the Post Office to improve aspects of its support and training for sub-postmasters. I recently visited St Johns post office in Worcester, which is an enthusiastic early adopter of the network transformation programme. Will she join me in celebrating the fact that the Government are investing in the post office network, rather than running a closure programme, as the last Government did?

[Jo Swinson]

I very much welcome my hon. Friend’s comments. He is quite right that the Government are investing £1.34 billion in the post office network, and I know from speaking to Members on both sides of the House that where these new models are open and working, they have had a really positive reaction from consumers. The Post Office has a bright future, but part of that is about ensuring that where issues arise, they are properly investigated. That is what this independent process has been doing, and that is why we are discussing it today.

[Mr Mike Weir (Angus) (SNP)]

The number of sub-postmasters affected might be small, but none the less it has led to terrible consequences for many of them. One reason many people pleaded guilty, paid back money or had money taken off them by the Post Office at source might have been the latter’s insistence that there was absolutely nothing wrong with the system. It has now been proved that there is doubt about at least part of the system, so is it not imperative that all these cases be dealt with speedily and that justice be done for these sub-postmasters?

[Jo Swinson]

The hon. Gentleman is right that it is imperative that these cases be looked at speedily, although I think he would also agree that that needs to be done comprehensively, and clearly when forensic accountancy work is going on, things can take time. We need to be clear about what the report says about the Horizon system. It did not find evidence of systemic failures; that is not to say there has never been a bug in the system, but I defy anyone to find an IT system that has never had a bug. What is important is that when bugs are found, they are dealt with and the problems are rectified. What has not been found, however, is any systemic problem leading to the issues faced by sub-postmasters, although there have been issues with the support and training provided alongside Horizon.

[Jonathan Lord (Woking) (Con)]

Like many colleagues, I have a constituent, Mrs Seema Misra, whose life and family life is in ruins after suffering reputational damage and receiving a custodial sentence. I see from the Minister’s statement that an independent figure will chair a review to determine how best to adjudicate disputed cases, but will she assure me that the working party set up to complete the review of current cases will also by chaired by an independent figure? That is important.

[Jo Swinson]

Yes, I am happy to give my hon. Friend an assurance that the working party will be independent. As I have already confirmed to the House, the continuing involvement of Second Sight, which is independent of the process, is crucial as part of that working group.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

The Minister has said that the network is working well. Will she share with the House the numbers of sub-post offices that are temporarily closed or have had to move to an alternative, temporary service delivery system?

[Jo Swinson]

I will certainly ensure that that information is sent to the hon. Gentleman in writing. As he, and I hope the House, will appreciate, these numbers change regularly by their very nature. To ensure accuracy, I will write to him and place a copy in the Library. What is important is that we have a commitment to maintain the network of post offices at 11,800. We are ensuring that we invest in the network, rather than embarking on closure programmes, which, as I know from my constituency and elsewhere, unfortunately had a negative impact on the post office network up and down the country.

[Andrew Bridgen (North West Leicestershire) (Con)]

Having been involved in this issue for some time and having initially been told by Post Office representatives that the Horizon software system was perfect and could not be infiltrated, I am pleased that the Post Office is co-operating with the independent investigation, whose interim report indicates that the system is clearly not perfect. I urge my hon. Friend to ensure that Second Sight continues with its investigations. Does she accept that if the system was perfect, the modifications would not be needed and many—or some—of the historic convictions may well be unsafe?

[Jo Swinson]

I certainly agree with my hon. Friend that no system is perfect; perhaps it is a bit of a hostage to fortune for anyone to proclaim a system as perfect. I would not agree with the second part of his question—that that therefore means that those convictions are obviously unsafe. The evidence is not there in today’s report, but if evidence emerges to suggest that, there are legal channels that can be followed to ensure that those issues are taken up.

[Huw Irranca-Davies (Ogmore) (Lab)]

It seems to me that two groups of sub-postmasters fall outside the remit of today’s statement. The 47 past cases brought forward by the Justice for Subpostmasters Alliance will be taken forward by the independent working party, but what about somebody—I have one such case in my patch—who for very good reasons does not feature in those 47 cases? Can that be looked at again? Secondly, what about live cases? The statement refers to “disputed cases in future”, but I have two live cases in my constituency that do not fall within anything that has been described today.

[Jo Swinson]

Clearly the procedures that the Post Office is putting in place to improve its training and support will, I hope, assist those cases that are live at the moment. On the hon. Gentleman’s first point, I can certainly give an assurance that if there are other cases that need to come forward, we would not want to deny those people the opportunity for that to happen.

[David Mowat (Warrington South) (Con)]

For the purposes of clarity, can the Minister confirm that all the issues we are talking about today are business, process and training-related, and not software-related? Is that what we are saying?

[Jo Swinson]

Yes. The report mentions a couple of bugs in the Horizon system, which the Post Office proactively found and rectified, but basically what it has found to be lacking in Horizon is not the software, but the support and other issues around the software.

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

The Minister has given some full answers to the questions posed, but she was unable to give a direct answer to one of the questions put by my hon. Friend the Member for Edinburgh South (Ian Murray) from the Front Bench. Let me give her another opportunity to confirm whether the Government and Post Office Ltd are considering changing the Locals programme from a voluntary to a compulsory basis. A simple yes or no answer would be adequate.

[Jo Swinson]

I am always keen to be concise. I think I did answer the question earlier. I pointed out that the transformation programme is an important part of the Post Office’s future. We are making sure that we look at how it will be delivered with the new strategy for the Post Office that will published, and we are working closely with all the stakeholders to ensure we can do that. What is important is that whatever the future system looks like, there will be a choice for sub-postmasters, rather than forcing them down a particular route.

[Mr Philip Hollobone (Kettering) (Con)]

Being a sub-postmaster is a very worthy profession, at the heart of many local communities and helping highly vulnerable people. With respect, I think the Minister dismisses too lightly the devastating impact that the Horizon system has had on a small number of people. The very least that Post Office Ltd should be doing is setting up a legal fund to review each case, because many will have pleaded guilty to false accounting, given the situation with the system and the legal advice they received at the time.

[Jo Swinson]

I absolutely recognise that the impact on individuals has been intensive and considerable, and I think I have made that point to other Members who have raised this issue. Constituency MPs are absolutely representing their constituents in taking forward these proposals, but I think there is a distinction to be drawn before assuming that convictions are therefore unsafe. It is important that we draw that distinction and that we are careful about what we say, particularly when it comes to legal proceedings that have taken place outside this House—and rightly independently of this House—and where people have entered a particular plea.

If individuals are concerned about the quality of the legal advice they received at the time, there are routes for them to challenge that, such as the Legal Services Commission. If evidence comes to light that materially affects the conviction, that would also need to be looked at by Post Office Ltd as the prosecuting authority, as I have said. However, that is not where we are yet. We will of course remain open minded about that as the review process continues. So far, only four of the 47 cases have been looked at in detail. Therefore, we await to see what more will come out of the review.

[David Simpson (Upper Bann) (DUP)]

I thank the Minister for her statement. She will have heard a number of Members putting information before the House about the lives that have been ruined. Injustice has been done, and that needs to be corrected. Will she tell us the exact details of the training that Post Office Ltd intends to carry out?

[Jo Swinson]

Training is carried out as a matter of course when new postmasters join the network. That can vary between a little over two weeks to three weeks. The Post Office is now ensuring that it visits new sub-postmasters after one month, and again after three months for the new local and main operating models, to deal with any teething issues or further questions that have arisen from their working the process for a few weeks.

Improvements to the helpline are also important, so that it does what it says on the tin and is actually helpful to people who call it. One thing that has improved the helpline is making it available for extended hours. As other Members have mentioned, sub-postmasters work very hard for long hours, so assistance needs to be available to them when they happen to be doing their reconciliation at the end of the day. That is not likely to be within office hours, so the service needs to be available after branches have closed. Those are just some of the improvements that the Post Office has been making.

[Mr Peter Bone (Wellingborough) (Con)]

I thank the Minister for coming to the House and making today’s statement. She is an excellent Minister, but on this occasion she has got it wrong. Indeed, I think she got the mood of the House wrong. The House is concerned about a very small number of people who have had their lives ruined. It is no good saying, “Oh, they can appeal,” or that they can do this or that. We need proactive action from the Government. I suggest that she talk to the Attorney-General to see whether he can look into those cases and review them.

[Jo Swinson]

I thank my hon. Friend for that question and for his kind words. I accept that this is a serious issue for the individuals involved, and it is absolutely natural that their constituency MPs are putting their cases. However, we have to be careful about going from the understandable sympathy for individuals in a difficult position to an assumption that all these issues are therefore unsafe and the result of problems in a way that is not borne out by the evidence in the report. That is why it is important to have a continuing independent review process in which people can have confidence, but it is also important to go by the evidence found in the report.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

For how long are my constituent and many others going to have this appalling cloud hanging over them? Has the Minister put a time limit on the next stage of the review?

[Jo Swinson]

The review is independent of the Government and of the Post Office, so it would not be appropriate for me or for the Post Office to put an arbitrary time limit on it. That said, I absolutely understand the hon. Gentleman’s point that there is a need for speed and for the prompt resolution of these issues, but that has to be balanced against ensuring that they are looked at in a comprehensive way. The independent working group, which will include representation from the Justice for Subpostmasters Alliance, will help to ensure that that happens swiftly and without compromising the details that need to be gone into.

[Jim Shannon (Strangford) (DUP)]

rose—

[Mr Speaker]

The hon. Member for Strangford (Jim Shannon) has bobbed up, as is his common practice, at the last minute. I should not want him to feel excluded.

[Jim Shannon]

I have bobbed up at the right time.

I thank the Minister for her statement. The Horizon system has been blamed by some sub-postmasters who have been accused of false accounting. Does the Minister agree that red tape makes it difficult to run rural sub-post offices, especially those in isolated locations? What steps is she taking to restore confidence in the system, especially in relation to rural post offices?

[Jo Swinson]

The hon. Gentleman is quite right to raise the issue of rural sub-postmasters. The communications systems depend on communications technology, which can be more of an issue in rural areas. Many post offices have a main phone line and also a back-up system, perhaps using a mobile telephone. Rural areas often have difficulties with broadband connectivity, which is why the Government are moving ahead with plans to ensure that rural broadband is much better spread out. The support for rural post offices is certainly significant, and we recognise that there are many branches that need subsidy from the Government to continue. That is why the Government are injecting £1.34 billion into the post office network. We also recognise that there will be a continuing need to ensure that rural post offices are supported in providing their excellent services. They might be the last remaining shop in a village, or the only post office serving a large, far-flung area.

Points of Order

Tuesday 9th July 2013 Commons Chamber

14:11

[Huw Irranca-Davies (Ogmore) (Lab)]

On a point of order, Mr Speaker. I welcome the Minister’s statement, and I think I understood—it might have been my hearing—that she made an offer to look beyond the 47 cases raised by the Justice for Subpostmasters Alliance. I was not clear, however, to whom any further cases should be referred. Perhaps, while the Minister is still in the Chamber, you can guide us on how we might get that clarification.

[Mr Speaker]

The failure of the hon. Gentleman to hear what was said does not, in itself, constitute a point of order. However, as the Minister is still here and looks happy to come back to the Dispatch Box to clarify the matter, he might be released from his ignorance before very long.

[Jo Swinson]

I am sure that the hon. Member for Ogmore (Huw Irranca-Davies) would have had the ingenuity to ensure that any such cases received attention in any event, but for the benefit of the House, I should point out that one avenue for highlighting any further cases would be to bring them to the attention of the Justice for Subpostmasters Alliance, which will be part of the independent working group. I hesitate to suggest, although I am probably safe in doing so, that my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot) would also be happy to continue in his role as a recipient for any such cases. He seems to be nodding. So those are two options for the hon. Member for Ogmore.

[Mr Speaker]

I trust that the hon. Gentleman is now satisfied. He does not have to suggest that his ear is somehow defective. I feel sure that it is not. He might simply not have been paying full attention; I do not know.

[Mr Christopher Chope (Christchurch) (Con)]

rose—

[Mr Speaker]

A further point of order. It is point of order day!

[Mr Chope]

On a point of order, Mr Speaker. Is it within your power to require the Government to provide time for the proper scrutiny of Government measures before they are subject to a vote? Command paper 8671, to which the Home Secretary referred in her statement, comprises 155 pages of pretty impenetrable prose, with hardly any explanation. The command paper has considerable policy implications, but there are many ifs and buts among the contents. I cannot see how the House can reasonably be expected to reach a substantive conclusion on whether signing up to the document is in the national interest unless we are given a lot more time for its scrutiny, not only by the House but by the Select Committees, which are appointed specifically to do the job of scrutiny.

[Mr Speaker]

The short answer is that I do not have the power to which the hon. Gentleman refers. I much appreciate his belief that the Chair ought to be invested with greater powers, and I do not for one moment dissent from that proposition. The reality is that he and others will have to use their best endeavours in the coming days—it is literally a matter of days—to ensure that they are furnished with adequate material, and understanding thereof, to enable them to participate to their satisfaction in the debate that the Government have apparently now scheduled. I can operate only within my powers, but I know that the hon. Gentleman is a persistent, indefatigable and skilful Member, and I am sure that he will make the very best fist of this, not only on his own but with others.

Planning Regulations (Removal of Provisions in Respect of Gypsies and Travellers)

Tuesday 9th July 2013 Commons Chamber

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

14:15

[Mr Philip Hollobone (Kettering) (Con)]

I beg to move,

That leave be given to bring in a Bill to make provision for the removal of provisions in planning regulations relating to Gypsies and Travellers.

It is a huge privilege for me to represent the people of the borough of Kettering in this place, and I would like to extend my thanks to the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis) for showing my constituents the great courtesy of attending the Chamber today to listen to their concerns, which I will do my best to express. He has proved himself to be knowledgeable and sensitive when it comes to the enforcement of planning regulations in relation to Gypsies and Travellers.

The reason for my seeking to introduce the Bill today is that my constituents are undergoing a consultation on where in the borough up to 37 Gypsy and Traveller pitches should be sited by the year 2031. It is no exaggeration to say that many of my constituents have been brought to tears by some of the site proposals. I also have the privilege to be a member of Kettering borough council, which, as the local planning authority, is doing its best within the national planning guidelines to undertake the consultation in the most effective way possible. However, the council has to follow national planning regulations and, by law, it has to identify up to 37 pitches. It has no choice in the matter. It does have some choice about where in the borough they should be located, but it must find those sites, and some of the proposals have been completely outrageous.

The purpose of my Bill is to remove any special provision for Gypsies and Travellers from the national planning regulations. I wanted to call it the “Gypsies and Travellers (The Same Planning rules as Everyone Else) Bill”, because that is really what I am after, but I was told by the parliamentary authorities that that would not accord with parliamentary procedure. That is why the Bill has its present title, but the effect would be the same.

Why should one category of person be treated differently from anyone else under the planning regulations? If one of my constituents from the settled community wanted to establish a mobile home in the middle of a green field in the open countryside, they would not be allowed to do so. However, if a Gypsy, Traveller or travelling showperson—the other term used in the planning documentation—wanted to do so, that would be permissible under the current planning regulations. That is exactly what has happened in the borough of Kettering, causing huge distress to many thousands of my constituents.

Most of the relevant planning regulations are to be found in a document entitled “Planning policy for traveller sites”, which was revised in 2012—unfortunately by a Liberal Democrat member of Her Majesty’s Government. Had there been a Conservative Minister in charge of this aspect of policy at the time, I suspect that the guidance would have been far more robust. The document states:

“The Government’s overarching aim is to ensure fair and equal treatment for travellers”.

I agree with that, 100%. Everyone—regardless of their background, ethnicity, age or whatever—should be treated the same. That is fine. It then goes on to say, however,

“in a way that facilitates the traditional and nomadic way of life of travellers while respecting the interests of the settled community.”

I disagree with the last part of that sentence, because I do not see why one category of person should be treated differently from anyone else. The document that such policies

“reduce tensions between settled and traveller communities in plan-making and planning decisions”.

The Minister has kindly agreed to visit Kettering in the near future to listen to my constituents’ concerns about this issue. When he comes, he will be left in no doubt that the consultation exercise being conducted by Kettering borough council has hugely enhanced the tensions between settled and Traveller communities in planning decisions.

Local planning authorities, of which Kettering borough council is one, are obliged under the national guidance to

“set pitch targets for gypsies and travellers…and travelling showpeople which address the likely permanent and transit site accommodation needs of travellers in their area”.

Why should they be treated differently from everyone else? The document goes on to say:

“When assessing the suitability of sites in rural or semi-rural settings, local planning authorities should ensure that the scale of such sites does not dominate the nearest settled community.”

Tell that to my residents in the village of Braybrooke, one of 22 villages in the Kettering constituency where, by fair means and foul, Gypsies and Travellers have set up a very large number of pitches on sites near to the village—and this was allowed to build up under the previous Government in such a way that 100% of the children in Braybrooke primary school were Traveller children. Such was their dominance over the local community that the local settled community decided not to send their children to that school. How can the “ghettoisation” of our countryside have been allowed to take place under national planning regulations? There has to be a balance in this system. That situation has been allowed to develop because Gypsies and Travellers have effectively been given special provision. My belief, however, is that everyone should be treated the same.

Under the consultation exercise that Kettering borough council is undergoing, it has to identify 37 pitches by 2031. Some of the sites—they will be unfamiliar to Members of this House, but very familiar to my constituents—are completely inappropriate. One pitch could be sited in Crown street, Kettering, another in Beatrice road, while six or seven could be at the Scott road garages site in Scott road, and another six to seven in the old sewage works in Burton Latimer. Another two could be at the Springfields site, north west of the village of Braybrooke, with two more at the Harrington road in Rothwell.

Many of those sites are within highly built-up areas within my constituency, and some are in the heart of the town of Kettering itself, and residents are rightly concerned that their homes will be devalued by tens of thousands of pounds if permission is given for a Gypsy or Traveller site to be set up nearby. There are understandable concerns, too, about the behaviour of Gypsy and Traveller groups, and these include crime, rubbish and antisocial behaviour.

Members may not realise that local residents have told me, on the basis of police evidence, that many distraction burglaries are undertaken by members of the Gypsy and Traveller community. It is a speciality of theirs. Likewise, farmers and rural dwellers are, frankly, terrorised at the theft of, and damage to, farm equipment and rural properties. The idea that these sites could be set up near to long-established communities both within towns and villages is bringing a huge amount of distress to my local residents.

Kettering borough council goes out of its way to do its best to provide affordable homes for as many as possible and over the last nine or 10 years it has delivered a total of almost 1,300 social rent and intermediate homes. Kettering borough council cares about how its local community is housed. Having to put within its planning system, however, sites for Gypsies and Travellers above or at a higher priority than anyone else is asking the council to do too much.

I congratulate Her Majesty’s Government and my hon. Friend the Under-Secretary on rescinding 186 pages of the equality and diversity in planning guidance brought in by the last Government—186 pages of Whitehall guff that has done tremendous damage to local communities, including mine in the borough of Kettering.

Question put and agreed to.

Ordered,

That Mr Philip Hollobone, Priti Patel, Mr John Baron, Mr Peter Bone, Mr David Nuttall, Philip Davies, Mr Christopher Chope, Mark Pawsey, Robert Halfon, Mr Stewart Jackson and Andrew Bridgen present the Bill.

Mr Philip Hollobone accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 8 November, and to be printed (Bill 87).

Financial Services (Banking Reform) Bill

Tuesday 9th July 2013 Commons Chamber

[Relevant Documents: First Report from the Parliamentary Commission on Banking Standards, Session 2012-13, HC 848, and the Government response, Cm 8545. Second Report from the Parliamentary Commission on Banking Standards, Session 2012-13, Banking reform: towards the right structure, HC 1012. Third Report from the Parliamentary Commission on Banking Standards, Session 2012-13, Proprietary Trading, HC 1034. Fourth Report from the Parliamentary Commission on Banking Standards, Session 2012-13, ‘An Accident waiting to happen’: The failure of HBOS, HC 705. First Report from the Parliamentary Commission on Banking Standards, Changing banking for good, HC 175-I and II.]

[2nd Allocated Day]

Further consideration of Bill, as amended in the Public Bill Committee

New Clause 8

Competition and Markets Authority review into competitiveness

‘(1) The Chancellor of the Exchequer shall instruct the Competition and Markets Authority to begin a full market study, according to its powers under the Enterprise Act 2002, into UK financial services institutions involved in the provision of core services.

(2) The full market study will consider:

(a) the level of competition among UK institutions involved in the provision of core services.

(b) the obstacles to increasing competition for UK institutions involved in the provision of core services.

(c) possible actions that could be taken to facilitate new UK institutions being competitive in the provision of core services.

(3) The full market study will be published within a year of Royal Assent of this Act.

(4) The review must result in a report to the Treasury.

(5) The Treasury shall lay a copy of the report before both Houses of Parliament.’.—(Chris Leslie.)

Brought up, and read the First time.

14:26

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

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

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 10—Sale of state-owned banking assets—

‘(1) Before the sale of banking assets in the ownership of HM Treasury, the Treasury shall lay before Parliament a report setting out—

(a) the manner in which the best interests of the taxpayer are to be protected in connection with such sale,

(b) the expected impact that any sale might have on competition for the provision of core services, customer choice and the rate of economic growth,

(c) an appraisal of the options for potential structural changes in the bank concerned including—

(i) the separation of the provision of core services from the provision of investment activities,

(ii) the retention of a class of assets in the ownership of HM Treasury,

(iii) the impact of any sale on the creation of a regional banking network.

(2) A copy of the report in subsection (1) shall be laid before Parliament and sufficient time shall be given for the appropriate committees of both Houses of Parliament to consider its findings before any sale decision.’.

Government amendment 5.

New clause 15—Local stakeholder banks—

‘(1) Within three months of Royal Assent of this Act the Secretary of State shall publish for consultation a report setting out proposals for the creation of networks of local stakeholder banks.

(2) This report shall contain an examination of stakeholder banking structures, defined as credit institutions that are not owned by private shareholders, with the with the aim of maximising shareholder returns. The examination should draw on experience in the UK and elsewhere and include—

(a) co-operative banks;

(b) credit unions;

(c) community development finance institutions (CDFIs);

(d) public-interest savings banks.

(3) The report shall examine potential impacts of the creation of networks of local stakeholder banks on—

(a) customer service and product range,

(b) accessibility to banking services for customer underserved by commercial banks,

(c) financial stability,

(d) accountability to local stakeholders.

(4) A copy of this report and the outcome of the full consultation shall be laid before Parliament and sufficient time shall be given for consideration of its findings by members of relevant committees of both Houses before any decisions are taken on the sale of state-owned banking assets.’.

New clause 12—Portable account numbers—

‘(1) Within six months of Royal Assent of this Act, the Treasury shall lay before Parliament a report considering—

(a) the adequacy of voluntary arrangements made by UK ring-fenced bodies to facilitate easier customer switching of bank account services; and

(b) legislative options for the introduction of portable account numbers and sort codes for retail bank accounts provided by UK ring-fenced bodies.

(2) The Chancellor of the Exchequer may, by affirmative order to be approved by both Houses of Parliament, confer powers upon the appropriate regulator to require UK ring-fenced bodies to comply with any specified scheme to establish the use of portable account numbers and sort codes.’.

New clause 14—Portable account numbers (No. 2)—

‘(1) Within 12 months of Royal Assent of this Act, the Treasury shall lay before Parliament a fully independent and comprehensive report detailing the options for introducing portable account numbers for bank accounts within the UK, including a full cost benefit analysis of the available options.

(2) The appropriate regulator may require banks and building societies to comply with any scheme to introduce and facilitate the use of portable account numbers, which is introduced in regulations made by the Treasury.

(3) No regulations may be made by the Treasury under this section unless a draft of the regulations has been laid before Parliament and approved by a resolution of each House.’.

Government new clause 1—Minor amendments.

Government new schedule 1—Minor Amendments.

[Chris Leslie]

Here we are again—a second bite at the Financial Services (Banking Reform) Bill. Today, we debate a series of amendments and new clauses that have been loosely grouped together under the title “Competition etc.” I shall speak in particular to new clauses 8, 10 and 12 in due course, but I shall start with new clause 8.

We felt it important to discuss the obstacles in the way of better competition in the banking sector. I am sure that it is not true of you, Madam Deputy Speaker, but many hon. Members have probably been with their retail bank since they were very young—not so long ago in your case, Madam Deputy Speaker. Although an aficionado of switching and looking at different services in banking, I must confess that I have been with the same bank since I was 14, and with no real logic other than the inertia that afflicts many customers: we tend to think that it is inconvenient to change bank accounts; we tend to think, “There is not much choice, so what is the difference or the point of shopping around?” It is this sense of a lack of competition and lack of choice that we want to remedy with the new clause, tabled with other amendments in the group.

There are significant obstacles to competition, particularly to new challenger banks coming into the system, breaking into the business and trying to do something to challenge the absolute dominance of the big five banks. The new clause would require the Treasury to publish a review considering the obstacles to those new challenger banks and ways of increasing the number of new banks coming into play.

Under the new clause,

“The Chancellor of the Exchequer shall instruct the Competition and Markets Authority to begin a full market study…into UK financial services institutions involved in the provision of core services”—

in other words, retail banking. The aim is to provide a structure to support better competition, dealing with obstacles in the way of allowing new institutions to break into the market and to consider what actions could be taken to facilitate the new institutions entering into general competition.

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

Does the Minister accept that help is needed not just for new entrants, but for unusual, smaller players in the present financial system? As a Labour and Co-operative Member of Parliament, I have an interest in the Co-operative bank. When HBOS and RBS got into difficulties, everyone rushed around throwing taxpayers’ money at them, but when the Co-op gets into serious difficulty because of its unique ownership basis and its lack of shareholders, it receives very little help from either the Treasury or the Department for Business, Innovation and Skills.

14:30

[Chris Leslie]

I hope that the Co-operative bank, and all other institutions, will now be in a position to make secure and stable progress. However, I do not think that there is really a parallel between the Co-operative bank and institutions that would have disappeared had it not been for the intervention of the taxpayer in keeping the cash machines operating. We hear Government Members say that the public deficit was somehow created as a result of ministerial choices. It is sometimes forgotten that the state—the taxpayer—had to intervene to rescue the banks. Thank goodness that happened, but it left us with a phenomenal problem with which we are still struggling years later.

[Mr Sheerman]

Many of my constituents worked for the Halifax mutual building society, and we saw what really caused the ruination of two banks. Wicked, evil, unethical people took over a bank and ran it into the ground. That was not about the Government; it was about greed, and about particular people.

[Chris Leslie]

Absolutely. Those are the very issues that should be in the Bill, but it is a pretty thin measure. We are still waiting, apparently endlessly, for the Government to decide to populate it at some point with the recommendations of the hon. Member for Chichester (Mr Tyrie) and the Parliamentary Commission on Banking Standards.

We need support for mutuality and greater diversity in the banking sector, and that is why the new clause refers to competition. We do not just want more plcs to enter the market; we want institutions of many different types, including mutuals, to be given a chance to compete for business. My hon. Friend’s Co-op bank, for example, might wish to have that greater choice were it available. The new clause was largely inspired by the recommendations of the parliamentary commission, whose most recent publication made it very clear that the sector suffers from a lack of serious competition.

Which?—formerly the Consumers Association—reported recently that 55% of people had never switched their main personal current account, and that the larger banks had not earned their market share by dint of innovation or the provision of competitive services but simply through “first mover” advantage, because they had been there for such a long time. It also reported that, sadly, customer surveys had indicated that the big five high street banks—Lloyds, RBS, HSBC, Santander and Barclays—consistently gave less satisfaction than others. Those banks have a very large market share, which has increased over the last few years. They control 85% of the current account market as opposed to 71% before the financial crisis, 67% of mortgage gross lending as opposed to 38% before the crisis, and 61% of the savings account market compared with 47% before the crisis. The inertia of their customers enables those large banks to sit on a fairly stable customer base. It has often been said that people are more likely to divorce than switch current account, although I am sure that that does include those who are in the Chamber today. The lack of dynamism and choice in the market is a significant worry, and it is no wonder that it has been criticised by the Office of Fair Trading.

There are major barriers to entry for new banks, which need to establish an infrastructure to have a fair chance of competing more widely. Recent suggestions include the adoption of utility platform sharing, and an extension of the payments system machinery beyond the big banks. I think that such ideas should be given serious and detailed consideration, but they pose a challenge to institutions that own and control payments systems, and we must think carefully about how they can be tackled.

Some of the big banks were supposed to divest themselves of branches. RBS was supposed to float off a number of its branches to Santander, but that did not get very far. Similarly, as my hon. Friend the Member for Huddersfield (Mr Sheerman pointed out), Lloyds was supposed to divest itself of many of its branches to the Co-op, and we all know what happened in that instance. In all, 1,000 branches were supposed to be out there creating a proper challenger bank, or at least mixing it up a little by increasing the number of players in the system. That has not happened, and I have to say to the Minister that the Treasury has not exactly covered itself in glory. I am not claiming that it is entirely the Treasury’s fault, but I think that it had a hand in overseeing some of the divestment strategy. I hope that the Minister will update the House, because divestment is very relevant to the issue of proper competition.

John Fingleton, chief executive of the OFT, has said:

“More than a decade on from the Cruickshank report, we still have a banking sector where competition is manifestly not working well for consumers.”

The hon. Member for Chichester, the Chairman of the Parliamentary Commission on Banking Standards, who has left the Chamber—oh, there he is, next to the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso). I apologise to him. He is clearly negotiating away as we speak. He has said:

“The lack of competition in banking has been reinforced by a regulatory regime favouring large incumbents. Customers have lost out as a result. Moves to remove barriers to entry are essential.”

We all agree with that.

We constructed new clause 8 very much along the lines of the commission’s recommendation of

“a market study of the retail and SME banking sector, with a full public consultation on the extent of competition and its impact on consumers. We make this recommendation to ensure that the market study is completed on a timetable consistent with making a market investigation reference, should it so decide, before the end of 2015.”

The time scale is very important, because the issue has drifted on year after year.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

The hon. Gentleman has gone to the heart of one of our key recommendations, but what we had in mind was that the Government should just get on and do it. We did not envisage a need for legislation. Am I not right in thinking that, if properly instructed, the relevant authorities could undertake the work themselves?

[Chris Leslie]

I hoped that legislation would not be necessary, but I think it worth while for the House to express its view, particularly in response to the commission’s recommendation. Heaven knows, we have been here before. We have heard plenty of warm words from Ministers. They have said “We will certainly consider this, because there is a strong case in favour of it”. When it comes to the crunch, however, if the House of Commons is to do anything through this Bill—and we shall not be doing a lot, because so much is being left to the other place—I think that it is worth our trying to insert the new clause, just to keep the Minister’s feet to the fire. All that we are asking for is a market study in preparation for the proper market investigation reference before the end of 2015.

When the Vickers report was published in 2011, Labour Members felt that specifying 2013 would allow an appropriate time in which to assess the issue, and, two years on from Vickers, I do not think that anything has changed our minds in that regard. Getting that market study under way is the very least that should be done, and the Minister needs to commit to doing that. This is a critical point. When Members listen to what the Minister has to say, they must read between the lines. He will make all sorts of warm noises and say, “The OFT has started this process for SME customers”, but it has not done so for retail customers. That is the crucial difference; focusing merely on SMEs is not sufficient.

The Government have already claimed in their response to the commission’s recommendations that they will be fulfilling the commission’s proposal, but that is not the case. They are not putting in place that retail review, and I do not understand why they are so resistant to doing that. The Minister must explicitly set out why they are holding back from having a market study and investigation of the issues in respect of retail banking.

The Government response is full of warm words—they say they are in discussions and they are engaging with the problem—but it is not strong enough. It is too piecemeal and not sufficiently transparent, and they are not giving the commitment consumers, let alone commission members, would like. If the Government can at least acknowledge that they will not accept the commission’s recommendation, that will give us a clear choice when we come to consider what to do in respect of new clause 8.

The hon. Member for Brighton, Pavilion (Caroline Lucas) has tabled new clause 15, which focuses on local stakeholder banks and local banking. I agree that we should look at sub-national financial provision, particularly for customers, who can feel that they have very little choice at all. She will know that in new clause 10 we say that if state-owned banking assets are to be sold, options for a regional banking network ought to be fully considered. That is a very important proposal from the Opposition. There are some very plucky and hard-working institutions across the country—the credit unions, the community development financial institutions and other smaller building societies and mutuals—that do a lot of very worthwhile work at regional and local basis.

[Mr Sheerman]

Would my hon. Friend add to that list crowd funding and crowd sourcing, which many people think is the basis of a new, democratic capitalism in our country? It allows people to bypass the banks, which have so often failed us, and gives to our communities the power to regenerate businesses and communities.

[Chris Leslie]

As some have said in the past, the magic of the “interweb” will ensure that customers can avoid that intermediation—that middle-management step—and access finance. That may well develop very rapidly, although we need to make sure the regulators can keep an eye on how it develops.

[Mr Sheerman]

That must not be too heavy.

[Chris Leslie]

Well, I think it is important that we make sure the foundations are put in place to allow those new forms of finance to come to fruition in a safe environment.

My hon. Friend makes that point well, and I also want to give a name-check to the Community Investment Coalition: a number of financial institutions at local and regional level have come together to campaign on some of these issues, and in particular to call for greater transparency in the provision of financial services from community to community on a postcode-level basis, although that is anonymised as we do not need to know which organisations have been lending to which individuals.

14:45

We are supposed to have had a commitment from the Government that they would try to get that level of data from the big banks so we could see where there were deserts in terms of financial provision. In some communities access to finance is a real problem, as is access to basic bank account services and other services which people have a right to these days as part of the warp and weft of modern lifestyles. Credit is really a modern utility, and we need to make sure that, as the CIC has campaigned for, the Government press the banks to be more transparent and to come forward with more data so we can decide what further local provision may be required.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Does the shadow Minister therefore believe we should follow what the US has done? It has a community reinvestment Act, which ensures that the major banks are investing equitably on an area basis. The major problem in the UK is that investment is directed towards London, of course.

[Chris Leslie]

And not just towards London, as a lot of the major banks have had their appetites whetted to make big profits by focusing on overseas. That disconnect with locality has been part of the problem. One issue for debate—on another day, perhaps—is the idea of having a regional banking network. The German Sparkassen system has a geographic mandate that requires those banks to do business within a particular locality. That is a dynamic for making sure there is a direct relationship between the banker and the customer, particularly for small businesses, but on a retail basis as well. That is a very good idea whose time has probably come.

[Caroline Lucas (Brighton, Pavilion) (Green)]

May I interpret the hon. Gentleman’s warm words to mean that Labour would support my new clause 15 if there were a vote on it?

[Chris Leslie]

Well, personally I prefer our new clause 10, but that is a good try by the hon. Lady. She has raised this issue in the spirit of trying to generate consensus on it, but I hope that in the limited time available to us we focus on the principle of making sure we get those commitments from the Government, which we all want in order to help get this transparency about what is happening in localities, as well as making sure we look at the state-owned assets and think about how they might be applicable to a regional banking network.

Government amendment 5 looks at some issues to do with competition, although they are mostly to do with the nature of ring-fencing and changes that might happen to the ownership of ring-fencing. I want to ask the Minister a question about the tensions between some of the objectives in the Bill. Government amendment 5 inserts a new requirement to consider competition issues, which seems to be slightly in tension with the existing provision to make sure there is no significant adverse effect from changing the ring-fencing arrangements. Can he clarify that that tension is resolvable, and confirm that the duty to consider competition will take effect subject to clause 4(3)?

On Government new clause 1 and new schedule 1, can the Minister help us by talking about the practical implications of the amendment to the Companies Act 1985 omitting disclosures to the regulators, done for the purposes of helping them fulfil their functions under part VI of the Financial Services and Markets Act 2000? In particular, this appears to stop such disclosures being exempt from section 449 of the Companies Act, which criminalises disclosure of information obtained in certain circumstances. What is the reasoning behind that change? Also, paragraph 2 of new schedule 1 amends section 376 of FISMA, changing “PRA-authorised” bodies to “PRA-regulated” bodies. Is that a significant change? Are there any bodies that are classed as PRA-regulated but which are not PRA-authorised? If so, which are they?

Our new clause 12 addresses the portability of bank accounts. I know that the hon. Member for South Northamptonshire (Andrea Leadsom) has been very active on this, and that she has tabled similar amendments. She has been vocal in favour of some of these changes, and has tabled a sensible set of proposals. I hope she would agree that we are mirroring each other on this question.

Our new clause 12 would mandate the Chancellor to publish a report on the adequacy of the current account redirection service and on a possible change in the law to compel all ring-fenced banks to introduce a current account redirection service that might include portability. The banks themselves have made proposals for a seven-day switching arrangement from this September. The Minister claimed in the Government’s response that they had secured that commitment, but that might be a little bit of exaggeration and spin; I suspect that the banks were heading in that direction, but I will let him off on this occasion. This all comes down to whether that seven-day switching will radically transform the convenience for the customer. It is all very well saying that there will be a year or so when some transactions from the existing current account will automatically be made into the new account, but I do not understand why that provision has been time-limited. Some people will forget that that provision expires after a certain number of months.

[Andrea Leadsom (South Northamptonshire) (Con)]

Interestingly, when we get into the nitty-gritty of how the seven-day switching process will work, we find that it seems to be more string and Sellotape—on top of the string and Sellotape currently holding the legacy systems together—so it is hardly a 21st century technological solution.

[Chris Leslie]

That is the worry, and we want to see how it is going to work. It is all very well if direct debits and standing orders—the sums leaving someone’s bank account—may be switched in that way, without the aggro and hassle of having to fill in new forms and so forth, but one of my anxieties is about payments into an account. For example, even the little step of someone having to tell their employer that they have a new account number and sort code is an inconvenient step too far. Apparently the banks are saying that they might deal with that as well, but this does not feel adequate and sufficient.

[Andrea Leadsom]

Is the hon. Gentleman aware that he is more likely to get divorced than to change his bank account?

[Chris Leslie]

Funnily enough, divorce has already come up a couple of times in our proceedings, and I am sure that Mrs Leslie will be watching them.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

The reality is that the seven-day switching service must be matched against increases in the level of switching of current accounts if we are to increase competition. All the evidence from countries like the Netherlands, where such a service has been introduced, shows that it has the trust of customers but does not increase switching levels, although that is the rationale for account portability.

[Chris Leslie]

Absolutely. Sir John Vickers pointed out in his report that a typical customer is likely to move current accounts every 26 years, on average, and it is estimated that about 6% of personal current accounts will be switched this year. All sorts of statistics prove that this is not a particularly active area, although there is a growing consensus among members of the commission, and even some of the banks, that portability might be an idea whose time has come.

[Mr Sheerman]

I switched a business account to HBOS, without knowing that anything was going to happen, because I thought that with KPMG as its auditors and with an auditor process in place my investment and my savings would be safe. What are we going to do to ensure that when people switch there is a guarantee that, at last, the accountants in this country and the auditors actually do their job?

[Chris Leslie]

That broadens things out into a whole new terrain, but suffice it to say, we should be able to trust our banks. We should be able to know that all these issues will be going on safely. To be fair to the banks—I do not say that often—some of their systems are able to cope, and complaints mechanisms are in place to deal with these things.

This is just about the customer being able to grasp and understand what is going on. The grey mist descends on many constituents—and, heaven knows, on many hon. Members, as we can see—at the mention of financial services, and that is without getting into pensions and some of those issues. Basic bank account services are incredibly important and we need the Government to say a little more than warm words in their response on this issue. I commend the hon. Member for South Northamptonshire on her campaign and we are very much behind the spirit of the changes she suggests, hence our new clause 12.

Finally, I wish to deal with new clause 10, which relates to the sale of state-owned bank assets. We feel that before a sale takes place of assets in the ownership of Her Majesty’s Treasury—we are very much focused on the Royal Bank of Scotland and Lloyds at the moment —the Treasury ought to set out clearly a report discussing the manner in which the best interests of the taxpayer will be protected in the sale, and the expected impact that any sale might have on competition for customers and on the rate of economic growth. That should be accompanied by a proper appraisal of the options for potential structural change in the banks concerned, including: whether there should be any changes to the division between retail banking and investment banking in those institutions; whether some asset classes need to be held back—this is sometimes characterised as a good bank/bad bank split; and, crucially, the impact of the sale on the creation of a regional banking network. We think that is essential.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

My hon. Friend will know that the banking commission recommended having a proper study of the good bank/bad bank option for RBS. Does he think that in advance of that study it might help if the Government exercised a little more care in their stewardship of RBS, given that their disastrous political meddling of the past month has resulted in a fall in the share price of some 20%, the bank losing a chief executive without a plan being put in place for replacing him, and confidence among investors being lost by the Government’s handling of the bank?

[Chris Leslie]

My right hon. Friend is completely correct about that. If the British public realised what has happened to the value of that taxpayer stake in RBS, they would be appalled. Today’s figures show that £2 billion-plus has been taken off the value of RBS since the botched handling of the departure of the chief executive, Stephen Hester. That mishandling forced the Chancellor to back down from a foolhardy dash towards a fire sale, which we know was part of the plan from the conversations that Sir Philip Hampton, the chairman of RBS, let slip in comments to journalists around that time. Labour Members, however, are absolutely focused on the need for the taxpayer to get good value for money, to get our money back. That is entirely possible. Stephen Hester revealed the flaw in the Chancellor’s strategy for a hasty sale driven by the electoral timetable when he gave an interview to the BBC last month. When asked whether taxpayers would get back their £45.6 billion, he answered:

“RBS is capable of being worth more than what the government paid for the shares”.

When asked again whether it is possible for us to get our money back, he said:

“RBS is capable of that and I would be disappointed if over the passage of time that that won’t be the case.”

[Stewart Hosie (Dundee East) (SNP)]

I am very supportive of new clause 10, particularly the notion that the Government describe how the taxpayer will get the money back. However, has the hon. Gentleman given any thought to the timing of such a report and what information may need to be omitted, particularly in relation to asset clauses the Government may continue to hold, because it might be market-sensitive in the run-up to the re-privatisation of the bank?

[Chris Leslie]

I would have thought that before the Government considered a sale they would decide what they want to sell and what they do not want to sell. I do not think that what the hon. Gentleman suggests should be a particular problem, particularly given the taxpayer interests involved, in terms of having that report before a sale. However, I accept that there could be circumstances in which commercial confidentiality might apply and a line might need to be considered. I would be happy to examine whether some aspects of that need to be built into this concept. There is an opacity about the Government’s strategy, and the fog engulfing the Treasury, perhaps hiding the chaos within, is extremely thick—a real pea-souper. I am amazed that once the Chancellor of the Exchequer had defenestrated the chief executive of RBS—let us be honest, that is essentially what happened, and although the Chancellor of the Exchequer might have protested, “It’s nothing to do with me, guv,” with his 82% shareholding he clearly had a hand in the decision —the Government were surprised when the markets reacted so adversely. It is amazing that they went down that route without thinking through who would replace Stephen Hester as chief executive of RBS, creating a massive amount of uncertainty about the future of the institution. We are glad that they changed their minds and were forced to back down from the rush to the fire sale, but what on earth are we left with and where is the situation going?

15:00

The commission managed to eke out of the Government a vague commitment that they would consider the good bank/bad bank issue, possibly in September. We need the Minister to elaborate on that commitment today, and it is very important we get that. Why have the Government ruled out some of the other considerations needed at this time? The Chancellor, itching as ever to achieve his political ends, has turned his focus on Lloyds and getting that stake out of the door. It might be easier to do that with Lloyds, but we need some reassurance that the taxpayers’ best interests will come first, not the political game playing and political timetable—whether it is about the timing of the general election or something else—that is driving the process. It should be done in the best interests of the economy and of the taxpayer.

Apparently sovereign wealth funds—in other words, other countries—might well buy stakes in Lloyds and British banks. I am told that apparently LIBOR will be run by the New York stock exchange, so there is a theme developing of other countries getting involved in historically British institutions. I will leave that issue to one side, however. I merely want us to have a clear and comprehensive strategy not just on better competition for the banking sector but so that the Chancellor can prove that he is adept at thinking through properly what to do with the Government’s stake—the taxpayers’ stake—in these institutions. They are fundamental to the British economy; they are massive institutions with a great footprint on our economy and worldwide. That is why we feel that new clause 10 is the least we should have—we should have that level of reporting, of availability of information and of options appraisal. We need a comprehensive assessment that is evidence-led and considers all options. That is an important matter of principle as, ultimately, this must be all about getting best value for the taxpayer.

[Andrea Leadsom]

I am delighted to be able to speak about this Bill on banking reform, which is so crucial to the future success of the British economy. All that time ago, Adam Smith said in “The Wealth of Nations” that for free enterprise to exist one needed both free entry and free exit of market players. Over the past 20 years, we have had neither in banking. Failing banks have certainly not been allowed to exit the market, hence all the problems with “too big to fail” and the massive taxpayer bail-outs. New players have also not been able to enter the market, as there have been enormous barriers to entry, and my new clause is an attempt to establish a real game-changer once and for all for the fate of competition in our banking sector, to enable new entrants to come into the market.

I know that the Government have already done a huge amount of work to change the plight for would-be banks. For example, we already know that the new Prudential Regulation Authority and the Financial Conduct Authority have made it easier for new banks to apply for a banking licence. Previously, there were enormous regulatory hurdles to entering the market for new banks, but now it has become slightly easier because they can get a banking licence that is conditional on their being able to recruit the right people and so on. They do not have to spend millions of pounds up front to evidence the fact that they can be competent as a bank.

The regulatory barriers to entry are gradually coming down, but an incredibly significant point that has not been addressed until now concerns the competition barriers to entry for new players in the market. The Government have made great strides in that regard, not just through the Vickers commission and the recommendations on seven-day switching, which will be a game-changer in enabling individuals and businesses to switch between banks, creating the competition that has been so lacking, but through some of the structural reforms they have announced more recently and the amendments to this Bill.

When I was elected to Parliament in 2010, one of the first things that my colleagues on the Treasury Committee —who are almost all in the Chamber today—and I did was consider the proposal from the Payments Council to get rid of cheques. We discovered in our evidence sessions that the proposal came purely from the banks. It was convenient only for them and absolutely was not convenient for the millions of people in this country who rely on cheques to settle bills, to pay their window cleaner or newsagent or to pay the neighbour who picked up their shopping for them. Millions of people still needed cheques, but it was very clear that the Payments Council planned to get rid of them for the convenience of the banks that owned and ran it. For me, that was the road to Damascus moment; I realised that the banking sector is the last great closed shop. The Payments Council, owned and run by the banks, governs the payments system, the big banks are the clearing banks through which every new challenger bank must go, and the payments infrastructure, VocaLink, is also owned and governed by the big banks.

For decades, the Payments Council has been able to permit or deny innovation in the payments industry. The big banks have been able not to allow challenger banks direct access to the payments system and have required them to go through the clearers, charging them up to 10 times more for accessing the payments system than they have been paying themselves. The first significant decision on which I want to congratulate the Government is that to consult on a new independent payments regulator. That is key to breaking open the banking sector and enabling new competition and transparency. It will be interesting to see just what has changed after the new regulator’s first few months of operation; it will be fundamentally transforming.

Importantly—this is where my new clause comes in—and as the hon. Member for Nottingham East (Chris Leslie) has said, for decades there has been a key barrier to competition in the banking system: the inability to move bank accounts freely and easily. People might be sick and tired of their bank. The Treasury Committee took evidence on opinion polls that suggested that certain banks had negative values when it came to whether customers would recommend them to a friend. People would say, “No, whatever you do, don’t go to my bank.” It is unusual to have such utterly negative recommendation levels between friends for a supplier. Even the energy sector fails to achieve such low levels of recommendations between friends. Something is clearly desperately lacking in customer service.

The Committee also heard some pretty shocking statistics about the failure of certain key banks to respond to customer service inquiries, to manage their call centres properly and to deal with complaints when they happen. It has taken all these banking scandals—payment protection insurance mis-selling, the bank swaps mis-selling and various other scandals—before the weight of evidence became enough for regulators to take action. Clearly the banks have not been good at policing themselves, and clearly it has been extraordinarily difficult for individuals and businesses to vote with their feet and move.

The difficulty is not only the decision to move bank; the person making that decision also faces having to make arrangements as regards their online shopping, their contract with the milkman and newspaper man, and their standing orders for, say, their television licence or their car insurance. If they change bank account, they have to change all those things, because they change bank account number.

The issue is not just whether a person can be bothered to change and go through all that hassle; very often, because of the consolidation that has taken place over the past 20 years, banks will force that situation on a consumer. A colleague told me in the Lobby the other day that their bank had just notified them that they have to change their bank account number, credit cards, debit cards, and cheque-books—everything—regardless of the fact that they do not want to do that, because the bank decided, off its own bat, to send them to another brand name. Of course, there is no compensation, or any way to get the bank to help the person to make all the notifications that they need to make.

Many people, particularly the elderly, have a real concern that if they change bank account things might just not happen; their regular payments might not be made, and everything might go horribly wrong. That puts them in a very difficult position. Of course, there is plenty of evidence of things having gone wrong. Perhaps the seven-day switching process will solve the problem of switching simply going wrong.

It would be a far better solution if, when a person moved bank, they took all their bank details with them. A similar thing happens in the case of mobile telephones.

[Jonathan Edwards]

The hon. Lady alluded to the allegedly competitive market in the energy sector, where there is a right to switch, although it can be difficult to do so, as I found out. Switching in itself does not stop companies from acting as a cartel. How confident is she that switching in banking would lead to greater competition in the market?

[Andrea Leadsom]

I will come on to that, and that will become clearer in the course of my comments. Certainly, in terms of barriers to entry, the lack of competition and switching—in other words, people’s inertia—has meant that banks simply have not had to compete on customer service. They have not had to fight to keep their customers. As those of us who have been in business know, there are times when we have lain awake at night, wondering how to stop our customers from leaving us tomorrow; that is the big motivator, whereas in the past it was how to nick a tiny bit of market share from one of the big players. The fundamental point is: “How do I hang on to my customers?” Customer retention is always the biggest challenge for every business, where there is free and open competition. That is what bank account portability would ensure.

If a person was switching between banks, instead of having to change all their bank details and cards, and having to remember the new numbers and notify all their suppliers, they would simply take their bank details with them, just as a person who changes mobile telephone provider takes their telephone number with them. That is what the amendment proposes.

I am delighted that the Government have said the following, in a press release responding to the work of the Parliamentary Commission on Banking Standards:

“On top of introducing 7-day account switching from September this year the government will ask the new payments regulator, once established, to urgently examine account portability and whether the big banks should give up ownership of the payments systems.”

I take that as a warm move towards the idea of bank account number portability.

Bank account number portability is a game-changer, but it is no surprise that the big banks, when asked about this back in 2010, virtually told us that it would cost so much that the entire world would end. That comes as no surprise to us; they would say that. However, if we scratch beneath the surface and talk to the likes of VocaLink, which provides the payments infrastructure, we find that many of the technological requirements of bank number portability already exist.

At the moment, the big banks own a person’s sort code and account number, and give the payments instructions that they hold for that person to VocaLink, so that it can make that payment. Instead of having that two-step process, in which a person instructs their bank, the bank instructs VocaLink, and VocaLink makes the payment, with bank number portability the consumer’s bank account number, sort code and payment instructions would be held within VocaLink. Instead of a two-step process with the bank at the front end, there would be a one-step process, in which the consumer communicated with VocaLink, and the bank instead provided the customer service front end and the customer proposition. That would completely streamline the system.

15:14

[Mr Love]

Is not one of the problems—this was certainly highlighted in our investigations—the ownership of the infrastructure by the banks, and the difficulty in getting them to change? Is not a payments regulator the ideal way to twist their arm, so that they do the right thing?

[Andrea Leadsom]

Yes. The hon. Gentleman is absolutely right, and he has certainly been a keen supporter of bank number portability, as have many hon. Members in the Chamber today. The payments regulator that the Government are consulting on is the first step to achieving transparency. The next step is empowering that regulator to do something to enforce bank number portability when it finds, as I am sure that it will, that to date there has been a completely deliberate attempt to restrict competition in the banking system.

The big banks have said that bank account number portability would cost an absolute fortune, yet the technology already exists. Some people have asked whether it would not be an enormous risk to data integrity if the consumer’s bank account number, sort code and payments instructions were held by VocaLink, but in reality, all the consumer’s details are held by the bank, which passes them all on to VocaLink, so there are double risks to data integrity at the moment. Holding those account details in VocaLink would reduce, rather than increase, the risk.

People also say that other banks cannot access VocaLink’s payments infrastructure directly, because all the banks that clear direct have mutually to underwrite each other’s payments. The smaller challenger banks cannot possibly afford to underwrite the payments of the bigger banks. However, we could easily solve that; already, in various exchanges, banks pre-fund payments. If a bank’s balance were too low, and it was running short of cash with which to meet its outgoing payments, it would be called, intra-day, for more cash. That problem is easily solvable, and the reason why it has not been solved is that that is simply not in the big banks’ interests.

It has also been said that the proposal would surely be incredibly complicated from an IT point of view, but VocaLink has already set up bank accounts for the Department for Work and Pensions, because a lot of the Department’s benefits customers do not have bank accounts. VocaLink is already able to manage customer account details for DWP customers, so the technology already exists. I simply do not accept the idea that there would be eye-watering costs. Chief executives of big banks have literally said it would cost trillions—absolutely vast sums—but I challenge them to provide any scrap of evidence that shows that is the case, and that their refusal is not down to their desire to restrict access to new players.

The advantages of bank account number portability are, of course, the elimination of barriers to entry, and increased competition as a result. One of the big problems for new entrants is that it is so difficult to gain customer share, because people will not move bank accounts. With bank account number portability, if I, as a customer, was sick and tired of my bank, I could move tomorrow, the day after, and the day after that, if I was not getting good service, and it would not be any skin off my nose; it would be perfectly easy to do, and it would be the banks’ problem. That would be an enormous change in the competitive environment.

Likewise, there would be far greater consumer choice. Bank account number portability would encourage the likes of Tesco Bank and Marks & Spencer Financial Services—any big, multinational conglomerate—to go into the money business; it would become yet another product line. That in itself would eliminate some of the problems of “too big to fail”, because there would be many more smaller players, which would have many product lines, and therefore would not have all their eggs in one basket.



For small businesses the change would be revolutionary. At present one of the biggest problems for small businesses is that the big banks require that as well as their company accounts, small business people have their personal accounts and mortgage with the same big bank and do all their foreign exchange, overdraft, loans and other transactions through that bank. It is incredibly difficult for a small business to move accounts because of the complexity of all their suppliers and all the people they are trying to trade with. The barriers to entry for them are perhaps even greater than they are for us as individuals. Again, being able to take their bank account number with them would change the position dramatically.

Another huge advantage that is not often talked about is that since the 1990s, when I was running Barclays bank’s team, an enormous consolidation has taken place. There used to be 44 big banks in the UK; there are now about 22 banks of any size. The consolidation meant that during the 1990s many banks took over other banks, broker- dealers, small fund managers and so on, so they have an enormous number of legacy systems. They have managed to string them together over the years, but bank fraud in this country alone is huge. Changing the payment system would dramatically reduce the incidence of bank fraud. Intellect, the IT trade body, has said that the change could reduce the incidence of bank fraud by up to £30 billion a year.

Finally, another key advantage of bank account number portability is resolution. Andy Haldane, the Deputy Governor of the Bank of England, has gone on record as saying that it would be the solution when the day comes that a big bank fails again. We have, of course, put in as many steps as we can. Basel III will make great strides towards ensuring that banks cannot fail again. We have created our new regulators. We have ensured that banks have proper leverage and proper capital. All those measures are designed to ensure that banks cannot fail again, but we know that banks will always fail. That is the reality in a western developed market economy such as ours. We saw only too recently the problems with Northern Rock, when people were desperate to take their money out. The answer to resolution is for the Bank of England to be able to say, “You have failed. We are now taking all your accounts and putting them with survivor banks.”

There is a huge amount going for bank account number portability, above and beyond the seven-day switching process. My new clause calls for the Government to ensure, within 12 months of Royal Assent, a full cost-benefit analysis of bank account number portability. Should the findings be that this is a good idea, and should it produce the kind of benefits that I have just described, the regulator should be empowered to implement bank account number portability. I welcome the Government’s assurances that they will move in that direction. On that basis I will not press my new clause to a Division, but I urge the Government to keep up the momentum and ensure that before too long we have full account number portability.

[Caroline Lucas]

Thank you, Madam Deputy Speaker, for the opportunity to speak to my new clause 15. It is a modest proposal for a full Government consultation on the potential for local stakeholder banks to be carried out before we sell off RBS or any other taxpayer-owned banking assets.

I was interested to hear the Minister mention yesterday his trip to Germany and how he saw in the pages of the Handelsblatt a big headline saying, “City of shame”, referring to the City of London. I agree that this is a stark illustration of the impact of financial mismanagement and of our current banking system on people’s views of the City. However, although I also agree that this highlights the need for improved standards in banking, I think it highlights, too, the need for a radical reappraisal of ownership and accountability structures, if we want to have a banking system that we can be proud of, not ashamed of.

I hope that during the Minister’s trip to Germany he also found time to look at the savings banks, the Sparkassen, that we have spoken about this afternoon and which make up about one third of the German banking system. They are run commercially with dual financial and social objectives, to make a profit and to support the local economy. Professional bankers take responsibility for day-to-day running of the banks and if they make incompetent lending decisions, they are more likely to get sacked than their counterparts in giant commercial banks. Local stakeholders, including local politicians, business leaders, employees and customer representatives, sit on a supervisory board. That is just one example of the sort of local stakeholder bank that my new clause seeks to promote.

The New Economics Foundation analysed data from 65 countries where such alternatives thrive. They include co-operative banks, credit unions, community development finance institutions and public interest saving banks. The common characteristic is the goal of creating value for stakeholders, not just for shareholders, and some exciting and incredibly positive trends emerge. First, a greater focus on the needs of customers, including more competitive products, better service and longer-term lending; secondly, provision for customers who are currently under-served by regular banks; thirdly, a boost to local economic development through lending to small and medium-sized businesses, preventing capital drain from the regions and maintaining branch networks; and finally, a positive impact on financial stability through less volatile returns, high levels of capital, prudent balance sheets and expansion of credit provision after the financial crash.

[Jonathan Edwards]

To what extent has the hon. Lady been influenced by the system in the US, where there is a strong network of local credit unions, that provide an economic function for the local business community, not merely banking for the poor?

[Caroline Lucas]

The hon. Gentleman cites one of the few examples in the United States and its economic system that I would want to emulate. Credit unions set an interesting example that we could learn from.

Although I welcome the findings of the Parliamentary Commission on Banking Standards, I worry that the commission was somewhat seduced by the assumption that RBS should be returned to the private sector in one form or another, without a sufficiently full and proper examination of the merits of publicly-owned alternatives. It is important to underline that “publicly-owned” does not mean state-run. The German public saving banks are managed by bankers, not politicians, but they are run to serve the interests of the local economy and of citizens, rather than those of remote shareholders. Managers are held much more accountable for incompetent lending than are private sector managers who drove their businesses to bankruptcy while exploiting their customers with mis-sold products.

It is important to understand also that local stakeholder banks are not unprofessional. The banks studied by the New Economics Foundation make a solid profit to ensure their own viability, and their first priority is always to make sure that the loan is repaid. Because they are not trying to make 22% return on equity, which is RBS’s current profitability on UK retail business, they are quite happy with 8%, so they can afford to meet their social purpose. If the Government are serious about becoming a champion of SMEs and regional prosperity, at the very least they need to look into the pros and cons of a network of regional banks.

What if best value for the British taxpayer is the long-term ownership of a successful bank or banks that support the British economy? An obsession with privatisation on either side of the House should not blind us to that possibility. My amendment simply proposes a full examination of various forms of local stakeholder banks to ensure that we take decisions about the future shape of RBS and our banking sector more widely on the basis of practical economics and evidence, not just ideology.

I support new clause 10 that was tabled by the Labour Opposition. Sub-paragraph (iii) refers to

“the impact of any sale on the creation of a regional banking network.”

What I set out in new clause 15 is exactly the kind of positive impacts that we would want to see. Rather than simply guarding against negative impacts on any regional banking network, I would like to see us actively, explicitly and energetically promoting the alternative of greater local and regional banking. I hope very much that there might be some chance that the Minister will look favourably upon my new clause.

15:30

[Mark Garnier (Wyre Forest) (Con)]

I wish to speak substantially to new clause 14, which stands in the name of my hon. Friend the Member for South Northamptonshire (Andrea Leadsom). She has waged a Boadicea-like war to bring about account portability, and I have been happy to follow that banner—certainly over the past two years—when trying to increase competition. Between the two of us, my hon. Friend has led on account portability, while I have looked closely at barriers to entry and regulation.

I repeat my hon. Friend’s point about how the regulator has given way a bit on regulatory barriers to entry. Although I would not say it has moved substantially, it has made it easier for challenger banks to enter the marketplace. Two or three years ago, any potential challenger coming to the marketplace looked to spend between £300,000 and a potential £25 million just to get to the regulator’s front door and open a formal dialogue to get a banking licence. That is now changing, and the regulator has come up with a new process that makes it a great deal easier. None the less, smaller banks have certain problems due to ongoing expectations that give an advantage to the bigger banks. Those bigger banks have greater granularity with their account holders, and can therefore consider more sophisticated risk-weighting models for their assets. Smaller banks do not have those IT advantages and the cost of their asset book rises with greater capital requirements, which is still a problem.

Before I get to the substantial points, when considering effective competition within the marketplace we must remember the importance of a well-educated consumer. I am pleased that the Government have already responded on that—yesterday the Secretary of State for Education announced the new curriculum, which includes financial literacy, and I pay tribute to his wisdom in realising that that is one of the greatest engines of social mobility. In any sophisticated society such as ours, it is important that those we are educating can deal with the most basic measure of the economy we live in—looking after their own money. That has been achieved through the hard work of organisations such as the Personal Finance Education Group and the all-party group on financial education for young people, and it is a very good thing.

Financial education, understanding and literacy are core to driving competition. It is no good giving people a multiple choice of banks they can use if they do not understand the products being presented. When considering standards within banks, it is important that the marketplace, as well as the regulator, holds those banks’ feet to the fire to ensure they are performing well, providing a good service and delivering trust, which is crucial to restoring a properly functioning banking market in the UK.

On account number portability, in September this year seven-day switching will start. The banks have come to us proudly and said that they have spent £700 million implementing that system, but in essence it is less a switching service and more a redirection service that lasts a year—more of the chewing gum and Sellotape we heard about earlier. The measure of success for the seven-day switching service is expected to be how many people switch, but I do not think it will pass that test because I do not expect many people to switch their accounts. It comes down to the fundamental problem that there are still barriers to entry for new entrants, which leaves a small number of banks in the marketplace. Most people cannot see the difference between one bank and another, and even if they can, they do not necessarily understand what it is. In their mind, the risk of an uncertain future with a different bank far outweighs the benefits of finding a better service and challenging the bank to be more efficient.

The proposals for account number portability in new clause 14, which the Government have already agreed is a good thing, are important and will make it simple for new banks to enter the marketplace and steal market share from existing banks. The provision has the advantage of being pro-competition—we have already heard strong discussions about that—and there are number of other important issues alongside that. First, in this world where we would like a lot more transparency, the new Financial Policy Committee is considering the state of the financial system. That will help it understand what is going on in terms of transparency, and bring the visible part of the system within the auspices of VocaLink. As a result, the FPC will be able to head off any disasters if it sees anything going on.

We also heard that resolution of failing banks is incredibly important. Part of the Bill’s raison d’être, and indeed that of all the work done by Vickers and everyone who has worked on this since the crisis of 2007-08, is to try to ensure that people affected by failing banks do not lose their livelihood or face a financial crisis, so a simple resolution of a failing bank is incredibly important. Under the proposals, although an individual might see on television that there has been a run on their bank and that it is collapsing, the next morning they would simply wake up to discover that their bank account had automatically been transferred to another bank. The systems would continue to work, so their pay would be received on their behalf, their standing orders would still be paid and their house would not be repossessed because they had not paid their mortgage. More importantly, if they do not like the new bank they had been sent to, a couple of days later they could move to a better bank that they felt more comfortable with. Resolution is therefore incredibly important.

The other incredibly important point is that some banks have legacy IT systems that have been around for a huge number of years. Parts of these IT systems can date back to the punch cards of the 1950s and 1960s. In a recent conversation with someone who has done a certain amount of work in one of the larger state-owned banks, I happened to make a throwaway comment about the old IT systems. He responded, “Oh yeah, absolutely.” He explained that he had been looking at some of the software surrounding the small and medium-sized enterprise accounts and had noted that one of the software models had a converter sitting alongside it for converting pounds, shillings and pence into decimals. That must be at least 42 years old, as decimalisation was in 1971.

We know for a fact that there are a lot of old and incompatible systems being held together with string and chewing gum. Andy Haldane at the Bank of England has done a study and estimated that 80% of banks’ IT spend is on holding old systems together. If we take into account the fact that it is timely because at some point all the banks will need to update their systems, and if we consider resolution, transparency and competition, we will come up with a pretty convincing set of arguments that now is as good a time as any to introduce what will amount to fairly substantial IT investment, and there are a number of reasons that come together to make it worth while.

VocaLink, which runs a payments system, has already done a great deal of work on that. I have heard from a number of the larger banks that it could cost £10 billion, but they are dead against any sort of account number portability, so I suspect that it would be a lot cheaper. That is why it is incredibly important that the Government come forward as soon as possible to get the cost-benefit analysis on moving to full account number portability and, importantly, not be distracted by looking at the seven-day switching service in a year’s time.

[Mr David Ruffley (Bury St Edmunds) (Con)]

I congratulate my hon. Friend, and I congratulate my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) on introducing new clause 14, which I call the Leadsom clause. Before concluding will my hon. Friend share with us the work he has done in speaking over the past two years to potential new entrants, new challenger banks, that have said that they would consider entering the market if bank account number portability came to pass?

[Mark Garnier]

Yes, without a shadow of a doubt. A great many of the smaller banks that are looking to enter the marketplace have to use a piggyback system with the big clearers. For example, C. Hoare & Co., which has been around for 341 years and is still a private bank, uses RBS for its clearing. To that extent, the larger banks are providing a service, but ultimately it is causing a great problem for them. Over the past two years I have met about 20 potential challengers looking to enter the marketplace, and certainly it is largely the regulatory barriers to entry that have caused the problem.

Ultimately, the challenger banks are going to be running current accounts. Some of the larger ones, such as Metro Bank and Virgin Money, are 100% behind having full account number portability and recognise—I think that this is one tribute to them—not only that that will be an opportunity for them to attract accounts from existing banks, but that they will have to work incredibly hard to meet the challenge of a more sophisticated consumer in order to keep those accounts once they have them. That is crucial to one of the key points of the Parliamentary Commission’s report, which is the need to ensure that we drive better standards.

I return to the fundamental point that the best way to drive better standards is to have a very discerning and demanding consumer in order to ensure that those banks provide a service, and for that discerning consumer, once we have taught them how to do it, to hold the banks’ feet to the fire, so they need to be able to move their account very simply and overnight.

[Mr McFadden]

I want to make a few points about new clauses 10, 12 and 14.

New clause 10 deals with securing the best interests of the taxpayer as regards the state-owned banks and their future. If the best interests of the taxpayer were in the Government’s mind in recent weeks in their stewardship of RBS, that has been shown in a very peculiar way. This story does not begin with the departure of the chief executive. It begins before that with a briefing from the Minister’s Department about the share price in which it said that the previous Government had overpaid for the shares, and the briefing tried to set the scene for a pre-election fire sale of the bank that would have short-changed the taxpayer. I am glad to say that despite that briefing, the Government seem to be edging away from that strategy. If they were holding out hope that the banking commission would have given them comfort on that front, it did not turn out like that, and rightly so, because it would have been wrong to give a running commentary on the share price for an institution. An institution’s share price should be determined by the market, based on its future prospects.

After the briefing, we then had the unseemly departure of the chief executive at the Government’s hands. Most people saw him as doing a good job of reducing the risks on the bank’s grossly overblown balance sheet and trying to get it back into a healthier position, in the best interests of the taxpayer. Not only was he bundled out before he had completed that task, but this was done without any proper succession plan being put in place. Over the period of a month, we have had political briefing about the bank’s share price and the announced departure of the chief executive with no successor in place, and, as a result, a loss of investor confidence in the Government’s future strategy for the bank. That is no way to exercise stewardship of arguably one of the most important banks in the country. It has undermined the Government’s reputation as regards these state-owned assets and done harm and damage to the bank. I hope that in future the best interests of, and best value for, the taxpayer will be uppermost in the Minister’s mind rather than the politically motivated dabbling that we have seen in recent weeks.

On a happier and more bipartisan note, I turn to the new clause tabled by the hon. Member for South Northamptonshire (Andrea Leadsom) and the very similar new clause tabled by my hon. Friend the Member for Nottingham East (Chris Leslie). At the heart of this is how much banks care about reputational loss; the hon. Lady referred to that. If the banks were in a normal business environment and there were a big IT failure or another failure of conduct such as mis-selling or LIBOR interest rate fixing, they would care because they would worry that their customers would walk, but they are not in a normal business environment. Banks seem to be immune to, and careless about, reputational damage that would really matter in another business environment.

During the banking commission’s deliberations, a parallel was drawn with the car industry. When a fault appears in a model of one of the big-brand car makers, they will very quickly issue a recall notice to ask the customer to come in and have the fault fixed at no expense and at a time that is convenient to them. Car companies do that because they care about their reputation and want that customer to buy a car from them the next time they get one. The same logic does not apply in banking, because the same forces of easy departure do not apply. There are two sides to this story. It is not all about the easy transfer of accounts, although that is important; it is also about what one would be transferring to and from. There is little point in creating a perfect exit system if the choice is merely between three or four offers that are all much the same anyway. There is inertia on both sides. We need more competition among the banks as well as an easier system of transferring accounts.

The seven-day switching process that will come into play in September is an advance, and it should be given a chance to work; we should test it properly. At the same time, the new clauses tabled by the hon. Member for South Northamptonshire and by my hon. Friend the Member for Nottingham East call for proper reports to be produced on full account portability. The hon. Lady set out very well the reasons why we need a proper report, one of which is the issue of cost. The incumbents say, typically, that this will cost a fortune and that it will have to be passed on to the consumer, so let us explore the cost properly and get to the bottom of whether that argument is valid.

15:45

There is another reason why we need a study. Ultimately, I do not think that the banks’ argument that this will cost too much carries weight and I think they know that. If I got out my crystal ball and peered into the future, I think I would see that the key argument will be about IT and privacy, not cost.

[Andrea Leadsom]

The right hon. Gentleman may recall a meeting we had with senior bankers in which they said that, although they were reluctant about bank account number portability, if it is going to happen let us make sure that we will be the first country in the world to do it and not wait until somebody else does it. That would give us first-mover advantage and it could provide a huge business opportunity for UK plc. What does the right hon. Gentleman think of that idea?

[Mr McFadden]

The hon. Lady may be right and that is another reason that we should have a proper report to drill into the issue.

On privacy, in addition to the cost argument I think that customers could also be discouraged by the argument that all their account details could be held in a single black box to which all the banks in the country have access.

[Mark Garnier]

The right hon. Gentleman raises an incredibly important point. I think that the vast majority of consumers would be very fearful of a central database holding their bank details. The beauty of the system proposed by VocaLink is that, although the payment system and the central infrastructure will hold the sort code and account number, the identity of the holder of the account number will be held by the bank. Therefore, the customer’s relationship will be with the bank, not with the payment system.

[Mr McFadden]

I thank the hon. Gentleman for making that important point. If consumers are going to have confidence in a system of speedy switching such as that being advocated by the hon. Members for South Northamptonshire and for Wyre Forest (Mark Garnier), these questions about privacy and security of information will have to be bottomed out to the public’s satisfaction. My view is that that will be a more important argument than the one about the cost to the banks of whatever IT changes will be necessary to put this system in place.

In conclusion, it is important that we give the seven-day switching service a chance to operate, but the report that the hon. Member for South Northamptonshire and my hon. Friend the Member for Nottingham East are asking for is also important, because it would bottom out theses issues and others that I have not mentioned. It is a shame that the hon. Lady does not intend to put her new clause to the vote. After all, it only asks for a report; it does not seek to mandate a change before we have done the work and got the proper evidence. I hope that the Minister will respond positively to her suggestion and that of my hon. Friend. It is really important that there is proper competition between providers in this sector to attract consumers and that the kinds of free choices that enable consumers to walk away and get another product from another provider are available in practice, not just in theory.

[John Thurso]

I also rise to support new clause 14 tabled by my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) and to which I have added my name.

The right hon. Member for Wolverhampton South East (Mr McFadden) chaired a panel of the banking commission and one of the first visits we undertook was to Birmingham, where we had a number of sessions, one of which was with representatives from small and medium-sized enterprises who were very vocal about the importance of securing a fair deal from the banks.

Which? organised an evening session that allowed us to visit different tables where individuals talked about their experiences. I had an interesting experience when I asked a table of people of a variety of ages, although mostly younger than me—not that that is difficult—about the ability to switch bank accounts. They were not really that keen and said, “It’s too much hassle. Why bother? It won’t be any different.” I said, “Suppose you could do it in the same way that you change your mobile phone, where you take your SIM card-equivalent and plug it into another machine.” At that point they all said, “Oh, that would be wonderful. What a good idea. Is it possible?” I said, “Not yet, but it is very likely to happen.” They said, “Actually, even that won’t work because it will just be the same old names that I will be going to.” I said, “How would you feel if the chap who has that nice transatlantic airline had a bank?” They said, “Oh yes, that would be jolly good.” That bunch of average customers had no idea that it might be possible to move accounts and no idea of the array of accounts that might be available as a result.

That experience drove home to me that the relationship between banks and their customers has been the reverse of what it should be. We go cap in hand and say, “Will you please take my account?” It ought to be the other way around. The banks should be coming cap in hand to us saying, “Please can I have your business?” New clause 14 goes to the heart of that dilemma. All right hon. and hon. Members who have spoken have made the point that the new clause is not a silver bullet and that many other measures are required, but it would be one of the key enablers of that change in the relationship, along with the payments regulator and other things that might be done. Ultimately, we need banks to be genuinely fearful of losing business—at the moment they are not, because they know that people cannot go anywhere else —and genuinely to want to win business. The commission has made progress on that and new clause 14 is very much a part of that.

I am sorry that my hon. Friend the Member for South Northamptonshire told us early on that she will not press her new clause to a vote. I always find that Ministers go a bit further if one waits until they have said nice things before telling them that. Clearly, she has had a tremendous impact on the Minister ahead of the debate. I look forward to hearing what he has to say.

[Andrea Leadsom]

I do have great expectations of the Minister’s response.

[John Thurso]

I was going to say something about “A Tale of Two Cities”, but I will leave it at my hon. Friend’s great expectations.

[Mr Ruffley]

How about “Hard Times”?

[John Thurso]

Yes, something like that.

I am very tempted by new clauses 8 and 10, which were tabled by the Opposition. I will not vote against them, but I will not vote for them at this stage. There is an immense amount in them, but I will wait to hear what the Minister says. There is also a great deal of debate to come in the other place. I do not want to say that I am against the new clauses, but I am not sure that the wording is exactly what I would like to have seen. I ask for the forgiveness of the hon. Member for Nottingham East (Chris Leslie) on that.

On new clause 10, there was a lot of debate in the commission about the good bank/bad bank split. We ended up with a central point that we all agreed to, but a number of us wanted to go more in one direction. However, whether a good bank/bad bank split is a good idea is a completely different issue from what should be done afterwards. If one takes the view that a good bank/bad bank split is not needed, one can still consider all the points that have been put forward, including the many things the hon. Member for Brighton, Pavilion (Caroline Lucas) said could be done to enhance regional banking and credit unions. All those things are equally possible whether or not one decides that the bad bank is necessary.

To my mind the good bank/bad bank argument is separate to what one does with a bank going forward. I happen to be somebody who believes that a good bank/bad bank split is right for the simple reason that if we take the flakier assets out of the bank and put them in a run-off bank, therefore liberating the capital being used in the balance sheet to support it, capital is then available in the good bank to be lent to SMEs and individuals. It is a simple mechanism for getting more capital flowing through, but I would make the point that it is not inextricably linked.

Following on from the slightly more partisan comments from the right hon. Member for Wolverhampton South East, one thing that comes out of this process, and which I have observed right the way through it, is that United Kingdom Financial Investments Ltd has not been the most successful of bodies. We have seen that there are politics in such situations, and that trying to put a mechanism in between muddies the water. That is one of the reasons why the commission’s report made its suggestions on UKFI.

Finally, the commission very much supports new clause 8. As I said in my intervention, I do not think this matter needs legislation. What I would be looking for from the Minister is a commitment that does not require me to look carefully between the lines, but is, in fact, a further commitment.

[Greg Clark]

This has been an interesting debate so far, and it will be a tall order to live up to the great expectations of my hon. Friends the Members for South Northamptonshire (Andrea Leadsom) and for Caithness, Sutherland and Easter Ross (John Thurso).

This set of new clauses has the common denominator of measures that can improve competition in banking. The parliamentary commission has made it clear that competition can, and should, bring about higher standards in the banking sector. It concluded that

“effective market discipline, geared to the needs of consumers, can be a better mechanism for improving standards and preventing consumer detriment than regulation, which risks ever more detailed product prescription.”

The Government completely agree. The British banking industry, at least at the retail level, was too concentrated before the crisis. The forced mergers of the crisis have exacerbated a bad situation. It is imperative that the regulators do not regard themselves simply as regulating incumbents, but act to promote new entry into the industry.

The commission welcomed the prudential reforms contained in the then Financial Services Authority’s barriers to entry review and commented that

“the concerns of challenger banks in this area appear to have largely been addressed”.

We accept the need to go further. Accordingly, we will be adopting the commission’s recommendation that the Prudential Regulation Authority should be given a secondary competition objective, and we will table amendments to the Bill to that effect in the autumn.

[Mr Andrew Tyrie (Chichester) (Con)]

Hear, hear.

[Greg Clark]

I am grateful for my hon. Friend’s contribution.

Government amendment 5 delivers on a commitment made in Committee to accept one of the commission’s earlier conclusions that when considering an exemption from ring-fencing the Government must have regard to any adverse effect ring-fencing provisions might have on competition in the market. The amendment ensures that ring-fencing should not be a barrier to greater competition in the market. To reassure the hon. Member for Nottingham East (Chris Leslie), it does require them to override any questions on whether the continuity objective should be breached. It is there to enable them to bear that in mind, not least for the reasons that we discussed—that competition can have systemic benefits that address some of the regulator’s objectives.

Another recommendation of the commission that we accept is the suggestion that there should be a rigorous study conducted on the benefits to consumers, and competition, of account portability. The House will know that from September the seven-day switching service operated by banks covering 99% of personal current accounts in the UK will come into operation. I do not whether hon. Members have noticed, but there is an excellent exhibition to promote the new changes to the service from September in the Upper Waiting Hall next to the Committee Corridor. It should make it easier, quicker and more secure to change bank account, helping competition, but, as my hon. Friends the Members for South Northamptonshire, for Wyre Forest (Mark Garnier) and for Caithness, Sutherland and Easter Ross said, that might not go far enough. In particular, I congratulate my hon. Friend the Member for South Northamptonshire on the consistent and forensic campaign she has waged on this issue through the Treasury Select Committee and beyond. We will therefore ask the new payments systems regulator to conduct a comprehensive review of account portability, including a cost-benefit analysis, as an immediate priority.

16:00

The regulator will be created under the Bill, and given that it will be set up following Royal Assent, it is more likely to follow within 12 months, rather than six, as I am sure hon. Members will appreciate. The Government will return with their own amendment in the House of Lords, as part of the proposals to establish the new regulator. As it is consistent with the Government’s intention, I hope that my hon. Friend the Member for South Northamptonshire will not press her new clause—she has been kind enough to signal that in advance, for which I am grateful to her.

[Mr Love]

Given that the new payments regulator will take some time to set up, I hope that the Minister will keep a watching brief on seven-day portability, because there is still some controversy over the proportion of fees for the receiving bank as opposed to the bank losing the customer. This was brought to the commission’s attention; we commented on it, and I hope that he will keep it under review.

[Greg Clark]

I certainly will keep a close eye on that, as too, I am absolutely certain, will my hon. Friend the Member for South Northamptonshire. The arrangement is that the fees should be shared between the bank of departure and the bank of arrival, which I dare say reflects the different costs. However, we need to keep an eye on its effect on competition.

In response to the parliamentary commission’s report, the Office of Fair Trading has announced that it will bring forward its investigation into small and medium-sized enterprise banking as part of an ongoing programme of work to investigate concerns about competition in banking. The hon. Member for Nottingham East rightly wants this to go further. The OFT is engaged in a programme of work looking at all sections of the banking sector. As I think Members know, it has recently completed an investigation into the personal current account market, and on that narrow point has argued that there should not be an immediate referral pending some of the changes taking place or in the pipeline.

We have asked that that work considers the impact on the new challenger banks created by the divestments from Lloyds and RBS. The hon. Gentleman asked where they stand. My understanding is that in both cases the parent banks are looking to move forward with initial public offerings of the challenger banks and that they intend them to form part of the competitive environment. The OFT aims to conclude its programme of work next year. It will then decide whether a market referral to the Competition Commission is needed. I can tell my hon. Friend the Member for Caithness, Sutherland and Easter Ross that such a referral would not require legislation; the OFT could make one under its existing powers.

Given that commitment, which is more or less of the same time frame as that envisaged in new clause 8, and given the significant measures being implemented to enhance competition, I hope that hon. Members will agree that the new clause, which calls for such a referral in 2014, following Royal Assent, should not be adopted. It is important that the OFT completes its review in 2014, so that it can build up a file of evidence to be submitted to the Competition Commission. That would be consistent with what both the independent commission and the parliamentary commission called for: that the OFT be in a position to make a referral in 2015. The OFT’s work is absolutely in line with that.

[Mr Tyrie]

Will the Minister confirm that, were there not to be a referral, the Government will ensure a full examination of the case for a market study of the retail side, as well as the SME side?

[Greg Clark]

That is happening. The review that the OFT is carrying out is comprehensive—it will keep us informed in that process—and is about building up the evidence to make that judgment in accordance with exactly the time frame that my hon. Friend has set out.

New clause 15, standing in the name of the hon. Member for Brighton, Pavilion (Caroline Lucas), would require the Government to consult formally on the creation of a network of regional banks. I strongly agree that a revival of regional banking in this country is a very good thing. Yesterday in the Chamber my hon. Friend the Member for Hexham (Guy Opperman) reported on a meeting that he organised in Gateshead. I am pleased to tell the hon. Lady that a senior director of the Sparkassen, Dr Thomas Keidel, was at that meeting. He very much commended the Sparkassen model in Germany as something that could be emulated in this country. In fact, when one of the delegates objected that it was very much part of the German system and culture, which might be difficult to transplant to this country, Dr Keidel immediately pointed out that the German system was explicitly modelled on the UK system before it was abandoned in this country. I am therefore optimistic that what is proposed should be possible.

There was certainly great enthusiasm on Tyneside—indeed, momentum was being established—for launching a regional bank for the north-east. The hon. Lady might also be aware that the Cambridge and Counties bank—a joint venture between Cambridge county council and Trinity Hall, the Cambridge college—is already active and is providing lending to local small and medium-sized enterprises. The steps that the Prudential Regulation Authority has taken to license new entrants—

[Mr Love]

I apologise to the right hon. Gentleman for jumping in rather late, but before he leaves the issue of regional banks I want to mention one of the most promising areas, which is community development institutions. They are working at the regional and local level; however, their sources of funding could be enhanced immeasurably if community interest tax relief was set at a proper rate. I recognise that the Treasury has carried out a consultation. I am not asking the Minister to respond now, but perhaps he will at some stage inform Members of where the Treasury has got with that consultation and whether it will review the incidence of community interest tax relief.

[Greg Clark]

I do not know whether the hon. Gentleman will be reassured or alarmed to learn that I had not left the subject of regional banking just yet. Indeed, I want to come to the precise subject he has just raised.

The Prudential Regulation Authority’s changed procedures were referred to—by, I think, my hon. Friend the Member for Wyre Forest. It is now possible to license new entrants, who could require up to 80% less capital up front than previously. That means that the time is now ripe for new banks in the regions to be established. The hon. Member for Brighton, Pavilion, in her new clause 15, and the hon. Member for Edmonton (Mr Love) refer to CDFIs—community development finance institutions. Some £60 million of wholesale funding for CDFIs is available through the regional growth fund. Tax relief up to 25% is already available on investments made by individuals and companies into CDFIs. Of course I will talk to my hon. Friend the Exchequer Secretary and carry forward the hon. Gentleman’s representation for further changes, but a significant set of advantages is available. Similarly, the more flexible rules for credit unions that have been introduced and the £38 million of funding for this movement have also created greater opportunities.

[Caroline Lucas]

Does the Minister accept that constraints on the amounts that larger credit unions—such as the East Sussex Credit Union, which I know well—are allowed to accept in deposits or are allowed to lend are stopping them fulfilling their potential? Will he look at that again?

[Greg Clark]

I am happy to take that forward. The hon. Lady will be aware that we have liberalised the rules for credit unions, but if problems are being caused, not least in East Sussex, I would be happy if she dropped me a line or came to see me.

We have great enthusiasm for the proposals that the hon. Lady makes, but what is required is not a study, but action. I make this commitment to her, and to any hon. Member who is interested in helping to establish a new regional bank in their area, that I will help them to do so. I hope that they will allow me to do that.

New clause 10 would require the Government to lay a report before Parliament before selling any banking assets. All hon. Members are aware of what the Chancellor said in his Mansion House speech about the next steps for Lloyds and RBS. For Lloyds, the Government are actively considering the options for how its shareholding can be returned to the private sector. Value for money for the taxpayer will be the overriding consideration, and there is no pre-determined time scale. Indeed, the disposal process may involve multiple stages over time, rather than a single moment.

For RBS, share sales are some way off. In line with the recommendation of the Parliamentary Commission on Banking Standards, the Chancellor has announced a review, to conclude in the autumn, into whether a bad bank should be set up for risky assets from RBS. Following the criteria suggested in the commission’s report, the review will assess whether creating a bad bank would accelerate the path back to private ownership, deliver benefits for the wider economy and be in the interest of taxpayers.

As I have mentioned, the OFT is looking specifically at the impact that new challenger banks created by the Lloyds and RBS divestments will have on competition in small business banking. UK Financial Investments has a remit to provide value for money in executing its requirement to devise the means of selling the Government’s shareholdings in the banks, and, in doing so, to pay due regard to maintaining financial stability and to act in a way that promotes competition. In doing so, UKFI and the Treasury must follow the value-for-money principles set out in the Green Book, and they will be accountable, through the Accounting Officer, to the National Audit Office and the Public Accounts Committee, as well as to the House and the Treasury Select Committee.

[Chris Leslie]

The Minister is talking about the edifice of propriety, in relation to UKFI and so forth, but it is as plain as day that the Chancellor made the decision that he did not want that particular chief executive of RBS, so out went Stephen Hester. Will the Minister at least put on record what the plan is for settling the future leadership of RBS? When will the new chief executive be appointed?

[Greg Clark]

The hon. Gentleman knows full well that that is a matter for the board of RBS, not for the Government.

Returning to new clause 10, it is not clear that a new mandatory reporting requirement would add anything to the arrangements that are already in place. In the previous regulatory regime, promoting competition did not play a prominent enough role in ensuring that the banking industry operated in the interests of consumers. The strengthening of the role of competition through the reforms in the Bill will go a long way towards correcting that. The further recommendations of the PCBS underline the role of competition more prominently still, and I thank the commission for its contribution in that regard.

I should also mention new clause 1, which introduces a new schedule of amendments to correct a series of minor and technical points in connection with the Financial Services Act 2012. I was asked some questions about this earlier. It refers to the complaints scheme covering the Financial Conduct Authority, the Prudential Regulation Authority and the Bank of England. The scope of the complaints scheme in relation to the PRA and the FCA was widened to cover all their functions under any legislation, and the current scope includes functions such as those relating to the Data Protection Act and the Freedom of Information Act, which already have their own complaints mechanisms. The new clause will correct that.

I hope that the House will accept that the Parliamentary Commission on Banking Standards and the Government are as one in their intention of promoting competition. We totally agree that placing a high value on competition in pursuing all our objectives for the banking sector in order to make it more competitive, more responsive to the needs of consumers and more resilient is very much in the interests of the country.

[Chris Leslie]

We have had a long, well-informed debate, and I pay tribute to Members on both sides of the House, particularly the members of the Parliamentary Commission on Banking Standards, for their contributions. I am disappointed, however, that the Government are still saying simply that they will think about these things and look into them. The Bill will leave this House in the same thin state in which it arrived. In protecting taxpayers’ best interests, it should not be viewed as asking for the moon on a stick to request a proper report and an options appraisal of what to do with state-owned assets. It is very important that, at the very least, we have a thorough appraisal.

16:15

The Minister made all sorts of warm noises towards regional and local banking, but as the saying goes, warm words butter no parsnips. The Government have, in fact, ruled out any options appraisal for regional banking in the particular instance of RBS, so I think the proof of the pudding, to mix my metaphors, will be in the eating.

The Government are not doing what is necessary to get the proper competition we need to help the challenger banks and to break open the number of players in the market. The Minister said, “Well, the OFT is doing various amounts of work, and we should wait to see how it can cope with all the other changes in the banking sector”. It is always a case of this Minister kicking the can further down the road yet again. It is never “now”; always “let us wait and see”. It is just not good enough. We need a more competitive banking system, so I shall press new clause 8 to the vote.

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

16:16

Division 50

Ayes: 230

---

Labour: 215
Democratic Unionist Party: 5
Scottish National Party: 4
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 1
Alliance: 1
Green Party: 1

Noes: 292

---

Conservative: 248
Liberal Democrat: 44

16:29

More than two hours having elapsed since the commencement of proceedings on consideration, the proceedings were interrupted (Programme Order, 8 July).

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

New Clause 10

Sale of state-owned banking assets

‘(1) Before the sale of banking assets in the ownership of HM Treasury, the Treasury shall lay before Parliament a report setting out—

(a) the manner in which the best interests of the taxpayer are to be protected in connection with such sale,

(b) the expected impact that any sale might have on competition for the provision of core services, customer choice and the rate of economic growth,

(c) an appraisal of the options for potential structural changes in the bank concerned including—

(i) the separation of the provision of core services from the provision of investment activities,

(ii) the retention of a class of assets in the ownership of HM Treasury,

(iii) the impact of any sale on the creation of a regional banking network.

(2) A copy of the report in subsection (1) shall be laid before Parliament and sufficient time shall be given for the appropriate committees of both Houses of Parliament to consider its findings before any sale decision.’.—(Chris Leslie.)

Brought up, and read the First time.

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

16:29

Division 51

Ayes: 228

---

Labour: 212
Democratic Unionist Party: 6
Scottish National Party: 4
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 1
Alliance: 1
Green Party: 1

Noes: 292

---

Conservative: 248
Liberal Democrat: 44

New Clause 1

Minor amendments

‘Schedule [Minor amendments] (which contains amendments of, or connected with, the Financial Services Act 2012 and amendments of provisions amended by that Act) has effect.’.—(Greg Clark.)

Brought up, and added to the Bill.

Clause 4

Ring-fencing of certain activities

Amendment made: 5, page 3, line 35, at end insert—

‘(3A) Subject to that, in deciding whether and, if so, how to exercise their powers under subsection (2)(b), the Treasury must have regard to the desirability of minimising any adverse effect that the ring-fencing provisions might be expected to have on competition in the market for services provided in the course of carrying on core activities, including any adverse effect on the ease with which new entrants can enter the market.

(3B) In subsection (3A) “the ring-fencing provisions” means ring-fencing rules and the duty imposed as a result of section 142G.’.—(Greg Clark.)

New Schedule 1

‘Minor Amendments

Companies Act 1985 (c. 6)

1 In Schedule 15D to the Companies Act 1985 (disclosures), omit paragraph 29.

Financial Services and Markets Act 2000 (c. 8)

2 In section 376 of FSMA 2000 (continuation of contracts of long-term insurance where insurer in liquidation), in subsection (11B), for “PRA-authorised” substitute “PRA-regulated”.

3 In Schedule 17A to FSMA 2000 (further provision in relation to exercise of Part 18 functions by Bank of England), in paragraph 10(1)(j), for “subsections (1) and (3)” substitute “subsection (1)”.

Income Tax Act 2007 (c. 3)

4 In section 991 of the Income Tax Act 2007 (meaning of “bank”), in subsections (2)(b) and (3), for “Part 4” substitute “Part 4A”.

Banking Act 2009 (c. 1)

5 In section 89B of the Banking Act 2009 (application to recognised central counterparties), in the Table in subsection (6), in the entry relating to section 81B, in the second column, after the modification of subsection (1) of that section insert—

“In subsection (2), for “PRA” substitute “Bank of England”.”

6 In section 191 of the Banking Act 2009 (directions), in subsection (1), after “inter-bank” insert “payment”.

Financial Services Act 2012 (c. 21)

7 In section 73 of the Financial Services Act 2012 (duty of FCA to investigate and report on possible regulatory failure), in subsection (1)(b)(i)—

(a) for “their activities,” substitute “of the carrying on of regulated activities,”, and

(b) for “or for the regulation of collective investment schemes” substitute “, for the regulation of collective investment schemes or for the regulation of recognised investment exchanges,”’.

8 (1) Section 85 of the Financial Services Act 2012 (relevant functions in relation to complaints scheme) is amended as follows.

(2) For subsection (2) substitute—

“(2) The relevant functions of the FCA or the PRA are—

(a) its functions conferred by or under FSMA 2000, other than its legislative functions, and

(b) such other functions as the Treasury may by order provide.”

(3) For subsection (3) substitute—

“(3) The relevant functions of the Bank of England are—

(a) its functions under Part 18 of FSMA 2000 (recognised clearing houses) or under Part 5 of the Banking Act 2009 (inter-bank payment systems), other than its legislative functions, and

(b) such other functions as the Treasury may by order provide.”

(4) In subsections (4) and (5), for “subsection (2)” substitute “subsection (2)(a)”.

(5) In subsections (6) and (7), for “subsection (3)” substitute “subsection (3)(a)”.

(6) After subsection (7) insert—

“(8) For the purposes of subsection (2), sections 1A(6) and 2A(6) of FSMA 2000 do not apply.”’.—(Greg Clark.)

Brought up, and added to the Bill.

Schedule

Ring-fencing transfer schemes

Amendments made: 11, page 22, line 22, leave out ‘subsidiary’ and insert ‘body’.

Amendment 12, page 22, line 28, leave out ‘subsidiary’ and insert ‘body’.

Amendment 13, page 22, line 30, leave out ‘subsidiary undertaking’ and insert ‘member of the group’.

Amendment 14, page 23, line 3, at end insert—

‘(d) making provision in connection with the implementation of proposals that would involve a body corporate whose group includes the transferee becoming a ring-fenced body while one or more other members of the transferee’s group are not ring-fenced bodies.’.

Amendment 15, page 23, line 24, at end insert—

‘(2B) In deciding whether to give consent, the PRA must have regard to the scheme report prepared under section 109A in relation to the ring-fencing transfer scheme.’.

Amendment 16, page 23, line 24, at end insert—

‘6A For the heading to section 109 substitute “Scheme reports: insurance business transfer schemes”.

6B After section 109 insert—

“109A Scheme reports: ring-fencing transfer schemes

(1) An application under section 106B in respect of a ring-fencing transfer scheme must be accompanied by a report on the terms of the scheme (a “scheme report”).

(2) A scheme report may be made only by a person—

(a) appearing to the PRA to have the skills necessary to enable the person to make a proper report, and

(b) nominated or approved for the purpose by the PRA.

(3) A scheme report must be made in a form approved by the PRA.

(4) A scheme report must state—

(a) whether persons other than the transferor concerned are likely to be adversely affected by the scheme, and

(b) if so, whether the adverse effect is likely to be greater than is reasonably necessary in order to achieve whichever of the purposes mentioned in section 106B(3) is relevant.

(5) The PRA must consult the FCA before—

(a) nominating or approving a person under subsection (2)(b), or

(b) approving a form under subsection (3).”’.—(Greg Clark.)

[Michael Fabricant (Lichfield) (Con)]

On a point of order, Mr Deputy Speaker. In the light of the fact that the International Monetary Fund has upgraded the United Kingdom’s projection for growth, and that the European zone’s projection has been downgraded, I wonder whether you have been given any indication whether the Chancellor of the Exchequer will be making a statement, as I, for one, would like to congratulate him.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

On the last part of the hon. Gentleman’s question, I think that he has already achieved what he wants. The answer to the first part of his question is no.

Third Reading

16:42

[Greg Clark]

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

It is good to start the debate with good news. When one is considering a Bill, one is cut off from the outside world, so that is good to hear.

I said on Second Reading that this is a historic Bill that resets the banking system in this country, so that it can once again enjoy the reputation that it had, and its worldwide renown, not just for technical excellence but for high standards of confidence, built on probity.

The Bill is historic in another important respect. It reflects the extensive deliberations and contributions of not one but two bodies of eminent experts: the Independent Commission on Banking, chaired by Sir John Vickers, and the Parliamentary Commission on Banking Standards, chaired by my hon. Friend the Member for Chichester (Mr Tyrie). Both undertook extensive work, and I am grateful to their members, and to the staff who supported them in their work.

Sir John Vickers’s commission was established immediately after the general election, in June 2010. It took extensive evidence before publishing an issues paper in September 2010; an interim report, on which it consulted in April 2011; and a final report in September 2011. The Government gave, and consulted on, an initial response in December 2011, before issuing a White Paper for consultation in June 2012. In the light of that consultation, a draft Bill was published last October, and the Parliamentary Commission was asked to give it pre-legislative scrutiny, which it did, and it concluded its report on 21 December last year.

Following Second Reading, the Committee scrutinised the Bill for more than 40 hours. The process has been characterised by an unusually determined effort to build consensus. Having considered all the options, the Vickers commission made a compelling case for a ring fence separating the riskier investment banking side of banks from personal and business lending. Ring-fencing, an ICB argument, will better insulate retail banks against global shocks and make banks easier to resolve in a crisis. It will thus create a more stable banking system, protecting the economy and the taxpayer against future crisis.

The parliamentary commission, in its first report, recommended some changes to the Bill, which we have been able to make, such as emphasising the importance of competition, as we have just debated, in applying the ring-fencing rules. The commission noted that in putting the so-called Haldane principles on the face of the Bill, the Government went further than its own recommendations. The parliamentary commission, in its December report, also called for the power to be available to force the separation of a ring-fenced bank into its component parts if that bank attempted to game the system or to undermine the ring fence. The so-called electrification of the ring fence is designed to ensure that it is respected in practice.

We debated yesterday the Government’s amendment to implement this power. There was some discussion about whether the power to require separation was too cumbersome to be used effectively in practice. As I said yesterday, there is no difference between the Government’s intentions and those of the parliamentary commission. We agree with the specific reserve power and it has to be usable. We included a time limit by which full separation had to be executed. The PCBS did not specify this, but my hon. Friend the Member for Chichester said that it should be informed by the regulator. That seems right to me and I have no difficulty in expecting to be able to arrive at a formulation that meets all the Chairman’s objectives during the further scrutiny of the Bill in this place.

[Mr Tyrie]

I am very reassured by what I have heard from the Minister. It seems from what he said that it remains the Government’s firm intention to implement the spirit and the letter of electrification for individual banks. It also gives me some reassurance that the commitments that appear to have been made in the paper published yesterday on the recommendations in the fifth report will also be implemented. Can the Minister give some indication when he will produce amendments, so that we have enough time to think about them before they are examined in another place and so that their lordships also have enough time to consider them carefully?

[Greg Clark]

I am grateful to my hon. Friend for his remarks. He is right that we are of one mind on the need to implement faithfully the commitments that we have given. The amendments need to be drafted in a way that is legally watertight, which takes some time. They will be prepared during the summer—the summer holiday will be out of bounds for the officials on the Bill team, sad to say—and they will be introduced in the autumn in the House of Lords.

As well as pre-legislative scrutiny of the Bill, the parliamentary commission’s final report made a series of recommendations concerning standards and culture in banking. As I indicated on Second Reading, in Committee and yesterday, the Government will make use of the Bill and the amendments to give expression to many of the recommendations that require legislation. I gave a commitment to work with the usual channels to ensure that this House has ample opportunity to debate the amendments when they come back for further scrutiny by this House.

[Mr Tyrie]

I may have misheard. Does that mean that we will get two days to consider Lords amendments?

[Greg Clark]

My hon. Friend is nothing if not tenacious as well as ingenious, and his hearing is acute. He will have heard me say that I will work with the usual channels, so the time for consideration will depend on the outcome of those discussions.

The implementation of the commission’s recommendations on culture and standards represents the third pillar of the reforms being made to the banking system. The first pillar was the institutional changes brought about by the Financial Services Act 2012, which received Royal Assent last December. That Act scrapped the failed tripartite system of regulation which, in the words of the parliamentary commission,

“created a largely illusory impression of regulatory control”.

In its place, that Act restored the Bank of England to its rightful place by ensuring, through the Financial Policy Committee and the Prudential Regulation Authority, the stability of the financial system. It established new forward-looking, rather than box-ticking, conduct regulation in the Financial Conduct Authority.

The second pillar of reform is embodied in the ring-fencing provisions advanced by Sir John Vickers and his committee, which are the main focus of the Bill under consideration. The reforms by the Parliamentary Commission on Banking Standards that deal with culture and standards represent the third pillar, and will play a major part in the passage of the Bill.

Having thanked members and staff of the Independent Commission on Banking and the Parliamentary Commission on Banking Standards for their hard work and the exacting standards they set for themselves, I extend my thanks to all those who have participated in the drafting and scrutiny of the Bill so far. First, I thank my Parliamentary Private Secretary, my hon. Friend the Member for Warrington South (David Mowat). Not only has he been assiduous in his more mundane duties of passing notes to and fro, but he has been an invaluable source of wise advice, drawing on a successful career in business. I discovered that he has an ability to see quickly through complexity and get to the heart of the matter—something much needed in matters of financial regulation.

I thank my officials for their efforts and the long hours spent drafting the Bill and Government amendments, as well as briefings for the many clauses we have debated. I hope that the seriousness of this legislation will assuage the loss of weekends and evenings spent with their nearest and dearest, although I hope they were at least able to see Andy Murray play—and indeed win—on Sunday, notwithstanding the timetabling of Report and Third Reading.

I thank those in my private office for their patience and cheerfulness in marshalling the many demands on their skills and expertise, and I am grateful to members of the Bill Committee, and its Chair and Clerks, for the hours we spent in each other’s company during spring. At one point I worked out that I had spent more time that month with the hon. Member for Nottingham East (Chris Leslie) than with my wife, although I hope he will agree that it was not an altogether unpleasant experience.

We had a lively and unusual Bill Committee in which my hon. Friend the Member for Amber Valley (Nigel Mills) went further than the electrification proposed by the Parliamentary Commission on Banking Standards, and demanded the “electrocution” of miscreant bankers. My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), whom I am delighted to see in his place, was revealed to have a secret life on Twitter, which I hope continues to flourish. I was also able to concede an historic Opposition amendment, given the charming entreaties from the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), even if it was only a single word. All that was done under the beady eye of the Treasury Whip, my hon. Friend the Member for Chelsea and Fulham (Greg Hands), who kept us rigorously to time—indeed, I think we finished a day earlier than was allowed for in the programme motion. Given that the Bill will return and we will have much to discuss, it is not so much goodbye to the Bill on Third Reading as au revoir—or, as I am sure my hon. Friend the Member for North East Somerset would put it, “Hasta la vista, baby.”

Ours is not the only country in which trust in banking collapsed during the financial crisis, but the fact that scandals and bail-outs happened elsewhere is of no comfort. In a world where trust is in retreat, this country must be a beacon of confidence, security and stability, but that will not happen unless we insist on higher standards than apply elsewhere. The overwhelming and urgent imperative is to rebuild that trust. The reforms enacted so far take us a long way, and further than our competitors. The Bill will take us further forward and make the reform necessary to restore the reputation—and with it the prosperity—of banking in the United Kingdom. I commend the Bill to the House.

16:53

[Chris Leslie]

After that tour of various languages, all of which I am sure were in order as Norman French is the only language to be used in the Chamber other than English, I join the Minister in paying tribute to the Independent Commission on Banking. Sir John Vickers and his team did a phenomenal job, which was only a prelude to the output of the Parliamentary Commission on Banking Standards, chaired by the hon. Member for Chichester (Mr Tyrie). Given that its final report was larger than a ream of A4 paper, which represented months or work, weeks of deliberations and many hours of hearings, I think that it is to its credit, and the hon. Gentleman’s in particular, that it managed to hold together a set of recommendations, which I hope at some point will find their way into the legislation.

After the global financial crisis, when we saw reckless banking require such a vast taxpayer bail-out, the public finances were adversely affected and the economy suffered. It is therefore essential that we do our best to ensure that that situation can never again be repeated. However, all we have in the legislation so far are the ring-fencing provisions. I hope that they will be an adequate protection, but they are only part of the change we need to see in banking.

We were forced to table a series of amendments in Committee and on Report because the Government stepped away from the radical changes needed to make banking reform a reality. We hope that the Minister’s warm words will be manifest in the Bill in the other place, where we will be watching what happens very closely. We will need adequate time to consider Lords amendments when the Bill returns to this House, because to provide for only a few hours for that would show disrespect to the rightful and democratic primacy of this House.

The Treasury’s response to the commission’s report was published only three or four hours before we started considering the Bill on Report. I must say that it left a great deal to be desired. It did not have the strength needed to carry on the work of the commission’s recommendations. If we needed any more evidence that the Government have been soft-pedalling on these issues, we need only look at how bank shares responded immediately after the response was published yesterday. They hardly gave the impression that the banks face strong challenges as a result of the reforms. Despite the Prime Minister’s promise to use the Bill to implement key aspects of the commission’s report, particularly with regard to criminal sanctions, so far nothing has materialised. We must hold our breath and hope that they will eventually find their way into the Bill in the other place.

It is a shame that the Government did not use this time in the House of Commons to take some proper steps forward, because ultimately if we are to have dialogue in Parliament it is necessary to start putting some flesh on the bones and including legislative provisions in the Bill, rather than leaving it to the Government as a matter of trust. That is the only way we ever really improve the quality and calibre of legislation.

There are a number of things that the Government have not agreed to do or have refused to act on so far. They have not risen to the challenge on the leverage ratio to drive the reforms that are needed from a UK perspective. Instead, they want to wait for international and European Union agreement to resolve the issue. They have fallen short of what is required for proper electrification of the ring fence separating retail and investment banking activities. That should have been backed up with a reserve power for full separation of the sector as a whole if ring-fencing proves ineffective. We hope that it will be effective, but the jury is out on that.

We think that the Government should have considered options, particularly in the sale of any state-owned assets in the main banks—RBS, in particular—to look not only at a split between good banks and bad banks, but at whether there is a case for changes in retail and investment banking or in relation to regional banking, but they rejected that. They have not gone for reform of the governance of the Bank of England to turn the court into a proper board, with the accountability needed to go alongside that when it comes to sounding the alarm on bank lobbying. We hope that the Minister will follow that up when the Bill comes before the House of Lords. There is not yet sufficient clarity on how the banking standards rules will relate to the codes of conduct or culture changes that we need in the sector. As we saw from an earlier Division, the Bill also falls short of the market study of competition in the sector, particularly as regards the retail banking activities that so many of our constituents feel frustrated about.

We tried our best to table as many amendments as we could. The Government should have listened and taken the opportunity to engage in that legislative process more effectively. We now have to find reforms to the banking system that not only focus on safety and the best interests of consumers and taxpayers but do the right thing for the economy. In our discussions on leverage and other aspects, we tried our best to make the case for a number of changes that might have got the banking sector serving the economy, going full steam ahead and giving credit support, particularly to small and medium-sized enterprises.

It is clear that this Bill is still in its infancy despite having completed half its parliamentary stages. It is acceptable as far as it goes, with its baby steps on reform, and we therefore do not seek to oppose its Third Reading. However, the Government now need to get serious. They must bolster the Bill to electrify the ring fence and ensure that it will work; stand up for consumers, with proper changes to promote choice and competition and protect those consumers from being ripped off; secure the best interests of the taxpayer; and ensure that we never again see such a level of damage inflicted on public finances and our economy. Far more is needed. The Government should be listening much more carefully to the parliamentary commission, in particular. They have to do far better than this.

17:01

[Guy Opperman (Hexham) (Con)]

After the global banking crash, my constituents in Northumberland wanted to see better banking, higher standards, fewer scandals, greater competition and a greater degree of choice and service. In the past three years, this Government have been on a slow but continual journey to reinvigorate British banking and clear up the mess that we inherited.

I believe that over the next couple of years smaller regional banks will spring up throughout this great country, and I want briefly to address the House on that matter. Paragraph 49 of the banking commission’s main summary gives an excellent summation of its views on competition in retail banking. I refer anybody interested in this to the grave and weighty paragraphs 313 to 343 of the larger volume, where they will see, in particular, the evidence of Anthony Thomson, the co-founder of Metro Bank, with whom I have worked at great length over the past two years to try to reinvigorate the regional banking market.

That culminated in a series of efforts that have been made with the various regulatory authorities, starting with meetings that my hon. Friend the Member for Chichester (Mr Tyrie) and I had in February 2012 with Mr Hector Sants, the then chief executive of the Financial Services Authority. Mr Sants followed that up by writing on 12 March 2012:

“We are conscious of the balance to be struck between ensuring high standards at the gateway, and the importance of allowing innovation and appropriate levels of access for new firms…there has been public debate about the potential advantages of new entrants in the area of small, regional banks focused on servicing the SME sector. In such cases we will be proportionate in our approach and would invite all firms with a viable business model and appropriate levels of resources to a pre-application meeting to help guide them through the application process”.

Those were wise words and a significant step by the then chief exec of the FSA.

Then came the Bill that became the Financial Services Act 2012, which, I am pleased to say, passed its Second Reading in this House on 23 April 2012. To my surprise, the Labour party voted against clause 5, which specifically emphasised

“the ease with which new entrants can enter the market, and…how far competition is encouraging innovation.”

Be that as it may, the banking commission and other parties hugely improved the approach to regional banking. I support the efforts of everyone involved and echo the words of the Minister and the shadow Minister.

Following a huge amount of effort outside this House to encourage regional banking, Mr Thomson and I held a conference in Gateshead on 7 June that was attended by 142 delegates, including the Minister. More important, however—this is of key relevance to the banking commission’s findings—Sam Woods, the director of the domestic UK banks division at the Prudential Regulation Authority, and Victoria Raffe, the director of authorisations at the Financial Conduct Authority, were also in attendance on that day. Those two people are in effect the gatekeepers of regional banking and of the authorisations and regulation that lie ahead. They were welcome and made the case that regional banks are the way ahead.

I for one expect at least three or four banks to spring up in the north-east over the next 12 to 18 months, ranging from asset-backed lenders such as Cambridge & Counties bank—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I know that the hon. Gentleman is going to draw his speech into the Third Reading, because this is the Third Reading debate. The two must come together and it would be helpful if that happened sooner rather than later.

[Guy Opperman]

I will totally draw it into Third Reading, Mr Deputy Speaker. Those particular persons are very much affected and are working hand in glove with the Bill, which I support wholeheartedly.

17:06

[Mr McFadden]

This is an unusual Bill, in that at the same time that it has sought to implement a reform recommended by the Vickers commission two years ago, it has run in parallel with the Parliamentary Commission on Banking Standards, which periodically has produced reports and asked the Government to use the Bill to implement their findings.

I place on record my thanks to colleagues who served on the commission and all its staff. It was an intense effort and I do not think we could have produced our reports without the able efforts of the many staff who worked for us, led by Colin Lee, who is a great servant of this House.

I want to draw the Minister’s attention back to yesterday’s official response from the Government to the commission’s report of a few weeks ago. We read in yesterday’s newspapers that the Government were going to accept the vast bulk of the recommendations and the Minister opened the debate by saying something very similar. However, I have looked through the Government document in detail and wonder whether the Minister could confirm that the position is not that simple.

Paragraphs 2.32 and 2.33 reject part of our recommendations on pay. Paragraph 4.5 makes no commitment to legislation on access to basic bank accounts. Paragraph 3.24 passes to the regulator only consideration of the changes that we recommended on the corporate governance responsibilities of executives and bank chairmen. Paragraphs 3.34 and 3.35 in effect reject our recommendation for gender reports on operations on the trading floor. Paragraph 5.11 rejects our recommendation to consider splitting RBS into regional banks as part of the Government’s study on RBS. Paragraph 5.28 rejects our recommendations on the governance of the Bank of England. Paragraph 5.31 rejects our recommendations on the chairmanship of the Prudential Regulation Authority.

As my hon. Friend the Member for Nottingham East (Chris Leslie) said, the Government have also rejected recommendations on leveraging and ring-fencing, in particular ring-fencing in respect of the sector as a whole. When it comes to the implementation of recommendations, the chairman of the parliamentary commission yesterday described the attempt to ring-fence one particular group as “virtually useless”.

I stress to the Minister that it is not accurate to say that the Government have accepted the vast majority of the parliamentary commission’s recommendations. The document that was published yesterday is full of excuses and sleights of hand that pass on to the regulator for consideration firm recommendations that we made. I stress to those in another place, who may have a greater opportunity to amend the Bill, that they should read the document that was published yesterday with a careful eye to see what has been accepted and what has not.

[Greg Clark]

The right hon. Gentleman is not giving the response a fair reading. First, not all of the recommendations were addressed to the Government. Some of them were addressed to the regulators. Secondly, some of the recommendations that were made to the Government have been taken forward through actions that can be taken by the regulators. When colleagues look at the response, they will see that it is a broad endorsement of what was an excellent report.

[Mr McFadden]

Perhaps the Minister and I have different interpretations of the word “broad”. He may be able to persuade the hon. Member for Chichester (Mr Tyrie), on the basis of some warm words, that these are great concessions, but I remain to be convinced.

The Government have a great deal more to do to convince Parliament—this House and the other House—that they endorse the vast majority of the recommendations. The more one reads the report that was published yesterday, the less one comes to that conclusion. I hope that those who are in a position to amend the Bill in future take heed of that and press with greater determination than Members of this House the amendments that would fully and faithfully implement the recommendations of the Parliamentary Commission on Banking Standards.

17:12

[David Rutley (Macclesfield) (Con)]

I was not able to participate in the Public Bill Committee or the parliamentary commission, but I have followed their work from a distance. We must recognise the important progress that has been made over recent weeks and months.

I praise my hon. Friend the Member for Chichester (Mr Tyrie), Chairman of the Treasury Committee and of the parliamentary commission. He has taught me a lot during my time in Parliament. Tim Knox, the director of the Centre for Policy Studies, has said of my hon. Friend that

“he’s quite prepared to argue half the night over whether a comma should be a semi-colon—which is reflective of the seriousness with which he takes his work.”

My hon. Friend is prepared to do a lot more than that. He is prepared to debate and work tirelessly for months on end with colleagues on both sides of the House and with Ministers to move matters forward.

The huge progress that has been made in recent months on this important subject is also a credit to the Minister and his colleagues on the Front Bench. The Government’s response, which was published yesterday, moved the debate forward. On page 22, it summarises the failure that took place at HBOS. I worked at HBOS from 2005 to 2007 and saw at first hand the problems with the federal structure at the bank. I hasten to add that I worked in the general insurance side of the business, which was performing particularly well. It was clear that there was a problem with managing risk across the entire business. It was also clear from my interactions with the Financial Services Authority that it did not have a grip on the regulation of the smaller parts of the business or the business as a whole. It was clear that my business friends in Yorkshire who worked outside the bank recognised that the bank was involved in very racy deals. They kept asking me how the bank could support them. The FSA clearly was not paying sufficient attention to what was going on.

The Bill is vital. It is critical to bringing about the individual accountability that many of us want to see across our financial services sector, with the tough senior persons regime, reversing the burden of proof and criminal sanctions for reckless misconduct. All those steps are vital, as is the ring fence and the attempts to electrify it. They will bring about a meaningful distinction between what goes on in retail banks, which are vital for individuals and small businesses, and more risky investment banking. In my interaction with other banks, such as HBOS and Barclays, it was clear that they had very different cultures and needed to be brought under control. The ring fence will help to do that.

It is important to bring about enhanced competition. I helped to launch Asda’s introduction to financial services, and other retail brands have moved into financial services too. As my hon. Friend the Member for Hexham (Guy Opperman) said, we need new entrants. That will encourage greater competition and help us in our task of building trust in our financial services sector. It is good to see, in recommendation 4.22, that the Government will be initiating an independent study into the feasibility of the costs and benefits of full account portability. Bold, radical steps are required to move things forward and build the trust we want to see in our financial services sector. I commend the work of the parliamentary commission and the Government in taking these steps forward.

17:16

[John Mann (Bassetlaw) (Lab)]

A vast amount of hard work has been diligently done for such a puny and inadequate set of proposals. Where does it leave us, if we look at the big picture? There is a debate about the Government’s failure to electrify the ring fence, although as I recall, the financial crisis started with Northern Rock and Lehman Brothers, where the ring fence would have made no difference whatever. What are we trying to address?

We have two banks in state ownership that are still in crisis. Clearly, the Government have no idea what to do with RBS, from who is running it and the Government’s cack-handed handling of Mr Hester’s departure, to what its role should be. Should RBS exist? Should it be broken up? How should it be broken up? Can it be broken up? How could competition emanate from breaking it up? We hear the word competition all the time. I was a signatory to the extremely modest bank account portability amendment that, rightly, was tabled. The structure of banking, however, remains pretty much as was. There is significantly less competition than there was 10 years ago. Building societies have been consolidated and about a third have vanished.

Where is the international level? This was not a British crisis, but today, as a consequence of the British LIBOR scandal, we have lost out to New York, which has played its political hand far more astutely than the Government and has grabbed business from this country. Frankfurt and Paris will be lining up to do the same. We are dealing with international banks, and the Government’s insular look at what should be done, presuming that British solutions will add to British competition, is a misnomer. We face problems with transparency in the UK dependencies, which, unlike any other country, we can influence. They remain totally opaque, specifically in relation to banking and subsidiaries—there is nothing there. On international banking agreements, the Government are hiding even from the modest proposals emanating from Brussels, of all places. This is not going to solve our problems. Competition has not moved forward, and there is no evidence that it will. The Government have an aspiration, but no strategy, for competition, so we remain with none. The problem of oligarchies running investment banking worldwide has not changed either; it remains as was—a fundamental weakness in the banking stranglehold over the rest of the economy—and totally unaddressed.

The fundamental issue that some posed at the beginning will remain the Achilles heel of all politicians and whoever is in government in this country from now on: if there is a further banking crisis and individuals—known as voters—are in a panic over their savings, there is no politician in any Government who would not bail out those accounts. No Government, whatever their colour, whatever the economic situation, would survive grabbing the electorate’s savings.

Most fundamentally, we have failed to create a concept of tiered risk for consumers to give them a choice. It has worked before. The classic example is a simple one, but a real one: the premium bond. When the premium bond was introduced, people knew that it was totally guaranteed; they knew it was not the best way of investing, but they bought them because they were absolutely guaranteed. We do not do that with our savings now. We have not created the options that would let our constituents say, “We’ll put X amount in here, knowing we’ll get a lower return than elsewhere, because the Government will give an absolute guarantee. And we can put Y amount in a middle-risk option, where there are some guarantees to certain levels, and we’ll put Z amount into something with great returns, but explicitly no Government guarantee.”

Our failure to create those options has created a fundamental weakness. I would not even describe that as radical; I would call it a rather conservative, with a small c, and moderate proposal, giving choice, creating markets and trusting people. We have not done that. At some stage, a future Government—not this one or the next one, I hope, or one in our lifetime—will face the dilemma again and will be forced to bail out a bank. There is the danger, however, that it might come more suddenly than that.

[David Rutley]

Does the hon. Gentleman not recognise that there are options for fully guaranteed savings with National Savings & Investment as well as the £85,000 protection? There are those opportunities for people.

[John Mann]

I sit on the Treasury Select Committee; the hon. Gentleman served on it, so we have a modicum more information on these matters, as do other hon. Members, than our constituents. Nothing has changed for them, however. Fundamentally, there has been no segmentation of the market, which is why the new challenger banks are getting no further. Only a tiny, tiny proportion of business is going to them. We have not restructured, even though in RBS and Lloyds TSB we have the perfect opportunity, owing to the crisis, to restructure. Across the world, we see vast numbers of people suffering and Governments of every political persuasion being voted out because of the financial crisis and the decisions they have made. This Government might face the same dilemma. I am not commenting on whether the decisions on the deficit and debt are right or wrong economically, politically or socially—that is a critical debate, but it is a different debate—but the fact that we are in this situation and we are not addressing it for the future in anything but the most micro-management way is part of that weakness.

The Government might want to give themselves plaudits and say, “Well, perhaps we’re doing a little better than the Government of Greece or Spain,” or whichever Government it is. The Americans can slap themselves on the back and say, “Unlike the Brits, we’ve got our act together. We’ve targeted their banks. We’ve portrayed them as the wrongdoers. We’ve managed to shift some of the powers to ourselves,” which is precisely what is going on among the political, banking and business classes in Washington and New York. They are winning that battle.

I will end on this point. This is a world crisis. My research document proves that every one of the top 50 banks in the world, without exception, have been involved in criminality in recent times. That is staggering for any industry. For us to hold that industry together with sticking tape, not even with the most damaged and shattered elements, including those that have had to be nationalised, such as Lloyds TSB—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Mr Mann, your time is up—that is the story of your life at the moment.

17:26

Three hours having elapsed since the commencement of proceedings on consideration, the debate was interrupted (Programme Order, 8 July).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the Bill be now read the Third time.

Question agreed to.

Bill accordingly read the Third time and passed.

Northern Ireland (Miscellaneous Provisions) Bill (Programme (No. 2))

Motion made, and Question put forthwith (Standing Order No. 83A(10)),

That the Order of 24 June 2013 (Northern Ireland (Miscellaneous Provisions) Bill (Programme)) be varied as follows:

(1) Paragraph (3) of the Order (conclusion of proceedings in Committee of the whole House) shall be omitted.

(2) Proceedings in Committee of the whole House shall (so far as not previously concluded) be brought to a conclusion six hours after the commencement of proceedings on the Motion for this Order.—(Mike Penning.)

Question agreed to.

Northern Ireland (Miscellaneous Provisions) Bill

Tuesday 9th July 2013 Commons Chamber

(Clauses 1 to 9)

[Relevant documents: Second Report from the Northern Ireland Affairs Committee, Session 2012-13, Draft Northern Ireland (Miscellaneous Provisions) Bill, HC 1003, and the Government response, Cm 8621.]

Considered in Committee

[Mr Lindsay Hoyle in the Chair]

Clause 1

Donations

17:27

[Naomi Long (Belfast East) (Alliance)]

I beg to move amendment 7, page 2, line 25, leave out ‘October’ and insert ‘January’.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Amendment 8, page 2, line 37, leave out ‘October’ and insert ‘January’.

Amendment 2, page 2, line 43, at end insert—

‘(2A) In section 71E of the Political Parties, Elections and Referendums Act 2000 (duty not to disclose contents of donation reports) after subsection (3) insert—

(3A) Such information may be disclosed where a donation received by a Northern Ireland recipient on or after 1 October 2014 exceeds £7,500.

(3B) Such information may be disclosed where the total donations received by a Northern Ireland recipient from a relevant person in a year exceeds £7,500, save that no information on donations received before 1 October 2014 may be published.”.’.

Amendment 6, page 2, line 43, at end insert—

‘(2A) Section 71B of the Political Parties, Elections and Referendums Act 2000 is repealed.’.

Clauses 1 and 2 stand part.

[Naomi Long]

My amendments 7 and 8 aim to ensure that all donations made to Northern Ireland political parties from January 2014 will eventually be subject to publication. That would not interfere with the Secretary of State’s right to make a decision to extend the period of secrecy and non-publication that currently applies to donations made to political parties. That would remain in the Secretary of State’s gift even if amendments 7 and 8 were accepted. However, they would make it clear to the general public that anything donated after January 2014 will eventually be made public, once the Secretary of State deems the security situation to be appropriate.

I believe that there is a lack of transparency in Northern Ireland politics, which causes significant public concern. That is reflected by the views of the Electoral Commission, which has commissioned a series of surveys on the matter. They show that a significant proportion of the public believe that this is a matter of concern to them. They want to know how their political parties are funded, and whether that funding has an impact on what the parties say and do in office. It is hugely important that we should move towards transparency as we try to normalise the situation in Northern Ireland.

17:30

[Lady Hermon (North Down) (Ind)]

Will the hon. Lady take this opportunity to confirm that the Electoral Commission for Northern Ireland, which is held in high esteem there, supports her amendments and does not believe that the deadline of 1 January 2014 gives sufficient notice either to political parties or to donors?

[Naomi Long]

The hon. Lady is correct to say that the Electoral Commission for Northern Ireland supports the amendments and believes that they would be practical in providing adequate support and advice to donors and political parties to make them fully aware of the change by January 2014. No substantive reasons have been given for this move not being able to proceed by 2014. Given all the issues surrounding transparency, and the public concern about the opaque nature of political funding in Northern Ireland, it is important to take this opportunity to make it clear that we want maximum transparency for the public there. We want the kind of transparency that the rest of the United Kingdom already enjoys, but which, for security reasons, we have been unable to enjoy until now.

For me, this is a matter not only of amendments 7 and 8, which I have tabled. I also want to refer to the other amendments in this group. Amendment 2 differs from those amendments, in that it seeks to set in stone the lifting of the veil of secrecy on party political donations in Northern Ireland by October 2014. It would not entirely remove the Government’s ability to extend the period further in an emergency. The Bill could, for example, include an order-making power to ensure that the Government could come back to the House in an emergency and reinstate the existing provisions, but they would need to have a substantive reason for doing so and they would have to bring their argument to the House and gain its support.

I put on record at Second Reading, and I want to do so again today, that this is not about being cavalier or dismissive about the security situation in Northern Ireland. Nor is it about dismissing the potential threat to those who donate to political parties. It is about accepting that that should not automatically, as of right, outweigh the public’s right to scrutinise donations to political parties. If we lift the bar and allow donations over £7,500 to be published, in line with the rest of the United Kingdom, people will factor in that decision when deciding whether to make such donations. Given that all the political parties have said that they get very few donations of that size, the proposal would not impede the normal democratic fundraising capacity of the Northern Ireland parties.

It is also important to confidence and trust that the public should believe that their elected representatives are not available for sale. The only way to convince people of that is to maximise transparency around these issues. No political party can defend itself against that charge while the secrecy continues to exist, because the information will not be in the public domain and available for scrutiny. My own party reveals such information voluntarily, and we encourage other parties to do so, but I believe that as of October 2014, we should be moving towards a more normalised situation for donations. The onus should be on donors to decide whether they wish to donate, knowing that their donation will be made public.

I shall listen carefully to what my colleagues in the Democratic Unionist party say about amendment 6. My understanding is that their intention is to remove entirely the possibility of donations to the Northern Ireland political parties from the Republic of Ireland. I cannot support that, and I want to explain why. Northern Ireland’s unique circumstances are reflected not only in our constitutional arrangements but in the fact that some parties operate on a Northern Ireland-only basis, some on a UK-wide basis and others on an all-Ireland basis. Taking that into account, I believe that it would be unfair completely to close the door to donations from the Republic of Ireland. A situation could be created in which parties that operate on an all-UK basis could receive donations from Dundee, Devon and Derby, while those that operate on a Northern Ireland-only basis would be unable to receive donations from Donegal or Dublin. I think that would be unfair.

I have a degree of sympathy, however, with the concerns expressed by the Democratic Unionist party on Second Reading about the potential for overseas donors to put money through the Republic of Ireland, essentially circumventing the rules on foreign donations. Indeed, I supported the Select Committee recommendation in paragraph 44 where we set out our concerns about that. Although we stopped short of recommending that all donations from the Republic of Ireland be stopped, we did recommend that the Secretary of State should seek to include provisions in the Bill that would close that particular loophole. I would be happy to support measures to do that, but I do not feel that it would be just or right to support measures that would simply put a bar on any donations from the Irish Republic, even if those people are resident and are donating to a party that operates on a Northern Ireland basis. That would not be fair or just.

I encourage all Members to consider amendments 7 and 8. Some might not agree with amendment 2, but I do not believe that the hands of the Secretary of State are in any way tied with respect to security judgments. I believe that amendments 7 and 8 will ensure clarity for donors, who will know that any money above £7,500 donated from January onwards will be subject to publication at whatever point in the future the Secretary of State decides that it is safe to declare the information. Clarity will be provided for members of the public who will know that we are moving in the direction of full transparency, in the same way as any other region of the UK. This draws the line under what has been a very tortured issue for a very long time. I hope that when the opportunity arises, Members will vote in favour of increasing transparency on these matters.

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to see you in the Chair, Mr Hollobone. I rise to speak to amendment 2, which is in the name of the hon. Member for Belfast East (Naomi Long) and myself. It is a pleasure to follow the hon. Lady’s speech, and I am grateful to her for supporting the amendment that I proposed—one that is obviously consistent with the recommendations of the Select Committee on the matter of transparency for larger political donations. This recommendation was not disputed in the Committee and there was no vote or dissenting voice, as can be seen in the report. Looking back over the evidence given to the Committee by every Northern Ireland political party, it becomes clear that there is little evidence that the parties are receiving many donations above this specified amount, so it is not as if we are talking about a large number of people potentially at a security risk.

A fair number of the parties favoured transparency, and the hon. Member for Belfast East has pointed out that her party already publishes its donations, while the Green party and Sinn Fein said they were in favour in the evidence given to us. It is not quite so easy, however, to find on Sinn Fein’s website all of its donations. Some of us have tried and have asked, but the information does not quite seem to be there.

[Stephen Pound (Ealing North) (Lab)]

I am very impressed with the hon. Gentleman’s comments so far. Will he confirm for the record that the Conservative party, which organises in Northern Ireland, is now going to be fully transparent in respect of all the donations received by that august body?

[Nigel Mills]

If only that were not so far above my pay grade, I would be happy to answer the hon. Gentleman. It is a matter that he will have to put to party officials. I have never had the pleasure of campaigning for my party in Northern Ireland, so I have not been made aware of those rules. I think that transparency is the right thing and that such matters should be disclosed, but I have no problem saying that the hon. Gentleman would have to ask somebody else about how my party operates in Northern Ireland.

The issue before us today is how to find a balance between transparency and the security threat. It is right that the Committee should have a say on that today. We should be reflecting on the fact that it is 15 years since the Good Friday agreement, and on how much progress has been made. The G8 summit in Northern Ireland was held without a hitch; and we had the Queen’s jubilee tour last year. I had the pleasure of being there to see it, and it was amazing to see that Her Majesty did not need to go around with all the bullet-proof glass of the past. That shows all the progress we have made, yet we seem to be saying that 15 or 16 years on from the agreement, we still do not dare publish the largest donations made to political parties.

The amendment refers to donations of more than £7,500. I think all the parties agree that that is a rare event, but there must come a point at which the level of a donation is such that members of the public begin to suspect that it is buying some kind of influence. There should be a threshold beyond which the public are able to see what donations are being received, so that they can be sure that no influence is being bought.

I have no reason to doubt that all the parties in Northern Ireland are entirely fair, that they are not for sale, and that they do not change their policies to suit donations. I am not sure that all the people in Northern Ireland are quite as confident of that as I am, but it is for them to be cynical. Their view on the subject may not have been greatly enhanced by a BBC programme that was shown in Northern Ireland last Thursday evening, and which I believe has prompted some doubt about the entire propriety of what happens.

It is possible that those who wish to make small donations will not be able to risk the threat to their security, but those who choose to donate more than £7,500 should do so in the knowledge that the fact that they have done so will be published, on the basis that it may be suspected that they are buying some kind of influence. We want to ensure that it is absolutely clear that they are not doing that, that none of the parties would do that, and there is no suggestion of any wrongdoing.

If it is not robust enough now and will not be robust enough in October 2014, when does the Minister think that the security situation will be robust enough to allow the publication of information about larger donations? What must change between now and the point at which we shall be able to publish that information? What criteria will the Government use under their new power to bring about more transparency? I am not certain that anyone fully understands what the obstacles are now, and what improvements would be necessary for us to provide that increased transparency, which I think every party that gave evidence to the Select Committee agreed was, in theory, desirable.

[David Simpson (Upper Bann) (DUP)]

As the hon. Gentleman knows, the Select Committee has discussed this issue on many occasions. Our party, along with nearly all the others, wants transparency, but the hon. Gentleman must realise that in parts of Northern Ireland today, to be a Unionist is to be an outcast. Subscribing to a political party could still put someone’s life in danger.

[Nigel Mills]

I bow to the hon. Gentleman’s expertise, but surely he agrees that such people can choose whether to donate a large amount to a party. If my amendment were passed, they could still donate £7,499 every year without their names being published. Surely he agrees that a donation can reach such a level that the donor must accept that it should be subject to transparency, because of the amount of influence that that donor might be exerting. The amendment provides that, in just over 14 months’ time, any donation that exceeds £7,500 will be made public. That would give an individual 14 months in which to make any large donation to a party that he or she wished to make—without the information being published—which would presumably tide the party over.

[Ms Margaret Ritchie (South Down) (SDLP)]

This topic is very important to those of us who are involved in the political process in Northern Ireland. Does the hon. Gentleman agree that it is necessary to balance the security risk against the public good, and that in this instance the public want transparency and accountability in politics?

[Nigel Mills]

Yes. I made that point at the outset. The need for absolute security must be balanced against the need for transparency, and I decided that the level at which the balance tilted towards transparency was £7,500. The hon. Lady might choose a different figure, but there must be a point at which donations are seen to buy influence, and the details should therefore be published.

The leader of the hon. Lady’s party gave some of the most compelling evidence to the Select Committee. He said that his big fear was that if a small business man gave £1,000 to his, and her, party, another party might knock on the door and demand £2,000, because that business man was clearly willing to donate. I think that there is a risk at that level. That is why I did not table an amendment proposing that all donations should be made public, and I think that that is why the Select Committee recommended the £7,500 threshold as well.

Fifteen years after the Good Friday agreement, with all the progress that has been made, can we really justify maintaining the secrecy of all the large political donations to Northern Ireland parties when in the rest of the UK we have the publication of much smaller donations with no trouble? We accept that there is a unique situation in Northern Ireland. The security situation there is clearly different from what those of us representing seats in the mainland face, but for how many more years can we tolerate there not being this transparency in politics in the UK?

17:45

[Naomi Long]

Even if we judge that the risk now is high, the point is that there will never be a point at which we can say there is no risk. This provision is about transitioning and saying that the donor must now take some responsibility for judging whether to take that risk, and that that risk should not always outweigh the public interest.

[Nigel Mills]

Absolutely, and if this amendment were passed, a donor would still have 14 months in which to make any donations they wanted to make and have them not made public. I suspect that would get the political parties through the 2015 general election, and that if they planned things carefully, they could get enough funds to get through the 2016 Assembly elections, so there would be no detriment to party funding until perhaps the 2020 elections in terms of the need for very large donations. That would give everyone a large amount of time to adjust to these new transparency rules.

I therefore ask the Minister to set out why the Government are apparently reluctant to go down this route even for the largest donations. I note that in their response to the Select Committee they said they would carefully consider any restrictions on transparency after October 2014. It would be useful to understand what their criteria are for making that decision. I accept, however, that the Minister cannot, and should not, tell us the specific intelligence he has about security threats.

Northern Ireland Members obviously understand Northern Ireland politics better than I do, but it is my understanding that the details of anyone who nominates a candidate or who stands for a council are published. If we have not had any evidence that there is a real security threat to people participating in those aspects of Northern Ireland democracy, why do we have this threat in respect of donations? It is worth asking how credible it is to have those two opposing situations, whereby it is safe to nominate or stand but it is not safe to donate money. I am not sure whether there is a very convincing argument for that.

[Lady Hermon]

Like the hon. Gentleman, I have the privilege of sitting on the Northern Ireland Affairs Committee. When we took evidence on this issue, we took evidence privately and in public session, and we took it in written as well as oral form. Did we ever receive evidence from a donor to any political party or to any independent Member of the Parliament that they felt at risk of being targeted by terrorists or anyone else for donating?

[Nigel Mills]

No, of course we did not receive any such evidence. We do not know who the donors are, so we could not go and ask them. That question was raised with some of the parties; they were asked whether they had any evidence from their donors that could be put on an anonymous basis, and I do not recall any evidence along those lines being received.

[Jim Shannon (Strangford) (DUP)]

A few moments ago the hon. Gentleman drew comparisons between elected representatives and donors, but elected representatives chose to put their names forward—in the same way as some of us on this side of the House chose to wear the uniform of the Crown, and served in Northern Ireland. That is a choice we made. The donors do not necessarily make a choice to have their names and addresses and businesses all known. That is the difference. The difference is between those who make these choices and those who donate and do not want to make anybody else aware of that. Derbyshire is not like South Down. Amber Valley is not like Belfast. They are two different places—there are different situations and different circumstances—and, with the greatest respect, I am a wee bit unsure that the hon. Gentleman is aware of all the background in Northern Ireland.

[Nigel Mills]

I am grateful to the hon. Gentleman for that intervention. Clearly, people who make donations before October 2014 should not have their details published, as that would not be their understanding of what would happen. My argument is that if they choose to make a large donation after 1 October 2014, they would be doing so on the understanding that they will be named—they would be choosing to be in that situation. I have no desire to force someone into a position that is not what they understood it to be, as it would be entirely wrong to do so.

I do not doubt that my constituency is very different from that of the hon. Gentleman and I do not want to underestimate his understanding of those risks, as they are clearly far greater than those in my constituency will ever be. However, we are all asked, as Members of Parliament in the UK, to vote on this Bill and to make these choices. We need to be in a situation where there is sufficient normality in Northern Ireland to be able to publish details of these donations. I am not convinced that we have not reached that point now and that for large donations it would not be the right way in which to tip that delicate balance, especially when we are not getting credible evidence from anybody that there is a real threat or that any past incidents would give us real cause for concern. Perhaps that evidence exists and just cannot come into the public domain. I have no doubt that the Minister will have information that is far stronger than the Committee could get its hands on or perhaps should get its hands on.

On the current balance of the arguments, I think we should be publishing details of those larger donations. I accept that we are not in a position to do that in respect of smaller donations, but let us make that change. Let us say that we have progressed far enough, 15 or 16 years on from that historic agreement, to think that the situation in Northern Ireland is strong enough for us to be able to publish details of those large donations. Let us go for transparency for the whole political process, and let us show that it is clean and that people cannot be bought. Let us not continue any longer with this fear or misunderstanding that the process is corrupt. That is where we are, and the events of last week and that television programme have raised again fears that something is happening which should not be happening. We all sincerely hope that it is not.

[Mr Nigel Dodds (Belfast North) (DUP)]

I am pleased to be able to take part in this debate. First, I wish to discuss amendment 6, which stands in my name and that of my colleagues, and then I will comment on the other proposals in the group. The hon. Member for Amber Valley (Nigel Mills) put a legitimate point of view, one that had support in the Select Committee but has not found favour with the Government, so I look forward to hearing the Minister speak on it. It is also worth making the general comment in relation to all these matters that the Bill did go through pre-legislative scrutiny. That is not to say that it cannot be improved or that we cannot debate it and tease out the various issues—that is what we are here to do. The hon. Gentleman referred to recent programmes and, of course, we also have to bear in mind the recent “Panorama” programme and The Sunday Times exposure of issues relating to Back-Benchers here and members of the other place. All these issues are very pertinent and need to be examined, too.

Our amendment 6 would repeal section 71B of the Political Parties, Elections and Referendums Act 2000. Political parties in Northern Ireland currently follow different rules from parties in Great Britain. Many people in the UK—UK taxpayers and voters—might be slightly surprised that a different set of rules applies on donations to people who can be elected to the House of Commons to make laws for the whole of the United Kingdom if they are in political parties in one part of the UK. The 2000 Act was passed to prevent foreign influence through donations being made without transparency, openness and all the rest of it and to ensure that donations were made by legitimate donors—donors who reside in the United Kingdom or who have locus in the UK, because, after all, the political parties to which they are donating are making laws for the UK. By logic, therefore, the same rules should apply across the UK to all the political parties represented in this House. That is what the amendment seeks to achieve.

In Great Britain, donations are permissible only from individuals or bodies in the United Kingdom. Northern Ireland parties, exceptionally, are allowed also to receive donations and loans from the Irish Republic. The amendment would end that exemption and put Northern Ireland on the same footing as the rest of the United Kingdom. One argument that is made over and over by many people, quite validly and properly, is that Northern Ireland should be brought into line with the rest of the United Kingdom. Usually, that argument is applied to the question of transparency and the revelation of the identities of donors—I shall come to that in a short while—but it never seems to be raised in the context of this glaring loophole, which preserves a special position, effectively for the benefit of nationalist parties. Let us be frank: that is why it was brought in originally and why it was lobbied for.

I listened carefully to the hon. Member for Belfast East (Naomi Long) and I understand where she is coming from. I understand the argument she advanced and the way in which she advanced it. Her concern was more to do with the loophole whereby donations come not so much from citizens or organisations in the Republic but from individuals or companies who are used as a conduit for political donations to parties in Northern Ireland from outside the Irish Republic—from the United States, or wherever. That is the real problem. It was identified by the Select Committee, which recommended that the loophole be closed.

The purpose of our amendment is to highlight that glaring loophole. We cannot have an exception that allows donations to come in from abroad and thereby allows them to come in from even further afield than intended—from America, Australia, Canada, other parts of the European Union or wherever else. That issue must be addressed. It is entirely unacceptable, when we talk about transparency, openness and all the rest of it, that in Northern Ireland parties that are represented or may be represented in this House could be funded by bodies, individuals and organisations in other parts of the world yet we would never be able to find out because of this exception.

I appeal to the Minister to consider the issue, to consider very carefully not just what we have said but what the Select Committee has said and to take the matter away and see how the loophole can be closed. If we are trying to move forward and bring the law on donations gradually and cautiously into line, we must do it across the board, not just on the issue addressed by clause 1 and the other amendments but on the issue we are raising through amendment 6.

[Lady Hermon]

I am grateful to the right hon. Gentleman for giving way. I need some assistance in making up my mind about whether to support the amendment, so I would like him to explain precisely the remit of section 71B of the Political Parties, Elections and Referendums Act, as amended. Does his amendment affect only donations from Irish citizens outside the United Kingdom, or would it apply equally to those who believe themselves to be Irish citizens living in the UK, and who might even wish to donate to the Democratic Unionist party?

18:00

[Mr Dodds]

The hon. Lady asks for clarification; I think the position is pretty clear. The position of those who would see themselves as Irish, or who hold an Irish passport and live in the United Kingdom, would not be affected at all. The exception allowed for in the 2000 Act as amended allows people who do not reside in the United Kingdom, but who do reside and have a residence qualification in the Irish Republic, to donate to Northern Ireland parties. We are saying that that is a back door route; the donations may be from individuals, companies and organisations in the Irish Republic, but that money can come from wherever—there is no regulation whatsoever. That is why we have tabled the amendment.

[Naomi Long]

I concur with the right hon. Gentleman’s concerns about international donations, but does he not agree that closing down all donations from the Irish Republic for parties that operate on an all-Ireland basis would not be fair, when parties that operate on a Northern Ireland or UK-wide basis can still get donations from the whole of the UK? Is it not more important that the Minister of State goes away and looks at how we can deal with the international issue in collaboration with the Irish Government, who manage their rules?

[Mr Dodds]

I have asked the Minister to take the matter away and consider it, but the fundamental point is that we are talking about the United Kingdom. When it comes to laws on donations, the electoral system for this House, and the way in which Members of the House are treated, right across the board, I believe that we are a Parliament of the United Kingdom, and Members of the House should all be equal, regardless of where we come from.

As far as the political set-up in Northern Ireland is concerned, there is absolutely nothing to stop political parties getting donations from any part of the United Kingdom, although I have to say that it is not common for Northern Ireland parties—the hon. Lady can bear this out—to be inundated with donations from other parts of the United Kingdom. I think that parties on this side of the water have that market well and truly cornered, whatever the source of the donations. We certainly do not get donations from the unions in Northern Ireland, either.

This is a point of principle for us, I suppose. The hon. Lady may not agree with it, and she has a perfectly valid perspective, but our view is that we are part of the United Kingdom, and we should all abide equally by the rules of the United Kingdom. The fundamental point is that the situation is not only wrong in principle but wide open to abuse; a coach and horses could be driven through the provisions, in ways that run contrary to the reasons for introducing the measures in the 2000 Act. They were brought in to pander to Sinn Fein in particular. Whatever the reasons may have been for that, years ago, those reasons have long since ceased to apply, and everybody should be on a level playing field.

[Nigel Mills]

I have sympathy with what the right hon. Gentleman is saying. One of the concerns of the Northern Ireland Affairs Committee was that his amendment would effectively contravene the provisions of the Good Friday agreement—that freedoms allowed there effectively enable an all-Ireland party to operate, and what he is trying to do would stop that happening—and that is perhaps not the way Parliament ought to go.

[Mr Dodds]

Nothing in the amendment, or in our proposal, would prevent a party from operating in both Northern Ireland and the Irish Republic. Likewise, there is nothing to stop a party from operating on a UK-wide basis, if it wished to. All the provision does is put Northern Ireland parties in exactly the same position as those in the rest of the United Kingdom, so that we are subject to the same rules and scrutiny. That is a perfectly legitimate point of view, which the Minister needs to consider.

Amendment 2 in the name of the hon. Member for Amber Valley (Nigel Mills) means that after 1 October 2014 all protected information should be published in relation to all donations over £7,500. Protected information is anything that could identify the person or organisation that made a donation during the prescribed period of donor anonymity. The amendment would remove the protection after 1 October 2014 and would remove all discretion from the Secretary of State so that, as the hon. Gentleman said, after that date all donors and their details would be published.

We discussed the issue generally on Second Reading and the Government set out their position, which was opposed to that of the hon. Gentleman. Generally speaking, we welcomed the Government’s approach, which was one of caution but of cautious progress. We made it clear in the House that we want to see Northern Ireland on all fronts—not just, as some people have it, selectively—moving forward and coming into line with the rest of the United Kingdom. Right across all fronts we wish to see that.

We welcome the fact that amendments 7 and 8, as well as amendment 2, safeguard the anonymity of those who have donated up till now. Some have argued that that should not be accepted, but it is accepted by everybody and rightly so. The question is whether the Government should still have regard to the circumstances in October 2014, or whether we should make a decision now that as of that date, regardless of the situation or circumstances, the discretion is taken away.

[Vernon Coaker (Gedling) (Lab)]

Does the right hon. Gentleman share my concern about clause 1(3)? He said that people who had made a donation up till now have their anonymity guaranteed, yet clause 1(3) seems to suggest that there might be circumstances in which the anonymity of those who gave before the Bill is enacted might be breached.

[Mr Dodds]

The hon. Gentleman makes a good point. I flagged that up on Second Reading and the Minister may want to look at it. The Bill is a tidying-up exercise, and the matter will have to be addressed in another place or on Report. The question is whether the clause leaves open some kind of discretion. When the Select Committee considered the matter, it recommended that the clause should be tightened so that there was certainty that anonymity would be preserved. There should be no room for doubt.

[The Minister of State, Northern Ireland Office (Mike Penning)]

The right hon. Gentleman is right. The protection of people who have given donations to a political party in Northern Ireland cannot be lifted retrospectively unless they give permission. If they are happy for their data to be released, the Electoral Commission may wish to do so. That, I think, is what the right hon. Gentleman is referring to. I will look at the provision again, but there is absolutely no intent whatever to release data on anybody retrospectively unless they agree to that.

[Mr Dodds]

I very much welcome what the Minister has said. I think that is the intent of everybody. The slight concern is about the drafting and the need for the intention to be explicitly spelled out in those terms. Some commentators have pointed out that the current wording is somewhat loose with regard to the possibility of some discretion. Given the situation with regard to litigation on these matters, it is not beyond the bounds of possibility that somebody will test it in court. The provision needs to be tightened up.

[Mike Penning]

If there is that concern, the Government will table an amendment in the other House and close it.

[Mr Dodds]

I very much welcome that and thank the Minister for his commitment.

[Stephen Pound]

This is an important aspect of the Bill that we must thoroughly ventilate. Does the right hon. Gentleman share my concern that although data may not be available for release, they do exist? If data are collated, stored and placed in a silo of information, there is always the fear and concern that they could be released. Examples at the moment from the other side of the Atlantic indicate that point. Does the right hon. Gentleman have any suggestions about how we could address that concern?

[Mr Dodds]

The hon. Gentleman makes an important point about data that are held and not meant for publication yet somehow find themselves in the public domain, and we can all cite many examples of that happening in recent years. There are, of course, criminal sanctions, but that does not necessarily guarantee anything. The fact of the matter is that it depends on the good will and good faith of those who safeguard such information, and on proper security to ensure that what Parliament intends and enacts is followed through. The hon. Gentleman raises an important point that rightly concerns people, and the Government may wish to comment on what steps they are taking to ensure that information does not enter the public domain when people have been guaranteed that it will not.

Returning to amendment 2, which would remove the discretion, we put on record our concerns that donors to political parties in the rest of the UK do not face the same problems as donors to parties in Northern Ireland. The hon. Member for Amber Valley (Nigel Mills) pointed out the tremendous progress that has been made, which we all recognise, value and celebrate, but there is still a serious threat in terms of terrorism and public safety. Not long ago there was the murder of a prison officer, David Black, and there have been other serious incidents, disruptions and bomb attacks. We operate in a different climate—it is much improved and better than it used to be—but most people accept that we are still in a situation in which caution must be exercised.

As we move forward to a more normalised society, we hope that the threat from dissidents and others will recede and continue to be dealt with. As we put the violent past behind us, it is right and proper that we move towards a system of donations and loans, as employed in the rest of the United Kingdom, and we support the normalisation process for political donations as outlined in the Bill.

[Lady Hermon]

I am extremely grateful to the right hon. Gentleman for taking so many interventions. Will he kindly reflect on a question that I asked on Second Reading? While we all accept and do not query the dreadful times that all of us of a certain age have lived through in Northern Ireland, we are now in more peaceful times. Will the right hon. Gentleman quantify in numbers—this will be helpful for people at home watching the debate—the threats to current donors to the Democratic Unionist party? Is it in half dozens or dozens, and can he quantify that in changed circumstances and—thank the Lord—quieter times in Northern Ireland?

[Mr Dodds]

A point was made earlier—I do not know whether it came from the hon. Lady or someone else—that the Northern Ireland Affairs Committee did not hear from a donor saying how afraid they would be if their identity was made public. It is not easy for people in that position, and there will not be lots of people coming forward and making their position clear. By necessity, some of these things will be done with the least publicity and information as possible from the donor’s point of view, because they want to protect their anonymity.

The Select Committee heard from the First Minister—I have already cited his evidence—from David McClarty, an independent MLA, and from representatives of my party, the Social Democratic and Labour party, the UK Independence party, which of course is becoming a major force in the rest of the United Kingdom, although not particularly in Northern Ireland, and the Ulster Unionist party. They all urged the Secretary of State to exercise caution when modifying the current confidentiality arrangements for political loans and donations in Northern Ireland. As the Committee’s report states:

“They argued that the security situation in Northern Ireland presented a barrier to implementing the same transparency regime as Great Britain because donors remained at risk of violence and intimidation”.

18:15

On Second Reading I quoted what the hon. Member for Belfast South (Dr McDonnell), the leader of the SDLP, told the Committee. He encapsulated his party’s concern and it is worth putting it on the record again:

‘Our difficulty is that we feel that we were particularly vulnerable in the past, in that some of our donors felt vulnerable and threatened… Sometimes, the threat is not even direct, but people are put under pressure and told, “You gave the SDLP £1,000 this week; we think that we are entitled to £2,000 this week”. The threat is at that level. In a situation in which there are still a handful of people moving about with guns, that threat is there.’

The Committee also heard from Mike Nesbitt MLA, the leader of the Ulster Unionist party, who expressed concerns that commercial donors would face recriminations in the form of boycotts of their businesses or violence. That is something that is very hard to pin down, because it is spread by word of mouth and those individuals might ask, “Why are people not coming in?” His party colleague Tom Elliott MLA, who represents Fermanagh and South Tyrone, told the Committee that “a number of businesses”—he could not quantify it—were being boycotted because of their affiliation to particular political parties. He said that two of the UUP’s commercial donors had recently contacted the party asking it not to send further correspondence to the company’s business premises in case the employee responsible for opening the post made public the fact that the company had donated to the party.

Those are real fears. They are not made up or designed to camouflage or cover up anything. Nevertheless, bearing all that in mind and exercising caution, I think that it is right that we support the provisions of the Bill, which are about moving towards greater transparency and openness when the situation allows.

[Mr Laurence Robertson (Tewkesbury) (Con)]

The right hon. Gentleman is making a number of very important points. A number of the Committee’s witnesses where asked why donors would be at greater risk than candidates, for example, or those who support candidates in other ways, perhaps by delivering leaflets, displaying posters, canvassing or signing the nomination papers. Why does he think that donors would be at greater risk that those participants?

[Mr Dodds]

It could be argued that donors are at as great a risk as those who put themselves forward as political representatives and stand for political parties. I suppose that one reason why they might choose to be a donor, rather than a candidate, is that they do not want to attract the sort of public attention that being a full or part-time public representative brings in Northern Ireland. They want to be involved in the political process, to support it and to have their political interests advanced and their views reflected, but they do not necessarily want to get involved in politics directly. However, even being a donor can attract problems for those people. There is a difference between being a donor and standing for election as a political representative. Not everybody wants to be a political activist. I think that there is a significant difference in the level of public attention that people want to attract, and that is human nature.

[Nigel Mills]

I want to take the right hon. Gentleman back to the quotes he gave about the commercial risk of a boycott if someone is exposed as a political donor. The leader of the UUP and the First Minister both said that it was the security risk that justified the lack of transparency and that the commercial downsides of a boycott alone would not be a sufficient threshold. Does he agree that it is only the security risk that justifies the lack of transparency?

[Mr Dodds]

I do not accept the hon. Gentleman’s point. I refer him to paragraph 23 of the research paper on this matter produced by the House of Commons Library, which says:

“Mr Robinson, Mr Nesbitt and Mr Elliott all argued that security and commercial risk to donors were intrinsically intertwined”.

The responsibility for setting the timetable for removing anonymity must, in our view, remain with the Secretary of State, as is the current position under the Bill. We would urge caution as to when the decision is considered, as we noted on Second Reading, when the Secretary of State gave us an undertaking that there would be consultation not just with the Electoral Commission but with the security forces and political parties. That is absolutely right and proper.

For those reasons, we support the consensus behind the Bill and urge colleagues to consider carefully the importance and significance of our amendment 6.

[Stephen Lloyd (Eastbourne) (LD)]

It has been a pleasure to listen to the right hon. Member for Belfast North (Mr Dodds), my hon. Friend the Member for Amber Valley (Nigel Mills), and the hon. Member for Belfast East (Naomi Long). They made very thoughtful contributions, and I appreciate being able to listen to them.

I entirely appreciate, from my own family experience, the challenges as to why there had to be anonymity in Northern Ireland for so many years. I entirely support that, for the reasons that others have mentioned. I have a great deal of sympathy for amendment 2, tabled by my hon. Friend the Member for Amber Valley and the hon. Member for Belfast East, which refers to a £7,500 threshold and has a provision giving people 18 months or so to make whatever substantial donations they make. A lot of thought has gone into the amendment, and in many respects I instinctively understand and appreciate it. The right hon. Member for Belfast North argued for allowing the Secretary of State to have flexibility up until October, because, sadly, the reality in Northern Ireland is that even though there have been enormous advances, things can change on a sixpence. The arguments are therefore very finely tuned.

A key part of normalisation is to make everything as equitable as possible between Northern Ireland and the UK. I fully understand the reasons for the length of time that the process has been given. I think that we are being very sensible in drawing to a close on this. If the Government cannot accept amendment 2, will the Minister categorically assure me that come October 2014 they would be absolutely cognisant of the fact that if another inappropriate excuse for a delay were implemented, it would be a very sad day for this House and for Northern Ireland? I suppose that some eagle-eyed observers will recognise that I am struggling slightly with this and reading between the lines. I would welcome our having equalisation come October 2014. That transparency is vital, and it is the next and final stage. I urge the Minister to make it very clear that while we retain the discretion up until 2014, our default position is to move towards normalisation expeditiously.

[Mark Durkan (Foyle) (SDLP)]

On amendments 7 and 8, tabled by the hon. Member for Belfast East (Naomi Long), I sympathise with the argument that if we stick unquestioningly to the date of October 2014 there is a danger that the same excuse will be given that the security situation does not permit us to move to more transparent arrangements. It is as if the date has been picked almost as a gesture to pseudo-transparency and the hon. Lady is testing that by proposing that it be brought forward. I sympathise with that, but January 2014 would be cutting it a bit fine, given that I assume the Bill will only get to the Lords this autumn.

I believe, however, that there is a case for bringing the date forward from October 2014. Bills are often enacted at the beginning of the financial year and I see no reason why that should not also be the case with this Bill. Members might point out that there are elections due next year, but I would have thought that a starting date of the beginning of the financial year would adequately and competently address the problem. I certainly do not think that the starting date should be after next year’s two intended elections, because that would make it look as though we were legislating with them in mind and almost allowing last orders for donations.

If January were the only date available before October, I would support amendments 7 and 8. I ask the Minister to consider bringing the date forward, because it looks as though the date of October has been set with next year’s elections in mind. Many people are also concerned that, come October, the can will be kicked down the road yet again.

Amendment 2, tabled by the hon. Member for Amber Valley (Nigel Mills) and the hon. Member for Belfast East, seeks to ensure that the real commencement date for transparency is made absolutely clear and unambiguous. We heard on Second Reading, and the Minister has told us in an intervention today, that there is no intention retrospectively to reveal donations, even those made in recent years. A signal has to be sent, however, that there will be a date from which a record of all donations can be revealed when the circumstances allow it. That needs to be made clear and explicit. That is what amendment 2 calls for and I support it, because I do not think the public believe political parties when we tell them that transparency, definition and certainty are not possible and that we cannot give them an unambiguous commencement date for transparency. Amendment 2 goes someway to addressing that deficit in public credence.

As I indicated on Second Reading, I am sensitive to the many risks and threats that people may have experienced because of their involvement in Northern Ireland politics, whether as a candidate, the family member of a candidate, an activist, a member or a donor. However, there comes a point when the public feel that the arguments about security are overdone and are an excuse for secrecy. They are not sure whether secrecy is in the interests of the parties or whether it truly ensures the safety of the donors.

18:30

There is even blurring as to what the donor sensitivity is. There might be commercial or customer sensitivity if somebody is seen to be giving to a particular party. As my hon. Friend the Member for Belfast South (Dr McDonnell) pointed out in evidence to the Northern Ireland Affairs Committee, when people are known to have given to one party, it makes them susceptible to approaches from other parties. I am not sure that that fully answers the question, if the point is that we will know that somebody gave £1,000 to X party one week and £2,000 to us the next. A lot of that information seems to circulate and get out in Northern Ireland anyway. Many people have impressions, reliable or not, of who are the significant donors to various parties.

People often attend party dinners or events at constituency level and are not particularly sensitive about appearing at such events in various publications. There are people who attend events that are attached to several parties. They have their own reasons, justifications and rationales for doing so. It is therefore not the case that everybody is paralysed about doing anything that shows support for or engagement in political parties. We must weigh carefully how far the genuine arguments about commercial sensitivity and security can be deemed to override the compelling requirements for transparency.

I also said on Second Reading that transparency is not needed just so that people can see who is supporting the election costs of particular parties and might therefore have influence on them; it really matters when parties are in a position to take or influence key decisions. The case for transparency has become more compelling in the context of devolution, because many parties take many different decisions. Indeed, parties not only take decisions, but have the ability to prevent Ministers of other parties from taking decisions. Those powers of veto can be exercised on behalf of vested interests as much as they can in the interests of Ministers’ Executive powers or people’s powers at Assembly or local council level. Of course, the councils will be taking on more powers, including over planning. That makes these matters more sensitive.

Other hon. Members have referred to the recent television programme and the issues that have arisen from it. On Second Reading, I put it on the record that my party colleague, Alex Attwood, took the initiative when he became the Environment Minister for Northern Ireland of saying that he would tell officials if he was aware that the person behind a planning application or the person who made a significant objection to a planning application was a donor to his party, so that the information could be recorded and the officials could handle the matter at a sufficient distance from the Minister. The officials made the point that that had not happened before and that it was not necessarily required, but in his view it was required. When we now hear stories, impressions and accusations ricocheting around in relation to companies and political parties and who may be on donor lists, the public concern is palpable. We cannot in this House ignore that. The parties in Northern Ireland, even those who have defended extending security cover and security sensitivity, cannot ignore that. When there are so many questions, people cannot take as the answer, “Well, there is still a compelling need for secrecy and we cannot afford transparency at any level.”

[Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)]

I thank the hon. Gentleman for giving way. On his point about the Environment Minister for Northern Ireland notifying officials when a potential SDLP donor is involved in a planning application, does he know whether that information, when lodged with officials, is subject to the Freedom of Information Act 2000, and is it available to a member of the public?

[Mark Durkan]

As I understand it, it is not, not least because it is not a compelling point. He informs his officials and the matter is handled in a particular way, but that does not put anybody at any risk. I do not believe that Alex Attwood is inadvertently trying to find a way around the provisions and the whole question of protecting things on a retrospective basis; it is about him as a Minister being honest with his officials and with the responsibility entrusted to him to exercise good, clear, honest and independent judgment. It is also about allowing his officials to do that as well, because many of the issues that have arisen in recent days involve concerns that Ministers are intruding into what officials are doing—that Ministers are being overactive in their Departments in relation to matters being handled at an official level. Questions arise about who meets Ministers and whether they record and declare those meetings fully, and whether they account for those meetings in response to questions in Committees. When those questions are being asked, we need to address transparency requirements.

It will not fall to this House and the Bill to provide all the answers to remedy the situation: the Executive and the Assembly will have to address tightening the ministerial code on ministerial meetings and donations. On Second Reading, I made the point that this issue does not just relate to planning decisions, and recent events relate to significant public contracts and public appointments. There have been a lot of questions on whether public appointments in Northern Ireland always follow the standard they are meant to follow. Many people would anecdotally suggest that there is too much coincidence and pattern in some public appointments.

Those are all reasons why we need more transparency. The fact that Northern Ireland is a small place is often used as a reason why we cannot have too much transparency. When I was a Minister, I would have made it known to a civil servant if a relative of mine was appointed to something. I would not have made the appointment, but it would have been for me to take official note of it. I wanted to disclose that, rather than have somebody else find out later on. Where relatives might have had a perceived interest in a particular project, or even a rival project, I would again have made a point of always declaring it. Of course, I was often told by civil servants, “Look, you can’t do that every time. Northern Ireland is too small a place. You can hardly walk down a street without bumping into people. You couldn’t throw a stone without hitting somebody that you know or are related to.” [Laughter.] That is not particularly good advice and is not the way I would usually want to make contact with people—even I might tweet first before doing that. The smallness of Northern Ireland can become an excuse for not having proper standards of transparency. That smallness is one of the reasons why it is necessary. The danger is that slippage in one area becomes an excuse for slipperiness in another. We should not allow that to happen. I have been definite about my support for making stronger moves on transparency, which is why I support amendment 2.

[Vernon Coaker]

On increasing transparency, does my hon. Friend think that the confidence of people in Northern Ireland would be increased if there was a statutory duty in the Bill to consult with the PSNI before arrangements were changed?

[Mark Durkan]

That could well be a pertinent point; the shadow Secretary of State makes a very good point. When it comes to security concerns, in many other instances, we treat the Chief Constable almost as an oracle. No doubt, the Minister will tell us that in any decision that he and the Secretary of State take, they reference information from the Chief Constable and other intelligence assessments, but it would be useful if that was in the Bill. Similarly, there is the role of the Electoral Commission; we know of its support for the amendments.

Amendment 6 would remove the right of anybody resident in the south of Ireland to make a donation to a party operating in the north of Ireland. I addressed this issue on Second Reading. I represent a border constituency in a regional city that serves both sides of the border in the north-west and which has strong links with neighbouring towns and areas. As such, the economic interest of the north-west is of cross-border economic interest. The same goes for the social fabric of the north-west: most families have a strong cross-border dimension, with many people living and working on a cross-border basis. Many people who work in the north live in the south, and vice versa, which is reflected in complicated—more so than they should be—arrangements for cross-border workers in respect of tax credits and other things.

When such cross-border life is part of the come-and-go flow of life, it extends to politics as well, because people have a strong interest in what happens in the region and want to offer political support, particularly if they are living temporarily in the south, but are from the north originally and might live there again or if they live in the south and have strong business interests in the north. It is natural. They do not regard themselves as being abroad when working or living in Donegal or Derry. They do not regard themselves as engaging in daily international travel.

[Mr Gregory Campbell (East Londonderry) (DUP)]

The Member is coming very, very close to asking Donegal to return to the United Kingdom.

[Mark Durkan]

No, I’m not. Donegal is well placed where it is, so close to Derry, and Derry is well placed and well favoured where it is, so close to the bounteous beauty of County Donegal.

At a wider level, there are parties in Northern Ireland that see us as being part of the body politic of the island as a whole—it is our natural body politic, just as the population of the UK as a whole is the natural body politic for those of a Unionist identity in Northern Ireland. The idea, therefore, that when it come to our politics—our political agenda, our political offer, our appeal for support—our natural broader political hinterland, our natural political family, should be precluded from giving political donations to us would be wrong and unequal. It would be absolutely wrong if Unionist parties were able to receive donations the length and breadth of the United Kingdom, including the whole of the island of Great Britain, to which they have such affinity, but nationalist parties in Northern Ireland could not receive contributions from people throughout the island of Ireland who want to support them.

18:45

There are some parties, such as Sinn Fein currently, that are organised on an all-Ireland basis. They should not be precluded by any new arrangement from being supported in that way. The option is available for other parties as well. My party operates support groups in the south, and always has done. The ability to operate support groups in the south was one of the things that gave many people in the south of Ireland a responsible and effective channel through which to back constitutional nationalism and support the sorts of things that we now have in the Good Friday agreement during the dark years of violence from physical-force republicans and intransigence from “No! Never!” Unionism. It is important that the wider contribution—the literal contribution—of people throughout the island should be respected.

However, I note the Northern Ireland Affairs Committee’s concerns that, in allowing continued donations from the Republic, care must be taken to ensure that only legitimate donations pass muster and that donations cannot be used as any sort of cover for getting round the wider provisions on truly international donations. That can be addressed not just by clearly requiring that donations can come only from those on the register in the Republic, but by adding clearly that anybody making a donation must make a formal declaration, for which they will be liable, that it is their money and has not been given to them by anybody else from anywhere else. Similarly, that declaration should have to be made by those receiving the money.

The system has to be made compelling in that way, because we have had enough of all the pseudo-transparency, where parties say, “Oh, our money comes this way and that way, and we publish things on the website.” However, as the hon. Member for Amber Valley said, when we go looking for the things that are supposedly published on the website, they are not there. I therefore totally oppose amendment 6.

[Naomi Long]

Just to clarify, will the hon. Gentleman confirm that he is not referring to my party’s website, where such information is easily found? I understand who he is alluding to, but it is not us.

[Mark Durkan]

I assure the hon. Lady and her party colleagues that I certainly did not want any stray fire to land on their reputation in that regard, so I am glad to affirm that point.

However, our opposition to amendment 6 is about putting things on a level playing field for all the parties in Northern Ireland, whether nationalist, Unionist or neither. As political realignment hopefully takes shape over the years to come, there will be all sorts of shifts in how parties present themselves, on either an all-Ireland or a wider-UK basis, and how far their nationalism or Unionism is emphasised. That is why donations should be available for parties from throughout the UK and from throughout the island of Ireland. That seems to me to be fair.

[Mr Dodds]

I am interested in what the hon. Gentleman is saying about both the donor and the recipient making a declaration. Currently, the rules mean that individuals or companies in the Irish Republic can provide funding to Northern Ireland parties, but that is not permissible when it comes to funding for parties in the Irish Republic, so the position is even worse. How does he think his suggestion can combat that problem?

[Mark Durkan]

The right hon. Gentleman raises a point that throws up the conundrum that, although we are trying to legislate for Northern Ireland in broad conformity with UK legislation as it is applied for parties here, because of the circumstances in Northern Ireland, the exception is to allow donations from the south. Then there is the discrepancy in the donations rules for people in the south, whereby they can donate under one set of rules to parties in the south and under another set to parties in the north. Perhaps there is a case for saying that we should try to arrive at some conformity on donations across the island of Ireland, or that donations from the south of Ireland should conform to the southern Irish rules as well. I do not have a problem with trying to finesse some of these issues so that we are not left with too many obvious conundrums. However, the answer to the question that the right hon. Member for Belfast North (Mr Dodds) has asked is not provided by amendment 6. It is not the answer to his very valid, pertinent and relevant question about the different standards for people from the south contributing donations.

I made the point on Second Reading that there were many people in the south who were originally from the north, or perhaps from this island, who had a valid and benevolent interest in the affairs of the north and who continued to make a contribution there, often through membership of public bodies. I also made the point that not all of them had been appointed to such bodies by nationalist Ministers. If such people are seen to have a valid role and to make a credible input in the best interests of Northern Ireland by way of a public appointment, I do not see why they should be precluded from doing so by way of donations to political parties.

[Mr Laurence Robertson]

It is a pleasure to follow all the right hon. and hon. Members who have spoken so far. I intend to make only a brief contribution to the debate, as many of the points have already been raised. I note that amendment 2, tabled by my hon. Friend the Member for Amber Valley (Nigel Mills), uses the word “may”, rather than “shall”, which is in keeping with the rest of the clause that he is seeking to amend. The Select Committee feels that we should move forward in this respect, and that we should try to normalise politics in Northern Ireland. I know that that was the ambition of the previous Secretary of State and the previous Minister, and it is fair to say that it is also the ambition of the current holders of those positions. It has been our guiding principle. Each and every political party that the Committee spoke to during the course of the inquiry approved of moving towards greater transparency.

Everyone on the Committee, myself included, recognises that there is a different security situation in Northern Ireland. The Committee has had a sufficient number of meetings, and paid a sufficient number of visits to Northern Ireland, to understand that fact. Further to my earlier intervention on the right hon. Member for Belfast North (Mr Dodds), a question that has frequently been asked is: why should the arrangements be different for donors and for those who participate in the elections? The right hon. Gentleman gave an explanation for why people might want to be donors but not candidates, and I understand that, but I am still not clear why a donor should be at greater risk or under a greater threat than someone who is standing for office for a political party. I would have thought that it was the other way round. People who support a candidate, largely by signing nomination papers, would surely expose themselves to the same risk.

It has been pointed out that if a business makes a donation, it could put them at a commercial disadvantage, but it is up to the business to make that decision. There is a Co-operative store close to my office in Tewkesbury. The Co-op has supported the Labour party for many years, and I have to make the decision whether to go and buy a carton of milk and a newspaper from that shop. It happens to be close to my office and very convenient, so I do that. I do not think that businesses should be able to hide behind the argument of a security risk in order to protect their business interests. If they make a donation to a particular party in Northern Ireland or elsewhere in Great Britain, they should take that commercial risk. That should be part of the normal run of politics.

I am somewhat intrigued by the substantive clause inasmuch as it allows the Secretary of State to increase transparency, but does not allow her to reduce it. Having looked very closely at the provisions, I am still slightly confused on this point. If the Secretary of State increases transparency, can she reduce it at some later date? In other words, she cannot reduce transparency from where it stands now, but can she reduce it if she has increased it in the future?

I make that point because if she cannot reduce it, where have we got to? What would be the difference from what my hon. Friend the Member for Amber Valley proposes? Let us say that the Secretary of State increases transparency, but in the year after that, the security situation—heaven forbid—got worse, so that she had to come back to introduce primary legislation to change that position. In those circumstances, I do not really see what would be any different from my hon. Friend’s proposal.

The Select Committee and I would certainly be against the publication of any information retrospectively when donors have made donations in the belief that that would not be the case. I am slightly concerned about the wording in clause 1, however, which it states:

“Such information may be disclosed if the Commission believe, on reasonable grounds, that…the relevant person has consented”.

We tried to strengthen that provision, saying that there had to be evidence that the person had consented. The Government response was that if they adopted our proposal, it would create an absolute offence and a mistake could be made. I am not completely persuaded by that argument. I think that the clause does need strengthening to ensure that a mistake cannot be made in this respect and that there has to be a clear indication from the person or organisation that made the donation that permission has been given for any such disclosure. I thus seek clarification from the Minister on those points.

[Jim Shannon]

I would like to say a few quick words on amendment 2, as proposed by the hon. Member for Amber Valley (Nigel Mills), and to put a different perspective on it. First, however, I wish to say that I have had a number of discussions with the hon. Gentleman and that we have served in the Finance Bill Committee together, as we have on Delegated Legislation Committees. I know that his interest is sincerely held and it is one that I respect. I was nevertheless struck as I read the briefing for this debate by its tone, and I would suggest that there is a reason for caution—anything further being an exaggeration.

My party, the Democratic Unionist party, is very much in favour of openness and transparency. We are also well aware of the security situation in Northern Ireland and of the fact that the dissidents are still very much on operations, which means that we cannot have one-size-fits-all legislation. It cannot happen; it is not like for like. Those who say that the people should stand up to intimidation show only the fact that they do not care or perhaps do not understand that people in Northern Ireland still live a life that carries a degree of anxiety—not just in historical cases, but in issues that are still ongoing today for communities across the whole of Northern Ireland. I accept that it is not to the same extent as in the past, but none the less there are still threats in my constituency and in others across Northern Ireland.

As someone who, like others, works within the community, I understand the real fear that people experience and I do not believe that it can be so easily dismissed as some people have suggested. Our security situation cannot be regulated to a date, as dissidents certainly do not respond to deadlines. Although I fully understand and agree with the necessity for transparency that has been put forward, this cannot be put before the security concerns of people and businesses, which are real and justified. To suggest otherwise would be to hope naively for the best, which is a good thing in principle, but not when people’s lives are at stake.

I have to say—I hate to say it, as well—that extortion of a sectarian nature is not a thing of the past when it comes to Northern Ireland. It still happens today; incidents are taking place. There is a very real possibility that if a business is seen to be donating to political parties, it might come under pressure to donate to other groups, perhaps those of an unsavoury nature. As my right hon. Friend the Member for Belfast North (Mr Dodds) said to the Committee, businesses can feel that they have been boycotted by customers whom they have had for years. There is a real issue for those people; it is not an exaggeration or a remote ideal. Is this what is intended by the legislation before us tonight? I do not believe so. I do not believe that the Bill is intended to scare off people who wish to contribute to a party. However, that will be a side-effect of it. People will fear that their homes, their businesses or, indeed, their families will be at risk, and that cannot be ignored by any Member in any part of the House.

19:00

I do not believe that we have reached a stage at which people can freely publicise their political ideals in any circumstances without fear of reprisal. As I have said before, in this debate and in others, security concerns are paramount for me, and they should be paramount for the House when it legislates. Can I, in all conscience, legislate in a way that would put people at risk because they support a political party, as is their right? I do not believe that I can, and I sincerely ask all other Members whether they can do likewise.

We must be open, but we must also be wise. I believe that wisdom dictates that the status quo should be extended for a further two years, as proposed by the Minister and by earlier speakers, and that it should be judged again at that stage. I do not believe that we will never reach a stage at which publication becomes safe, and I firmly believe that that is the direction in which we should be heading, but the fact that we see a signpost to a destination does not mean that we have arrived, and in this instance “better safe than sorry” definitely applies.

I cannot support amendment 2, but I commend amendment 6, which was tabled by members of my party and presented very eloquently by my right hon. Friend the Member for Belfast North. I believe that it presents us with a way forward in the Province.

[Ms Ritchie]

rose—

[The Temporary Chairman (Mr Philip Hollobone)]

The hon. Lady has been very patient, and now her moment has arrived.

[Ms Ritchie]

Thank you, Mr Hollobone. I wish to speak to amendments 7 and 8 and amendment 6.

Given that we are living in a more normal society in Northern Ireland—although the degree of that normality varies, and we have seen it ebb and flow over the last few months—I believe that the anonymity relating to donations could now be lifted, not necessarily next October but perhaps at an earlier date, as suggested by the hon. Members for Belfast East (Naomi Long) and for Amber Valley (Nigel Mills).

I cannot disagree with what I understand to be the intended purpose of the amendments. It is important that, in trying to achieve a greater level of political maturity and in the practice of politics generally, we strive to achieve the highest standards of public life, whether we are serving our constituents or executing our parliamentary duties here at Westminster and in the Northern Ireland Assembly. The public ask us to serve them, and the duty to serve them is in our contract with them when we are elected as members of political parties. The electorate rightly demand from us the highest standards in public office in the execution of that contract, and it is important for the guiding principles of transparency, openness and accountability to constitute not just the pillars on which our fledgling democracy is built, but the rules that govern donations to political parties serving us in public life and wider civic society.

Like my hon. Friend the Member for Foyle (Mark Durkan), I acknowledge that there may be concern about security issues—concern that was expressed by the leader of our party when he gave evidence to the Northern Ireland Affairs Committee. There is a need to protect donors, because some of them—and some parties —fear that they may might be at risk from a terrorist or other threat. However, if we have learned anything over the last few months—and over the last few days, when television programmes have contained revelations about alleged political interference in certain bodies—it is the importance of giving some form of resilience and confidence to the public.

In that respect, I do not have any problem in supporting the amendments of the hon. Member for Belfast East, although it will not come as a surprise to learn that I do not support the amendment in the name of the right hon. Member for Belfast North (Mr Dodds) because like my party colleague, my hon. Friend the Member for Foyle (Mark Durkan), I believe we live in the island of Ireland. I believe that fervently as a democratic Irish nationalist, but notwithstanding that, I represent a border constituency, and many people at the southern end of it daily travel to places of employment in County Louth. They pay taxes sometimes in both the north of Ireland and the Republic of Ireland. They also have their children educated in the north, and they buy goods and services in the south and the north. There is that exchange of ideas and people. They view people in County Louth, albeit it is in the south of Ireland—in the Republic of Ireland, a different jurisdiction—as their neighbours and friends. In those circumstances, with that exchange of people and ideas, I cannot support this amendment. I am sure DUP Members will perfectly understand where the parliamentary party of the SDLP is coming from in that respect.

I also believe that we need to see progress on a whole range of matters, however. Mr Haass has been appointed today to chair the all-party talks on flags and emblems and reconciliation. It is important that we move towards that in the next phase of devolution so we can see the full implementation of the Good Friday agreement, including support from the British Government for a Bill of Rights that is dedicated to the needs and requirements of Northern Ireland.

[Lady Hermon]

May we clarify one little point of conflict between the hon. Lady and her colleague, the hon. Member for Foyle (Mark Durkan)? He supported the thrust of the amendments in the name of the hon. Member for Belfast East (Naomi Long), but he suggested that January was a bit too soon and perhaps the tax year would be better. However, the hon. Member for South Down (Ms Ritchie) has just said she supports the amendments of the hon. Member for Belfast East, so is it January, or is it March and the tax year, or has the hon. Member for South Down got further ideas?

[Ms Ritchie]

It was my very clear understanding that my hon. Friend the Member for Foyle said that if the hon. Member for Belfast East were to press her amendment to a Division, he, like me, would support her—although I think I might be a Teller in such a Division. We in the SDLP believe that there is a need to move towards greater transparency and accountability. That can be balanced against the political progress we are making in the interests of the public good and, above all, the wider needs of society in Northern Ireland, because the experience of the last few weeks tells us that the public want politics to move in that direction. They want us, while serving them, to exercise our job in the right and proper and accountable manner.

[Stephen Pound]

We have heard a great deal this evening about the threats and dangers that could possibly be attracted to party political donors. It is perhaps salutary to mention that if such threats exist to those who donate to political parties, credit should be given to those who have the courage to participate fully in the democratic process as candidates and elected representatives, and perhaps we in this House do not give enough credit to those who sit with us in this Chamber and who take the most extraordinary risks in conditions that are frequently beyond the imagining of us on this side of the water. Many right hon. and hon. Members sitting here tonight have had very close personal experiences in that regard, so when we talk about the threat to donors let us also salute the courage of those who participate fully in the democratic process.

May I, in these brief remarks, say that I thought that the right hon. Member for Belfast North (Mr Dodds) showed his fine—I was going to say almost Jesuitical subtlety but he probably would not thank me for that—analysis of the situation when he referred to the need to advance incrementally and organically? It is one thing to legislate, but we cannot legislate for human behaviour; we cannot demand that people’s behaviour and instincts change, and that society and culture change, because a piece of law has been approved in this House. A cultural change, an organic change, has to take place, and that is, of necessity, a slow process; it is an incremental process. None of us disagrees with the desirability of the destination; we all want to be in that place. It is the road map and the route we are talking about today. In the particular circumstances of politics in Northern Ireland, proceeding festina lente—I hope hon. Members will forgive me a spot of Latin—should be our watchword on this occasion. In recognition of that, the proceeding slowly and cautiously option is by far the best one. I look forward to hearing from the Minister, possibly also on the subject of transparency of the Conservative party in Northern Ireland.

[Mike Penning]

It is a pleasure to serve on this Committee of the whole House under your chairmanship, Mr Hollobone. As usual, we have had a wide-ranging debate on the provisions. I wish to make two personal comments. First, may I apologise on behalf of the Secretary of State, who would have been here but for the fact that, as Opposition Members know, it is right and proper that she is in the Province this evening as there are important matters to be dealt with there? It is right and proper that I acknowledge that she would have been here and she particularly wanted to deal with clauses 1 and 2. May I also say a personal thank you to right hon. and hon. friends in the House who have sent me notes and stopped me in the corridors following the tragic loss that my family have had in the past couple of days? The comradeship of this House has helped me through, especially as I was giving evidence to the Select Committee when my father-in-law passed away.

This debate has taken place with the perfect tone, and people watching this debate, particularly if they are doing so in Northern Ireland—I hope they are and I hope the BBC covers it properly—will be impressed. We probably all disagree about many of the issues; one of my colleagues came up to me saying, “Who agrees on what here?” We all agree that Northern Ireland has come a huge distance in the past 15 years but still has quite a long way to go. I would love to be able to stand here and say that I can agree with amendments 7, 8 and 2, but I cannot.

The office I hold means that I see things that I had hoped I would never see, and there are things I cannot repeat on the Floor of this House. May I pay tribute, as the shadow Minister did, to those who stand for office in Northern Ireland, whether in this House or any other elected body, because they stick their head about the parapet? As so many in this House, in the Assembly and in local government know, that very often puts them and their families under threat. We heard on Second Reading about the terrible atrocities of the past. Sadly, some of those threats remain today. Of course I add the caveat that we have come an awful long way but, as I said on Second Reading, I have to look daily at protection for people—close protection weapons, home protection and so on. Some of these people are elected but the vast majority are just going about their normal work to protect us. Sometimes they are not even in the public sector. I know we will never be in a perfect situation in which there is no threat to anybody, but while there is a threat I must be very careful to ensure that those who wish to donate and their loved ones are not put at risk by revealing their identities. Clauses 1 and 2 move us forward, slowly but surely, as we have for the past 15 years, and I thank the shadow Minister for supporting me in that regard. As I said, we would all love to be in a completely different position. I know that some hon. Members do not agree with me, and I completely respect them and their view, but the Bill moves us forward, although perhaps not at the speed that some would like.

19:15

[Naomi Long]

I acknowledge that the Bill moves us forward. That is welcome and I welcomed it on Second Reading. Will the Minister clarify exactly how my amendments 7 and 8 would pose any threat to security, given that all they would provide is that from January any donations made would be subject to publication once the Secretary of State deemed it was safe to publish?

[Mike Penning]

I completely understand where the hon. Lady is coming from. The whole Bill went through pre-legislative scrutiny, and we are not discussing semantics —it is much more serious than that. We are saying that the Secretary of State will take the powers and that, if we are in a secure position, we will move forward. As mentioned earlier—I think the Chairman of the Select Committee, my hon. Friend the Member for Tewkesbury (Mr Robertson), asked about this—the Secretary of State also has the statutory power to revoke.

[Lady Hermon]

I am extremely grateful to the Minister for taking a second intervention so soon after the first. I was very concerned when the Minister wound up on Second Reading and used an expression that struck me—and, I am sure, other right hon. and hon. Members —at the time:

“If one person is put at risk, that is not right.”—[Official Report, 24 June 2013; Vol. 565, c. 118.]

Although I cannot speak for others, I inferred that if one donor felt he or she was at risk the transparency measures would not be lifted by the Northern Ireland Office. Will the Minister take this opportunity to clarify when it will ever be the right time—when we have no risk at all?

[Mike Penning]

That is a good intervention. I read what I said the following day, as all good Ministers should—as all good Members should, to be honest—and I was speaking metaphorically. I was not speaking about an actual physical individual, because of course that would be a crazy situation. We would never, as hon. Members have said, get into a position where there was no threat to anybody. Let me clarify: I was speaking in general terms, rather than individually.

Let me touch on the threat. My job is not only to ensure, along with the Electoral Commission, that the electoral system in Northern Ireland runs properly but to ensure the national security of Northern Ireland. There might be concerns about individual businesses, and I think that this applies to businesses that give donations to any political party in the UK—we have talked about the Co-op—and they suffer any consequences, but that is completely separate from the intimidation and personal threats I see daily.

The shadow Secretary of State asked whether it should be on the face of the Bill that the PSNI should be a consultant. This subject is much more wide ranging than the PSNI; we could do that, but we do not need to. As the hon. Member for Foyle (Mark Durkan) said, it is more wide ranging and involves the other security services that are helping us and that helped us so brilliantly during the G8.

Amendment 6 stands in the name of the right hon. Member for Belfast North (Mr Dodds). I am told that I should not say this, but I have some sympathy with the argument, in that we need to move forward. I will not accept the amendment—he probably understands that—but if we are talking about normalisation, I accept that there need to be discussions between the Government in the south, us, and all the political parties on how we can get to a slightly better position. I very much take on board the point that the Good Friday agreement set out that there is a different situation in Northern Ireland when it comes to donations and political parties. Of course, there is a cross-Ireland political party that has had Members elected to this House, but it is not represented in the Chamber today.

I am committed to ongoing discussions, and to seeing how we can move the issue forward. I cannot accept amendment 6, but as that commitment is, I think, roughly what the right hon. Gentleman asked me to give, hopefully he is happy with that. I ask hon. Members to withdraw amendments 7, 8, 2 and 6, and commend clauses 1 and 2 to the Committee.

[Naomi Long]

I thank hon. Members for their contributions. When we discuss this issue, it is natural that we focus heavily on the threat to donors from terrorism. I do not dismiss that, and I do not dismiss the point that the threat level is severe. However, no compelling evidence was presented to the Select Committee during our inquiry to show that the threat specifically targeted donors. People remain willing to sign councillors’ nomination papers—people who do not want to lift their head above the parapet and be elected representatives, but who are willing to have that information published.

The Chairman of the Select Committee highlighted clearly that a boycott could happen in any part of the United Kingdom, and that that is not a compelling reason for the current arrangements, so we need to be cautious about conflating those two things. However, although we naturally focus heavily on the security threat, we must also focus heavily on the wider threat to the political process that the lack of transparency is becoming in Northern Ireland. The suspicion that politics operates for the benefit of those with the means to buy influence is utterly corrosive to the democratic process. It taints all of us as politicians, and it puts the institutions under threat, as the public disengage from politics as a result of that perception.

Confidence in Northern Ireland politics is at a low ebb, and only through increased transparency, and increased speed of delivery of transparency, can we meaningfully address that. I have listened carefully to what the Minister said, and while I understand and accept many of his points, I cannot accept that a coherent argument has been made to say that amendments 7 and 8 would pose any threat to the security of any individual.

[Mike Penning]

I know that the Select Committee took evidence, but a lot of the evidence that could perhaps have convinced the hon. Lady could not be given to the Select Committee. She cannot see the evidence that we see daily. Nobody in this House is more determined that there should be democracy than I am, but to push something forward without that knowledge is dangerous.

[Naomi Long]

The evidence that I am seeking is not evidence of the security threat. The evidence that I am referring to is evidence that amendments 7 and 8 would in any way compromise anyone’s security. The amendments leave it to the Secretary of State to decide when that information should be made public—she currently has that power—but make it clear that anyone making a donation after January 2014 will eventually have that fact made public when the Secretary of State and the Minister of State are confident that it is safe to do so, in the light of all the information that they see and we ordinary Members of Parliament do not. There is no compelling argument against amendments 7 and 8; they are supported by the Electoral Commission, and I would like to press them to a vote.

[Mark Durkan]

Does the hon. Lady recognise that the events of recent days mean that the concerns that lie behind her amendments are clear and present concerns of the public, and are felt profoundly? It is a bit much for the Minister or anybody else to conduct this debate as though those concerns were not there.

[Naomi Long]

I agree entirely. There is a serious risk if people no longer trust their politicians and no longer trust their institutions to act in the public interest. The only way we can overcome that is by clearing the matter up. No party can easily defend itself while this information remains secret. I am willing to accept the Secretary of State maintaining the discretion as to when the information will be published, but I see no risk to anyone from a decision being made now that makes donors and parties aware that anything donated after January will be made public, when the Minister of State and the Secretary of State are convinced that it is safe to do so.

[Mr Dodds]

To be absolutely clear, what the hon. Lady is talking about is bringing forward the date from October to January. That would not have any effect on any donations up to now or any donations before January next year, so in relation to the wider issues and the context in which we are speaking about this, the measure would take effect only from next year. Is that right?

[Naomi Long]

That is absolutely correct. I made it clear on Second Reading that I would be in favour of any measure that retrospectively exposed donors to publication. I believe that would be unjust while there is a legal question about whether they had the expectation that donations made in the prescribed period would not be made public. At a very personal level, they understood that to be the case. If we are to have honour and integrity in politics, that should extend to people’s understanding of agreements that have been made, so I would not favour retrospective exposure. Only donations made after January would be affected and that would come about only after the Secretary of State had ruled that it was safe to do so. I therefore wish to press the matter to a vote.

Question put, That the amendment be made.

19:26

Division 52

Ayes: 16

---

Labour: 6
Democratic Unionist Party: 6
Conservative: 2
Social Democratic & Labour Party: 1
Independent: 1
Alliance: 1

Noes: 294

---

Conservative: 196
Labour: 58
Liberal Democrat: 38

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3

MPs to be disqualified for membership of Assembly

[Naomi Long]

I beg to move amendment 10, page 4, line 5, after ‘Commons’, insert ‘or House of Lords’.

[The Temporary Chair (Mr Philip Hollobone)]

With this it will be convenient to discuss the following:

Amendment 11, page 4, line 7, after ‘Commons’, insert ‘or House of Lords’.

Amendment 12, page 4, line 11, at end insert—

‘(2) A person who becomes a Member of the House of Lords is not disqualified under section 1(1)(za) at any time during the period of 8 days beginning with the day the person becomes a Member of the House of Lords.’.

Amendment 13, page 4, line 30, leave out from ‘members)’ to end of line 31 and insert ‘leave out “either House of Parliament.”.’.

Clause stand part.

Amendment 14, page 4, line 36, after ‘Ireland)’, insert ‘or Seanad Éireann (the Senate of Ireland).’.

Amendment 20, page 4, line 36, at end insert ‘or Seanad Éireann (Senate of Ireland).

(dc) is a member of the House of Lords.’.

Amendment 15, page 4, line 38, after ‘Éireann’, insert ‘or Seanad Éireann’.

Amendment 3, page 4, line 41, at end add—

‘(3) In section 1(1) of the Northern Ireland Assembly Disqualification Act 1975 (disqualification of holders of certain offices and places) before paragraph (a) insert—

“(za) is a member of the European Parliament;”.

(4) After section 1B of that Act (as inserted by section 4(2)) insert—

“1C Members of the European Parliament

A person returned at an election as a member of the Northern Ireland Assembly is not disqualified under section 1(1)(za) at any time in the period of 8 days beginning with the day the person is so returned.”.’.

Clause 4 stand part.

Amendment 16, in clause 5, page 6, line 13, leave out from ‘MPs’ to end and insert

‘, members of the House of Lords or members of the Oireachtas).’.

Amendment 17,  page 6, line 28, leave out from ‘MPs’ to end and insert

‘, members of the House of Lords or members of the Oireachtas); and’.

[Naomi Long]

I intend to keep my remarks on this group of amendments brief. I welcome the fact that the Government have acted on their promise to ensure that double-jobbing between MLAs and MPs will now be brought to an end. I also recognise that, as a result of discussions in the Northern Ireland Affairs Committee, the Government have moved to include within that provision Members of Dail Eireann so that TDs, too, will not be able to hold a seat in the Assembly. I think that it is right that they have done so and welcome that move. [Interruption.]

[The Temporary Chair (Mr Philip Hollobone)]

Order. I am trying to enjoy what the hon. Lady is saying, but unfortunately there is a lot of chatter coming from behind the Speaker’s Chair. I am sure that hon. Members would like to hear more clearly the very important points she is making.

[Naomi Long]

Thank you, Mr Hollobone.

As I was saying, I welcome the fact that the Government are dealing with and resolving the issue of MP-MLA double-jobbing. That is a huge improvement. As a result of the Select Committee’s discussions, the Government have also moved to resolve the issue of TDs, who could also sit as MLAs, and to equalise the situation. That is also important and I welcome it at the outset.

The Government did this for good reason, which is the challenge of being in two legislatures at the same time—

[Mike Penning]

On a point of order, Mr Hollobone. I am afraid that even from this position on the Treasury Bench I cannot hear a word that is going on, mostly because of conversations at the other end of the Chamber.

[The Temporary Chairman (Mr Philip Hollobone)]

That is indeed a point of order, for a change. May I ask hon. Members who are not staying to listen to the debate to leave or to remain quietly?

[Naomi Long]

Thank you very much, Mr Hollobone. It is unfortunate that the noise blotted out all the praise that I was heaping on the Government, because I am just about to stop and start to highlight areas where they have not been quite so generous. However, I do appreciate that these issues are being addressed. I very much support that, as did the Select Committee.

These provisions are being proposed for a very good reason. Serving in two legislatures involves the physical challenge of being in two places at once. The conflict in sitting times between the House of Commons and the Northern Ireland Assembly means that Members who wished to be here today for this business would have to be absent from the Assembly, where they could be questioning Ministers and holding them to account. There is significant evidence that that creates a democratic deficit either there or here.

The problem is not restricted purely to Members who sit in the House of Commons. I recognise that the House of Lords is not structured in the same way as the Commons. Its Members do not have an electoral mandate and therefore do not have the same demands on their time with regard to constituency business. However, as a revising Chamber with a primary focus on legislation and scrutiny, it is hugely important that its Members are free to dedicate themselves to that task without the interference of a constituency burden and the other legislature that they would have to deal with when they are at the Northern Ireland Assembly.

[Nigel Mills]

I agree with the hon. Lady. Does she accept that, as I propose in amendment 3, this must apply even more to the European Parliament, which is even further away and has some kind of elected legitimacy, at least while we are in still in the European Union and it is relevant to us? I cannot see how someone can serve in Brussels and in Belfast at the same time.

[Naomi Long]

I will come to the hon. Gentleman’s amendment shortly. I understand that European Parliament legislation precludes people from serving in the Assembly at the same time as in the European Parliament. Perhaps the right hon. Member for Belfast North (Mr Dodds) would be able to advise whether that is the case. If not, I would welcome the issue being resolved in the Bill and would support the hon. Gentleman’s amendment if it achieved that.

It is not only about distance but about simply having the time to commit to doing the job that one is supposed to be doing. The House of Lords plays an important role in acting as a revising Chamber for this House. Someone who is a peer and also an MLA will not be able to commit themselves fully to either body, and that is unfortunate. The situation is exacerbated by the direct conflict between the sitting times of the Assembly and the House of Lords, particularly on Mondays and Tuesdays but also extending into the rest of the week, when people would be on committee business in the Assembly. The Assembly committees are extremely powerful instruments, and it is therefore important that Members play a full and active role in them.

I also recognise that remuneration for the work of a peer is different, which reflects the fact that many peers have careers outside Parliament that may on occasion conflict with the sittings of the House of Lords. I made it clear on Second Reading that I was content for this matter to be resolved in the context of wider reform of the House of Lords, and it was initially indicated that that would be the case when we discussed this during and after the Bill’s consultation period. However, given that House of Lords reform has not progressed and looks unlikely to do so in, let us say, the short term, it is important that the Government revisit the possibility of taking action in this Bill in order to ensure that Members of the House of the Lords and those who are elevated to it do not continue to sit in the Northern Ireland Assembly. If membership of this House disqualifies people from serving in the Assembly, I believe that the same should be true of membership of other Parliaments.

19:45

I do not believe it is acceptable that someone who sits in the Seanad, the upper House of the Dail at the Oireachtas, is technically allowed to hold a post—although no one does—in the Northern Ireland Assembly. I think that is wrong. I am glad that the Government have addressed the issue of the Dail, but I believe they should address the Oireachtas as a whole, so my amendments also seek to exclude Members of Seanad Eireann from being able to sit in the Northern Ireland Assembly. I believe that that would be consistent with the approach to the House of Lords. Both deal with legislative matters, which the Government gave as their primary reason for excluding MPs and TDs.

I would suggest that all those arguments also apply to Members of the European Parliament. I have been unable to unravel—let us put it that way—precisely whether Members of the Assembly are specifically excluded from being MEPs, but history shows that any Assembly Member who has been elected to the European Parliament has stood down. I therefore support amendment 3, tabled by the hon. Member for Amber Valley (Nigel Mills), which would clarify the issue in domestic legislation and make it clear that it is not the will of this Parliament that people should be able to hold both posts.

The report of the Northern Ireland Affairs Committee acknowledges that those are important issues. We note in paragraph 66 that legislation on dual mandates

“should be applied consistently across both Houses of Parliament”

and ask

“that the Government include a provision in the substantive Bill to this effect.”

Moreover, in paragraph 75 we say that it would be “illogical” to allow

“a position whereby a member of the UK Parliament was excluded from being an MLA but a member of another legislature was not.”

I think that that stands the test of scrutiny and hope that even at this stage the Minister will be able to offer us some comfort on these matters.

[Nigel Mills]

It is a pleasure to follow the hon. Lady and I agree with most of what she said. Indeed, when the Northern Ireland Affairs Committee considered the Bill we welcomed the Government’s decision to legislate to abolish double-jobbing between this place and the Northern Ireland Assembly, and we suggested that if the Government were going to go down the route of legislating on one lot of double-jobbing, they should do so for all manner of double-jobbing in order to be consistent. It is welcome that the Government listened to the Committee on the issue of Members of the Irish Parliament. If it is right to block Members of this Parliament from being Members of the Assembly, it would have been iniquitous to not also block Members of the Irish Parliament. That is a welcome change.

We accept the need to legislate to end double-jobbing between the Parliament in London and the Assembly in Belfast, but I find it difficult to understand why the Government think there is no need to end it in the context of the European Parliament in Brussels. I see from the Government response to the Northern Ireland Affairs Committee report that they see no need for that because no concern has been raised.

The Government consider that if that was done, it should apply across the United Kingdom and not just in Northern Ireland. However, the same argument would apply to ending double-jobbing between this place and the Scottish Parliament and Welsh Assembly, but the Government are proposing legislation only for Northern Ireland. I believe that legislation is planned for Wales, but I am not sure of the position on Scotland.

It is therefore hard to see the logic of legislating to stop Members of Parliament sitting in the Assembly, but not to stop Members of the European Parliament sitting there. Surely if we think that that is wrong, we should legislate on it as a matter of principle and say that people can choose whether they sit in the Assembly or another Parliament, but they cannot do both. That is the simple logic behind amendment 3.

I see no reason to detain the Committee. The hon. Member for Belfast East set out all the good reasons for banning double-jobbing. The people of Northern Ireland think that that should happen and all the parties over there have voluntarily agreed that it will happen from the next general election. In my view, that should also apply to the next European Parliament election, which is due to take place in just under a year. I therefore commend amendment 3 to the Committee.

[Mark Durkan]

The intention of amendment 20, which appears in my name and that of my hon. Friend the Member for South Down (Ms Ritchie), is to achieve exactly the same effect as that outlined by the hon. Member for Belfast East (Naomi Long) in respect of her amendments. The Clerks said that amendment 20 would be the best way to achieve the principle of one Member, one Chamber. However, I am open to supporting the other versions that would get us to the same point, namely the amendments tabled by the hon. Member for Belfast East. I also note the extension of that principle in the amendment tabled by the hon. Member for Amber Valley (Nigel Mills), which refers to the European Parliament.

Oddly, the provisions on Members of Oireachtas Eireann being Members of the Assembly date back to a situation involving a prominent and senior member of my party, Seamus Mallon, who was deputy leader of the SDLP. In the 1980s, his membership of the Northern Ireland Assembly was challenged on the basis that he was also a Member of Seanad Eireann. Of course, when my party stood in the election to the Assembly in 1982, we made it clear that we would not take our seats and would not sign on for salaries, allowances or anything else. It is therefore not comparable to Members of Sinn Fein not taking their seats here, but taking allowances. When Seamus Mallon was subsequently appointed to the Seanad, a member of the Ulster Unionist party saw fit to make a legal challenge to force a by-election so that a Unionist could take the seat in an Assembly that had no real powers.

On the back of that controversy, Sinn Fein made the case in the early years of the peace process for a gratuitous piece of legislation that was put through this House, which provided that Members of either House of the Oireachtas could be MPs and/or Members of the Northern Ireland Assembly. Sinn Fein was the only party that sought that piece of legislation. That was because, in building the party and selling itself to its supporters, it wanted to use its heavy hitters as abstentionist MPs and as candidates for the Dail. It was entirely a confection to support Sinn Fein’s ambitions and pretentions in building the party and the movement. This House was convinced to legislate on that basis. Of course, Sinn Fein has not activated the change it sought, and rightly so. Whenever its more prominent elected representatives in the north decided to seek election in the south, they did so on the basis of giving up their seats in the north. They too seemed to accept the standard of one Member, one Chamber. We should therefore ensure that when there is an opportunity to legislate, we should take it.

The Government were right to move on the dual mandate between Westminster and the Assembly, not least because they had served notice that if the parties did not move to rectify the situation, they would move to legislate. They have done that and I support them. As I indicated on Second Reading, I took my own decision on the dual mandate and it is right that legislation sets a clear, common standard.

[Dr William McCrea (South Antrim) (DUP)]

Will the hon. Gentleman clarify how that view sits with his party leader, the hon. Member for Belfast South (Dr McDonnell), who sits both here and in the Assembly?

[Mark Durkan]

That is permitted under the legislation. In my view, legislation should clearly not allow that; a party leader should not be under pressure to say that, because they are in one and can be in the other, they should sit in both because the law allows it. There is pressure on people because being able to sit in both helps to protect a second Assembly seat in the constituency, but such tactical considerations should not enter into it. The best way to spare everybody from those sorts of considerations is to have one clear, uniform standard in law.

Of course, the hon. Gentleman’s party has Members who sit in both the Assembly and this Chamber. Indeed, they have one Member who sits in Westminster and the Assembly while serving as a Minister in the Executive. I have always argued—when I was a Minister and subsequently —that any Minister should solely be a Member of one Chamber and be fully accountable to that Chamber. I have consistently argued that one should not be a Minister in one Chamber and a Member of another.

[Dr McCrea]

I thank the hon. Gentleman for giving way. He talks about consistency. Is it not a fact that when he was a Minister in the Northern Ireland Assembly he was also a Member at Westminster?

[Mark Durkan]

No, that is not a fact. When I was a Minister in Northern Ireland I was not an MP. I became a suspended Minister—I was a suspendee, not a suspender —in October 2002, and I was not elected to this House until 2005. I subsequently made appointments when I was a Member of this House; I was the leader of my party and had the power to appoint Ministers. I made it very clear well in advance that I could not appoint myself as a Minister, no matter how many seats we had won and how many Ministers we might have had to appoint in the Assembly. I was an MP and could not be a Minister. That was our party rule, and the party standard has been consistent. Similarly, when my hon. Friend the Member for South Down, who was a very able Minister for Social Development in the Executive, was elected to this House, she resigned as a Minister. That was consistent with that principle: we have consistency and form on this issue.

Regardless of what justification Members or parties might be able to give for having coped with the dual mandate in the past, circumstances are different now. We have an absolutely settled process. It is important to give the public the confidence that we believe it is a settled process by moving on dual mandates. That would indicate that we do not believe that there is any uncertainty surrounding the institutions which might give an excuse for having a foot in two Chambers.

[Lady Hermon]

I am grateful to the hon. Gentleman for taking an intervention, but may I run one suggestion past him? I have never had a dual mandate and I do not particularly favour them. However, in the context of a devolved Administration in Northern Ireland that is sustainable and will continue, is there not an argument to be made for the Finance Minister in that devolved Administration to be present in this House, particularly for the Budget, financial statements and the comprehensive spending review, so that he or she can address the key issues across the Dispatch Box to the Chancellor of the Exchequer on that day and on those issues?

19:59

[Mark Durkan]

No, having been Minister for Finance and Personnel in Northern Ireland, I do not believe there is such a compelling reason. I would have regarded it as a distraction from my full-time day job if I had been operating in another Chamber as well. The limited opportunities we have here to ask questions on a statement or the Budget do not compare to the effective opportunities a Minister and his or her officials have via the other channels to the Treasury, such as joint ministerial committees that exist for engagement between Governments. Those are adequate for Scotland and Wales, so I do not think we should create an exception in Northern Ireland if someone happens to be the Minister for Finance and Personnel.

[Jim Shannon]

What about your party leader?

[Mark Durkan]

The hon. Gentleman has obviously missed my point. We want to legislate so that there are no special cases, no special pleading and no tactical pressure on anybody, be they a party leader or anybody else. That is why we should legislate to a standard, not on an ad hominem basis.

[Mr Gregory Campbell]

I thank the hon. Gentleman for giving way; he is being very generous with his time. He alluded earlier to a direction of travel and the destination we all want to reach: a single mandate for each Member. I think there is unanimity there, but would he agree that Scotland and Wales seem to have got there without the need for legislation?

[Mark Durkan]

Perhaps they did, but the fact is that notice was served to the parties in Northern Ireland that, if such a change did not happen, the Government would move to legislate, as they have now correctly done. It would have been wrong for the Government to give the signal, and then not to use the Bill to address the matter. We discussed this on previous Bills, because it came up whenever we considered the question of constituencies and voting systems, as well as House of Lords reform.

[Paul Murphy (Torfaen) (Lab)]

Further to the last intervention, my hon. Friend will be aware that the Bill, if passed, will apply to Northern Ireland. Similar legislation will be passed for Wales, but none will be passed for Scotland.

[Mark Durkan]

That would be a discrepancy as well. If the principle is one Member, one Chamber, it should apply all round. Perhaps the right hon. Gentleman is suggesting that those of us who tabled amendments should have included the Welsh Assembly and the Scottish Parliament, so that there was no question of somebody deciding to be in several Chambers.

[Naomi Long]

That was discussed at length in Select Committee. One reason we did not do it was that, this being the Northern Ireland (Miscellaneous Provisions) Bill, there would have been no argument for including it. I think the Secretary of State for Wales is intending to introduce legislation creating that bar, although whether the Secretary of State for Scotland chooses to do the same is a matter that perhaps he could clarify better than me. Either way, this matter should be resolved.

[Mark Durkan]

I fully take the hon. Lady’s point; it was a helpful intervention, but the point that the right hon. Member for Torfaen (Paul Murphy) made was also a good and valid one. If we were using the Bill, in the pedantic sense, to make it truly perfect and to cover all the options, we could have included the Welsh Assembly and the Scottish Parliament, but we did not, for the sorts of reasons she mentioned.

If we are moving, rightly, towards precluding dual mandates in this Chamber and the Northern Ireland Assembly, the same should apply to the other place as well. If it is to be one Member, one Chamber, it would be wrong if somebody could be in another Chamber in this Parliament—a Chamber which, because of the strange rules, procedures and fixations that people have here, seems at times to have more impact on legislation, by way of amendments, than this one.

The argument then arises about why somebody should be allowed to sit in another Chamber simply because they are not elected and have no mandate. The fact that they are there on an unelected basis does not make their dual membership of two different legislative Chambers any more acceptable than it would be for somebody who had been elected to both Chambers. Indeed, we have heard the Democratic Unionist party make the argument that there is more legitimacy if someone is elected to two Chambers, because the public, in electing that person, know that they are in two Chambers and knowingly give them that mandate. In many ways, the least defensible position is to say that someone can be an elected Member of one Chamber and an unelected Member of another at the same time.

The same thing has to apply to the Oireachtas. If people have rightly been precluded from being a Teachta Dala at the same time as being a Member of the Assembly, they should also be precluded from being a Member of the Seanad Eireann at the same time, whether as a Taoiseach’s appointee or as someone elected through the panels by the electoral college system that exists in the south for the Seanad. Again, if people are sitting in one legislative Chamber, that should be their sole place. That is the point of amendment 20 and the amendments tabled by the hon. Member for Belfast East.

I fully take the point made by the hon. Member for Amber Valley, who wants to extend that position to the European Parliament. Some of us had thought that that was already provided for, but I understand that it applies more specifically to membership of this House—to national Parliaments, as opposed to regional or other territorial Assemblies. In practice, when the parties in Northern Ireland have run Members of the Assembly as candidates for the European Parliament in recent times, they have usually done so on the basis of a full declaration that, if elected to the European Parliament, that candidate’s membership of the Assembly would cease. However, in taking a belt-and-braces approach, the hon. Gentleman makes a good point with amendment 3.

I repeat the point that if we want to have one Member, one Chamber, we should apply that to the second Chamber of Parliament and the Oireachtas, as well as to the first Chambers of both.

[Mr Donaldson]

We do not have an amendment in this group, but I want to speak to a number of the amendments that have been tabled.

I, along with others here, held a dual mandate for some time, being a Member of Parliament and subsequently being elected to the Northern Ireland Assembly. At times I think it pushes the boundaries a little to suggest that there is huge public opposition to the concept of dual mandates. When I was elected for two terms in the Assembly, I was a Member of Parliament, but I was elected—I do not share this for any reason other than to illustrate my point—with the highest number of first preference votes of any candidate in the Assembly elections on both occasions. No one voted for me on the basis that they did not know that I was already a Member of Parliament, yet they deemed it appropriate to elect me to a second Chamber. The idea that the public were always entirely opposed to dual mandates is therefore spurious, because the facts do not support it.

Because of the development of the peace process in Northern Ireland, we needed people in the Assembly who had the experience of serving as Members of Parliament. That was important. I recognise that we have now moved on and, on the basis of voluntary undertakings given by parties in Northern Ireland, we now have very few Members who hold a dual mandate between this House and the Northern Ireland Assembly, and by the next election there will be none. To say that there is a need for these changes is therefore stretching the point, to say the least. Indeed, this issue would be way down my list of priorities for inclusion in the Northern Ireland (Miscellaneous Provisions) Bill.

[Mr Gregory Campbell]

The hon. Member for Foyle (Mark Durkan) made the point that the Government said they would legislate on moving to a single-mandate position only if the parties did not move in that direction voluntarily. Is it not the case that the parties have so moved, yet the Government are still proceeding with the measure?

[Mr Donaldson]

My hon. Friend makes a valid point. The Government have already legislated—as, I think, the Assembly might have done—to ensure that a Member of this House who is also a Member of the Northern Ireland Assembly receives no pay for holding the office of Assembly Member and has a much reduced office costs allowance. There is already provision to deal with the issue. The reality is, however, that the proposal is also incorporated into this Bill.

I would like to say on behalf of the Democratic Unionist party that we oppose the amendment that would exclude Members of the House of Lords from the opportunity of serving in the Northern Ireland Assembly, and we have valid reasons for doing so. The House of Lords is an appointed second Chamber in the United Kingdom Parliament. In making appointments to it, there is a desire to achieve a degree of regional representation. I happen to think that it is to the benefit of devolution to have a connection between this Parliament and the devolved legislatures. I accept that it is not preferable for that to involve Members of this House, because we are elected and there is the question of the dual mandate and because certain issues can arise at constituency level.

Those matters do not pertain to Members of the House of Lords, however. Even in a reformed House of Lords, there would be value in making provision for some Members of the devolved legislatures also to be represented, if they so chose, in the House of Lords. That would help to bind the United Kingdom together, and to recognise the special position of the House of Lords. As a body, it is not necessarily representative in geographical terms, but it is widely representative of society. Why should we not have in the House of Lords legislators from the devolved regions of the United Kingdom? We do not accept the need to amend the Bill to exclude Members of the House of Lords from having that dual representation—if not a dual mandate—in the separate Chambers.

[Lady Hermon]

The House of Lords is a key part of the legislature of the United Kingdom and, as someone who is very keen on devolution, I believe that the Assembly is an essential part of the Government in Northern Ireland. Can the right hon. Gentleman honestly say, with his hand on his heart, that a person—or multiple people—sitting in the Assembly and in the House of Lords can do justice to both roles and sit in both places simultaneously?

[Mr Donaldson]

I can say, hand on heart, that I believe they can. When I was a Member of the Assembly and of the UK Parliament, my attendance record on Committees in the Assembly was far superior to those of single-mandate Members of the Assembly. When I chaired the Assembly and Executive Review Committee, I had a 100% attendance record—I was the best attendee on the Committee. We have to weigh these things up and strike a balance.

[Naomi Long]

I certainly do not dispute the fact that the right hon. Gentleman’s Assembly Committee attendance record was good, but we should look at the disparity between the average voting records of those in this House who do not have a dual mandate and those who do. According to “The Public Whip”, the average voting record of those of us who do not hold a dual mandate is 413 to 414, compared with 259 to 260 for those who do have a dual mandate. The Assembly might not suffer, but the attendance of those Members in this House seems to do so. I am not suggesting that that is the only metric we should take into account, but it is an important one.

20:15

[Mr Donaldson]

I come back again to the issue of mandate. If the people of East Londonderry decided that they wanted someone other than the current Member to be their MP, because the current Member also happens to be a Member of the Assembly, they will have made that choice. The reality is that the choice they made at the last election was to elect someone who was also a Member of the Assembly and who has, by the way, an excellent voting record in this Chamber and participates well in debates. In all those issues, we have to strike a balance. What we are recognising is that we accept the argument that in respect of Members of this House there is a greater weight of opinion that says that it is difficult to do both tasks. In respect of the House of Lords, however, I believe that having a small number of MLAs who also happen to be Members of the House of Lords is something of value to the Assembly and to the people of Northern Ireland.

[Mr Gregory Campbell]

I know this is probably academic, as I recognise that we are moving in the same direction. The hon. Member for Belfast East (Naomi Long) singled out voting records. That is one and only one element of performance. If we look at oral contributions, written questions and the tabling of motions, we see a very different picture. It is worth looking at theyworkforyou.com which can show us who is performing well and who is not.

[Mr Donaldson]

I would also say that a constituent, whether it be in Limavady or Lisburn, is well able to make a judgment about whether the person they elected to a particular chamber better serves the interests of the people by being here to vote on the Mersey Tunnels Bill, which is of no relevance whatever to the people of Limavady or Lisburn, or by dealing with an issue in the Northern Ireland Assembly that is of relevance to them.

We have moved on from the question of dual mandates between the House of Commons and the House of Lords or the House of Commons and the Northern Ireland Assembly, but I do not believe that the same arguments apply in respect of being a Member of the House of Lords and being a Member of the Northern Ireland Assembly. As I have said, I think there is real value to the Assembly in having a small number of Members who are also Members of the United Kingdom Parliament by virtue of their membership of the House of Lords. Equally, I would hope, the House of Lords can see the value of having that sort of representation, albeit on a small scale.

We nevertheless support the amendment tabled by the hon. Member for Amber Valley (Nigel Mills) because the European Parliament is an elected chamber, and we draw a distinction between an elected and an appointed chamber. If the argument is made that it is difficult to be in London and in Belfast, I would say that it is even more difficult to be in Brussels or Strasbourg and in Belfast. None of the Northern Ireland parties pursue the option of having their MPs as an MLA, but if the argument goes that we are legislating to prevent dual mandates for the House of Commons because we want to prevent it happening in the future, I suggest that the same principle should apply to Members of the European Parliament as well. It may not be the practice at the moment, just as I believe the practice of dual mandates in this House is coming to an end, but if preventive measures are called for, we have to be consistent and look at the position of the European Parliament.

We are minded to support amendment 3, tabled by the hon. Member for Amber Valley, but to oppose the amendments that include the House of Lords in the excluding provisions. We believe it is right to include the Irish Parliament within the exclusions, given that it is an elected body, and I think that the hon. Member for Foyle (Mark Durkan) is seeking to extend that to include the Irish Senate.

[Mark Durkan]

The right hon. Gentleman will recognise that the Irish Senate is not actually elected in a public sense. Indeed, some of the seats are appointed by the Taoiseach. Those of us who are backing these amendments are being consistent: whether or not a chamber is elected is not what matters; what matters is whether it is a legislative chamber.

[Mr Donaldson]

That is a fair point, but my party approaches the matter from a very different perspective. The Parliament of the Irish Republic is in a separate jurisdiction, outwith the United Kingdom, and we have always taken the principled view that a member of a Parliament that is outwith the United Kingdom’s jurisdiction should not be entitled to membership of a devolved legislature or of this Parliament.

[Jim Shannon]

My right hon. Friend is making a valid point. Surely it would be ludicrous for a member of the Northern Ireland Assembly also to be a member of Dail Eireann or of a Senate with a different constitution, a different aspiration, and a different way of looking at things from an Assembly that is in the United Kingdom.

[Mr Donaldson]

Indeed. I do not know what affirmation new members of the Irish Senate make, but it is surely a contradiction for people to come to either of the Houses of Parliament here and affirm their allegiance to the United Kingdom, and then to go to the legislature of another country and affirm their allegiance to that country. That is why, on principle, we cannot accept the concept that a Member of the Parliament of another country could also be a member of either a devolved legislature in the United Kingdom or, indeed, of this Parliament.

[Ms Ritchie]

The hon. Member for Belfast East (Naomi Long), my hon. Friend the Member for Foyle (Mark Durkan) and I firmly believe in one Member, one Chamber. I declare an interest as a former Member of, and Minister in, the Northern Ireland Executive and Assembly, and also as a former district councillor in Northern Ireland. As such, I know very well that Members must serve only one Chamber if they are to do the job properly and adequately.

The proposal to extend this legislation to the upper chambers, the House of Lords and the Seanad in the Irish Parliament, has my full support. I believe that there is a certain amount of hypocrisy in contending that dual mandates must end while ignoring the practice in respect of other legislative bodies. The current approach is inconsistent, and leaves us with an untidy arrangement.

There was a period during the early years of the Assembly—back in 1998—when dual mandates were an important part of the political system, but given the changes in our political system in Northern Ireland and its evolving maturity over the past 15 years, there is clearly a different political climate as well as a different expectation on the part of the body politic. While I am not convinced that this legislative route is the most appropriate, the direction of travel is clear, and my party supports it.

As we move towards the new system, however, we must ask why we are preserving the practice in some arenas but not in others. Why are we creating this imbalance? I accept that the House of Lords operates differently because it has no constituencies, but the important point—emphasised a few minutes ago by my hon. Friend the Member for Foyle—is that it is a legislative Chamber. If we are legislating to prevent people from being members of two different legislatures, that is exactly what we should do.

[Naomi Long]

Surely part of the rationale for the structure of the House of Lords is the fact that it can serve as a revising Chamber, and scrutinise legislation in a robust way, because its Members are not being lobbied by constituents as we in the House of Commons are when we are dealing with legislation. Could not an electoral mandate expose Members of the House of Lords to that kind of lobbying, and prevent them from acting as we expect a Lord to act?

[Ms Ritchie]

That was a useful intervention, because it illustrated the role of Members of the House of Lords. While they have clear legislative responsibilities, they also do very in-depth work. We can cast our minds back to the work done in respect of the Welfare Reform Bill, and its ping-pong nature, with the Bill going back and forth between us. Lords come from many varied backgrounds, but they do their work. The Lords may not be elected, but they do have legislative responsibilities, which naturally would clash with the responsibilities of an elected Chamber such as the Northern Ireland Assembly. That is the very problem that this measure is meant to address. I would not hold my breath about this House finally taking on the much-needed reform of the House of Lords, but if, and hopefully when, it does, would it be desirable that people can run for election and hold office, namely by having a dual mandate between the Assembly and an elected House of Lords?

It is important that this issue is sorted out now within the terms of the current Bill. I note that that position is supported by the Northern Ireland Affairs Committee. In so doing, we come to this issue with the premise of one Member, one Chamber. Having had the experience of serving in other Chambers, and knowing the extent and breadth and depth of work and investigative intelligence that is required of Members in all those Chambers, particularly in terms of legislation, we not only support our own amendment—amendment 20—but we also support those of the hon. Member for Belfast East.

[Mr Dodds]

On clause 3 and the ending of the dual mandate between Members of this House and Members of the Assembly, our party made it clear some time ago that we would be bringing this matter to the point that by 2015, as was recommended, dual mandates would be ended. We are working towards that, and it needs to be made very clear in this Committee tonight that this Bill does not end dual mandates; the parties in Northern Ireland are ending dual mandates, and they are doing so for the reasons that have been advanced, which are that we have now moved forward to a position where politics is much more stable, and the Assembly and the Executive are up and running. We are therefore in a very different position from the one we were in only a short time ago, when dual mandates were not only preferable, but essential, for the reasons laid out very clearly by my right hon. Friend the Member for Lagan Valley (Mr Donaldson) and because of the leading political figures in this House who were playing the important—the crucial—role of bringing about peace, stability and devolution in Northern Ireland. That would not have worked if there had not been that dual mandate at that time; that is absolutely the case.

There is a tendency sometimes to look at situations from the perspective of today, rather than looking at the context of the time. I want to pay tribute to all Members who held dual mandates at that time. I want to do so not because I was one of those Members who held a dual mandate, but because they put themselves and their families under enormous stress and strain in terms of the work load, but still carried out an immensely powerful job, as was recognised through the votes of the people, who consistently voted for them. Therefore it is only right and proper to pay tribute to those politicians who did that in very difficult circumstances, and who had their pay cut, we must remember—it was not as if they were doing it for two salaries. It was done for the reasons set out, and also because, to return to an earlier discussion, there were very real threats against politicians, and not too many people were prepared to come forward and put their head above the parapet. Every Member in our party, and Members of other parties as well, including the SDLP and the Alliance, suffered very severe threats at that time, and actual attacks on their person, their offices and on people close to them. That was the reality of the situation we lived in.

[Naomi Long]

That point was also made by the right hon. Gentleman’s colleagues on Second Reading, and it is important to put on the record that nobody is suggesting that people who served during that period did not have a justification for doing so. Those who seek fast reform make the point that that period is now at an end.

20:29

[Mr Dodds]

Yes, that is the point that I was making and it is important to put it on the record. We are talking about the difficulties of having a double mandate, but I recall that back in the late 1970s and during most of the 1980s the original three MEPs from Northern Ireland, Ian Paisley, John Hume and John Taylor, had three mandates. Nobody is going to say to me that they did not do a very good job for Northern Ireland in Europe. I know that there was a different context and a different set-up then, but they worked very well together. I had some experience of that through working with Ian Paisley in the European Parliament, and I know that the hon. Member for Foyle (Mark Durkan) will know about it from first-hand experience of working with John Hume. That arrangement was necessary and they did an immensely powerful job for Northern Ireland. Indeed, I recall one of those MEPs, not the one from my party, saying that on one occasion he managed to speak in Strasbourg in the morning, in the Belfast Assembly in the afternoon and in the House of Commons in the evening. I asked him whether he used the same speech, but it was not a single transferable speech. Those were different days and we accept that we have moved forward, but it is important to put on the record where we are coming from.

Let me deal with the issue of the House of Lords. The explanatory notes talk about “dual mandates” and people prevented from being a Member of both this House and the Assembly, as is right and proper. What mandate does a Member of the House of Lords have? They do not have any mandate. We have a mandate because we are elected, but a Member of the House of Lords has none because they are appointed. So this legislation does not apply to the House of Lords because it is in a different position. If the House of Lords were elected, there would be a strong argument for saying that we should be legislating to prevent dual membership there, but it is not elected and it is different. Indeed, that was one of the reasons why people opposed reforming the House of Lords, because to do so would put it on the same level as, or make it equivalent to, this House, and that would threaten the authority of this House. So this matter is summed up in the very phraseology used about ending “dual mandates”. It is right and proper to do that in respect of the House of Commons, but Members of the House of Lords do not have a mandate. They have a legislative role, but they do not have a mandate.

[Mark Durkan]

Is the right hon. Gentleman not trying to create a class of Members of the House of Lords who are Members of that House and sit there without a mandate, but who nevertheless have a mandate by virtue of sitting in another Assembly? He is trying to have it both ways; if he is making a virtue of their having no mandate, leave them without a mandate.

[Mr Dodds]

I think that when the hon. Gentleman reads that over again in Hansard, he will perhaps want to reflect on that contribution.

It is clear that we are legislating to end dual mandates. As Members of the House of Lords do not have any mandate, it does not apply to them. In any case, for the other reasons that have been set out by my right hon. Friend the Member for Lagan Valley, there is a difference. Interestingly, when the Secretary of State for Wales made his announcement in March, he did not include a bar on membership of the House of Lords and the Welsh Assembly; he confined it to the House of Commons. So for all those reasons, the Government are taking the right approach.

On the issue of membership of the Irish Parliament, we very much welcome the Government’s decision to follow the position of the Select Committee and to take on board the representations made on that matter. It is right and proper that that should be the case.

Finally, let me turn to the issue of non-representation—I raised this on Second Reading and return to it now—by people who have seats in this House but who do not take them and do not do the work of parliamentarians. The Minister will know that the issue has been raised and is being pursued. The Bill is not necessarily the vehicle or the means by which it should be pursued, but the Minister should rest assured that, as we talk about dual mandates and about representation and people being fit for jobs and about the jobs they are or are not doing, there remains the outstanding scandal of all—the Members of Parliament who are elected, who get money to run their parliamentary business and who get representative money for which they do not have to account in the way that we do as parliamentarians and that they can use for party political purposes. That is an issue that the House still must, and, I am sure, will, address.

[Mike Penning]

It is a pleasure, Ms Clark, to work under your chairmanship for the first time this evening. Yet again, we have had an interesting and wide-ranging debate—some of it within the scope of the Northern Ireland Office’s remit and some outside it. Perhaps I can address straight away one of the areas of debate we have had this evening because, although I fully respect the view, it falls outside the scope of the Bill and of my portfolio. The question of whether an MLA can sit in the European Parliament is a matter for the Cabinet Office and the UK Government as a whole. My hon. Friend the Member for Amber Valley (Nigel Mills) can take it up with the Cabinet Office, if he wishes, but I have been strongly advised that it falls within its remit and not mine and that I therefore cannot accept the amendment.

[Nigel Mills]

Will the Minister give way on that point?

[Mike Penning]

If I may, I will make some progress. We have a lot to get through this evening and not a lot of time, even though it looks like we do. We have not made much progress down the list of amendments.

The Government listened to the Select Committee and changed our mind about whether someone could be an MLA and a Member of the lower House in the Republic. We listened carefully to the debate and accepted that suggestion.

I completely agree with the right hon. Member for Belfast North (Mr Dodds). My personal view, as well as that of the Government, is that there is a difference between a person elected to this House with a mandate—the words in the explanatory notes were put there for a reason—and a Member of the House of Lords. Members of the House of Lords do not have a mandate: they are not elected; they do not have a constituency; they do not have constituents. However, the Government’s view is not fixed and if, when the Bill passes to the other place, the House of Lords has a view on that, we will consider what comes back to us. At present, the reason behind the change is to do with mandates and not to do with whether Members are in another Chamber.

[Lady Hermon]

I want to draw the Minister’s attention to the fact that the explanatory notes, so beautifully quoted—selectively—by the right hon. Member for Belfast North (Mr Dodds), go on to quote the Committee on Standards in Public Life, which reported in 2009 after the horrendous scandal of MPs’ expenses. It states that

“the Committee questions whether it is possible to sit in two national legislatures simultaneously and do justice to both roles”.

It does not use the word mandate at all and uses the word “legislatures”, so will the Minister revisit that?

[Mike Penning]

It is very important that we consider what the electorate have decided to do. The electorate elect people to this House and to the Legislative Assembly. I pay tribute to those who had more than a dual mandate when there was a need for people to put their heads above the parapet and stand for office when things were enormously difficult in Northern Ireland. We have moved on. We accept that MLAs should not be able to stand for the lower House in the Republic, but we do think, at present, that they should be able to sit in the Lords. MEPs are a matter for another Department, on another day, and another Bill, in the Government’s opinion.

[Mark Durkan]

Will the Minister address the issue of membership of Seanad Eireann?

[Mike Penning]

Exactly the same applies: that situation will be addressed, should the issue of the Lords be addressed. At present, the Government are not addressing the issue of the Lords; we will oppose the amendments on that subject. The Government oppose amendments 10 to 17, and recommend that clauses 3, 4 and 5 stand part of the Bill.

[Naomi Long]

I think the argument regarding dual mandates in the House of Commons and the Assembly has been fought and, largely, won. People may well say that the public do not mind double-jobbing, but it was a live issue in the 2010 elections, which is why all parties made the commitment publicly in their manifestos, before those elections, that they would not maintain dual mandates. People were elected on the expectation that they would leave the Assembly during this term. Everyone has said that that is the point that we want to get to. I know why I feel the need for legislation, but I do not know why the Government do. Perhaps it is because every time we discuss the matter, even those who say that they are in favour of such legislation in principle continue to put up quite a spirited defence of double-jobbing—and are still here to do so, three years after the last Westminster election and two years after the last Assembly election. However, I would not want to speak for the Government on that point. It is important that the Government, having made a commitment to legislate on this subject, follow through on that.

On the other amendments that I have tabled, the issue for me is whether we are applying the rule consistently. The hon. Member for North Down (Lady Hermon) made a compelling point: the concern when the issue was raised was not simply about dual mandates, although that became a shorthand for it; it was about serving in two legislatures and the challenge that presents with regard to people being able to do both jobs properly. There is a further point, in that in the House of Lords, the expectation is that people are not fettered or influenced by constituency responsibility. However, if they have that responsibility because they have an elected mandate in another legislature, they are no longer free in that way. That distinguishes elected posts from other forms of employment outside the House of Lords in an important, fundamental way.

[Mark Durkan]

Does the hon. Lady recognise that in the context of Northern Ireland, there is a significant point to make about the House of Lords, in that no nationalist political representative takes a seat there? My party will not nominate to the House of Lords, precisely because its Members are not elected, and because of various other constitutional attributes it seems to have. Only Unionists or others who are not nationalists go to the House of Lords. If we make an exception for the House of Lords—an exception that I would not seek to make for Seanad Eireann—we end up with unequal legislation, because it ends up being only Unionist Members, and not nationalist Members, who are able to sit in two Chambers.

[Naomi Long]

I respect the hon. Gentleman’s right to advance that case, but it is not my case, or a case that I would choose to make, because if people are elevated to the House of Lords, they have the option of taking up that post. They are not barred from doing so because they have a nationalist perspective, or an Irish Republican perspective, for that matter.

[Mr Donaldson]

Will the hon. Lady accept from me that there is at least one Member of the House of Lords who would claim to come from a nationalist background and whose spouse, I believe, happens to be a member of the same party as the hon. Member for Foyle (Mark Durkan)?

[Naomi Long]

I understand the point that is being made. However, it is not my job as a member of the Alliance party to pigeonhole Members of the House of Lords and to count Unionists and nationalists, given that I do not want elections to be conducted by such distinctions.

20:45

[Mark Durkan]

Let us be clear. In my remarks I referred to a nationalist representative. Somebody who was appointed as a working peer because of the competence and skill they have and the clear independence and service to the whole community that they demonstrated against much grudging from other quarters is entirely able to defend themselves as being there not as a representative of my party or even with the designation that my party confers on itself in the Assembly.

[Naomi Long]

I think—

[The Temporary Chair (Katy Clark)]

Order. I remind all hon. Members that this is a summing up at the end of a debate. We are not commencing the debate again and it is not a second speech, so I ask the hon. Lady to take that on board.

[Naomi Long]

Indeed. I was on my last sentence when I took the intervention.

I believe that the exclusion of Members of the House of Lords, the Seanad and the European Parliament from sitting in the Northern Ireland Assembly is an important point. Having listened to what the Minister said, I do not accept that there is a strong argument for maintaining the current position and I seek to press amendment 10.

Question put, That the amendment be made.

20:46

Division 53

Ayes: 4

---

Labour: 2
Social Democratic & Labour Party: 1
Independent: 1
Conservative: 1

Noes: 213

---

Conservative: 176
Liberal Democrat: 29
Democratic Unionist Party: 7

Clause 3 ordered to stand part of the Bill.

Clauses 4 and 5 ordered to stand part of the Bill.

Clause 6

Reduction in size of Assembly to be reserved matter

[Mr Dodds]

I beg to move amendment 4, page 6, line 37, at end add—

‘7B The alteration of the number of members of the Assembly required to express

their concern about a matter which is to be voted on by the Assembly, such

concern requiring that the vote on that matter shall require cross-community

support.

This paragraph does not include the alteration of that number to a number

exceeding 30.’.

[The Temporary Chair (Katy Clark)]

With this it will be convenient to discuss the following:

Amendment 5, page 6, line 37, at end insert—

7B The subject matter of Sections 16, 17, and 18 of this Act.

‘(2) In Schedule 2, paragraph (b) after “sections” insert “16, 17 and 18”.’.

Clause stand part.

[Mr Dodds]

The purpose of clause 6 is to move the decision on the reduction in the size of the Northern Ireland Assembly from the category of excepted matter to that of reserved matters, which I think has received reasonable assent in Northern Ireland. The purpose of amendments 4 and 5, which stand in my name and those of my right hon. and hon. Friends, is simply to move into the category of reserved matters, as opposed to excepted matters, decisions relating to the appointment of the Executive and the way it is formed. Given that the number of MLAs will be reduced, we propose that all matters pertaining to the appointment of the Executive, its composition and make-up and the way the First and Deputy First Ministers are elected, and matters pertaining to opposition in the Assembly, should also be reserved matters. We believe that this would allow any political agreement negotiated by parties in Northern Ireland to be legislated for in the Assembly. It would give the Assembly the tools not only to discuss these matters, which do need to be discussed by the parties in Northern Ireland, but to agree them, of course by cross-community vote and by the normal mechanisms that require that to happen in the Northern Ireland Assembly. That would act as a bit of an incentive to allow and promote greater debate in relation to these matters.

21:00

The other amendment is consequential. If the number of Assembly Members is reduced, we have to take account of the numbers required for a petition of concern. Again, that matter would be decided by the Assembly. We are not saying that this should be decided here and now, in this Bill, but simply that we should move these issues into the category of reserved matters so that they could be decided by the Assembly under the cross-community procedure. If we are going to allow the Assembly to decide on its size, we should allow it that further responsibility in relation to wider aspects of the political process in Northern Ireland.

[Paul Murphy]

I am grateful for the opportunity to say a few words in Committee about this very important, if small, Bill. I feel a little in fear of being in splendid isolation on these Benches, although I am also surrounded by a phalanx of Northern Ireland politicians—something that I am not entirely unused to.

This has been an interesting debate. Perhaps, in referring to clause stand part, I could reminisce a little about why the Assembly has a membership that many believe is rather large, at 108. We could compare that with, for example, the Welsh Assembly. Wales has a population roughly double that of Northern Ireland but its Assembly has roughly half the number of Members of the Assembly in Belfast. There is a reason for that. It came about, as it so happened, on Maundy Thursday 1998 at 3 o’clock in the morning or thereabouts, when we struck an agreement with the parties—although of course at that stage the DUP was not involved; I think they were getting rather cold marching to Stormont in the snow.

As my hon. Friend the Member for Foyle (Mark Durkan) will recall, the initial belief was that there should be a membership of 95, but in fact it went up to 108. The final figure was reached quite quickly by the then Prime Minister, and we as Ministers, on the basis that although the idea of having five Members per constituency, making a total of 95, had some merit, increasing it to six would give smaller parties that had been involved in the talks on the peace process the opportunity to be represented in the Assembly—the Women’s Coalition, the Progressive Unionist Party and others. That was sensible. It related to the fact that we already had ready-made constituencies in Northern Ireland that could be used as the basis of the boundaries for the new Northern Ireland Assembly.

In the previous debate we heard interesting reference to how things have moved on. I believe that if we had not had people in the Northern Ireland peace process and political process who did not have a dual mandate, those processes would not have happened, because those people brought an invaluable wisdom and a richness of experience to the talks. Incidentally, I am not persuaded that we should be legislating about who should or should not be allowed to stand for the House of Commons or for the Assembly, but that is another issue, and we have just dealt with it. The point is that those decisions were made at the time to ensure that the process went on. I think that the 108 figure was right for the time, because it did what it had to do. Now that times have moved on, however, it seems to me that we should ask whether that figure is an encumbrance. Is it too big? Is it too expensive? Does it work? I think that this is a matter for the political parties in Northern Ireland to decide, as opposed to this place. It should be the Northern Ireland Assembly that decides whether it should be smaller.

Incidentally, when the Government tried a year or so ago to change the boundaries of our parliamentary constituencies they completely forgot about the knock-on effect it would have on Northern Ireland. Happily, that measure has disappeared, but it would have had a profound effect on the balance in Northern Ireland. The Government had not thought about that when they considered the parliamentary boundary review, but that is another issue.

It is for the parties in Northern Ireland to decide on the size of their Assembly and that is why I support clause 6, but I issue one caveat. I understand—had I read the Bill more thoroughly I would know whether this is the case—that the Secretary of State will have to endorse such an agreement. I think that is right, because the Good Friday agreement, the St Andrews agreements and the entire peace process were guaranteed by the Irish and British Governments and the Irish and British Parliaments, so that is another important factor. I will only be convinced, however, when the Secretary of State or the Minister, in response to this or any future debate, make it absolutely clear that no such changes should be made unless they achieve the consensus of all the parties in Northern Ireland as to what the figure should be.

I understand that the Assembly has a mechanism—the Assembly Commission, which is representative of all parties—that could initially consider any representations. Whatever happens, the decision should be reached by consensus, discussion, negotiation and agreement, and only then should the Secretary of State give her approval. Nevertheless, the principle is a wise one and I support it and hope it will be carried if it is put to the vote.

[Mark Durkan]

It is a pleasure to follow the right hon. Member for Torfaen (Paul Murphy), who chaired the strand 1 negotiations leading to the Good Friday agreement. The very important and patient role that he played throughout the negotiations is not often acknowledged.

Clause 6 deals with possible changes to the size of the Assembly and the right hon. Gentleman has explained why it ended up at its current size. He has corroborated many of the points that I made on Second Reading about how the figure of 108 was arrived at. The decision was made ultimately by the British Government. Some of us favoured a top-up scheme, but I remember the right hon. Gentleman and the then Prime Minister telling us during the night and early morning that the reason why they saw the option of six Members per constituency as offering the best chance of accommodating smaller parties was that if they went with the option of a top-up of 10 it would be too complicated for them to work out all the different permutations of top-ups. That was significant at that stage of the negotiations. We need to understand why that decision was taken. The right hon. Gentleman has rightly said that it can be revised and reviewed; indeed, the review mechanism of the agreement itself allows for that.

I do not think that there is any disagreement between the parties that the size of the Assembly needs to be addressed. The Assembly and Executive Review Committee has previously kicked it about, but we have still not seen any substantive moves. There are sensitivities involved in decisions about the size of the Assembly. A reduction to five seats per constituency would probably be broadly supported. A reduction to four seats per constituency would be much more sensitive, because it would make a serious difference to the capacity for proportional representation.

There is a question over the degree of gerrymandering that will be possible when the Assembly or the key parties therein have the power to settle the number of seats per constituency. The parties could abuse that power. That is why it is right that there should be a reserved power for the Secretary of State. However, some of us are not reassured that the Secretary of State would use that reserved power in an alert or effective way, because when Sinn Fein and the DUP come along, the attitude of the Northern Ireland Office seems to be, “Whatever you’re having yourselves.” That seems to account for sufficient consensus on such matters.

[Naomi Long]

In fairness to the current Secretary of State and the NIO as currently constituted, will the hon. Gentleman reflect the fact that what he describes has always been the case, even when his party and another party were in the position in which the DUP and Sinn Fein now find themselves?

[Mark Durkan]

I am not aware that we tried any such thing. I certainly never agreed to any such moves, not least when I was Deputy First Minister. When my fellow leader suggested that there were things that we could do to ensure better political patronage, I made it very clear that I was not for doing any such thing, regardless of what the NIO wanted to do. I used to spend much time in disagreement with NIO Ministers who had wheezes that they were working out with the First Minister. I did not go along with any of the Jonathan Powell, John Reid, David Trimble, Tony Blair wheezes on further ensconcing the position of the then leader of the Ulster Unionist party. It seemed to me that messing about with the institutions and playing those sorts of games was not the way to do things, either for that party or for the process and institutions that we had.

[Mr Donaldson]

It is just a minor point, but I am interested in how the hon. Gentleman regarded the wheeze that was introduced in the Assembly to unresign the former Deputy First Minister, who was then the deputy leader of the SDLP.

[Mark Durkan]

I think that privately I was the first to make the comparison with Bobby Ewing in the shower. I know that others said it publicly, but I think that the memoirs will show that I made that observation first because it was an obvious one to make. I did not agree with such wheezes. When it came to my election as Deputy First Minister alongside David Trimble as First Minister in the autumn of 2001, I did not agree with some of what the then Secretary of State said about the circumstances in which that election would take place. I made it very clear that, as far as I was concerned, if the Assembly fell and there was an election, that should be that.

Similarly, to correct a misrepresentation that was made on Second Reading, we did not agree to the wheeze of moving the date of the Assembly election. Under the agreement, the date of the second Assembly election was meant to be May 2003, because the first Assembly was to sit for five years to allow for bedding in. We did not agree with the date being postponed from May 2003. The right hon. Member for Torfaen, who was Secretary of State at the time, will remember that we said we were opposed to moving that election date. We have not agreed with any of the wheezes. When things are said, they should remain.

[Mr Donaldson]

Lest we rewrite the Second Reading debate, I wish to place it on the record that the point I made was merely that there is a precedent for extending the Assembly to five years. I am glad that the hon. Gentleman now accepts that the 1998 Assembly was extended to five years to, as he describes it, bed in. The point that I made on Second Reading and that I reiterate now is that there is a precedent for extending the life of the Assembly to five years.

[The Temporary Chair (Katy Clark)]

Order. I ask Mark Durkan to address the amendment that we are debating.

[Mark Durkan]

I will do that, Ms Clark.

On the number of Members in the Assembly, the parties seem to be agreed in principle that that can and should change. The agreement provided for a review, just as the agreement provided that the first Assembly would last for five years. The first Assembly was not extended. There was provision in the Northern Ireland Act 1998, and in the agreement, for the first Assembly to be five years, and four years thereafter. We did not agree with the date being changed.

21:15

We must ensure that making membership of the Assembly a reserved matter does not create a situation where the dominant parties can start to have undue influence on the electoral architecture of Northern Ireland. Sinn Fein and the DUP already abused that position on local government boundaries, when a Bill to appoint a boundary commissioner actually fixed the boundaries. It was a complete misrepresentation to say it was a Bill to appoint a local government boundary commissioner when the parties themselves fixed the boundaries. There was no vigilance on that from the NIO or anywhere else: no concerns from the British or Irish Governments. The salient point made by the right hon. Member for Torfaen was that the British and Irish Governments are meant to be protectors and guarantors.

I will not rehearse the point I made on Second Reading on the move by Sinn Fein and the DUP, supported by both Governments, to change the rules on inclusion so that the only parties that voted for the First Minister and Deputy First Minister would be entitled to go into Government. That was their plan, which thankfully we were just about able to stop in the St Andrews agreement. Simply trusting these matters to the lead of Sinn Fein and the DUP gives the rest of us misgivings. We want more assurances about the role of the Secretary of State on reserved powers that she, or any successor, would have.

Making significant matters reserved and moving more of them into the locus of devolution raises an issue about an outstanding part of the agreement that we have still never arrived at: a Bill of Rights. A Bill of Rights was meant to protect people against any egregious decisions made by a party or parties collectively, or a Minister or Ministers collectively. That was to be part of the protections included in the Bill of Rights, and we still do not have them. When the Secretary of State and the NIO seem to be inert and indifferent to having a Bill of Rights, some of us have difficulty in relying on the reserve protection of the Secretary of State. The Secretary of State and the Minister of State need to address this, and other issues, as the Bill progresses.

I understand that these amendments will not be pressed to a Division, and I am glad of that. The same would apply to any amendments in my name, I hasten to add, and to the relief of the Committee.

[Mike Penning]

This part of the debate has been enhanced by the presence and knowledge of the former Secretary of State, the right hon. Member for Torfaen (Paul Murphy). He has saved me from going through half my speech to explain how we came to 108.

Clause 6 is a huge nudge to the Executive and the Assembly. As the hon. Member for Foyle (Mark Durkan) said, there is general agreement that trying to— [Interruption.] I am sorry if I promoted the hon. Gentleman in a way that perhaps he would not want to be promoted. I do apologise. There might be general agreement, but there is not consensus. Until we have consensus, this cannot be addressed, which is why, sadly, I will oppose both amendments. I am sure that the amendments were tabled with the right feel for what is going on, but we have to get the decisions made. The Secretary of State will have powers under the new reserved matters, but this is another stage forward, another movement on. If we want continued normalisation under the devolved Administration, it is important that the Government do everything we can, with the help of Her Majesty’s Opposition, to get consensus, rather than just general agreement.

[Sammy Wilson (East Antrim) (DUP)]

Does the Minister accept, however, that some of the smaller parties, if the veto rests with them, will always be tempted to veto any change, including this necessary change to the structures and numbers of people elected to the Northern Ireland Assembly? All that could be vetoed by small parties with a party political interest in ensuring that there is no change, and of course that prevents Government from becoming more efficient in Northern Ireland.

[Mike Penning]

I understand exactly where the hon. Gentleman is coming from, but at the end of the day, 108 seats were created to ensure that the smaller parties were represented. It is for the people of Northern Ireland to work out among themselves, in a mature democracy, what that number should be—for instance, whether it should be five per constituency, as the hon. Member for Foyle said. I have heard the concerns about going down to four, but that is not for us to dictate. At the end of the day, this has to be decided in Northern Ireland, which is why, sadly, I ask Members to oppose the two amendments and support clause 6.

[Mr Dodds]

I have listened carefully to the Minister. Clearly, the contribution from the right hon. Member for Torfaen (Paul Murphy) has been received warmly because we recognise the part he played as Secretary of State for Northern Ireland, and as Minister of State before that; he was widely praised for his efforts during his tenure, and we thank him.

There is a view across most of the parties in Northern Ireland, with the exception, I think, of Sinn Fein, that the Assembly is too big and should be reduced in size. Until we can get that cross-community support in the Assembly, we are where we are, but at least the Bill recognises movement, in that it makes this a reserve matter, rather than an excepted matter, and so puts it more within the Assembly’s bailiwick. Our view, in tabling the amendments, was that the more that was done, the better; it shows maturity and demonstrates that the Assembly is developing. It shows that issues such as the make-up of the Executive, how it is appointed and elected, the First Minister and Deputy First Minister should all be more within the remit of the Assembly.

I have heard what the Minister has said, and I also heard his earlier comments that he was listening carefully to the matters being raised and would reflect upon them. In that spirit, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 ordered to stand part of the Bill.

Clause 7

Extension of term of Assembly

Question proposed, That the clause stand part of the Bill.

[Ms Ritchie]

I approached clause 7 by way of a probing amendment that was not selected. I sought information on Second Reading about why the mandate of the current Assembly was being extended from a four-year term to a five-year term, given that the people of Northern Ireland voted for parties on the basis of four, not five years.

Many political representatives, including the current Secretary of State and the former Secretary of State, have stated that there is insufficient consensus on extending the term, while the Northern Ireland Affairs Committee compiled evidence that clearly suggested there was insufficient evidence and did not agree with extending the term to five years. I understand that three parties—at the centre, shall we say—supported extending the mandate: the Democratic Unionist party, Sinn Fein and the Alliance party. On the other hand, the Social Democratic and Labour party and the Ulster Unionist party did not.

I believe in democracy. Members were elected to the Northern Ireland Assembly on the basis of four, not five years. That is a very different position from that in Scotland and Wales. In November 2011, when people stood for election and sought mandates in Scotland and Wales, they did so on the basis that those terms would be five years. It was very different in Northern Ireland. I did not get that mystery unlocked on Second Reading, so I now ask the deputy Secretary of State if he will provide me with an explanation; I am sure he will be happy to do so.

[Mr Dodds]

I want briefly to put on record our view, which we also stated on Second Reading.

We believe that the argument for moving the date of the Assembly election is strong, not least because that is what is happening for Scotland and Wales. There is no logical, coherent reason at all to challenge the Government position—that we should also extend the mandate for the Northern Ireland Assembly by one year, to ensure that a Westminster election and an Assembly election are not held on the same day. That is important because they are probably the two most important elections that are held. Council elections are obviously significant, as are elections to the European Parliament, but when we are electing the legislature and the Executive for the Northern Ireland Assembly and also representatives in this House, it is inevitable that one of those elections would dominate the media and the political debate to the exclusion of the other, to a much greater extent than with other elections. For that reason, clause 7 is important.

[Dr McCrea]

Does my right hon. Friend accept that some issues that are relevant for the people of Northern Ireland can be dealt with only by the Northern Ireland Assembly—as opposed to international issues, for instance—and that a clear division between the two election dates would prevent muddying of the water?

[Mr Dodds]

Yes, I agree with that. The decision was taken for Scotland and Wales when we debated the Fixed-term Parliaments Act 2011, while the position in Northern Ireland was left open to allow for further consultation and discussion with the political parties there. That discussion was held. It was carried out in a very full way—indeed, in many respects there was more consultation and discussion about this issue than many others. A view was reached that is supported by a clear majority among the parties represented in the Assembly, and it is also a cross-community view. Of course, not every party agrees with it, but that is a significant development.

[Naomi Long]

Does the right hon. Gentleman agree that the Government’s proposal as it stands not only ensures that the next set of elections will not happen concurrently, but reduces the opportunity for that to happen in future, with the result that there will be less ad hoc-ery—for want of a better term—in setting election dates? The Government’s proposal will ensure that they no longer coincide, which is to be welcomed.

[Mr Dodds]

The hon. Lady anticipates the exact point I was going to conclude with. Clause 7 takes care of the problem for 2015, but by permanently fixing the Assembly term at five years—again, as in Wales and Scotland—it also takes care of any future problems with overlaps between Assembly and Westminster elections.

For those reasons—and also because the clause ensures that Northern Ireland is absolutely four-square in line with the other devolved legislatures, in Scotland and Wales, as part of this great United Kingdom—I am more than delighted to support the Government on clause 7.

[Stephen Pound]

I yield to no person in my admiration for the hon. Member for Belfast East (Naomi Long), for many reasons. One is because of the marvellous new expression we have heard this evening: “ad hoc-ery”. In the past we have had “what-aboutery”, but “ad hoc-ery” is absolutely marvellous—I thought he was a Taoiseach in Ireland many years ago, but that is neither here nor there.

The clause as it stands is supported by Her Majesty’s Opposition, principally because we think it is logical and sensible, and equalises the various devolved Assemblies. However, if anyone thinks that choosing a particular five-year period will ensure that no problems occur in future, they have another think coming, because there has never been a time in European political history when so many anniversaries have been queuing up to come down the road. We can therefore pretty much guarantee that whenever the Assembly votes, it will be the anniversary of something, and whenever the Assembly votes, there will be no guarantee whatever that it will be synchronous with this House. However, it would be sensible and far better—and, I think, rather more appreciated by the democratic community—if there were a fixed term in this particular case. A fixed term for this House we can discuss later, but for tonight, the position of Her Majesty’s loyal Opposition is that we support the Government’s proposal that there should be a five-year term, as there is in Wales and Scotland.

21:29

[Mike Penning]

We debated this matter extensively in the Second Reading debate, during which the hon. Member for South Down (Ms Ritchie) referred to me as the deputy Secretary of State almost all the way through her contribution. I should have corrected her then, but I shall do so now. I am the Minister of State in the Northern Ireland Office, and I am very proud of that. I have never heard of a deputy Secretary of State. It might well have been corrected by Hansard, but I thought I would mention it anyway. I also fully acknowledge that I am not going to convince the hon. Lady that no conspiracy took place that suddenly made us change our mind on this matter. In fact, 70% of the MLAs asked us to move the election by one year to 2016.

[Ms Ritchie]

Will the Minister give way?

[Mike Penning]

I want to make a tiny bit of progress, if the hon. Lady does not mind.

As the hon. Member for Ealing North (Stephen Pound) suggested, we should never take anything for granted, but the provisions for the one-year extension and the five-year term should, in theory, keep the Assembly elections separate from the UK general elections. However, this is not set in stone, and nor is the five-year fixed term for this House. Parliament could dissolve and we could have an election here. That is a fact.

[Ms Ritchie]

rose—

[Mike Penning]

I will give way to the hon. Lady. I am being very rude, and I apologise.

[Ms Ritchie]

I am grateful to the Minister of State for giving way. Will he consider this possible evidence? The report from the Northern Ireland Affairs Committee on the draft Bill states:

“Nevertheless, we did not hear any compelling evidence to support this proposition.”

That is, the proposition to extend the mandate from four to five years. The report also states:

“We are concerned that extending the current term to 2016 would be contrary to the expectations of the electorate at the last Assembly election in 2011 and recommend, therefore, that the current Assembly term should end, as planned, in 2015.”

I would be obliged if he could explain why the proposals are now in the Bill.

[Mike Penning]

On this question, we disagreed with the Select Committee. We agreed with it on some things, and changed the draft legislation accordingly, but we did not agree with it on this matter.

[Mark Durkan]

rose—

[Ms Ritchie]

rose—

[Mike Penning]

I will not give way. I have finished speaking on clause 7, and I hope that the Committee will allow it to stand part of the Bill.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.



Clause 8

Appointment of Justice Minister

[Mark Durkan]

I beg to move amendment 18, in page 7, line 4, leave out from ‘is’ to end of line 41 and add—

‘repealed.

‘(2) Any provision by Act of the Northern Ireland Assembly which provides, by virtue of section 21A(3) or (3A) of the 1998 Act, for the method of appointment of a Minister in charge of devolved policing and justice functions, shall be repealed.

(3) Any Minister in charge of devolved policing and justice functions shall be appointed in the same way as other Northern Ireland Ministers.’.

[The Temporary Chairman (Katy Clark)]

With this it will be convenient to discuss the following:

Clauses 8 and 9 stand part.

[Mark Durkan]

Amendment 18 deals with the appointment of a Justice Minister. I shall not go through the history of the various bits of legislation that have gone through this House—many of them steered through by the right hon. Member for Neath (Mr Hain)—to provide for all sorts of permutations and models for appointing such a Minister. The main parties settled on a version that would allow the Minister to be elected by means of a cross-community vote in the Assembly. Of course, the party that gained that Ministry could then end up having a surplus of ministerial positions over and above its entitlement under d’Hondt.

The right hon. Member for Torfaen (Paul Murphy) will recall the tortuous negotiations that we had, and the fact that we were determined that there should be some sort of proportional system, be it d’Hondt or Sainte-Laguë. We went through the various permutations, and d’Hondt was the one that most people were familiar with, because of their experience with the European Parliament. It was deliberately chosen as an inclusive arrangement and to create a situation in which parties were not in a position to vet or veto each other’s ministerial appointments. We actually used that language in the discussions and the negotiations; the parties did not want to be in a position of being able to vet or veto other appointments.

Nevertheless, when it subsequently came to the arrangements for appointing a Minister of Justice in the context of the devolution of justice and policing, there was a departure from that principle—for all the various circumstantial and other reasons with which we are all familiar. I shall not take the Committee’s time in either rehearsing or rebutting them this evening.

If people went for that formula, straying outside the terms, principles and promise of the agreement, they did so on the basis that it was needed to get the devolution of justice started and it was a way of breaking the impasse ensuring that there were no more standoffs. The progress made overall and in the context of justice and policing, means that we have time to consider whether the exceptional arrangements made in and around the position of the Ministry of Justice should still continue.

This clause is designed to end the aberration in the sense of a party being over-represented—over and beyond the d’Hondt entitlement—but that does not simply correct the matter in itself. As I pointed out on Second Reading, it creates other anomalies and potentially some pressures on the parties.

[Naomi Long]

Does the hon. Member acknowledge that it deals with a second anomaly, too, which is that a Justice Minister could be removed from post by a cross-community vote? That could lead to a different aberration, whereby a party could end up with less than its d’Hondt entitlement to Ministries. Is not that issue relevant as well?

[Mark Durkan]

Yes, I recognise that. When these measures originally went through, I made a point about the unequal situation and said that the power in the hands of two particular parties in respect of the Justice Minister’s position was potentially abusable. That anomaly clearly needed remedying as well. We always believed that this should be done as part of d’Hondt, and we believed that the number of Departments could have been adjusted at the time—not to add to the number of Departments, but to keep to the 10 that had been approved, absorbing a Department of Justice. The parties chose to go this way and even to add an additional Department even though their stated position was that they wanted to reduce the number of Departments in Northern Ireland.

In our view, the future Justice Ministry—when the Northern Ireland Executive is next appointed—can be decided and allocated in the same way as other Ministries under d’Hondt. We already have a situation whereby there is more tick-tacking, contact and understanding between the parties in advance of d’Hondt being formally run in the Assembly than was originally envisaged or required at the time of the agreement. Some of the issues are about the sensitivities around who will take what post and what might be detonated by that. Those issues will have to be dealt with in the context of the negotiations.

We view d’Hondt as the mechanism for appointing a future Minister of Justice, as with all other Ministers, in full knowledge that that will create a number of difficulties and uncertainties at a number of levels—we have those problems with other ministerial appointments in any case. There are questions this week about existing Ministers, their appointments and the attitudes of parties towards the rules and the spirit of the pledge of office and so forth. It is not as though the issue of the Minister of Justice is the only sensitivity, as there is also sensitivity about the possibility of d’Hondt leading to the Minister of Justice post going to only one political party. There are clearly sensitivities in relation to other matters, which is why the position of the Policing Board and the whole Patten architecture is so important as well. There are various proofs related to the exercise of the powers and responsibilities of a Minister of Justice that have been well observed and honoured in respect of the current Minister, but they would be equally obligatory for any future Minister appointed under d’Hondt.

[Naomi Long]

As I said on Second Reading, I support clause 9. I acknowledged at that time the existence of the twin anomalies that because Justice Ministers were appointed outwith the d’Hondt process, they could end up with a Ministry more than they were entitled to under d’Hondt, and could also lose that Ministry on the whim of a cross-community vote—although I must add, in fairness to parties in the Executive who may feel fearful, that that has not been exercised, or been threatened or in any other way intimated, by any of them.

I am grateful for the way in which the Government have negotiated and listened to what has been said by my party and others, and I welcome the clause. I think it important that including the Justice Minister in the d’Hondt system will result in a fairer arrangement, whether we gain or lose in party-political terms.

[Mr Dodds]

The hon. Lady is right to say that there has been no threat or attempt to change the Justice Minister under the current arrangement, that the Northern Ireland Office has listened, and that by and large the parties in Northern Ireland have agreed with this provision. However, in the light of what was said by the hon. Member for Foyle (Mark Durkan), may I ask whether she agrees with me that no attempt is being made to change the current special arrangements relating to the role and functions of the Minister vis-à-vis the Executive?

[Naomi Long]

That is entirely consistent with what the Government are proposing. The issue relates simply to the Minister’s appointment and security of tenure. Concerns were raised by my own party and indeed by other parties, and the Government, having listened to other parties in the Executive, took those concerns on board and formulated proposals which addressed them. That was helpful.

I have to say that my view of how an Executive should be formed in future differs from that of the hon. Member for Foyle (Mark Durkan) and his party. We have been open and honest about the fact that we would much prefer the reforms of the Assembly to include a move away from d’Hondt and towards the election of all Ministers by means of a cross-community vote, because we believe that that would enhance collectiveness in the Executive. There would have to be agreement among the Northern Ireland parties for that to happen. I should add that I do not consider d’Hondt to be a normal way of appointing Ministers; I consider it to be a mechanism resulting from the Good Friday agreement which was required to manage an abnormal political situation. I hope that, when we seek to reform the Assembly more widely, that will be on the table for discussion along with everything else. However, I support what the Government are attempting to do, and oppose the attempt to change it.

[Stephen Pound]

I welcome what has just been said by the hon. Member for Belfast East (Naomi Long). I hope that the Committee will forgive me for observing that the entire debate, which began so many hours ago, has been conducted in a positive, mature, sensible and serious manner, which I think is to the credit of all Members.

Let me also say on behalf of Her Majesty’s Opposition, as a matter of formality but also as a matter of personal desire, that we entirely understand why the Secretary of State has been detained elsewhere. We understand how difficult things are at present, as we approach Friday, and we understand very well that the right hon. Lady’s first duty must be to ensure peace and good order in Northern Ireland. The Opposition make no criticisms whatsoever. In fact, we feel that the Minister of State has made a very good fist of it, as he often does.

It is a great pleasure for us to hear the frequent encomiums to my right hon. Friend the Member for Torfaen (Paul Murphy). We must never forget the part that he played in bringing us to where we are at present. I think it important to recognise the contribution made by many people, not just those who are in the Chamber tonight.

If there is one theme that could be said to have run consistently through the entire debate, it is the contrast between what we would like to do and what we think we can achieve. In the various statutory instruments discussions we have had, I have invoked St Augustine, and apparently I misquoted him when I said it was the great doctor of the Church who said “Make me pure, but not quite yet.” I received a letter in English from Canon Bernard Scholes telling me I had completely misunderstood the Augustinian theory on that, so I shall look to certain colleagues on this, probably the right hon. Member for Belfast North (Mr Dodds), to whom I always defer in matters of theological exactitude.

21:45

On a serious point, we all know where we want to be. The question that has faced the House tonight, dramatically over and over again, is this: do we proceed without full consensus—without that organic growth, without that cultural change—or do we legislate and let the people catch up, or do we let legislation follow the people? In the context of Northern Ireland, we simply have to realise that consensus is crucial. We cannot operate on any basis—on any level, in any area—without that consensus. The key point of the Belfast agreement, the Good Friday agreement and all subsequent agreements has been a hard-fought and hard-won consensus.

Tonight’s debate has shown we can proceed in a good spirit, overwhelmingly moving in the same direction. There is no doubt about that. The only question is about the speed at which we approach that desirable place.

Having made that point, I move nothing, I criticise no one, I thank many people, and I am delighted to say to the Minister that we have supported him more often tonight than I ever thought we would in my lifetime.

[Mike Penning]

May I repeat the thanks expressed on Second Reading to Her Majesty’s Opposition for the supportive way they have looked after me in my new role? I look forward to being with the shadow Minister tomorrow, up on the Committee Corridor once again, when we consider another piece of secondary legislation.

I genuinely wish I could support the amendment, but I cannot, as we are not yet in the right position to do so, as the shadow Minister suggested. This is a difficult situation, but I think everybody accepts and understands why the Justice Minister was first appointed in this way and then subsequently again in 2011. We have moved on from that, however. While what we propose in clauses 8 and 9 is not perfect, it does move us forward and address the anomaly in the position of the Justice Minister. We were formally approached by the First Minister and Deputy First Minister to look at putting in place a provision that addressed this anomaly. We have done so through clauses 8 and 9, which is why I hope they will be agreed to.

[Mark Durkan]

I thank the Minister for what was a very straight and straightforward reply. It was exactly as expected. I would not have expected the Government to be moving. I expected that the best we would get would be mutual engagement, but no mutual adjustment. We have had mutual engagement, and there has not been adjustment. I fully understand the points made by other Members as well.

The right hon. Member for Belfast North (Mr Dodds) said that there are provisions around the Minister of Justice in terms of the Executive locus. That is precisely what I was referring to when I talked about some of the standards that are there, which are well honoured by the current incumbent, and which apply equally to all other Ministers as well. The existing protections do not need just to apply to the means of appointment, and there are also obligations and standards in place. However, recent events show that we might have more to do either here or in the Northern Ireland Assembly in respect of increasing the robustness of some of the standards around ministerial probity and accountability.

On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 8 and 9 ordered to stand part of the Bill.

The Deputy Speaker resumed the Chair.

Bill (Clauses 1 to 9) reported, without amendment (Standing Order No. 83D(6)), and ordered to lie on the Table.

Business without Debate

Tuesday 9th July 2013 Commons Chamber

European Union Documents

Tuesday 9th July 2013 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 119(11)),

EU Strategy for an Open, Safe and Secure Cyberspace

That this House takes note of European Union Document No. 6225/13, a Joint Communication on a Cybersecurity Strategy for the European Union: An Open, Safe and Secure Cyberspace; supports the Government in welcoming the strategic vision of the Strategy; and notes the Council Conclusions on Cybersecurity. —(Mr Swayne.)

Question agreed to.

Delegated Legislation

Tuesday 9th July 2013 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Capital Gains Tax

That the Collective Investment Schemes (Tax Transparent Funds, Exchanges, Mergers and Schemes of Reconstruction) Regulations 2013 (S.I., 2013, No. 1400) dated 6 June 2013, a copy of which was laid before this House on 7 June, be approved. —(Mr Swayne.)

Question agreed to.

Electoral Commission

Motion made, and Question put forthwith (Standing Order No. 118(6) and Order, 18 June),

That an humble Address be presented to Her Majesty, praying that Her Majesty will appoint Anthony Hugh Burton Hobman as an Electoral Commissioner with effect from 1 January 2014 for the period ending on 31 December 2017. —(Mr Swayne.)

Question agreed to.

FINANCIAL ASSISTANCE TO INDUSTRY

Tuesday 9th July 2013 Commons Chamber

Ordered,

That the Motion in the name of Secretary Vince Cable relating to Financial Assistance to Industry, in respect of Digital Region Limited, shall be treated as if it relates to an instrument subject to the provisions of Standing Order No. 118 (Delegated Legislation Committees) in respect of which notice has been given that the instruments be approved. —(Mr Swayne.)

Services for Stafford Hospital

Tuesday 9th July 2013 Commons Chamber

21:51

[Jeremy Lefroy (Stafford) (Con)]

I have the great honour and privilege to present this petition to support services at Stafford hospital which, along with other petitions on similar terms, has been signed by 50,346 of my constituents and those of neighbouring colleagues. The petition expresses the deep concern of a community whose hospitals face the threat of a downgrade following the appointment of the trust special administrators and proposals by the contingency planning team to remove services from the hospitals. The petition has been collected by volunteers across the community.

The petition reads:

To the House of Commons.

The Petition of residents of Stafford and surrounding area,

Declares that the Petitioners believe that the Trust Special Administrators, Jeremy Hunt and any other individuals responsible for the future of Stafford Hospital should support the hospital and save its acute services.

The Petitioners therefore request that the House of Commons urges the Department of Health to ensure that Stafford Hospital retains a 24/7 A&E department, level 3 critical care and emergency service and full maternity services.

And the Petitioners remain, etc.

[P001194]

Dalgety Bay (Radiation)

Tuesday 9th July 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Swayne.)

21:52

[Mr Gordon Brown (Kirkcaldy and Cowdenbeath) (Lab)]

I rise to raise an issue—radiation contamination in Dalgety Bay in my Fife constituency—that I have raised with the House on two previous occasions: in November 2011, when I first asked Ministers to take action; and in March this year, when I suggested that the time was now overdue for action. I regret having to come back to the House, but I am grateful to you, Mr Speaker, for allowing me to raise this issue, because we now have greater evidence of the scale of the contamination and of the risks inherent in it.

We are now faced with a choice, because in the next few months the Ministry of Defence will have to make a decision, as the Scottish Environment Protection Agency will be bound to designate this area as the only radiation-contaminated area in the United Kingdom if action is not taken by the MOD as soon as possible. It is an amazing fact that we have nuclear waste sites, we have nuclear submarines and we have weapons in different parts of the United Kingdom, but this small beach in the heart of my constituency, which is on a walkway, the coastal path of Fife, is liable to be named the first ever radiation-contaminated area in the UK. I want to do everything in my power this evening to persuade the Minister that it is within his power and the power of his Department to stop that.

Dalgety Bay is already the first area of the United Kingdom where a risk assessment study has had to be done to measure the extent of radiation contamination and where what is called an appropriate person report—a report under the legislation dealing with radiation contamination—has been produced and has concluded that the polluter of the area is indeed the Ministry of Defence. Today and tomorrow, the Committee on Medical Aspects of Radiation in the Environment is meeting in London to discuss the risk assessment report. In my view, it will reach the same conclusion as Health England: that the area is contaminated, that action must be taken as soon as possible and that the polluter should take responsibility for doing so.

Although I have raised the issue in the House for 18 months, it is only in the past few days that I have discovered the scale of the problem in the greatest detail, thanks to the risk assessment report and to the appropriate person report, of which the Minister will no doubt be aware. That makes it clear that the contamination of the beach area in Dalgety Bay arises from the fact that starting in 1946 and for 13 years, wartime fighter planes and other planes in the possession of the Royal Air Force were scrapped and incinerated before the ash, including radiated parts, was dumped in the area of Dalgety Bay. In 1946 alone, 800 planes were scrapped and their parts dumped in this area of my constituency. From 1946 to 1959, not a few planes—not tens, or twenties, or scores—but hundreds were broken up before their parts were incinerated and the ash, including radiated parts, was dumped in the area.

The Scottish Environment Protection Agency report, which has just been published, states:

“The total number of radioactive…particles… that have now been recovered since the beginning of our investigation in September 2011 is over 1,000. Of these sources, five had a radioactivity content of greater than 1 MBq of Radium-226…Four of these sources were located in the area which is currently cordoned off and the fifth on an area in front of the headland which is only accessible at low tide.”

There is no doubt in the view of SEPA that dumping of materials took place, that they have radioactive content, that because of coastal erosion the particles are being brought up to the surface and that action will now have to be taken.

Only a few days ago, I also discovered that there is a huge difference between what the Ministry of Defence admits privately and confidentially behind closed doors about what has happened and the public statements it has made. I very much regret having to bring this to the House, but on 14 December 1990, Her Majesty’s inspectorate of pollution sent a memo to Lord James Douglas-Hamilton, the Minister at the Scotland Office at the time. It is written by someone called Mr Wright and the copies went around a number of different people within Government. Mr Wright said:

“I attended a meeting with the MOD to discuss the possible origins of the contaminated material and to consider how best to proceed. MOD confirmed that some 800 aircraft were scrapped during 1946 at the nearby…HMS Merlin and that the aircraft would have contained instruments and equipment luminised with radium.

There is evidence that the debris from demolition work at the air station was used for infilling purposes between 1946 and 1959.

This information, together with the nature of the contained debris which has been found leaves little doubt as to the origins of the contaminated debris which has been found…and is likely that there is more material buried in the area inland from the beach.”

He went on to say:

“I am glad to report that”

the MOD

“seem willing to help both with further monitoring and with any remedial action which might be necessary.”

So there, in 1990, we have an admission that the Ministry of Defence is not prepared to make today—an admission that it refused to make when the responsible persons report, naming it as a polluter, was published. That is a memorandum from within the Government machine, from Her Majesty’s inspectorate of pollution, making it absolutely clear that the Ministry of Defence had not only admitted culpability, but was prepared to take the remedial action I have been demanding for some time.

In 1992, a similar report was done, in which the Ministry of Defence named Dalgety Bay as one of the polluted areas. Again, after 2000, it is absolutely clear from the report of Mr Fred Dawson, who was the head radiation protection officer dealing with the safety officer at the MOD, that the Ministry of Defence was advised by him, at that time, that it would be found liable, and that there was significant reputational damage involved in denying liability in this area.

When so many people and expert agencies have made it absolutely clear that the material is radioactive and was dumped by the Ministry of Defence, and that the infill has made possible the tip at the sailing club and at Dalgety Bay head, why does the Ministry of Defence still refuse to accept responsibility? It requested a lawyer’s report as well as an expert report by the Scottish Environment Protection Agency. Why, when it was published, a few days ago, did the Ministry of Defence say that it was not satisfied, that it doubted the veracity and accuracy of the report, and that it was not yet prepared to accept its culpability in this matter?

In the risk assessment report, which I have read in some detail, and the appropriate persons report, there is a year-by-year catalogue of the actions taken by the Ministry of Defence, through the Royal Air Force, which used the airfield for breaking up planes, incinerated the planes, prepared the ash for dumping, and removed the ash to the dump, which eventually became the ground on which part of Dalgety Bay—the new town—is built. At no point is it made clear by any witness that the Ministry of Defence is anything other than liable for this.

Why has the Ministry of Defence insisted on trying to pass the buck to other people in the area who have no responsibility for this contamination? The developers, the property owners, and the sailing club, which has had to change its constitution to protect itself from the fall-out from this, have all been suggested, by the Ministry of Defence, as being potentially to blame, when it is absolutely clear from every document we have that the Ministry of Defence is responsible. Unfortunately, it has to accept its role as a responsible polluter in the area.

This matter is made more difficult by the response of the Ministry of Defence to the risk assessment report by the Scottish Environment Protection Agency. In a Ministry of Defence letter of 28 June to SEPA, a copy of which I have been given—it is very short and rather dismissive, I am afraid—the Ministry cites four objections, three of which are entirely technical and, I believe, easily dealt with, but one of them simply beggars belief. Key issue No. 1 is what it calls

“‘theoretical’ object—it is not clear whether an object with the properties required”—

that is, with radiation inherent in it—

“has been found or whether there is simply the possibility that such an object might exist.”

However, these objects were admitted in 1990. The fact that these particles were there was admitted in 1992. The Ministry of Defence’s own contractor found hundreds of these particles; 3,000 have been found in the bay.

The Dalgety Bay and Hillend community council has done a study of the work done by the Ministry of Defence contractor, and I am grateful to Colin McPhail, the chairman of the community council. It covers 100 trial pits and six bore holes. Some 84% of the material comes from the tip, and in 47% of the articles, there is radium-226. In 75% of the articles discovered, there is debris from the airfield. There can be absolutely no doubt that these are not theoretical objects, but particles that have been discovered. After all this time, the debates that we have had in the House of Commons, the letters that have been exchanged, the protests of the community council, and the evidence that the Ministry of Defence has received, it really is beyond me that the Ministry of Defence can believe that it is dealing with a theoretical issue, not a practical issue; there are contaminated particles that have to be either removed or covered up if the safety of residents is to be guaranteed.

If the Ministry of Defence thinks, in theoretical terms, that all the objects have been discovered and no further objects are going to rise to the surface, it is wrong. These objects are being discovered at the rate of 1,000 a year, and because these materials, as I know, do not decompose or disappear of themselves, they are likely to continue to come to the surface as a result of coastal erosion. As the Scottish Environment Protection Agency has told me, there is a cache of contaminated ash and clinker in areas of made ground which form the current coast in the area of Dalgety Bay.

In the letter that the Ministry of Defence sent to SEPA, it refers to a review that it is doing, and I would be grateful to hear the details of that. It says that it will take into account the findings of Public Health England, but Public Health England has already stated on 28 June that is agrees

“that radium-226 contaminated objects recovered from Dalgety Bay include objects that could give rise to radiation doses that exceed the relevant criteria”

of the regulation.

We know that the objects under consideration are not theoretical, but real. We know that the finds of these items are likely to continue over the years. We know that Public Health England already considers this a health issue that must be dealt with. We know that the Committee on Medical Aspects of Radiation will make a disposition on the matter tomorrow.

For two years now, the area has been in limbo. The beach area has been fenced off. The sailing club has had to change its constitution, as I told the House. House prices may yet be affected. The Ministry of Defence is trying to persuade residents in the next town, Rosyth, that that should become the site for the decommissioning, dumping and breaking up of nuclear submarines, telling them that there is no health hazard involved. When the MOD engaged in a consultation on the issue, the residents of Rosyth, who have a history of working with the Ministry of Defence through the naval base and, still, the royal dockyard, the major objection that the residents of Rosyth raise to the decommissioning and dismantling of submarines at Rosyth is that if the Ministry of Defence cannot be trusted to deal with radiation contamination at Dalgety Bay, how can they trust it to deal fairly with them over the dismantling and breaking up of submarines at Rosyth?

The Minister who dealt with the matter in the past said that if contamination is proven, if risks remain, and if the Ministry of Defence is found to be responsible, it will voluntarily, without the need for a designation order, fund the clean-up operation to remove the blight that is in the area for years and decades to come if nothing is done.

With these two major reports we have moved from the world of ifs to the world of certainties. Contamination has been proven. Risks do remain. The Ministry of Defence is responsible, and it is no use the Minister coming to the House this evening and saying, “If contamination is proven, if risks remain or if the Ministry of Defence is responsible, it will act.” These three facts are established. They are not theoretical, but real. They are not what might be. but what is. We have moved from the world of conditional statements that could have been made two or three years ago to unconditional certainties.

The Scottish Environment Protection Agency was asked only to judge the balance of probability in these matters. It has actually shown that the problem is the responsibility of the Ministry of Defence beyond all reasonable doubt, in my view. It is now time for the Ministry of Defence to do the decent thing. It should own up, clean up the area, pick up the bill for that because it is the responsibility of the MOD, and it should hurry up, because the residents of Dalgety Bay should not have to undergo another winter when further coastal erosion causes more particles to appear, the health risks to be mentioned by residents, as they are now, and the damage to get worse. I urge the Minister, even at this late stage, to accept responsibility and to get on with the clean-up of Dalgety Bay.

22:08

[The Parliamentary Under-Secretary of State for Defence (Dr Andrew Murrison)]

I start by warmly congratulating the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) on securing this debate. It is an important subject and he has expressed his views passionately, as I would expect. He has been, if I may say so, an assiduous Member of Parliament in his attention to this matter, securing Adjournment debates in November 2011 and in March this year. My right hon. Friend the Defence Secretary tells me that the right hon. Gentleman has also had a long conversation with him, when he covered much of the ground that he covered this evening and which I hope to cover in the time available to me tonight.

I well understand the right hon. Gentleman’s passion for this subject given his long association with the area and the local community he represents, and if he is agreeable to the notion, I look forward to visiting Dalgety Bay before too long. We have a duty to those we represent to present a balanced view that neither sensationalises nor causes unnecessary anxiety, and I know the right hon. Gentleman will want to do just that. Contrary to the impression he gave, however, the Ministry of Defence has never sought to abdicate its legal responsibilities, much less “pass the buck”. In fact, we have acknowledged that in all likelihood our historical activities introduced radium into what was Royal Naval Air Station Donibristle and HMS Merlin. Moreover, we have demonstrated a serious commitment to supporting the Scottish Environment Protection Agency, and expended £825,000 to date undertaking a site investigation, as well as a monitoring and recovery programme along the foreshore. The right hon. Gentleman will recall the work we have undertaken in a number of gardens belonging to his constituents where radium was discovered, at a cost of some £500,000.

On recent statements in the press concerning a memo allegedly from the MOD, the document we are aware of, dated December 1990, is from Her Majesty’s industrial pollution inspectorate to the Scottish Office—I think that is what the right hon. Gentleman referred to in his remarks. We have found no evidence to corroborate claims that 800 aircraft were destroyed in 1946 through burning, and the resultant waste material—including ash—deposited on the beach or within the headland prior to 1959. Interestingly, the memo mentions the disposal by burial of waste arising from the scrapping of aircraft at a location inland from the beach, which we understand may be a former quarry. The memo also appears to acknowledge the MOD’s willingness to assist the regulator, then Her Majesty’s industrial pollution inspectorate—a situation not dissimilar to today when the MOD is assisting SEPA with its statutory inspection of the beach and adjacent shoreline.

The question is whether there is significant risk of significant harm, and the extent to which the activities of those who controlled the land after the MOD impacted on the current situation. The right hon. Gentleman cannot dismiss the latter point because that is the statutory test.

[Mr Gordon Brown]

Has the Minister read the risk assessment and the appropriate persons report? If he has, will he acknowledge that the Scottish Environment Protection Agency has established beyond any reasonable doubt that none of the people whom the Ministry of Defence thought may have been responsible for adding to pollution in the area is deemed responsible? If the statutory agency responsible for reporting on these matters is not believed by the Ministry of Defence, what are we to believe?

[Dr Murrison]

It is not a question of not believing statutory agencies, but I must report to the right hon. Gentleman that SEPA has been less than helpful in this matter. That is why there is a need for a further meeting, which my officials have scheduled, at which I hope such issues will be fully worked through. I am sure he would agree that in matters such as this where there is controversy over the evidence, and particularly the risk assessment that is central to this—

[Mr Brown]

rose—

[Dr Murrison]

If the right hon. Gentleman will allow me, I will get back to him when I can. It is essential in controversial matters such as this that we are absolutely clear about the science, and particularly the risk assessment. That lies at the heart of our difficulty with some of the work that SEPA has done. At the end of this month, however, officials will meet SEPA and—particularly in the light of evidence to which the right hon. Gentleman alluded that may be forthcoming in the next few days—I hope we will be able to plot a way forward.

[Mr Brown]

Will the Minister publish the advice that was given to the Ministry of Defence before it talked to Her Majesty’s inspectorate of pollution? Will he tell us, as a freedom of information issue—I have asked for this information to be provided—what Ministry of Defence officials said to those people who were in touch with the inspectorate when it prepared the report in 1990? As far as the advice on the risk assessment is concerned, the Ministry of Defence’s objections essentially come down to one major point: it suggests that it does not believe that these sources have been found at the level of radiation required. Yet the people who have actually been doing the excavation are contractors employed by the Ministry of Defence.

[Dr Murrison]

I am pleased that the right hon. Gentleman has submitted a freedom of information request, and of course we will, as far as we can, respond to it. I must say that we have already looked for some of the documents cited by SEPA but cannot find them. Naturally, we will comply with whatever he requests, and if we have the information, will certainly provide it to him.

I believe that considerations of the sort I have outlined in relation to risk and who is responsible for management of the land are germane to this discussion. Indeed, they are key to understanding whether designation is required and how the material has come to be within the foreshore. Ultimately, the presence of radium at Dalgety Bay must be viewed and addressed in the light of the statutory regime for contaminated land, rather than correspondence from the 1990s.

[Lindsay Roy (Glenrothes) (Lab)]

Does the Minister not agree with the former head of radiation protection at the MOD, Fred Dawson, who has warned that

“denial of liability could result in a long, drawn-out, expensive process at the end of which the MOD will be found liable and suffer significant reputational damage”?

[Dr Murrison]

Well, the aim of the Ministry of Defence is to do the right thing. We are bound by statute, but I hope that it will not come to statute because, as I have explained, our intention is to comply with statutory authorities voluntarily, but we need to explore the methodology that has gone into their assessment and take into account the views of Public Health England, which, despite its name, is of course the adviser to the Scottish Government on radiation matters—[Interruption.] The right hon. Member for Kirkcaldy and Cowdenbeath says from a sedentary position that it has given its view, but I think that he has given a partial account of it. If I can make some progress, perhaps I will be able to give a fuller account of what Public Health England has actually said.

My technical and legal experts have reviewed the two most recent reports by SEPA and identified issues relating to the adequacy and validity of both the risk assessments and the appropriate person report. Those concerns relate to the interpretation and use of fundamental scientific and legal principles. I do not know whether the right hon. Gentleman has had sight of the independent review by the Centre for Radiation, Chemical and Environmental Hazards, formally part of the Health Protection Agency, but I must say that it hardly gives a ringing endorsement of SEPA’s approach and shows that many of our concerns are well founded. Those concerns lie at the heart of what this is all about and what I think he is trying to characterise as our unwillingness to make progress on the matter, which I think is unfair. I hope that he will understand that, when faced with professional opinion—

[Mr Brown]

rose—

[Dr Murrison]

If the right hon. Gentleman will allow me, I will continue, because I think that I have been reasonably generous in giving way. I have four minutes left and it is important to put forward the Government’s side on the matter.

I hope that the right hon. Gentleman will understand that when we are faced with evidence that is not entirely congruous in some important respects, it is essential that we take stock. A robust, evidence-based risk assessment is required that accords with accepted best practice and is scientifically rigorous. Without it, we simply cannot understand the level of risk posed to health and ensure that suitable and sufficient measures are in place to protect the public.

To that end, we have previously emphasised to SEPA the importance of a credible risk assessment and raised serious concerns with it about its approach, concerns that have been reinforced by the findings of the recent review undertaken by the Centre for Radiation, Chemical and Environmental Hazards, which concluded that the likelihood of a member of the public inadvertently ingesting an object contaminated with radium that could cause them significant harm is less than one in 10 million. I remind the right hon. Gentleman that radium is predominantly an alpha emitter, so ingestion is the key route by which harm can occur, notwithstanding the fact that radium and its decay products emit both beta and gamma radiation. SEPA confirmed at the last Dalgety Bay forum in May that the management measures currently in place remain sufficient to manage the risk to the public such that the risk remains very low, and arguably these measures exclude any area at Dalgety Bay from designation.

The right hon. Gentleman will recall that in his first Adjournment debate he openly acknowledged that up until October 2011, when two high-activity items were discovered, there had been no evidence to suggest that there was a potential threat of any significance to public health or, for that matter, the presence of extensive contamination. As early as 1998, the annual risk of contracting a fatal cancer through inadvertent inhalation or ingestion was found to be less than one in 1 million: in his words, a “negligible risk”. He also went on to draw comparison between—

[Mr Brown]

Will the Minister give way?

[Dr Murrison]

No, I will not. I do not have time; I am very sorry.

The right hon. Gentleman also went on to draw comparison between Aberdeen and Dalgety Bay based on a 1995 study that found that the highest ambient external radiation dose rate found at Dalgety Bay was two thirds of that found naturally in the granite in Aberdeen.

The scoping risk assessment undertaken by the Centre for Radiation, Chemical and Environmental Hazards in 2012, which took account of the two high-activity objects found in late 2011 and the subsequent find in April 2012, together with the current management measures, concluded that the risk of attributable cancer was actually less than one in 100 million. In addition, the most recent cancer study published by the Committee on Medical Aspects of Radiation in the Environment in December 2012, to which the right hon. Gentleman referred, found no evidence of the occurrence of cancers in the local population that could be attributed to the presence of radium-226.

[Mr Brown]

rose—

[Dr Murrison]

I have one minute left and I will not give way.

I have to say to the right hon. Gentleman, who was of course in high office for 13 years and did nothing on this subject, that he needs to be very careful indeed about raising fears in his local population. He knows full well that Government will comply with statute but, more than that, will do anything they can voluntarily to protect public health, but it has to be on the grounds of science and a proper risk assessment. To that end, my officials will be meeting SEPA later this month to discuss the methodological problems with the science and come to some sort of way ahead. I personally look forward to visiting Dalgety Bay in the very near future, and I look forward to further discussions with the right hon. Gentleman on this subject.

Question put and agreed to.

22:22

House adjourned.

Ministerial Correction

Tuesday 9th July 2013 Ministerial Corrections

Tuesday 9 July 2013

Commission on Security and Cooperation in Europe

Tuesday 9th July 2013 Ministerial Corrections

[Mr Raab]

To ask the Secretary of State for the Home Department if any of the 60 individuals named on the list published by the Commission on Security and Co-operation in Europe, individuals involved in the tax fraud against Hermitage and the torture and death of Sergei Magnitsky, published in June 2012 have visited the UK in the last year; and if she will disclose the details of any such visits.

[Official Report, 18 April 2013, Vol. 561, c. 499W.]

Letter of correction from Mark Harper:

An error has been identified in the written answer given to the hon. Member for Esher and Walton (Mr Raab) on 18 April 2013.

The full answer given was as follows:

[Mr Harper]

It is long-standing policy not to disclose details of records which may be held in relation to arrivals in the United Kingdom. The Home Office Special Cases Directorate is already aware of the individuals on the list and has taken the necessary measures to prevent them being issued visas for travel to the UK.

The correct answer should have been:

[Mr Harper]

It is long-standing policy not to disclose details of records which may be held in relation to arrivals in the United Kingdom. We do not make decisions on entry into the UK speculatively. We are aware that some individuals have been linked to the arrest, detention and death of Sergei Magnitsky. Any application for a visa to come to the UK will be considered on the individual merits of the case in line with our usual practice.

Westminster Hall

Tuesday 9th July 2013 Westminster Hall

Tuesday 9 July 2013

[Mr Peter Bone in the Chair]

Herbal Medicine (Regulation)

Tuesday 9th July 2013 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Lancaster.)

00:00

[David Tredinnick (Bosworth) (Con)]

I am extremely grateful to have the opportunity in this debate to raise the issue of herbal medicine with my hon. Friend the Minister. The issue has been on the agenda for many years, and I hope that by the end of the debate we can shed light on where we are going. I look forward to my hon. Friend’s remarks.

On Friday, I was at the Royal Society summer science exhibition. The Royal Society is our oldest and, some would say, most distinguished scientific society. Its fundamental purpose is to promote and support excellence in science and to encourage the development and use of science for the benefit of humanity. The Royal Society has played a part in some of the most fundamental, significant and life-changing discoveries in scientific history, and it continues to make outstanding contributions to science in many research areas. I will refer to what I saw at the exhibition and to what it has to say to us about herbal medicine generally.

If I may say in passing, Mr Speaker might like to visit the Royal Society because it has a wonderful gold mace that is the mirror image of the Mace that is carried into the Chamber. The mace was a present to the Royal Society from Charles II. Among the Royal Society’s former presidents are Sir Christopher Wren and Edmond Halley. The Royal Society has a wonderful line and body of knowledge, so I set great store by it. We must take note when the Royal Society seriously considers herbal medicine and related methods of delivery.

I was particularly struck by the Royal Society partnership grant project with Boroughbridge high school in Harrogate under the direction of Colin Inglis, the school’s biology tutor, and overseen by Professor Kerr, the consultant microbiologist at Harrogate and District NHS Foundation Trust. The project looked at several simple plants and herbs available in our gardens, from greengrocers and from garden centres to see what their impact could be on E. coli and other bugs—I will focus on E. coli. Working over not a very long period of time, the project found that E. coli growth is inhibited by the use of thyme, lavender and geranium set in essential oils. They said that they were able to identify the minimum inhibitory concentration of those oils derived from herbs and plants—the lowest concentration of essential oil that inhibits the growth of E. coli. When I discussed that with the directing staff, they said that the next step would be to determine the concentration that would kill E. coli—the minimum bactericidal concentration. That simple project in a school in Harrogate has huge ramifications, because it shows how easily-found common herbs and plants can be used in the furtherance of medicine.

In the evening at the Royal Society there was a panel discussion on “Nature’s Marvellous Medicine,” and those addressing the audience were not ill-informed: Professor Dianna Bowles, emeritus professor in the department of biology at York university; Professor Roderick Flower, professor of biochemical pharmacology at the William Harvey research institute; and Professor Monique Simmonds, director of the Kew innovation unit, where she studies the chemistry of plants and fungi—of course, Kew Gardens is currently classifying all British herbs. They are not ill-informed people, and they were speaking about what could be done with herbs and plants.

The chief medical officer, Dame Sally Davies, recently said that resistance to antibiotics risks health “catastrophe” that would rank with terrorism and climate change. She said that Britain’s health system could slip back by 200 years unless the “catastrophic threat” of antibiotic resistance was successfully tackled. The Select Committee on Science and Technology, of which I am a member, might address that in this Parliament. Dame Sally Davies said:

“This is a growing problem, and if we don’t get it right, we will find ourselves in a health system not dissimilar from the early 19th century.”

Although hospital infections from bugs such as MRSA are greatly reduced, they are being replaced by infections with other bacteria. Antibiotic use is rising, not least in agriculture, and resistance is steadily growing in fish and farm animals—I remember raising the matter in this House 20 years ago or more—and there are problems with farmers, particularly in the third world, feeding antibiotics to chickens. I said then that such use could have catastrophic consequences, and now we know that, in some parts of the world, cattle have been fed antibiotics as a prophylactic, so it is no wonder that the new chief medical officer is focusing on that.

It is perhaps also significant that Professor Christopher Thomas, the professor of molecular genetics at the university of Birmingham, added to Dame Sally’s remarks:

“We need new ways to kill resistant bacteria or reduce their carriage of resistance genes. Novel approaches that might have appeared unrealistic a few years ago need to be explored.”

I suggest that one of those areas that needs to be explored is better use of herbs and plants in medicine. In a sense, and this is not an original phrase, we need to go back to the future to find those solutions. If I have anything further to say about Dame Sally’s release, it is that it does not provide any solution other than to suggest that we need to go for more antibiotics. The problem is that some doctors are saying that no antibiotics will work in 20 years’ time. The Government have a catastrophe management team—that is not the official title—and I think that issue should be added to its list.

Today, we are not specifically debating common plants that are available as foods or in the garden. Such plants are covered by different regulations. What we are debating is the future of herbal medicine in this country. If I may, I will set out the stall on what has happened in recent years. We have to go back to the House of Lords Science and Technology Committee report of 2000 that considered herbal medicine and other medicines that are not currently used in mainstream health care. The written evidence from the Department of Health stated:

“There is scope for the larger professions to follow the osteopaths and chiropractors in gaining statutory self-regulation, and this would undoubtedly serve their professions well.”

I served in the Committee stages of the Osteopaths Act 1993 and the Chiropractors Act 1994, and the difference that statutory regulation has made to those professions in providing safe services for patients and giving assurance to doctors such as the Minister is extraordinary. They came in from the cold.

The Government then identified acupuncture and herbal medicine as specific therapies for which they wanted to achieve statutory regulation. I shall not dwell on acupuncture, as we must focus on herbal medicine. In her evidence to the Lords Science and Technology Committee inquiry, the then Under-Secretary of State for public health, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) said:

“I think we would support their moves towards statutory regulation…We would strongly encourage them to continue the process towards proper self-regulation and statutory regulation as well…We do think that in the area of acupuncture and herbal medicine it is perhaps more important than in other areas.”

In its report, the Committee said:

“It is our opinion that acupuncture and herbal medicine are the two therapies which are at a stage where it would be of benefit to them and their patients if the practitioners strive for statutory regulation under the Health Act 1999,”

which is an enabling Act that, if I remember correctly, provides for different disciplines to come in via statutory instrument,

“and we recommend that they should do so.”

Regulation was recommended because those herbal professionals met the agreed criteria for statutory regulation that the Lords had come up with. There was a risk to the public through poor practice, and they had a voluntary regulation system and a credible evidence base. Regulation would ensure that appropriate training was established, resulting in competent practitioners with an understanding of the evidence base for their therapy along with an appreciation of the limitations of the treatments that they could provide. Safe practitioners would understand when to refer. Effective regulation would therefore seek to safeguard the public from incompetent practitioners and identify practitioners suitably qualified to use a range of potent herbal remedies not appropriate for over-the-counter sale. There are some powerful remedies.

The next stage in the saga is the European Union’s intervention. However, I want to make one point at the outset before we consider European directives. The proposal for statutory legislation pre-dates all the arguments about European directives, such as the traditional herbal medicinal products directive and others. The policy had broad cross-party support, and the distinguished Lords Committee, which included members such as Lord Walton of Detchant and Lord Baldwin, had proposed it. Distinguished men came up with that proposal. We were going down that route anyway.

Then the European Union became involved, with directives. We must address the directives, but we are not dealing only with them; we are dealing with a policy that was already in train. The objective of proper regulation had been there before the European Union directive 2001/83/EC, amended by directive 2004/24/EC, which said:

“A Member State may, in accordance with legislation in force and to fulfil special needs, exclude from the provisions of this Directive medicinal products supplied in response to a bona fide unsolicited order, formulated in accordance with the specifications of an authorised health-care professional”—

a key phrase—

“and for use by an individual patient under his direct personal responsibility”.

That meant that herbal practitioners would have to be classed as authorised health care practitioners in order to be able to continue using their herbal products.

In January 2002, the Department of Health, along with the Prince’s Foundation for Integrated Health and the European Herbal and Traditional Medicine Practitioners Association established the herbal medicine regulatory working group—HMRWG. The group and subsequent groups were chaired by Professor Mike Pitillo, a well-respected man whom I knew and who devoted many years of his life to the issue. His efforts were and are still appreciated by all who knew him; sadly, Mike died in February 2010. God bless him; he put so much into the issue on behalf of the community. The working group’s remit was to make recommendations on the regulation of herbal medicine practitioners and the reform of section 12(1) of the Medicines Act 1968. In 2003, the group published its report, “Recommendations on the Regulation of Herbal Practitioners in the UK”.

In effect, the group’s work on the issue of possible reforms to the regime of unlicensed herbal medicines supplied under section 12 represented the first stage in the exploration process envisaged by the Government. It needed to be seen as distinct from but complementary to the wider European negotiations on the then proposed directive on traditional herbal medicinal products, which related to industrially produced traditional herbal remedies sold over the counter directly to the public.

Working in parallel to the group was the acupuncture regulatory working group, which I need not discuss. The HMRWG concluded that the two professions should be regulated together, thereby addressing the high practitioner costs of running two separate registers. The Department of Health ran a consultation on regulation of the two professions, published in 2004 as “Regulation of Herbal Medicine and Acupuncture: Proposals for Statutory Regulation”. The results of the consultation were published in February 2005 as “Statutory Regulation of Herbal Medicine and Acupuncture: Report on the Consultation”.

The Medicines and Healthcare products Regulatory Agency ran a simultaneous consultation on section 12(1) reform—MLX 299, “Proposals for the Reform of the Regulation of Unlicensed Herbal Remedies in the United Kingdom Made Up to Meet the Needs of Individual Patients”—and published its results in January 2005. In 2005, if colleagues recall, we had a general election. There were delays at the Department, unsurprisingly, and pending developments in health care regulation as part of the Foster review stalled further work for nearly a year.

However, in early 2006, the Government set up the steering group on the regulation of acupuncture, herbal medicine and traditional Chinese medicine in order to consider how to proceed with the regulation of those professions. That involved yet another consultation process. On 12 June 2008, the steering group’s report was presented to the then Minister, the right hon. Member for Exeter (Mr Bradshaw). On 16 June, the steering group, chaired by the late Professor Pitillo, held a press conference at the King’s Fund to report on the document.

All the reports and consultations found massively in favour of herbal medicines generally and statutory regulation in particular. After that tortuous process, they arrived at that conclusion.

[Mr Philip Hollobone (Kettering) (Con)]

I am enjoying my hon. Friend’s speech immensely. No one else in the House knows as much about herbal medicine as he does. He speaks for the nation. In its survey, the MHRA found that as many as 3 million people had consulted a practitioner of Chinese herbal medicine, and as many as 25 million had bought herbal medicines over the counter during the previous two years of its survey.

[David Tredinnick]

I am grateful to my hon. Friend, who is ever supportive. He has tabled questions and acted for his constituents on this issue, as he always does. He is right. Three quarters of the population of the United Kingdom have used traditional Chinese medicine, herbal medicine, phytotherapy or one of the other disciplines sometimes classed as complementary. There is a huge swell of people out there who want such medicines. Going back to Dame Sally’s remarks, people are now frightened of using antibiotics; they are worried about overuse and that, when they really want them, they might not be effective. We have a crisis not only of effectiveness but of confidence. People who tend to go down the herbal medicine route have a lot of confidence, however, because they are dealing with nature and natural products that have been used over the years. Properly administered, those products do not have side effects and they are not prone to becoming ineffective.

[Kate Hoey (Vauxhall) (Lab)]

I congratulate the hon. Gentleman, who is knowledgeable on the subject. Would it be helpful if he outlined what he feels might happen if the Government do not do what they said that they would do and what we all want to see happen on regulation?

[David Tredinnick]

I am grateful to the hon. Lady, with whom I discussed the debate earlier, and I will be coming on to the options available to the Minister. In fairness to him, I know that he has been focused on the matter, with his colleague in the Lords, the noble Earl Howe, a distinguished Minister. However, before I look at the solutions and some of the obstructions and problems—why we are not getting a solution—I will first go through where the Government are now.

On 16 February 2011, the then Secretary of State, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley), made a written statement on the regulation of herbal medicine. Subject to parliamentary procedures, he aimed to have legislation in place by 2012—importantly, when the European law kicked in—and he stated:

“When the European Directive 2004/24/EC takes full effect in April 2011 it will no longer be legal for herbal practitioners in the UK to source unlicensed manufactured herbal medicines for their patients. This Government wish to ensure that the public can continue to have access to these products.

In order to achieve this, while at the same time complying with EU law, some form of statutory regulation will be necessary and I have therefore decided to ask the Health Professions Council”—

the strong regulatory body—

“to establish a statutory register for practitioners supplying unlicensed herbal medicines.”—[Official Report, 16 February 2011; Vol. 523, c. 84WS.]

Progress, however, has been slow.

Before I get to the solutions, as prompted by the hon. Member for Vauxhall (Kate Hoey), let me emphasise that, although a Health Minister is responding to the debate, we should not be under any illusion that only the Department of Health is affected. If we do not got things right, we will see a large number of small businesses folding, because the whole supply chain of herbal medicine will collapse. That is extremely unsatisfactory.

Furthermore—I will not stray into this territory for long, Mr Bone, in case you are thinking of calling me to order—when the Science and Technology Committee went to Harwell to look at the European Space Agency, at its work on satellites and at what we are doing with the global positioning system in Europe, we looked at the Catapult centre, which is an organisation backed with hard cash by the Government to drive science forward. That is fine, and I asked them whether it was picking winners, but while I was listening in the state-of-the-art space centre, I was thinking, “But what about the small businesses we already have?” What will we do about the people who are providing a service to the community in health care? What will we do with them if their livelihoods are under threat?

[Mr Hollobone]

My hon. Friend’s excellent speech has come to the nub of what could be a huge crisis. If statutory regulation fails to go ahead, a wide range of herbal medicines supplied by practitioners to their patients will be lost. The directive has already stopped practitioners prescribing herbal medicines made by manufacturers and herbal suppliers for prescriptions to individual patients. Potentially, thousands of small and medium-sized herbal enterprises could go out of business.

[David Tredinnick]

My hon. Friend illustrates the point. The European directive on traditional herbal medicinal products now prevents third-party manufactured herbal medicines being prescribed to patients by practitioners, as well as individualised herbal medicines prescribed by practitioners and manufactured by a third party. One of the communities in the herbal medicine diaspora most affected is that of traditional Chinese medical practitioners. The directive has already had a negative impact on the availability of Chinese herbal medicine in the UK and Europe. The problem lies in the fact that the directive stipulated that, to prove traditional usage, there must be a 30-year history of usage, of which 15 years must be in the European Union. That can be difficult, because many Chinese medicines have been used for thousands of years in China—Chinese medicine goes back 3,000 years at least—but not in the European Union or the UK.

The directive was also conceived before we had the vast opening up of trade with China. Probably, no one envisaged what was going to happen. I will touch on that, because I was speaking to the Foreign Secretary about it last week. We now have a situation in which, once stocks of some Chinese medicines run out, it will not be possible to buy many of the formulations currently available.

[Kate Hoey]

Is this another example of the European Union interfering in all sorts of areas about which our own country should be able to make up its mind? Is this not another opportunity to say that we need to get some powers back from the European Union or leave it altogether?

[David Tredinnick]

The hon. Lady is right. We all saw the headlines in the Sunday papers, and the coalition Government are intending to do just that. I hope that we can get some powers back. One of the solutions that I will propose—I know that you have an impartial role as Chair, Mr Bone, but I have heard mention of the European Union pass your lips in the past—may not even involve the European Union.

To finish with the Chinese problem, we are dealing with an international issue. We are trying to develop trade with China and have just opened a lot of trade missions there—the Department for Business, Innovation and Skills and the Foreign Secretary are backing such attempts—and we see it as a great area, but the Chinese are not happy about the idea that they have western medicine in their country, but we do not make full use of Chinese medicine over here. I have spoken to people about that. The idea that we will have a sweeping of the shelves of Chinese medicine will not play well in the international domain. We have had some controversial issues—the Government’s approach to the Dalai Lama was not overwhelmingly well received by some people in China, although many in this country support what has happened over there. If the Foreign Secretary has not yet been in touch with the Minister, he might well do so, because our international position with China is affected.

Recently, somehow, we have got to an impasse. I have had some helpful conversations, but there have been all sorts of suspicious signals and it is no secret that some practitioners have found it hard to get to the Department; some of the herbal medicine governing bodies have complained that they have not had easy access. Things do not feel quite normal, because the flow of information has not been what we might have expected. I have been told that the problem that stalled the process occurred in Poland.

In short, the European Court of Justice ruled that Poland was importing and selling unapproved drugs. It ruled against the Poles. Apparently, that has brought everything to a grinding halt in the UK. I sent the Minister a copy of the opinion that I received from the European Herbal and Traditional Medicine Practitioners Association, which was provided by David Reissner, a partner with Charles Russell lawyers and an acknowledged expert in pharmacy and health registration. There is no better person to give an opinion. In his letter he says:

“In my view the Poland case was primarily about whether financial considerations could be used as a justification for permitting the use of medicines that do not have a market authorisation. My conclusion is that the statutory regulation of herbal practitioners is still compatible with the ability by such practitioners to be authorised health-care professionals”—

that is a key phrase—

“who can order specials for individual patient use, relying on the exemption in Article 5.1 of EC Directive 2001/83.”

He continues:

“I also confirm that it is my opinion that statutory regulation is the only way to ensure that herbal practitioners are considered to be authorised health-care professionals within the meaning of Article 5.1 of the Directive.”

[Mr Hollobone]

To ensure that I understand, is my hon. Friend saying that Poland has effectively been caught out misusing the special needs provision in article 5.1, whereas the Department of Health proposed a perfectly legitimate scheme under the same article but has been put into a state of paralysis by the European Commission’s judgment?

[David Tredinnick]

That is pretty much right. The fact is that the Poles were trying to get round the system, were caught out and European law was applied effectively, but we are not in the same situation. I am sure the Minister has looked at the matter carefully, so will he please tell us his view? As far as I can see, there is absolutely no justification for using Poland and that view is widely held in the Community.

The key reason why the issue has got stuck has nothing to do with health care but is to do with the turf war and vested interests. I suspect that there are people in the medical establishment who do not want statutory regulation because they think it would interfere with the status of their own profession. When I talked to the Department for Business, Innovation and Skills about this, there seemed to be some confusion because it thinks that we might be going down a route of more regulation unnecessarily, but, sine qua non, there will be no herbal sector if we do not do something about it. Not doing something is not an option. We cannot just leave the matter as it is. I am pretty sure that vested interests in the medical establishment are trying to block this.

I said in the House recently that I had had a chance meeting with Lord Wilson of Tillyorn who was the last but one Governor of Hong Kong and introduced statutory regulation of herbal medicine there. I asked him what the objectives had been and whether he had problems with the medical establishment, and he said that he did. There are two issues: health care and vested interests. That is worrying because those vested interests may be very powerful. Returning to what Dame Sally, the chief medical officer, said and what I learned at the Royal Society last Friday, I ask those vested interests to back off because antibiotics are not working. We need to find something else and herbal medicine is one way forward. It has been suggested that there would be a legal challenge, presumably by people who are generally hostile to herbal medicine and increasingly misguided and misinformed. The Royal Society is the premier scientific body in this country, and the game is changing.

[Mr Hollobone]

Herbal medicine is extremely cost-effective and could help the country to tackle the ever-rising drugs bill in the national health service.

[David Tredinnick]

I have seen evidence in Europe that when doctors combine the two, the allopathic drugs bill can be reduced because herbs tend to be less expensive. That may worry manufacturers, and it has long been said that they are actively campaigning against this. They would be wise to accept that working with natural medicine is good for sales of conventional medicine.

[Mr Peter Bone (in the Chair)]

Order. I apologise that I forgot to say at the beginning that I intend to start the wind-ups no later than 10.40, and that two Members have written to me asking to participate in the debate.

[David Tredinnick]

You are ever courteous, Mr Bone, and I will not detain the Chamber much longer. I am acutely aware of not taking up other people’s time.

The Minister has three options. The Health Practitioners Council was the original idea. The Professional Standards Authority for Health and Social Care oversees the regulatory work of other organisations but is not as robust. A special licensing system for practitioner-prescribed products is a possibility, provided they are not traded between member states, and that may be a way out of the problem. We must find a solution, or there will be a disaster in the long term. I have used Chinese herbs and herbal medicine for many years, and I find them extremely safe and effective. I want people in this country to be able to use herbs. The key objective for the Minister is to ensure that the maximum number of products is available safely through regulated practitioners.

10:07

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Bosworth (David Tredinnick) on bringing this matter to the Chamber for consideration. Many of us have herbal shops in our constituencies. We are aware of their good work, and that has been backed up in interventions today.

I have been contacted about the issue by a small local health food shop in the main town of my constituency, Newtownards, and by numerous patrons of that little shop who benefit from it. That is the point I want to make. The issue is clear: if EU interference continues, it will put businesses out of operation and people out of jobs, and it will result in more people searching the internet for remedies that may not be safe. That will not bring about any benefits. The EU lingers like a shadow over almost everything. Regulation is needed, but it is also necessary for common sense to prevail, and the balance may be difficult to achieve.

[Mr Gregory Campbell (East Londonderry) (DUP)]

My hon. Friend has touched on the crucial point of the debate. Balance is needed to try to avoid people accessing unauthorised, unprofessional and perhaps harmful products, but to enable them to access products made by professional herbalists that they believe and evidence shows improves their condition. We must ensure that we get the balance right between the pursuit and prosecution of those who engage in bad practice and the promotion of those who engage in good practice.

[Jim Shannon]

My hon. Friend has gone to the crux of the debate in those few words. It is about getting a balance between allowing people to continue to use their herbal medicines and ensuring that they do not indulge in anything outside that.

I beg your indulgence, Mr Bone, because I would like to take this opportunity to highlight the save our supplements campaign, which has been well publicised. We should all be aware of the goals of that campaign and the ramifications for today’s topic of regulation. The issue that is causing concern in health shops is maximum permitted levels. It has been suggested to me that interference by Brussels—the shadow of Europe is almost like the grim reaper who hangs over everything that we do in the House—will set low doses for dietary supplements, so removing choice from consumers and adversely impacting on high streets.

[Mr Hollobone]

It would not be a Westminster Hall debate without a contribution from the hon. Gentleman, and I am enjoying it hugely. I am all for bashing Brussels and agree that there is no need for the EU to interfere with the issue, but the EU has given this country a way to address the matter through the establishment of a statutory register, which the present Government undertook to do by the end of 2012. Surely, there is complicity in the Department of Health, and we need the Department to explain why it has not fulfilled that undertaking.

[Jim Shannon]

I thank the hon. Gentleman for his valuable intervention, which gets to the crux of the matter and makes a point that I will come to later. We have an opportunity to address the issue, and I hope that the Minister can put the record straight when he responds.

Some high street health food shops are struggling to compete with internet retailers, which often offer a cheaper price, even though, more often than not, the product is inferior. Again, that uncertainty must be addressed. We have been made aware of the facts through previous speeches and interventions on the subject. For example, in a statement on the regulation of herbal medicine and traditional Chinese medicine, the Secretary of State said that he aimed

“to have the legislation in place in 2012.”—[Official Report, 16 February 2011; Vol. 523, c. 77WS.]

We are very aware of that and are wondering why it has not been done. Will the Minister indicate what is going to happen?

I have not been in Westminster long—I am one of the new intake from 2010—but I realised early on that things do not happen in a flash. However, “subject to parliamentary procedure”, should, in my opinion, not involve such a delay. I share the concern of my constituents and of Members present that the issue has been hijacked by EU regulations. In conjunction with the hon. Member for Bosworth, I reiterate that that was never the intention. Let us get the legislation working in Westminster and ensure that it delivers for our constituents.

The idea of the legislation is to ensure that people are licensed to sell and offer advice and that the trade is as safe as can be. On the issue that my hon. Friend the Member for East Londonderry (Mr Campbell) referred to, the girls in my office, who are always trying to get me, as an MP, to slow down and take better care of myself—that is what they tell me anyway—told me that they went to the local health food shop and were amazed at the wealth of knowledge that the lady who helped them had. She clearly was tremendously knowledgeable, and someone could spend the afternoon discussing what the best herbal medicine for them is. It turned out that that lady had a degree in herbal medicine and was able to suggest many different things.

There is a very real fear that should the legislation not go through and should our health food shops continue to suffer from our inaction, or from the Government’s inaction, such closures will mean that more people will order online with no face-to-face interaction or advice. They will not be told that they should not take certain supplements if they are on other medications, or that two supplements may counteract each other. The problem will not only mean fewer jobs on high streets, but potentially more pressure on our GPs in surgeries, as they try to figure out symptoms that may have been caused merely by people taking the wrong combination of supplements. In other words, the expertise and knowledge of people in herbal medicine shops is critical.

Not many of us question the benefits of supplements, especially in the busy lives that we lead, which often mean that we cannot eat as healthily as we would otherwise like. However, who here knew that taking the blood thinner warfarin with a multivitamin containing vitamin K would put people’s health in jeopardy? The lady in the health food shop did, and she was able to advise people who came to her about it. What happens when there is no local shop? Will GP calls be taken up with queries from, for example, people suffering from nausea, dizziness and so on, who find out, after extensive and expensive tests, that when they read in their magazine that vitamin E encourages glossy, thick hair, they had not realised that the aforementioned symptoms could be caused by too much vitamin E. That did not appeal to me, but if I had thought that vitamin E would have given me glossy black hair, or even roots, I would have bought it by the gallon. However, unfortunately, that was not the case. When people are buying supplements in health food shops, they ask what they are taking and are given advice. I hope that the point I am trying to make can be seen; it is very clear.

It is my belief that regulation by those who are knowledgeable is essential, and that should not be diluted by trying to ensure that the latest round of EU tick-box regulations are checked. The issue merits Government attention and a full debate process, and we are glad to have this opportunity in Westminster Hall. I again congratulate the hon. Member for Bosworth on securing this critical debate. I will support him in continuing to bring the issue to the Government’s attention to see action in terms of health and safety, as well as job security. I apologise, Mr Bone—I have guests in the Gallery that I have to take round the Chamber in a very short time, but like the character says in the film, “I’ll be back.”

10:09

[Kate Hoey (Vauxhall) (Lab)]

It is a pleasure to follow the hon. Member for Strangford (Jim Shannon). I congratulate the hon. Member for Bosworth (David Tredinnick) on securing the debate, which is very timely, given that the House is about to rise for the summer recess, and we are seemingly still no nearer to getting what was promised some time ago—indeed, by the previous Government as well. It has been a long saga, as the hon. Gentleman outlined. I shall speak only briefly, because I want to give the Minister a long time to explain why we are in this position.

I start by reiterating my view that when people voted to join the common market back in 1975, they never would have dreamt that the EU would interfere in this kind of thing. However, it is absolutely crucial that if we are going to prevent the very well-established and effective herbal medicine products from disappearing, literally, from our shops and stop the consequent blow that that would mean for the retail sector, we need to get this regulation as quickly as possible.

I dislike regulation and want to see less of it. I believe that most people have common sense; they know what is good for them and want to do what they think is right. They do not need bureaucrats from the Department of Health telling them all the time what they should and should not be taking. We hear that all the time in so-called public health adverts, when most of what is said is either common sense or complete nonsense. I am a great believer in using not only herbal medicine, but natural products from our countryside. There are so many common-sense things that most of us grew up with—not necessarily only people brought up in the countryside but them in particular. If someone got stung by a nettle, they went immediately and looked for a docken leaf. We did all sorts of things naturally, and now, very few people seem to feel that that is what we should look to. I am afraid that vested interests are the reason for a lot of that. The pharmaceutical industry does not want to see it happening and would love to get rid of all health food shops.

[Mr Gregory Campbell]

Does the hon. Lady agree that as well as the vested interests that she alludes to, at times, in the medical establishment, there is almost a form of elitism that denigrates herbal medicine, suggesting that it only has a placebo effect and is not practically of benefit to people, even though many testify that it is?

[Kate Hoey]

The hon. Gentleman puts it very well. That is what happens, not only in the pharmaceutical industry, but with doctors, who have a very narrow view of what health is, in my opinion. That makes it all the more important that we ensure that alternative medicines are available. It is great that we have an heir to the throne who believes that some of this is really important. I wish that the Department would listen to His Royal Highness Prince Charles, because some of what he says on the matter is absolutely right.

The other issue that I want to raise is about the Health and Care Professions Council, which I think the Minister has overall responsibility for. It is based in my constituency and does a brilliant job. However, recently, it seems as though the Department’s general view on what it does and how it works has changed. We have been trying to get sports therapists registered for a very long time. Everyone agrees that that should happen. The HCPC, which is meant to be the body that gives advice, has gone and said, “This must be registered. We must do this.” Sport England wants it to happen, as does anybody involved in sport; yet somewhere in the Department, there is a block. I actually do not think that it is Ministers; I think that it is officials. Officials do not care who is in government; they do what they want to do; and they will continue to pull a line. It seems as though the Minister or the new Secretary of State could be dangerously close to heeding advice from officials to drop the whole thing. I worry very much about that.

[David Tredinnick]

When I was working on my speech for today, I looked at the lists of those who are regulated by the Professional Standards Authority for Health and Social Care and the Health and Care Professions Council and I could not for the life of me work out why some were on one list and some on the other. There is another debate to be had on that issue.

[Kate Hoey]

I hope that the Minister will give us some clarification on that.

Many campaign groups, including Consumers for Health Choice, are very clear that they want the Secretary of State and the other Ministers to ignore the siren call from officials and fulfil their promises. This is very simple. When the register was announced back in February 2011, it was warmly welcomed by virtually everyone. Consumers were pleased that the register allowed an exception for herbal practitioners from the traditional herbal medicinal products directive—an EU law that became fully applicable in April 2011 and would have meant the banning of all unregistered herbal medicinal products. People will remember the campaign that was held across the country. All MPs got many letters of protest from constituents and from herbal shops and health shops. At the time, the position was that virtually all herbal medicinal products would have been banned. A register would have allowed practitioners to access unlicensed products, thus preserving choice in relation to safe and effective products for thousands of consumers. We all want people to be safe, but that has to be within the broad band of common sense and experience, not because a particular official decides that they do not like a product.

The industry was very pleased. Obviously, the practitioners were delighted that they could still use products that they had used for many years and would not see their consumers drift away, disappointed by a restriction stopping them buying things. All the manufacturers and retailers were pleased for the same reason. It was a win-win situation, so where is the register? The reality is that, because campaigners were reassured by the Government’s words—perhaps people should have been more cynical about the promises of a Government of any sort; that is why there is such a disconnect between the public and politicians—we relaxed the pressure to introduce the register. Of course, the Government got distracted by the huge and messy Health and Social Care Bill and we lost the then Secretary of State. That is where we are now.

I am very concerned and I want to hear the Minister give us an assurance today that this proposal has not been dropped, that the officials are not getting their way and that the register will be introduced as quickly as possible, so that everyone can exercise choice about what they use—choice about their health and how they treat their body—in a way that is not dominated by directives from the European Union.

10:22

[Mr Philip Hollobone (Kettering) (Con)]

Natures abhors a vacuum, Mr Bone; it looks as though it falls to me to fill it, albeit briefly. I apologise that I cannot stay for the end of the debate, but I have been encouraged to speak by the excellent contributions that we have had so far, led nobly by my hon. Friend the Member for Bosworth (David Tredinnick), who has an unparalleled reputation for knowledge in this area. I am sure that we all commend him for that.

There is no reason at all why the European Union should interfere in this issue. Why should not the United Kingdom be able to decide for itself whether it wants to regulate herbal medicines? This is another area in which the European Union is unnecessarily interfering in our daily lives and, of course, affecting millions of people. We have already heard that more than 3 million people access Chinese herbal medicine in any two-year period and that 25 million of our citizens buy herbal products over the counter in any two years, so this is a matter of huge interest.

The problem is quite technical, but I think that we could easily overcome it, as indeed the Government said that they would. The European Union has given this country a way around the European Union regulations, and the Government took up the challenge. In February 2011, two months before European directive 2004/24/EC took effect, the then Secretary of State for Health said:

“This Government wish to ensure that the public can continue to have access”

to unlicensed manufactured herbal medicines. That was the clear will of Her Majesty’s Government. The Secretary of State continued:

“In order to achieve this, while at the same time complying with EU law, some form of statutory regulation will be necessary and I have therefore decided to ask the Health Professions Council to establish a statutory register for practitioners supplying unlicensed herbal medicines.”—[Official Report, 16 February 2011; Vol. 523, c. 84WS.]

As the hon. Member for Vauxhall (Kate Hoey) said, millions of people throughout the country—practitioners and users—took great comfort from those words and the clarity of direction laid out by Her Majesty’s Government.

Sadly, although the Government promised that the register would be introduced by the end of 2012, we are now well into 2013 and there is no sign of it. Presumably, the Secretary of State made his clear statement on the advice of officials in his Department. If it is the officials who are now telling the Government that they cannot have the statutory register, we need to hear from the Minister today that that is the case and the reasons for that about-turn, because millions of people in this country, including many of our constituents, took great comfort from those words in 2011.

As my hon. Friend the Member for Bosworth said, it appears that the Department has been thrown into a state of paralysis by the judgment on Poland. Poland was clearly caught out trying to break the rules and, under EU regulations, the Commission took Poland to the Luxembourg Court, which duly found against Poland. The Polish case is not a parallel to the United Kingdom situation. It may be a judgment on the same part of the EU legislation, but Poland was trying to abuse article 5.1; the United Kingdom Government said that they wanted to comply with article 5.1, by coming up with the statutory register. If Her Majesty’s Government believe that that judgment on Poland is the cause of their paralysis, the Minister needs to say so today and explain why that judgment is holding up the United Kingdom setting up a statutory register.

An EU directive has come in; that was in April 2011. The Government said that they would have a statutory register by the end of 2012, to ameliorate the worst effects of the directive, yet more than two years on, the herbal medicine industry, which Her Majesty’s Government said that they wanted to protect, remains exposed to that EU directive. That is simply an unacceptable situation. There will be, in all our constituencies, small and medium-sized herbal practitioners that are finding their livelihoods affected by an EU directive that the Government promised they would ameliorate—two years on, they have failed to do so. The Minister needs to explain to the House today why we are in this sorry state and what he will do to sort it out as quickly as possible.

10:28

[Andrew Gwynne (Denton and Reddish) (Lab)]

It is a pleasure to see you in the Chair, Mr Bone. I congratulate the hon. Member for Bosworth (David Tredinnick) on securing the debate. As someone who, over the past few days, has been suffering with quite bad hayfever, I would quite like a remedy, herbal or otherwise, for my suffering. I am pleased that we have had a chance in today’s debate to discuss some very important issues in relation to the regulation of herbal medicine. I know from the hon. Gentleman’s previous contributions in the House that he takes a very keen interest in and is a committed supporter of various forms of alternative medicine, including homeopathy and herbal medicine. He continues to raise these issues passionately in the House, most recently in the estimates day debate last week. I also congratulate the hon. Members for Strangford (Jim Shannon) and for Kettering (Mr Hollobone) and my hon. Friend the Member for Vauxhall (Kate Hoey) on echoing the many issues and problems. There are issues with the provision of non-manufactured herbal medicine due to the absence of regulation of herbal regulation practitioners. There have admittedly been delays in making progress on the regulations, which all relevant parties agree with, and all sides agree that the unexplained delays are frankly unacceptable. I will return to that later in my contribution.

As we know, the MHRA is responsible for medicines. It explains the licensing of manufactured herbal medicines as follows:

“The new European Traditional Herbal Medicinal Products Directive…came into effect on 30 April 2011. The Directive establishes a regulatory approval process for herbal medicines in the European Union...It requires each EU Member State to set up a traditional herbal registration scheme for manufactured traditional herbal medicines that are suitable for use without medical supervision. Companies are no longer able to sell manufactured unlicensed herbal medicines unless they have an appropriate product licence”.

The supply of non-manufactured medicines is permitted, but there remains a long-standing concern with the non-regulation of herbal medicine practitioners. Currently, anyone can set up as a practitioner. The guidance states:

“Regulation 3 of The Human Medicines Regulations 2012 (formally Section 12(1) of the Medicines Act 1968) is commonly referred to as the ‘herbalist exemption’ and permits unlicensed remedies to be made up and supplied by a practitioner to meet the needs of an individual patient following a one-to-one consultation. The existence of this regime is greatly valued by herbal practitioners and by many members of the public. However, there are widely acknowledged weaknesses in the public health protection given by the regime. Regulation 3 remedies are not subject to a regime of specific safety or quality requirements. There are no restrictions in terms of those who operate under the regime. Anyone—irrespective of qualifications or experience—can practise herbal medicine and, after making a diagnosis and forming a judgment about the treatment required, can make up and supply an unlicensed herbal medicine.”

As we heard in the debate, there was a great deal of discussion about regulation under the previous Government. They supported moves towards statutory regulation of herbal medicine practitioners, which was the subject of consultation in 2004. The consultation report stated:

“The majority of the responses indicated strong support for the introduction of statutory regulation, in order to ensure patient and public protection and enhance the status of the herbal medicine and acupuncture professions.”—

That point is important in its own right. In 2008, a report to Ministers from the Department of Health steering group on the statutory regulation of practitioners of acupuncture, herbal medicine, traditional Chinese medicine and other traditional medicine systems practised in the UK concluded:

“The Steering Group is strongly of the view that the decision to statutorily regulate professions practising herbal medicine and acupuncture is in the public interest.”

It also urged that there be no Government delay in introducing regulation, saying:

“The Steering Group is of the view that there is an urgent need to proceed without delay with the statutory regulation of practitioners of acupuncture, herbal medicine, traditional Chinese medicine and other traditional medicine systems. The Department of Health has been working with practitioners from these sectors, in some cases for over a decade, and a timeframe has been published that has not been adhered to.”

On 3 August 2009, the four Health Departments of the UK published a consultation paper on statutory regulation of practitioners of acupuncture, herbal medicine, traditional Chinese medicine and other traditional medicine systems practised in the UK. A clear majority of responses—85%—were in favour of statutory regulation, but, as we have heard, there has been little progress, despite the then Secretary of State for Health, the right hon. Member for South Cambridgeshire (Mr Lansley), pledging on 16 February 2011 to regulate herbal medicine practitioners, as the hon. Member for Bosworth pointed out. The Health and Care Professions Council was asked to establish a statutory register for practitioners supplying unlicensed herbal medicines, but there has been no further progress. When does the Minister expect that he will establish a statutory register for practitioners supplying unlicensed herbal medicines? The National Institute of Medical Herbalists is rightly critical of the lack of progress:

“In February 2011, the Secretary of State for Health announced that UK herbalists were to be statutorily regulated. He pledged that, subject to the usual procedures, the Department of Health (DH) would have this ready by 2012. Statutory Regulation (SR) is urgently needed to protect the public from untrained herbalists and also to allow trained herbalists to continue to practice within the constraints of EU Directives. Regulation will be via the Health and Care Professions Council (HCPC) which regulates dentists, dieticians and physiotherapists. Two years later the DH has failed to publish the draft legislation and there is no sign of progress. The fear is that with many other priorities the DH will let the issue drop. Failure to implement SR for herbal medicine practitioners is disastrous…In short, statutory regulation is clearly in the public interest!”

A recent MHRA survey showed that about a quarter of the population use over-the-counter herbal medicines. If that continues, as I suspect it will, surely the Government have a responsibility to ensure that arrangements are in place to make certain that such medicines are safe, as far as they can be, and that those who prescribe and dispense such medicines are appropriately qualified and regulated. It is therefore important that we get a clear view from the Government today on whether they will continue with the statutory registration proposals. It is also important that they give us some confidence that it will be done within a reasonable time frame, so that we can give that confidence back to the industry and those who use herbal medicines.

I commend the hon. Member for Bosworth for his persistence in this matter and for securing the debate today. I look forward to the Minister’s assurances that the Government still take regulation seriously—I hope— and are looking for practical ways to ensure that it can proceed swiftly.

10:38

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

It is a pleasure to serve under your chairmanship, Mr Bone, for, I believe, the first time. I am sure that you were salivating, listening to the issues raised in the debate—

[Mr Peter Bone (in the Chair)]

Order. I want to make it clear to the Minister that when I sit in this Chair, I have no views on anything.

[Dr Poulter]

Indeed, Mr Bone, as you say, you have no views on anything when you are impartially chairing the debate, but I am sure you pay keen interest to the topics raised, in your position as Chair and otherwise.

I pay tribute to my hon. Friend the Member for Bosworth (David Tredinnick) for securing the debate, which I am sure is of interest to the consumers and practitioners who use herbal medicines, as well as to the many Members who attended the debate today. None of us disagree with the principles articulated here—we can all sign up to them—but good government is about working through the practicalities of proposals to ensure that they become good laws, as I will discuss later.

There have been many good and worthy contributions to the debate. The hon. Member for Strangford (Jim Shannon) showed his strong support for herbal practitioners in his constituency, and he was right to say that things in Government do not happen in a flash but have to be properly thought through. I want to reassure him that some of the products he mentioned—he talked about the benefits of vitamin E, for example—are freely available from herbal practitioners, and indeed from pharmacists and other places.

There were other strong contributions from my hon. Friend the Member for Kettering (Mr Hollobone), who is no longer in his seat, and the hon. Member for Vauxhall (Kate Hoey). The hon. Lady made her case eloquently, and I would be happy to meet with her at a later date to discuss sports therapists further, but I would not wish to intrude on Mr Bone’s patience by talking about the issue today and I hope she will forgive me for that.

I pay particular tribute to my hon. Friend the Member for Bosworth for his principled and long-standing support for herbal practitioners and his interest in alternative therapies, homeopathy and many other such issues. Today he has demonstrated his extensive knowledge of the topic under debate, and of alternative therapies in general. I am sure I am right in saying that he is the most informed Member of Parliament on many of these issues, and it is a great tribute to him that he has secured the debate today. I am sure that herbal practitioners and alternative therapists would wish to pay tribute to his great work and his advocacy on their behalf, and on behalf of his constituents.

My hon. Friend is right to highlight the chief medical officer’s challenge about the future of antibiotics, but we can make a clear distinction between those remarks and the subject of today’s debate. I am sure that the chief medical officer would not wish her remarks to be associated with a call for a greater use of herbal medicine—that was clearly not outlined in her paper. Although it is important that we always consider ways—via traditional medical routes or otherwise—of improving people’s health and providing the right therapies, the paper clearly laid out the long-standing challenges as being about antibiotic resistance, and it would be wrong, therefore, to allow the two issues to be confused.

By way of background, it is worth highlighting that although we support patient choice some herbal products have caused harm to consumers. There are a number of reasons why that might happen: the herb may be intrinsically toxic; the product may be accidentally or purposefully contaminated by harmful materials or heavy metals; people may choose herbal products for serious conditions when medicines with a solid evidence base would be more appropriate; and, if herbal products are taken together with conventional medicines, the interactions may be unpredictable. It is right, therefore, that we support the responsible use of medicines and have a licensing system.

Directive 2004/24/EC on traditional herbal medicinal products was introduced to harmonise the European Union internal market and remove barriers to free movement. The directive deals with products manufactured on an industrial scale, and makes all operators in the market comply with the same set of rules, facilitates free movement and ensures increased product safety, which, I am sure we agree, has a positive impact on patient safety and public health.

The question of whether herbalists and traditional Chinese medical practitioners should be statutorily regulated has been debated since the House of Lords Science and Technology Committee first reported on the matter in 2000. The hon. Member for Vauxhall and my hon. Friend the Member for Bosworth outlined in their remarks that there is a lot of background and history. The previous Government grappled with the issues, and the current Government are also considering how to address and fulfil the commitments made by the previous Health Secretary, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley). Hon. Members will be aware that on 16 February 2011 the Government announced their intention to take forward the regulation of herbal medicine practitioners and traditional Chinese medicine practitioners, specifically with regard to the use of third-party products in their practice.

Herbal products broadly fall into three categories. The first are the 310 herbal medicines that already have a marketing authorisation or a traditional herbal registration—in other words, a product licence. Those 310 medications are currently available for use and are effectively licensed. They are safe and widely used, and have undergone all relevant testing and checks. The second category, which is the one we are addressing today, covers products manufactured by a third party. Such products have been illegal since April 2011, following the implementation of the EU directive. The third category is products made up by a practitioner on their own premises following an individual consultation. Although such products are not affected by the directive, some of the herbal ingredients may be restricted by the Human Medicines Regulations 2012.

The previous Health Secretary’s concerns about the second category—products manufactured by a third party—prompted the decision to take forward statutory regulation of such products. The Government’s intention was to allow regulated herbal practitioners lawfully to source third-party manufactured herbal medicines, with appropriate safeguards in place to minimise the risks associated with the products, but since April 2011 the European directive has made it illegal for herbal practitioners in the UK to source such products for their patients.

Following the EU judgment in the case of the Commission v. Poland, which my hon. Friend the Member for Kettering mentioned, we have reassessed the risks. That case actually concerned unlicensed conventional medicines being used because they were cheaper, and although there is a clear distinction between those products and herbal remedies we had to look at what else the judgment said. It looked at the specials regime and, critically, it emphasised how strictly the regime must be applied. The judgment has a knock-on effect for what we propose for the use of herbal medicines manufactured by third parties without a licence, and it therefore needs careful consideration because there is a very high risk that we would be found to be in infraction of the European directive. We therefore need to consider further herbal products manufactured by a third party, and I will return to that point later.

The Government would, of course, like to find a way through the issue that supports responsible businesses and ensures public safety. Since the announcement in February 2011, the Department of Health has been working with officials in the devolved Administrations and with the Health and Care Professions Council to establish a statutory register for herbal practitioners. Alongside that, we have been considering a strengthened system for regulating medicinal products, to enable consumers to have access to a greater range of third-party manufactured herbal medicines. The process continues to be complex and lengthy, and it has been further complicated by the judgment in the European Union v. Poland case.

We acknowledge that there is strong support from some groups of herbal practitioners for the statutory regulation of the sector, but not all practitioners are in favour. I am sure, therefore, that hon. Members will appreciate that it would be irresponsible for the Government to undertake to alter the status of a group of workers without first ensuring that the policy and final decision offered an appropriate form of regulation and ensured that the proposals adequately addressed the risks posed to consumers of third-party manufactured herbal medicines.

As I stated earlier, complex issues are involved. We are discussing how to ensure that our proposals are fit for purpose and proportionate, and that they properly protect the public. I want to assure the hon. Member for Vauxhall that the matter has not been dropped. We absolutely support the principles outlined by my right hon. Friend the Member for South Cambridgeshire in his written ministerial statement to the House, and I fully appreciate that the delay is causing anxiety and concern to practitioners of herbal medicine and to consumers.

To ensure that we take forward the matter effectively, we want to bring together experts and interested parties from all sides of the debate to form a working group that will gather evidence and consider all the viable options in more detail, particularly because of the Polish case. I am aware of the concerns of my hon. Friend the Member for Bosworth about making timely progress, and I would therefore very much welcome his direct involvement in the working group to ensure that the interests of practitioners are properly looked after. We can meet when the House returns to work out how to take forward the proposal.

I hope that my commitment to setting up a working group will reassure my hon. Friend and all hon. Members that the Government are carefully considering this important issue. We recognise and agree with the principles, but the practicalities are such that we must have legislation that is fit for purpose—that does not trigger infraction proceedings from the European Union, but protects the public. That is vital in all health care matters, whether in relation to traditional medicines or to herbal medicines and alternative therapies. For that reason, we want to set up a working group and to work with my hon. Friend, and herbalists and others, to ensure that the legislation is fit for purpose. I look forward to discussing that with him in due course.

[David Tredinnick]

Before my hon. Friend sits down—I think that he was about to do so—may I thank him for his remarks? I am sure that knowing there is some progress is welcome, but I remind him that there have been many working groups in different guises over a long period, and the image that springs to mind is of the long grass. I am grateful to him for suggesting that I might be part of the process, but I want to be reassured that we are in the short grass. Lastly, is there general agreement with the devolved Administrations or is that a sticking point?

[Dr Poulter]

I reassure my hon. Friend that I am not aware of any points of disagreement with the devolved Administrations, but I will write to him and provide reassurance if there are any issues of which I am unaware. My understanding is that there is a unified position across all of the different health Departments.

[Jim Shannon]

On the devolved Administrations, I speak with some knowledge of the Northern Ireland Assembly, where my colleague Edwin Poots is the Minister of the Department of Health, Social Services and Public Safety. We and the Minister in the Northern Ireland Assembly are keen to have a focus of attention and a continuity of thought among all the regions of the United Kingdom to ensure that we can support the Under-Secretary of State for Health. The quicker he and the Government move that on, the gladder the regions—especially Northern Ireland—will be to jump in behind and support them.

[Dr Poulter]

The hon. Gentleman is absolutely right to highlight the strong working relationships, particularly with his colleague in Northern Ireland. We are grateful for that continuing strong working relationship on both this and other issues, and I look forward to working with him.

I reassure my hon. Friend the Member for Bosworth, who was concerned about the short and the long grass, that the intention behind his involvement in the working party is to keep it firm to its task. I am sure that he will want, as part of his involvement, to ensure that that happens. When we meet to discuss this further after the House returns in September, we can ensure that the proposals are proportionate and fit for purpose, and that they protect the public, including through giving people an informed choice about the use of herbal products.

[Kate Hoey]

Will the Minister give way?

[Dr Poulter]

I will give way for the last time.

[Kate Hoey]

I tend to agree about the long grass: officials are always coming up with another working party, because it is a nice way to postpone things. Will the Minister give us some idea of the time scale?

[Dr Poulter]

We need to sit down together. I very much want to involve my hon. Friend the Member for Bosworth, and the hon. Lady would be very welcome to join that discussion when the House returns. The idea is to get a working party up and running in the early autumn to ensure that we progress matters. We obviously need to discuss issues raised today about statutory regulation and third-party manufactured products, and to look at such products in detail to see which might be classified as more akin to food additives or vitamin and mineral supplements and which as more akin to medications, because there is a spectrum. We need to work through such issues to make sure that we get to the right place.

It is important that any legislation not only passes the test of principle—we are all signed up to it—but is practical and fit for purpose. Particularly in light of the judgment in the case of the EU Commission v. Poland, we have other issues to consider that make the matter a little more complex. I reassure my hon. Friend the Member for Bosworth and the hon. Member for Vauxhall that we are committed to making timely progress, and when we meet on our return in September, we can progress things. I am sure that my hon. Friend’s involvement will keep the Government keen to their task.

[Mr Peter Bone (in the Chair)]

I thank hon. Members for taking the time for an absolutely splendid debate.

10:56

Sitting suspended.

Gift Cards

Tuesday 9th July 2013 Westminster Hall

09:00

[Penny Mordaunt (Portsmouth North) (Con)]

It is always a pleasure, Mr Bone, to see you in the Chair. I know that many in the House are exercised by the stories we have heard in the wake of companies going into administration of people not being able to cash in their gift vouchers or losing their savings in schemes such as Farepak. It is terribly unjust and it is time that we did something about it.

My experience with Portsmouth FC has taught me that the victims of a company’s administration are not always obvious. In that case, rules that were not widely known meant that football creditors were at the head of the queue for repayment, despite the fact that the credit of others had been just as vital to the running of the club. Those at the head of these queues might receive only a tiny fraction of their investment, and those at the back nothing at all. It is devastating to be told that, through the mismanagement of others, one will not receive back a penny of one’s loan. How much worse is it to be told that money one has paid over, not as a loan but in exchange for goods, will be taken without redress?

[Jessica Morden (Newport East) (Lab)]

The hon. Lady is quite right to highlight the issue of unsecured creditors losing money when companies go under. As she said, the situation is reminiscent of what happened with Farepak, when thousands of people lost their Christmas savings. It is only now, seven years later, that we have come to a very unsatisfactory conclusion. Does she agree that we should redouble our efforts, because what might seem like quite small amounts of money to some people are very significant to those whom she mentions?

[Penny Mordaunt]

I am grateful to the hon. Lady for her intervention. She is absolutely right to say that this matter disproportionately affects those people on the lowest incomes. As she rightly said, the Farepak incident, which happened before I was elected to this House, has been going on for a number of years, so it is really time that the Government acted to stop such poor practice continuing.

[Charlie Elphicke (Dover) (Con)]

I congratulate my hon. Friend on securing this important debate. Is she aware that the matter affects failing retailers as well? A YouGov poll in March 2013 found that 86% of people believed that gift cards should be regulated to protect consumers against failing retailers? Does that not show the importance of taking action as soon as possible?

[Penny Mordaunt]

I agree with my hon. Friend and I am grateful to him for his expertise. As I share a corridor with him in Parliament, I know that he is a champion of consumers in Dover and Deal and I am grateful to him for his support on this issue.

It is a terribly unjust position in which the holders of gift cards find themselves when the shop that issued the card goes into administration. Such people should not be treated as ordinary creditors. A grandmother who buys her grandchildren the once-ubiquitous WHSmith voucher for Christmas does not regard herself as having lent Smith’s any money. On the contrary, she has made a purchase. Indeed, her circumstances are just the opposite of a creditor’s, who might expect to receive some interest on his loan, as her gift card is worth less and less as time passes, due to the effects of inflation. It is as illogical to deny gift card holders the right to redeem their vouchers as it would be to demand that people who had bought their goods return them to the shop to help pay off the creditors. It is from that essential point that we must proceed today. A gift card is not a bond certificate; the money has not been loaned to the company. Quite simply, the collection of the product has been deferred, which is, in any case, to the advantage of the company. That principle has already been recognised at an EU level in respect of e-money, which is money put on to pre-paid cards or gift cards bought through third parties. Those moneys must be kept in segregated accounts pending the use of the cards, so that the consumer is protected.

In Britain, that scheme is regulated by the Financial Conduct Authority, a successor to the Financial Services Authority. Individual retailers may opt in to the scheme, but, for perhaps obvious reasons, the temptation seems to have been uniformly resisted. Although there is no mandatory and regulated scheme for cards issued by companies independently for use in their own shops, there appears to be no impediment to its introduction. Already many retailers that issue their own unregulated cards accept the regulated cards issued by third parties, such as the One4all card, including Argos, Boots, B&Q, Currys, Debenhams, Topshop and the aforementioned WHSmith. In all, the Gift Voucher Shop, which is responsible for the One4all card, has more than 1,500 corporate clients. Surely that is a double standard that should not be allowed to continue. Two customers who intend to spend their vouchers at the same shop could thus be in the absurd situation that one can have a full refund and the other receives nothing. The matter is left entirely to the discretion of the administrator.

It is true that under the Consumer Credit Act 2006, those who bought vouchers with credit cards are protected, but only if they bought between £100 and £30,000 of vouchers. The problem here is twofold: people who buy vouchers as savings, perhaps against the expense of Christmas, are very unlikely to use credit cards; and those who buy vouchers as gifts to put towards say the purchase of white goods on a wedding list are unlikely to do so to the sum of £100. Chargeback offers some protection to consumers using certain debit cards, such as Visa, American Express and MasterCard. In all circumstances, there is a 120-day window in which to make a claim for a refund, and the claim must be made by the purchaser, not the holder of the voucher. Once again, that is contingent on a given card supplier operating the scheme, and, in all circumstances, those who bought vouchers with cash, which is a likely scenario when smaller sums are involved and if the people buying them are paid in cash, are entirely exposed.

What is hard to understand is why the administrator is allowed to appropriate the money held against vouchers for the purposes of winding up the business. As I said earlier, that is akin to telling anyone who has previously bought something from that shop to return it without a refund, or the practices of the most artless playground bully.

Some administrators are prepared to accept vouchers, such as those for Nicole Farhi and Blockbuster. Holders of Republic vouchers were not so fortunate, which meant that the administrator simply took £1.2 million in advance payments. That is £1.2 million with just one retailer. The evidence of total sales suggests that there is still a demand for gift vouchers. Last year, more than £4 billion was spent on their purchase and, as they are not exchangeable for cash, one can only assume that retailers like them, too. How many of the people who contributed to that £4 billion knew that they, or the vouchers’ intended recipients, were so vulnerable?

Currently, holders of gift cards are well down the order of priority for creditors. They are on a par with Her Majesty’s Revenue and Customs, suppliers and unsecured creditors, but behind secured creditors, the costs of insolvency, and debts due to preferential creditors and employees. I do not argue too much with the order of creditors other than to say that employees should never be an afterthought. My point is simply that gift card holders do not belong on a list of creditors at all. It is not possible to exchange gift vouchers for cash, which is further proof that they are not a form of credit as there is never any prospect of getting back one’s money. It would be bizarre if this were permitted when a company went into administration. Rather, it should be possible to redeem one’s vouchers. That would resolve some of the concerns of the Association of Business Recovery Professionals about the knock-on effects of promoting holders of vouchers up the list of preferred creditors. R3, as it is known, is anxious that were card holders prioritised, businesses and suppliers, which are currently with card holders in the fifth tranche of those to be paid by administrators, would be even worse off.

I mentioned my experience with Portsmouth FC’s administration, and I understand only too well the hardship that is borne by small businesses that must extend credit in order to get the trade they need to survive when they are left hanging on administrators’ decisions. The same goes for employees, who are placed in the invidious position of waiting in limbo to know whether they will have a job in the future or be paid for the work they have already done.

There is also a concern that preferred creditors—those who issue secured loans—would be more wary of extending cheap or reasonable credit in the future if the list of preferred creditors were to be expanded to include gift card holders. At a time when small businesses and retailers are still concerned that lending is not getting through to the degree that is needed, that concern must not be dismissed.

R3 has put forward three possible solutions—a requirement to purchase bonds against the value of issued gift cards; the ring-fencing of the money used to buy cards until they are redeemed; and the extension of the 2006 Act to include purchases under £100. However, each of these solutions has problems. In the case of the first two, they would handicap solvent businesses by restricting cash flow and they could make administration more likely. Equally, extending the 2006 Act would come into effect only if administration procedures began, but cash buyers would still be out in the cold.

If one takes all of these factors into account—the need to protect the viability of going concerns and to treat gift card holders equitably, without undermining lending or supplier confidence, or disadvantaging employees —the solution seems clear. If vouchers are allowed to be redeemed, the administrator does not need to surrender the money that it has on deposit through the sale of gift cards. Instead stock, which would be very likely to be sold off at a generous discount to raise money quickly, would be exchanged for the vouchers.

[Jessica Morden]

The hon. Member has made some really important points. Does she agree that, at the very least, some kind of warning should be put on gift cards or vouchers? That would be a start—telling people what risk they face if things go wrong. It would also be a good way forward.

[Penny Mordaunt]

I agree absolutely with the hon. Lady. I have already said that there are products out there that would do the same thing as some of these gift vouchers and that could be exchanged for goods at an enormous number of retailers. Clearly, if people were aware of those particular e-money products and of how exposed they make themselves by not buying them, they would go and buy them. So she is absolutely right to point out that raising awareness is half the solution to this problem.

If the gift voucher holders were allowed to redeem those vouchers in exchange for goods, that would be done at pre-insolvency prices, which is after all the basis on which the cards were bought. Therefore, the impact on the administrator would be more modest than otherwise. Furthermore, the goodwill of the card holders would be sustained. The fact that they hold vouchers for a specific shop suggests that they would like to buy its goods, and they are the very people on whom the administrator would rely during a post-insolvency sale. Indeed, treating gift card holders better could make the administrator’s life much easier.

I do not pretend that this problem is easily solved, but it would be helpful if the Department for Business, Innovation and Skills recognised that there was a problem and that a solution was required. I have raised this matter in the House and I have written a number of times to the Minister who is here in Westminster Hall today. In one of the replies that I received, it was even acknowledged that gift cards are considered to be pre-payments for specific goods and services, rather than cash or an extension of credit—quite. However, the Department is content to continue to allow gift card holders to be treated as creditors.

I appreciate what the Minister has said to me in the past, namely, that in administration proceedings there is only so much money to go round and that administrators have to act in the best interests of creditors as a whole. However, it is apparently accepted that voucher holders are not creditors, so setting aside stock for them would not be to prefer one creditor over another. Indeed, the process might even lead to the sale of other stock for ready money. Her Majesty’s Treasury has shown a willingness to engage on this matter, and I hope that BIS will now be prepared to do so too.

11:13

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

As always, it is a pleasure to serve under your chairmanship, Mr Bone.

I thank my hon. Friend, the hon. Member for Portsmouth North (Penny Mordaunt), for securing this debate, because she raises an important issue. She has been a long-standing advocate for moving the holders of gift cards and vouchers up the order in which creditors are paid when there is an administration or an insolvency procedure. She has been that advocate for very sound reasons. We all understand the distress that is caused when a business—whether it is a major high street chain or a smaller local company—goes into administration. People are very disappointed if they are holding gift cards, which often have been actual gifts to them, but those cards end up being worthless. Clearly, that situation causes upset and I understand the need and the desire to address it.

Indeed, the Government are keen to try to ensure that those types of problems do not continue. A huge amount of work has been done with the hon. Member for Newport East (Jessica Morden) and others on the particular issue of Farepak, to try to get the best deal for those people who faced those appalling circumstances just before Christmas a few years ago. We have seen some positive moves by parts of industry that perhaps show the way for us to find some solutions to this issue; I will discuss them later. The specific solution of moving gift-card holders up the hierarchy is not necessarily the best solution; there may be other solutions and I hope to explore some of them in my remarks.

Let me address the particular issue of whether we should change the order in which creditors are paid. Both my right hon. Friend the Business Secretary and I have listened very carefully to a range of views on whether consumers with pre-payment cards and vouchers should be made preferential creditors. However, the problems of doing so—some of which my hon. Friend touched on in her speech—prove that this is not a solution that is especially desirable for vulnerable groups, such as employees or small and medium-sized enterprises that had supplied goods to the business in question. Much as I sympathise with all of the people in that situation, there are individuals for whom there is a real responsibility to try to get as much money back as possible. Just looking at one group in particular is perhaps not helpful; we need to look at all the individuals who are affected by an insolvency.

Unfortunately, as my hon. Friend said, after an insolvency, an administration or a company not doing as well as it would have wanted to, a limited amount of money is available. Ultimately, that business has not been successful, and that money must be spread out among the creditors. The question is how that pot of money should be divided up.

Among those seeking to be reimbursed from that limited pot of money are employees who may have worked but not been paid their full wages; business suppliers, many of which may be the SMEs that we all want to support in order to help the economy, particularly in our own constituencies, and we are well aware of the challenges that small businesses face; financial institutions; and Her Majesty’s Revenue and Customs. The difficulty is that, with that limited pot of money, if we were to change the preferential creditor status to improve the position of holders of gift cards, that would necessarily make the position of those other creditors worse. Therefore, it is a win-lose situation, not a win-win situation.

I am particularly concerned about two of those groups—employees and SMEs. Just like gift-card holders, business suppliers fall within the category of unsecured creditors. Therefore, they often receive only a fraction of what they are owed in these cases. That can have a particularly disproportionate impact on their finances, and we need to ensure that that is uppermost in our minds when we consider this issue. Making gift-card holders preferential creditors could, especially if large numbers of gift cards were issued, reduce the already scarce funds available to those supplier businesses, which are arguably in as much need—if not more so—of those funds to continue operating and continue employing people. We do not want to end up with a system where more businesses are suffering financial distress. So, the suggestion that we do something that could have a negative impact on the financial viability of small businesses must be treated with a great deal of caution.

With employees, there is a slightly different situation, because they are already in the pool of preferential creditors. However, if we add more people to that pool, of course the money that is available must go further. Employees could be in an even worse situation, in already difficult circumstances. Of course, we feel for gift-card holders when a high street chain goes bust, but we also feel for the employees, many of whom have huge uncertainty and do not know whether they are going to keep their job, whether the company will be bought out or whether some branches will remain open. If they do not even get paid for the work that they have already done—although some schemes enable them to reclaim some amount towards the payment they would have received—they end up out of pocket. That is a particular concern when considering such a change.

My hon. Friend also mentioned secured creditors, such as banks, which do not necessarily always elicit the most sympathy in this House or in the wider public. However, if lenders cannot rely with confidence on the security given by borrowers, they might become less inclined to lend in the first place or might factor that risk into increased costs of borrowing. As my hon. Friend said, there are already challenges in respect of bank lending to small businesses. Putting further hurdles in the way and burdens in place could limit access to working capital for a business that might already be under financial pressure and, ironically, could perhaps hasten the failure of such a business and even its insolvency. These issues and impacts mean that that solution is not necessarily the right way to address the matter. My hon. Friend will not necessarily be happy with that answer, but I hope that she understands why the Government take that view.

[Penny Mordaunt]

I think that I am on the same page as my hon. Friend the Minister. My argument is that we should not be treating these people as creditors at all. A number of solutions have been discussed this morning. For example, the hon. Member for Newport East mentioned awareness; we have e-money products; and I have suggested that such consumers should not be treated as creditors and that they could receive preferential treatment in exchanging the vouchers for goods, which is what they originally wanted to do. I am keen that the Minister does something. There is considerable evidence that companies are continuing to sell vouchers even though they know that they are going to go into administration and cannot honour them.

[Jo Swinson]

My hon. Friend raises a good point. I will come to the potential solutions that we think could alleviate some of the pressure for consumers. It is quite right to say that that is where we need focus.

Some issues that my hon. Friend raised are worth pursuing, particularly those relating to the 2006 Act. I am happy to take up some of the suggestions raised by R3 and get back to her. That would help in some cases, but where payments are made in cash, which is often the case for the small amounts on gift vouchers, that protection would not necessarily be extended. Various solutions may assist.

We have been trying to work with the industry, challenging it to do more to deal with these issues and support these consumers. On whether goods will be able to be bought in exchange for gift cards, of course, it is not always the case that they cannot be. As my hon. Friend mentioned, in many cases administrators allow vouchers to be redeemed, although there is often an initial period of uncertainty, as in the example of Nicole Farhi last week, as she said. This is done for sound business reasons, where the administrator wants to preserve the goodwill of a business if their objective is to sell it on as a going concern for the benefit of all creditors. That can have real business benefits.

One challenge for businesses that know they are going into administration is that they are trying to ensure that they are as viable as possible and are maximising their business assets, which can be one reason why gift cards and gift vouchers continue to be sold. But if some other solutions could be put in place by industry, that may not need to be a problem.

There are four ways in which industry could be encouraged to think about how it can further protect consumers. First, as has been mentioned, the Electronic Money Regulations 2011 provide protection for prepayments when made in card form. My hon. Friend mentioned the One4all card and there is also a system operated by O2, where a card loaded up with money is then usable at a wide range of outlets, through the card issuer systems. It is not restricted to a single retailer or a group of retailers. Such cards are treated differently; effectively, much more like currency—like cash. If more gift cards were delivered through those open loop systems, that would be one way that the industry could help to protect consumers.

Secondly, there is the good example of the Co-op, where payments made by consumers can be held in a separate trust-protected account. The Co-op Christmas savings has now moved to this model, which is an excellent initiative. It deserves huge credit for doing this and recognising that this gives their consumers extra benefit, and it is another reason for consumers who want to save for Christmas in that way, with an organisation or a shop such as the Co-op, to do so. It is also important that the Co-op managed to do this quickly, without incurring significant additional expense and within the existing constraints of its operating systems. I encourage others to follow such a model.

Thirdly—we need to challenge the industry on this—gift card and voucher issuers should consider adopting an industry code of practice, with specific commitments on the protection of customers’ prepayments. The Trading Standards Institute has a consumer codes approval scheme, with core principles on the protection of prepayments and deposits. The widespread adoption of those principles by the industry would be a clear message to administrators about the industry view on how consumers should expect their prepayments to be treated.

Fourthly, it is also worth exploring whether industry could introduce insurance-backed protection of prepayments. This already works well within the package travel sector. Such options may be part of the solution more widely within the retail sector and may be able to protect consumers.

The hon. Member for Newport East mentioned having a warning system on gift vouchers. This has merit, because one challenge is the lack of information. People assume sometimes that buying a gift voucher is like having cash, rather than, as the hon. Lady highlighted, making them a creditor to a business. Making it clearer to consumers up front that there is a risk, although generally that risk will be small, might mean that consumers would think twice about buying a gift card from a certain company, or set of companies, and might not leave it sitting in a drawer, gathering dust for months, instead deciding to spend their gift because there is no guarantee—it is not like having cash sitting in their purse—and there is a level of risk with this product. Given that there is currently a level of risk with this product, it is appropriate that consumers should be aware of that. Informed, empowered consumers are an important part of having a stronger economy, because we need them to have confidence to go out there and buy products and gifts. Any measures that can enhance that would help.

We hope that the consumer bill of rights will be introduced later this year. Hon. Members will be aware that the draft was published a few weeks ago. It is, rightly, going through pre-legislative scrutiny in this House. A range of protections is built into the Consumer Rights Bill and the associated consumer rights directive, which has come from Europe and will be introduced in the UK through secondary legislation. Those protections relate to how prominent, transparent and up-front the information that consumers need before making decisions needs to be. Hon. Members have mentioned warning labels, or similar information—a key point—which should perhaps be included for consumers.

I hope that legislation is not the answer and that the industry is able to get its act together and recognise the concerns expressed by hon. Members from all parties about this issue. I am sure that, if the industry does not act, hon. Members will wish to mention that during the progress of the Consumer Rights Bill. I hope that, by the time we get to debates on that Bill we will have some positive news to report on what industry has been able to do.

I thank my hon. Friend sincerely for raising these issues and for her campaigning and tireless work. I hope that our pursuit of a range of options, which we hope that industry will also take up, shows that there can be a positive way forward. I also hope that my hon. Friend and other hon. Members interested in this issue will continue to work with me and the Government to encourage the gift card and voucher industry to move swiftly to develop practical and reliable ways to restore consumer confidence and protect consumers’ money.

11:30

Sitting suspended.

Zero-hours contracts

Tuesday 9th July 2013 Westminster Hall

[Nadine Dorries in the Chair]

14:29

[Nadine Dorries (in the Chair)]

Gentlemen, it is very warm outside and this is a one and a half hour debate, so if anyone wishes to remove their jacket, I am happy for them to do so. Also, because this is obviously a popular debate and we are assuming 15 minutes for the opening speech and 30 minutes for the wind-ups, I ask for speeches to be kept to 15 minutes as I suspect there will be a number of interventions.

[Julie Elliott (Sunderland Central) (Lab)]

It is a great pleasure to serve under your chairmanship, Ms Dorries. I am grateful to have secured this debate on an issue on which I and many other hon. Members have been working for some time.

Zero-hours contracts are contracts whereby a worker is guaranteed no minimum hours and no minimum pay. In this country, we essentially have a large pool of workers, and employers have no legal obligation to pay them when they are not needed.

Zero-hours contracts have a widespread and deeply damaging effect on workers, and I call them “workers” advisedly. People employed on zero-hours contracts are treated differently to employees, and as such they are second-class staff. People employed on zero-hours contracts earn 40% less than those in fixed-hours employment. A study by the Resolution Foundation shows that, before tax, people on zero-hours contracts earn an average wage of just £9 an hour, juxtaposed with £15 an hour for people with set contract hours. Among graduates, the difference is £10 an hour versus £20 an hour. Firms that use zero-hours contracts have a higher ratio of low-paid staff than firms that do not use such contracts. Zero-hours contracts have traditionally been employed in the hospitality and leisure sectors, but they are increasingly being used in the health, social care and further education sectors.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that being undervalued not only has a cost to the individual? Not having pension contributions, for example, could lead to a much higher burden on the state in the long term than if those people were properly remunerated and were joining proper pension schemes.

[Julie Elliott]

I totally agree with my hon. Friend. In fact, there are other areas in which having such contracts costs the state money, and I will address that later.

According to the Government’s own estimates, nearly a quarter of major British employers use zero-hours contracts. The 2011 workplace employment relations study found that the number of firms with workers on zero-hours contracts increased from 11% in 2004 to 23% in 2011. The recession and the lack of recovery are hitting Britain’s lowest paid workers hardest.

Zero-hours contracts are not new, and they were not borne out of the financial crisis or the recession. The figure of 200,000 people employed on zero-hours contracts in 2012 is almost certainly an underestimate, as many people will not realise that they are on such contracts.

[Jessica Morden (Newport East) (Lab)]

Although I know from my constituency work that the use of zero-hours contracts is increasing, it is difficult to assess what the exact figure is for places such as Wales—I think Wales would be particularly hard to assess. That in itself is a problem, because it is difficult to assess the impact if we do not know the scale of the issue.

[Julie Elliott]

That is absolutely correct. In fact, a number of Departments have responded to parliamentary questions by saying, “We don’t know.”

Many people will not realise that they are on zero-hours contracts. If, as it seems, zero-hours contracts are part of the new labour market, and not simply a reaction to the recession, we need to show our willingness to combat their worst excesses. Zero-hours contracts affect only approximately 1% of the work force, but that is 1% of a very large number and cannot be ignored.

Although they are on the increase in the public sector, zero-hours contracts are still more prevalent in the private sector, which is responsible for 85% of all such contracts in the UK. It is clear why zero-hours contracts appeal to employers, as they reduce risk by conferring greater flexibility to enable them to weather fluctuating demand. We want to do what we can to make it easier and more attractive for employers to hire new people, but all too often zero-hours contracts are the answer. Staff who have worked for their employer for less than a year make up more than a third of all zero-hours contracts. Young workers, newer workers and women are shouldering the burden while employers enjoy the benefits.

[Robert Flello (Stoke-on-Trent South) (Lab)]

I congratulate my hon. Friend on securing this debate. Is not one of the fundamental issues that zero-hours contracts are about transferring the burden and the difficulty of dealing with a contract from the employer to the most vulnerable and the lowest paid? How can it be in any way fair to transfer that burden from the employer to someone right at the bottom of the pile?

[Julie Elliott]

It simply is not fair, and it simply is not acceptable in most cases.

Having a high number of employees on zero-hours contracts is also potentially damaging to employers as it can lead to inadequate staffing levels, the loss of training and skills development and an inability to attract and hold on to the highest quality staff. Too many people are living a life on call, and I hope this debate will move the conversation forward from discussing the existence of such contracts to evaluating solutions to the problem.

Zero-hours contracts can have a devastating impact on people’s lives. Workers employed on such contracts have little certainty of their expected weekly earnings and therefore cannot plan their family finances. People with employee status have several legal rights that workers do not, such as the right not to be unfairly dismissed, maternity rights and redundancy rights. The inherent variability of earnings throws into doubt an individual’s eligibility to claim various forms of benefits. The disruption to family life that results from frequent short-notice requirements to work makes so many things, from child care to the weekly shop, nearly impossible to plan.

[Mrs Mary Glindon (North Tyneside) (Lab)]

I also congratulate my hon. Friend on securing this debate. I worked for nearly two years on a zero-hours contract in retail. Will she confirm that it is often women who are in this situation? To add to what she said about people not knowing what they are going to earn from week to week, does she agree that it is also about their well-being and their sense of value in the workplace? People on such contracts do not necessarily feel that they belong to a company.

[Julie Elliott]

I totally agree. As I said earlier, people on zero-hours contracts are second-class employees—they are not employees but workers, which is a big difference.

People employed on such contracts cannot take advantage of the Government’s child care help, because they do not know when they will need child care. And they cannot take advantage of housing schemes, because without a regular income, they cannot get a mortgage. Without a guaranteed income, many cannot even enter the rental market. Some people on zero-hours contracts are having to rely on payday lenders because they have not received enough hours in a given week, which pushes them further into debt.

On average, people employed on zero-hours contracts tend to work 10 fewer hours a week than those on more conventional contracts—21 hours versus 31 hours. That is a significant factor in the level of underemployment in the UK. Some 18% of those on a zero-hours contract are seeking more hours or a different job, compared with 7% of those on a regular contract.

[Mr David Anderson (Blaydon) (Lab)]

I congratulate my hon. Friend on this worthy debate. What she has just said proves the fallacy of what we hear every day from the Government on the great job they are doing in increasing employment in this country. What they are really doing is taking people from secure, well-paid jobs, particularly in the public sector, and putting them into jobs where absolutely no respect is shown for their life or for anything else.

[Julie Elliott]

That is absolutely correct, and I will talk about it later.

The growing use of zero-hours contracts may go a long way towards explaining why such a weak economy has managed to maintain a relatively low unemployment rate. The Prime Minister often refers to the 1 million or so private sector jobs he seems to have personally created since 2010. Given the conveyor belt of awful numbers emanating from the Office for National Statistics since the election, one can hardly blame him, but it is imperative to delve deeper into that claim, because as we all know, not all jobs are created equal.

My hon. Friend the Member for Dumfries and Galloway (Mr Brown) asked some parliamentary questions on the kind of jobs that are being created, and the Government have been unable to provide clear answers.It is imperative to ascertain how many of those 1 million-plus jobs are minimum wage, how many are zero or small-hours contracts, how many are agency contracts and how many are outside London.

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

Is my hon. Friend aware that as a result of the Postal Services Act 2011, it is now possible for other providers such as TNT to enter the mail delivery market? In London, TNT workers on zero-hours contracts now deliver our mail. Many are sent away every day because there is no work for them. Does she think that this is the direction that the Government have in mind for our economy?

[Julie Elliott]

At the moment, it seems to be where this Government are heading. Regulation is lacking where perhaps a little more regulation is needed.

[Anas Sarwar (Glasgow Central) (Lab)]

I congratulate my hon. Friend on securing this debate. This is a problem not just in the private but in the public sector. The Financial Times found that in the last two years, the number of zero-hours contracts increased by 24%. Does that not show that this Government have the wrong priorities?

[Julie Elliott]

Absolutely. I will move on to the public sector shortly, and particularly to some of the alarming figures on the health service that we have received through freedom of information requests.

After receiving an unsatisfactory answer from the Secretary of State for Health to my written question asking how many people in the national health service were employed on zero-hours contracts, I submitted a freedom of information request to each NHS trust in the country asking how many people had been employed by the trust on zero-hours contracts only over the past five years: that is, those without a substantive contract in addition to the zero-hours contract. I also asked for a breakdown of what positions those people held, including any bank staff. Of the 88 trusts for which I have data, 77 employed at least one person on a zero-hours contract and one third employed at least 500. Together, the top 10 trusts employed a staggering 10,800 people on zero-hours contracts. Perhaps more remarkably, thousands of NHS nurses and midwives were on zero-hours contracts.

It is imperative to point out that those figures are for workers on zero-hours contracts only. They do not include employees who hold a substantive post with their trust and choose to have a zero-hours contract in addition to their primary employment, which allows them to take advantage of extra shifts, such as nurses who work on the bank as well as doing their normal shifts. The figures reflect the number of people who hold only a zero-hours contract.

As I said, there are clearly some people for whom a zero-hours contract is an added bonus, but the majority are not in that position. For some people in some circumstances, zero-hours contracts provide the flexibility and extra work that they want, but they leave far too many people without financial security.

Zero-hours contracts in health care are by no means restricted to trusts and hospitals. The Centre for Employment Studies Research has produced a study touching on the use of zero-hours contracts in social care in five councils in south-west England. In 2011-12, more than half of all domiciliary care workers were employed on zero-hours contracts. Figures uncovered by the shadow health team have found that nationally, more than 300,000 social care workers are employed on such contracts.

[Derek Twigg (Halton) (Lab)]

I thank my hon. Friend and congratulate her on an excellent speech. The Department of Health wrote to me in an answer today that there were 4,200 adult social care workers on zero-hours contracts. Is she concerned about the impact on social care and the security of the people who work in that field?

[Julie Elliott]

Absolutely. People who work in social care work with vulnerable people, often on their own, and turnover and movement of staff in that field are not good. Stability and continuity are needed to give people the best possible care. I fail to see how calling people in—often with very little notice, so that different people attend the same person—is the best way to provide social care in this country. According to the figures that I have, 20% of all people working in social care are on zero-hours contracts, rising to 60% for domiciliary care.

[Mr Anderson]

This morning we met a Unison group and had discussions with home care workers who work in this city. Not only are they on zero-hours contracts, they do not get paid for time spent travelling between houses, they have no pension rights, their travel costs are not paid, they must pay for the phone calls when they ring in to say each client is okay and they must do training in their own time. Does that not show a huge lack of respect for some of the most valuable people in this country, who do tremendous work? Does it not show how the Government’s deregulation mania is driving such people into a serious position?

[Julie Elliott]

I could not agree more with my hon. Friend. I will come to this later, but I question whether the people working in that field on zero-hours contracts are actually being paid the minimum wage, after all the costs that they must pay themselves are deducted. If they were employed, they would not have to do so.

The numbers simply are not conducive to the world-class care that patients deserve. Reflecting on the corrosive nature of zero-hours contracts, one care worker interviewed for the CESR’s study said:

“I can’t plan my life, not knowing when exactly I am going to be working, I can’t plan things…I have gappy rotas, periods when I am not working, odd half-hours. I take a book with me. I know that I am not getting paid, sometimes it’s really depressing. One of my colleagues said she was going out from 3 pm to about 7 pm, and actually there was only two payable hours in that whole period”.

That confirms what my hon. Friend just said.

How can we expect care workers or NHS nurses to have total commitment to an organisation or company that has none toward them and puts them on zero-hours contracts? They leave nurses and carers worried and looking for other jobs instead of focusing on patient care, leading to worse care for patients.

Not incidentally, we must also look at ourselves—at the House of Commons. We should be setting an example of good employer practice. According to the House of Commons Commission, as of 31 January 2013, nearly 9% of House of Commons staff are employed on a zero-hours contract.

In their responses to my FOI request, many trusts were at pains to explain that workers on zero-hours contracts were not obliged to accept any work offered. That is absolutely right; such an obligation would be illegal. It would be servitude. That is not much of a defence. There is also growing evidence to suggest that the choice to turn down work is illusory. Often, employers will cut the hours of any worker who turns down work, a practice known as zeroing down. The Resolution Foundation interviewed a domiciliary care worker in Newcastle who said:

“When I started out at my current job, I did nine weeks without a single day off and I was regularly working anything up to 55-60 hours a week. Since putting my foot down and refusing to work every other weekend…my hours have dried up.”

For many workers, the flexibility of zero-hours contracts is a one-way street that benefits only the employer. There is even evidence that some employers zero down workers’ hours simply to avoid the costs of redundancy or as punishment for reporting unfair treatment.

What needs to be done? We need to discuss concrete solutions to the zero-hours contracts crisis. Suggestions include regulations that state that if a worker’s average normal working hours are in excess of their contracted hours, they have the right to have their real-world hours written into their contract. We also need to raise awareness of zero-hours contracts first and foremost among people employed on them. Job adverts offering positions on zero-hours contracts should say so explicitly.

My right hon. Friend the Leader of the Opposition has proposed living wage zones and tax breaks to persuade companies to pay their employees a living wage, in order to boost productivity and cut the welfare bill.

[Fiona O'Donnell (East Lothian) (Lab)]

I am grateful to my hon. Friend for securing this debate and giving me the opportunity to contribute. Does she agree that it is essential that any training that staff require should be paid by the employer?

[Julie Elliott]

Of course it should. Not paying is a complete lack of obligation by employers to the people who work for them, whether they are workers or employees. Their businesses prosper because those people work for them, and people should be looked after properly.

Paying employees a living wage would boost productivity and the welfare bill. The Institute for Fiscal Studies has calculated that for every £1 spent paying a living wage, the Treasury saves 50p on tax credits and benefits. The Resolution Foundation has calculated that if everyone now receiving the minimum wage received the living wage, there would be a £2.2 billion net saving, comprised of higher income tax and national insurance receipts. There is growing evidence that living wages boost productivity, motivation and performance, and reduce leaver and absentee rates, thereby offsetting the cost of the higher wage. The people who reject that analysis are the same people who said that the national minimum wage would lead to vastly higher levels of unemployment. They were wrong; it simply led to higher wages.

Progress has been made in the past two decades to protect those on zero-hours contracts and agency workers, who are often the same people. The working time regulations, the national minimum wage and the agency workers regulations have done much to improve the rights of such workers, but zero-hours contracts have reached a tipping point where further regulation is now required, because more needs to be done to tackle the inequalities and unfair treatment inherent in such contracts of employment. We must strengthen efforts to ensure that employers who abuse zero-hours contracts are brought to order. The tax and benefits system should be updated to reflect the changes in the labour market and to support people on zero or small-hours contracts. The contracts are merely the latest in a long line of ingenious tactics by the less scrupulous employers to keep costs down at all costs, all to the cost of their employees. Once we have addressed some of the worst excesses of zero-hours contracts, I do not want to see equivalents pop up and for us to take years to respond to those as well, with the lowest paid suffering all the while at the sharp end of the employment market.

When I asked the Minister present what the Government were going to do about zero-hours contracts, she stated that they would crack down on any abuse of such contracts. I am pleased that the Secretary of State for Business, Innovation and Skills announced last month that he was undertaking a fact-finding review of zero-hours contracts. He says that only anecdotal evidence of abuse is available, but I think that we are well past the stage of anecdotal evidence.

Many people on zero-hours contracts work fairly regular and often long hours. In such cases, zero-hours contracts are not about flexibility for the employer but about control over the employee. We could call it exploitation. Many workers start early in the morning and are expected to stay at work until late in the evening, with multiple unpaid breaks in between. That is a life lived on call. I welcome contributions from colleagues and the response from the Minister. People on zero-hours contracts, whether they treat our sick, look after our elderly or serve our food, need a commitment from the Government. I look forward to hearing it.

14:52

[Lisa Nandy (Wigan) (Lab)]

I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this important debate. We can see how important it is, because there are literally no seats left on the Opposition Back Benches, although I am sorry to see that concern does not seem to be the same among Government Members.

I am grateful, nevertheless, to the Minister for taking the time to be in the Chamber, because I want to talk a little about the astonishing rise of zero-hours contracts in my constituency, reflecting the national picture mentioned by my hon. Friend the Member for Sunderland Central. The number of such contracts has more than doubled since 2005, and the level of human misery that they are causing has become more and more apparent to me over the past three years. I want to give the Minister the human flavour of what that means. I have real concern about what zero-hours contracts are doing to young people, who are desperate to get into the labour market at the moment, but are seeing their opportunities closed off at every turn.

A young man in my constituency works on a zero-hours contract as a security officer. This young man, as well as being incredibly ambitious for himself and his life, has a difficult background; he came out of the care system, and he needs a level of stability that his job and his employer simply do not provide, which is a concern. Zero-hours contracts are a problem for many of the people on them, but for this young man, working in a difficult job and not knowing when or how he will be called or what his income will be from one week to the next, the contract is a particular problem.

When I was preparing for the debate, I looked quickly on the internet at a few of the jobs advertised in Wigan. Similar jobs were advertised: a security officer at Robin retail park, at £6.50 per hour. The advert stated that the job was on a zero-hours contract and that the employee must work as and when required. At least the advert specified that the job was on a zero-hours contract. Many people in my constituency over the past few years simply did not know that they were signing up to a zero-hours or small-hours contract; they were astonished to learn that not only had they got themselves into such a situation, but they could not get out. As my hon. Friend the Member for Sunderland Central said, they were suddenly not eligible for any of the other forms of support available. People feel trapped, and they are desperately in need of a Government who will do something to help them.

[Nia Griffith]

Has my hon. Friend been approached by constituents who have been forcibly moved from one type of contract to another type? They find that, on the new contracts, all their rights seem to have evaporated. Basically, they have been forced to sign up, perhaps because of some small issue such as wanting flexible hours or some slight change, or because the whole work force is being shifted, and that move is really damaging.

[Lisa Nandy]

My hon. Friend is absolutely right. I was about to talk about the situation of some care home workers in my constituency, and that is certainly one of the things that happened to them. Furthermore—the point that I want to impress on the Minister—employers who abuse zero-hours contracts are likely to be poor employers; their employment practices on a whole host of issues affect the entire work force. I welcome my hon. Friend’s intervention.

Unison recently produced research which showed that around 40% of people working in care homes or providing social care are on zero-hours contracts. We should all be deeply concerned about the rise of the practice, even if uninterested in the employment rights of the people affected or their families, because the truth is that it must be having an impact on the level of care that we afford to the old, the sick and the vulnerable in our society.

A group of care home workers, all women, recently came to see me. They had been under contract with the council, and they moved from one firm to another as the council changed the contract. They came to see me about a whole range of problems, including zero-hours contracts for some and small-hours contracts for others. They were given extremely short notice of the hours that they were supposed to work, so—as my hon. Friend the Member for Sunderland Central said—they had no opportunity to plan, which was a real problem for those with child care responsibilities, or with other caring responsibilities for elderly relatives or friends.

One woman told me an absolutely astonishing story about a co-worker, who had been told that if she did not take a series of jobs put on to the rota at short notice, she would not be offered hours next time. She had two children, so she had to take them with her on a series of shifts lasting for more than eight hours. The young children had to sit locked in the car for most of that time. The firm did not even factor in a lunch break for the worker, which apparently is standard practice. On top of that, she had the children with her, although they were unable to go outside and play; they did not eat and were locked into the car for several hours, which she was absolutely distraught about, but she was left between a rock and a hard place—she has to feed her children somehow, and that was the job she had been offered.

[Robert Flello]

I am enjoying my hon. Friend’s speech, because it is a good speech, but the things that she is saying are absolutely horrifying. Local authorities up and down the country are in a dire financial situation, but does she agree that they simply should not be touching such companies even with the longest of bargepoles?

[Lisa Nandy]

I completely agree, and I was about to say that I have been astonished by the slow response of my own local authority. I have tried and tried to get it to take the issue seriously, but the response has simply not been good enough. We should not be spending public money on enabling such employment practices to continue, whether nationally or locally. We all have a responsibility to stop them.

The women also told me about the serious problems that they are having budgeting. They work for the minimum wage, so they do not earn a lot to start with; we all know that the minimum wage is not enough to meet essential needs, so they are already earning poverty pay. On top of that, they do not know what they will be bringing in from one week to the next. As my hon. Friend the Member for Sunderland Central said, that is pushing people into the hands of legal loan sharks. Payday lenders have sprung up throughout Wigan—walking down the high street now, more payday lenders can be seen than practically any other sort of shop. We are collectively colluding in pushing people into the hands of those appalling lenders who cause such misery in people’s lives.

As well as zero-hours contracts, I have come across women with small-hours contracts. They are supposed to be guaranteed a certain amount of work but are not given that work, even though that is specified in their contracts. I have seen several examples of contracts not being upheld at all.

The point I want to impress on the Minister is that when employers treat people on zero-hours contracts in that way and where their use is widespread, it is likely that they are poor employers across the board. One firm in my constituency, Cherish, provides care to elderly people in their own homes. It breaches the minimum wage requirements because its employees are not paid for travel time, which is often hugely variable in my large constituency. Most of those women do not have transport because they cannot afford it as they are not paid enough, so they must travel long distances on several bus routes, which takes a long time, but they are not paid a penny for that. Lunch is not factored in and their payslips are confusing and incomplete. A whole host of problems have been brought to me about Cherish, and when I wrote to the firm I received what can only be described as a sarcastic letter thanking me for my interest in the company. I was astonished at the lack of response from the CQC and the local authority.

I echo what my hon. Friend the Member for Sunderland Central said. It cannot be beyond our wit to devise a statutory framework to crack down on those unscrupulous employers, but that must go with a culture of valuing our workers. I have been dismayed by the coalition Government’s attack on the trade union movement in the last few days, which can only hinder the situation of those women and not help it.

[Nadine Dorries (in the Chair)]

Mr Sawford, may I remind you that the time limit on speeches is six minutes?

15:01

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

Thank you, Ms Dorries. It is a pleasure to serve under your chairmanship and to follow my hon. Friends. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this debate. She feels strongly about these issues and is a real champion for people in her constituency and throughout the country who are being exploited by zero-hours contracts. I will echo some of the points that my hon. Friend the Member for Wigan (Lisa Nandy) made and relate them to the experience of my constituents in Corby and east Northamptonshire.

In this Session, I have presented two private Members’ Bills to offer greater protection to the lowest paid and most vulnerable workers in Britain. The Gangmasters Licensing Authority (Extension of Powers) Bill will extend the powers of the Gangmasters Licensing Authority to enable it to regulate employment agencies in all sectors of the economy. That is combined with my Zero Hours Contracts Bill, which will prohibit the use of zero-hours employment contracts and end the scandal of employers requiring workers to be available for work when there is no guarantee of available work. I will go further than other contributors to this debate and say that zero-hours contracts should be banned. A contract of employment clearly implies that there is some employment. All too often the problem with zero-hours contracts is that people are not given any employment, yet they are required to attend for work.

I hope the Bill will become law, but whether that is now or later depends on Parliament. I want to generate a debate about how we can better protect the lowest paid and most vulnerable workers from being kept in a permanently fragile and uncertain state of zero-hours employment. That is why I am pleased to contribute to the debate today.

The Office for National Statistics estimates that at least 200,000 people are employed on zero-hours contracts in the UK, of which 75,000 are aged 16 to 24. We know that that figure is a huge underestimate, and I have begun to challenge it to reveal the true situation. Just last week, a written answer from the Minister of State, Department of Health, who is responsible for care and support, revealed that 307,000 people work in social care alone on zero-hours contracts. If the labour force survey claims that 20% of people on zero-hours contracts are working in the care sector, I am confident in saying that the true number of people in this country on zero-hours contracts could be approaching 1 million.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does the hon. Gentleman agree that what should flow from the review by the Secretary of State for Business, Innovation and Skills is exactly what he is homing in on: a much more accurate estimate of how many people are affected? When we try to determine what needs to be done to help those people, we need to know how many are affected.

[Andy Sawford]

The hon. Gentleman is absolutely right and, if he will forgive me, I will come to that shortly.

It is well known that zero-hours contracts started in specific sectors of the economy, but are now widespread in all sectors, including in my constituency. Hundreds of constituents have contacted me about them. People tell me about waiting for a call or turning up at the workplace day after day, only to find that there is no work, yet their contracts make it difficult to find alternative employment or to claim jobseeker’s allowance. Like my hon. Friend the Member for Wigan, I have heard examples of people making child care arrangements or paying for transport to work and then waiting hours before being told they are not needed. Others have told me that because of zero-hours contracts they are unable to get a bank overdraft, a mortgage or car finance.

Of those on zero-hours contracts, 70% are for permanent jobs. How can it be right that someone in a permanent job is not given a permanent and proper contract of employment? More than 80% of people on zero-hours contracts are not looking for another job. They want to remain in employment, but they want that employment to be fair and secure.

A few weeks ago, the Resolution Foundation published an excellent report stating that those employed on zero-hours contracts receive lower gross weekly pay, and that workplaces utilising zero-hours contracts have a higher proportion of staff on low pay. In my constituency, zero-hours contracts and agency workers create a two-tier work force with permanent employees being paid better and having security of employment, but many others are paid incredibly low wages and are exploited from week to week.

The argument is that zero-hours contracts offer flexibility, but I would argue that if those contracts are justifiable, that flexibility should be beneficial to both employers and employees. In most cases, that is simply not so, particularly in low-wage sectors. Workers on those contracts have no control over the hours they work, the amount of money they earn each week or even the breaks they take. Reports show that care workers on zero-hours contracts are not paid for travel time or gaps between appointments. Unison published some excellent research on the impact on social care. I have a personal concern about that and I urge the Minister to look at it in detail. I would have said more about it if I had had more time.

Zero-hours contracts are just the tip of the iceberg. My hon. Friends have called for a review of the whole culture of work in this country, particularly as it has developed during the recession and in recent years as our economy has flatlined. Under-employment is generally too high in all its forms. Self-employment has been rising and bogus self-employment is a big issue. We have particular issues with Swedish derogation contracts that guarantee minimum hours of pay between agency assignments to exempt people from minimum pay.

I am pleased that the Minister met me and a delegation from Corby earlier this year to look at these issues. I am also pleased—I thank her for this—that she supported an initiative by the Employment Agency Standards inspectorate and Her Majesty’s Revenue and Customs to look at the issues in detail in Corby. The initiative was taken in my area, and I was not surprised to see the level of exploitation. When visiting agencies, they found more than 70 breaches of employment law, and HMRC put a figure of £100,000 on the money owed to local workers in my constituency. I urge the Minister to provide proper resources to HMRC’s minimum wage department and to support the vital role of the Employment Agency Standards inspectorate. It protects the most vulnerable people in my constituency and around the country. It should be better resourced, it should do more, and we should support it.

What do I want? I want more than an informal review. I want a proper formal review by the Government to look at the scale of zero-hours contracts, and a jobs market that identifies good practice. I want to explore the possibility of a ban. Zero-hours contracts have been banned in Luxembourg, Belgium and Lithuania. There are opportunities to develop new forms of flexible employment contracts and I urge the Minister to look at the work of the Union of Shop, Distributive and Allied Workers in this area.

15:09

[Mr Iain McKenzie (Inverclyde) (Lab)]

It is a pleasure, Ms Dorries, to serve under your chairmanship this afternoon. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this important debate. It seems that austerity has sparked some employers to introduce zero-hours contracts, which they see as the ultimate flexible employment option.

Zero-hours contracts offer no guaranteed work. They form part of the general disregard for decent terms and conditions. Unfortunately, employers have increasingly turned to such contracts. Typically, as we have heard, an individual undertakes to be available for work, but the employer does not undertake to provide any guaranteed hours and pays only for the hours worked.

Zero-hours contracts have been widely used in various employment sectors, and a survey by the Industrial Relations Service suggests that 23% of employers now include zero-hours contracts as one of their employment options. The Office for National Statistics found a major surge in zero-hours contracts in 2012, with the number of people on such contracts peaking at 200,000. As we have heard, the private care sector has been particularly vulnerable to this practice, and a recent survey of home care workers found that more than 40% were on zero-hours contracts.

Zero-hours contracts undermine employment rights and hit young workers and women hardest. For staff, they entail huge drawbacks by comparison with permanent, regular work. There are no guaranteed, regular earnings to provide certainty over meeting bills or planning for the future. The variability of earnings also throws into doubt individuals’ eligibility for various benefits, creating even greater uncertainty over income.

Zero-hours contracts have shown themselves to be more open to abuse than regular permanent contracts. For example, some scheduling of work hours in the home care sector allowed no time for travel between home visits, leading to staff working considerably beyond their paid hours in some cases.

What will be crucial for workers is whether zero-hours contracts constitute an employment relationship. If there is an employment relationship, an employee on a zero-hours contract will acquire the same comparative rights as other employees. If there is a pattern of regular work that is regularly accepted, it should be deemed that the contract is one of employment.

Employers should take heed because zero-hours contracts can work against them. They damage the employer’s ability to attract and hold on to high-quality staff. They also damage their ability to provide continuity and quality of services. Zero-hours contracts are simply not compatible with developing a professional work force and delivering quality services.

Let me give a few examples. The G4S security fiasco just before the start of the London 2012 Olympics, when the firm was unable to meet its contracted staffing requirements, is an example of how zero-hours contracts can be a disaster. In my constituency, Amazon outsources hiring at peak times of the business year to private employment agencies that offer zero-hours contracts. The result is that many subcontracted employers end up in employment disputes that hit the headlines and ultimately reflect on Amazon and its business. I call on Amazon to distance itself from such contracts, even if it is associated with them only at arm’s length, and to give clear direction to its subcontractors. Amazon does not want zero-hours contracts offered to its temporary staff.

It would be far less damaging for employees and employers if permanent contracts were offered specifying a minimum number of hours per week. For thousands of workers across Scotland and the rest of the UK, life on a zero-hours contract means they are living their life permanently on call, uncertain whether they can secure enough working hours each week to pay the bills.

The forward march of zero-hours contracts is likely to have profound implications for the UK economy, as well as for the individuals on those contracts and for the services that those people provide.

[Nia Griffith]

Does my hon. Friend think there is scope for using procurement to force those who supply public sector—Government and local authority—projects to ensure that the workers they employ are not on zero-hours contracts?

[Mr McKenzie]

Absolutely. My hon. Friend makes an important point: procurement can be used to stipulate terms and conditions. We should stipulate that zero-hours contracts are not welcome in any procurement contract.

As I said, the erratic income stream that often comes with zero-hours contracts can make it difficult to manage household budgets, to juggle family and caring commitments and to access tax credits and other benefits. It is clear that the supposed flexibility that these contracts provide comes at far too high a price for the overwhelming majority of those who are employed on them.

[Robert Flello]

As well as the damage and exploitation experienced by the individuals concerned, is not the taxpayer, through working tax credit and the like, effectively subsidising the profits of these private companies?

[Mr McKenzie]

Absolutely. My hon. Friend makes a good point: the taxpayer is subsidising these companies. Increasingly, there is a race to the bottom in terms and conditions in services.

I am led to believe that the Government have acknowledged the need for reform, and a review will report in the autumn. However, I fear that it is unlikely to lead to an outright ban on zero-hours contracts and that it will not be the precursor of a much-needed agenda for promoting fair and full employment. None the less, thousands of people across the UK hope that the Government will, at a minimum, recognise the indisputable case for introducing more stringent safeguards to provide greater certainty and security for the growing numbers who work on these contracts. It is almost as though we have gone back in time to a scene from “On the Waterfront”. I have witnessed people turning up at factory gates and being chosen for a shift, while others are turned away and told to come back the next day. Those are simply not the employment contracts or practices that we need for the 21st century.

15:16

[Ian Lavery (Wansbeck) (Lab)]

It is a pleasure, as always, to serve under your chairmanship, Ms Dorries. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on bringing this subject to the Chamber. It is essential that such debates take place, because many of the people we are discussing do not have a voice in society.

I am overwhelmed by the absence of Government Members. I am really disappointed, to say the least, that not even one Conservative MP is in the Chamber to listen to some of biggest concerns that affect some of the least well-off people in society. The zero-hours contract is the scourge of the working poor. It has trapped many people in an employers’ paradise; it is a charter for legal abuse, as we have heard in many fine contributions today; and it needs to be stamped out.

Some 8% of workplaces now use zero-hours contracts. Interestingly, 85% of the people employed on those contracts work in the private sector. The Government tell us almost hourly, “We’ve disposed of many jobs in the public sector, but look how many we’ve created in the private sector.” Well, if this is the type of job they are proud of, they really need to look at this, because these are not jobs in reality. What is happening to many people on zero-hours contracts is an absolute scandal.

People on zero-hours contracts receive lower gross weekly wages—an average of £236 a week, compared with £482 for those who are not on zero-hours contracts. On average, therefore, those who are on zero-hours contracts receive less than half the pay of those who are not. Workplaces that utilise zero-hours contracts have a higher proportion of staff on low pay—between the national minimum wage and £7.50 an hour—than those that do not. Those employed on zero-hours contracts also work fewer hours—an average of 21 hours per week—than those who are not, who work an average of 31 hours per week.

Frances O’Grady, the general secretary of the TUC has said:

“Employers know they can get away with advertising zero hours jobs because there are so many jobseekers hunting too few vacancies.

With the tough times set to continue, now is the perfect time for the government to be reviewing— and hopefully regulating—the increasing use of these exploitative contracts.”

In my constituency, 26 people are applying for every job at the jobcentre. That is an absolute outrage. A lot of those jobs involve zero-hours contracts. People are really excited if they get the opportunity to work one or two hours a week, yet in the statistics that is counted as employment. That is outrageous.

Lord Oakeshott, the Liberal Democrat peer, said:

“A zero hours Britain is a zero-rights Britain in the workplace—Beecroft by the back door. Being at the boss’s beck and call is no way to build a skilled, committed, loyal labour force.”

I do not agree with the Liberal Democrats that much—hardly ever—but I agree with that comment. It spells out neatly and concisely exactly what zero-hours contracts are all about. As my hon. Friends have said, they give no guarantee of regular earnings, which leads to huge problems in meeting energy, food and clothing bills, and people have no way to plan their future. The need to respond to calls, frequently at short notice, to obtain work absolutely disrupts any type of social or family life. It causes problems with the kids and with everyone involved, because people on those contracts cannot plan anything at any time, yet they are paid nothing for the privilege. We need to look at that situation.

There is much more that I would like to say. Just before I came in I met someone from Nacro, who explained that there are probation officers who work on a proper, 37-hour contract, and who at night time are given zero-hours contracts. They work two separate contracts, which is causing chaos, but the probation service does not need to pay overtime and extra payments. That practice will spread through society, and it is unacceptable.

I agree with my hon. Friends who have said that the practice of giving zero-hours contracts should be outlawed. Okay, there is a review, but it must outlaw them. Let us be fair to people, respect people, look at how they want to work and give them working opportunities that they can be proud of and plan their lives around, so that they can secure their future. Zero-hours contracts are the sort of thing that should not be allowed in civil society; but perhaps we do not live in a civil society.

15:22

[Alex Cunningham (Stockton North) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate my fellow north-east England MP, my hon. Friend the Member for Sunderland Central (Julie Elliott), on securing this long overdue debate.

At a time when unemployment is persistently high—and nowhere more so than in north-east England—the Government still refuse to listen to Opposition calls for a compulsory jobs guarantee. The same Government are content to massage the unemployment and employment figures in whatever way possible, to give a very different impression of the challenges facing countless people. It is therefore all the more fitting that we are here today to discuss contracts that must be contributing in a substantial way to in-work poverty.

We all know that the bulk of jobs created under the Tory-Lib Dem Government are part-time and low paid, leaving families and individuals struggling to cope, while the Prime Minister boasts of the opportunities he has created for them. I am not too surprised that there is not a Conservative in the Chamber, and that the Conservatives have left a Liberal Democrat Minister and Parliamentary Private Secretary to answer today. However, the Prime Minister cannot throw a veil over the reality of worklessness and minimal or zero-hours contracts, whose numbers are growing daily, and which are often used as a mechanism to screw down wages, screw down people and screw down our country.

We need to take action to make sure that unscrupulous employers cannot take advantage of workers in what is already a tough jobs market, and to ensure fairness in the workplace and promote real job creation—of jobs that pay well while assuring security in the workplace and shared prosperity. There is no doubt that employers seek increasingly flexible staffing structures and many are adopting zero-hours contract arrangements to avoid agency fees and to sidestep the Agency Workers Regulations 2010.

The use of zero-hours contracts is, as many hon. Members have said, widespread across both public and private sectors. A survey by the Industrial Relations Service suggests that 23% of employers now include zero hours as an employment option. In public services, the care sector has been particularly vulnerable, with more and more such contracts. The situation is likely to worsen further under the NHS’s new commissioning arrangements, which do not guarantee providers with work, so that they in turn do not guarantee work to staff. That alarming trend has even spread into areas such as cardiac services and psychiatric therapy.

Some may say the employers cannot be blamed, but I do not care who is blamed: no one should have to suffer the indignity of a contract under which it is possible for no work at all to be provided. In figures from the national minimum dataset for social care, it is estimated that 150,000 domiciliary care workers alone are employed on zero-hours contracts. Statistics released last week by the Minister of State, Department of Health, the hon. Member for North Norfolk (Norman Lamb) suggest that 307,000 people in the social care sector, or 20% of the work force, are employed in that way. Within the North Tees and Hartlepool NHS foundation trust alone—that is the one that serves my area—there were 786 zero- hours or casual contracts in operation in April 2013, 682 of which were for clinical positions. I acknowledge that some of those may cover people with other roles, elsewhere and within the trust, but I still think it is a scandal that we are trying to provide care on that basis—even if it does afford the employer flexibility to fill gaps.

Elsewhere, in the worst scenarios, zero-hours contracts can result in some of the most vulnerable people—who care for other vulnerable people—being unfairly treated owing to a lack of proper protections. Recent work by the Resolution Foundation indicates that those who are employed on zero-hours contracts work fewer hours than those who are not, averaging 21 hours per week compared to 32 hours per week; and there is a gap of about £6 an hour, on average, between those who are on zero-hours contracts and those who are not. Not only does that put employees completely at the mercy of employers, presenting the opportunity for rogue employers to exploit workers; it also removes any semblance of the stability and certainty that must be central to rebuilding our economy and people’s lives.

[Robert Flello]

I want to pick my hon. Friend up on a fact. He mentioned the difference in the number of hours, but I suggest there is not a difference. It is just that the people who are not on zero hours are getting those hours paid.

[Alex Cunningham]

Indeed. That is very much the case. It just worries me that although the average working week for people on those contracts may be 21 hours, for many people they mean zero.

Power imbalances operate in many workplaces, and workers who need a minimum number of hours a week to remain financially secure often find the uncertainty of working fluctuating numbers of hours tremendously tough. Similarly, some find their contractual situation becomes a device through which loyalty is used to determine future work load. In essence, the allocation of a favourable number of hours becomes reliant on such factors as previous flexibility and a willingness to accept all hours offered, as well as fickle aspects such as cordial relationships with line managers. Regardless of how good a worker someone is, if their face does not fit, their zero-based contract may mean just that—zero. The repercussions that are used to sanction employees who are deemed to have stepped out of line should be better regulated to ensure fairness in the workplace. It is time that safeguards against exploitation were re-examined and bolstered to achieve a balance of power.

Before the Working Time Regulations 1998 and the National Minimum Wage Regulations 1999, zero-hours contracts were often exploited to clock off workers during quiet periods, while retaining them on site to allow for a rapid return to work. That down time was largely unpaid, and was grossly unfair to employees. Under the previous Labour Government, action was taken to protect the interests of workers and stop that abuse. We cannot and must not go backwards on these issues. We need a Government who will take more action now. If we must have such things as zero-hours contracts, we need to ensure that they are properly regulated to maintain an individual’s freedom to contract on favourable terms, with some form of guarantee that they have a job worthy of the name.

15:28

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

It is a pleasure to serve under your chairmanship, Ms Dorries, for the first time but not, I am sure, the last. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing the debate, and on her excellent opening speech. I should like to say that we are having a debate this afternoon, but it seems only the Labour party really cares about the issue. There is not a single Conservative MP in Westminster Hall this afternoon. I am glad to see the Minister, and am also happy that the Government will undertake a review of the worrying rise in zero-hours contracts.

I wish to associate myself with many points that have already been made—it is always difficult going last in such debates—but I want, in particular, to agree with the comments made by my hon. Friend the Member for Sunderland Central about the flexibility of such contracts being a one-way street. The flexibility is all to the advantage of the employer and to the detriment of the employee. The worker is left waiting for a call and is on call, not knowing from one day to the next, or from one week to the next, whether they will get any hours at all. These contracts do not even provide a guarantee of any hours, and therefore, they have been named zero-hours contracts. In many cases, workers are desperate to increase the number of hours they work, and many of them are on very low incomes. These contracts seem extremely exploitative and make the lives of some of the poorest in society even harder.

I am particularly concerned about three groups of workers who the contracts seem increasingly to affect: the first is young people; the second is care workers, as some of my colleagues have discussed; and the third is public sector workers, which is worrying, because even though the majority of such workers are in the private sector, the use in the public sector seems to be increasing. It must be in the Government’s power to do something about that.

Research suggests that one in three people employed on zero-hours contracts is aged between 16 and 24. It is absolutely devastating to be unemployed at such a young age and to be only able to get a contract of work that does not guarantee any hours at all. The fact that this exploitative arrangement is the first experience that a young person could have of work seems totally unacceptable and unfair.

[Andy Sawford]

My hon. Friend makes a really important point about the particular impact on young people. I hear from young people who feel that they have had no training and no investment from their employer, because there is no incentive to do so when they are in such fragile, short-term employment.

[Emma Reynolds]

The Government need to look at the issue even more closely and consider whether the practice should be banned, for young people, in particular, but for all workers.

I turn to the issue of care workers. As has been mentioned, a report by Unison found that 40% of home care workers are employed on zero-hours contracts, and that number is thought to be on the rise. Home care workers play an incredibly important role in our society, especially given that we have an ever-increasing ageing population. They are saving the state money by ensuring that elderly people can stay in their homes and live there, rather than in a care home, and they are ensuring that elderly people are not in hospital. I am particularly concerned about reports suggesting that those workers are not being paid for travel time between visits. It seems that that must be, in some way, illegal—how can it be legal? In winding up, if the Minister has time, I would like her to comment on that point. If they have not been guaranteed a minimum wage for the real hours that they are working, have their minimum wage rights been breached? Is the employer, in such cases, in breach of the European working time directive?

Finally, let me say something about the public sector, because the contract is not unique to carers. We are seeing the increasing use of such contracts in all parts of the public sector, whether in the health service or elsewhere. In the health service alone, workplaces using zero-hours contracts rose from 7% in 2004 to 13% in 2011. Central Government have also been found to be using zero-hours contracts. As has been suggested, local government contracts seem to be driving the rise of these exploitative contracts. My hon. Friend the Member for Sunderland Central suggested that it is going on here in the House of Commons, too, and I would like the Minister to address that issue specifically.

Will the Minister reassure Labour Members, who are concerned about this injustice, that the review that the Government are conducting will look at exploitative practices by employers? Will the review consider how many of the workers who have had those contracts are low paid, and will it consider banning the contracts? Will she say whether central Government will take a leading role in getting rid of the contracts from their own payroll and do something to discourage, dissuade or even sanction local government if, when contracts are issued, conditions are not in place in the contracts to stop this kind of exploitative practice?

Our debate is timely, because the use of zero-hours contracts can be seen in a wider context of rising inequalities. Regrettably, inequalities in income are increasing, and the gap between rich and poor is widening. The Government are only exacerbating that. Living standards have been frozen, or in some cases, have declined for many lower and middle-income workers. The mean family income in 2015 will have the same worth as in 2002. For the first time in generations, parents are concerned and expect that their children will be worse off than them. The increasing use of zero-hours contracts in the private and public sectors is only exacerbating those inequalities, and I would like the Government to do something about it.

15:35

[Ian Murray (Edinburgh South) (Lab)]

It is a great pleasure to serve under your chairmanship for the first time, Ms Dorries—no doubt there will be many more times to come. I pass on my congratulations to my hon. Friend the Member for Sunderland Central (Julie Elliott), whose speech was fantastic. Not only today, but every day that she has been in Parliament she has been championing the rights of people on zero-hours contracts, and it is important for her to have led today’s debate.

Although a small number of people use and like the contracts, we have heard, from all Opposition Members, about people who have gone to their constituency surgeries with examples of where the contracts are not appropriate. It is a shame that we cannot take a vote today, because we might win it, given who is here this afternoon. Of course, the aim of a zero-hours contract is to deflect from giving anyone pay; it is not just about hours. When an employer is looking at putting together a zero-hours contract, it cannot only be about the work available. It must be about reducing the wage bill and ensuring that there is no pay.

[Nia Griffith]

Does my hon. Friend agree that there is sometimes an irony in the use of agency workers, whereby the workers get paid very little and are second-class citizens, compared with the permanent employees, but, in fact, the firm gets ripped off because of the agency fees?

[Ian Murray]

That is a good point. We should have another Westminster Hall debate on the agency issue, in terms of how that all fits together. It is not only about zero-hours contracts, as there is a tapestry of problems in the employment industry that are worth looking at.

Many hon. Members—including my hon. Friend the Member for Wansbeck (Ian Lavery), who always speaks very passionately about such issues—have said that people get no pay and no hours. People sometimes go to great expense to turn up at work. They arrange child care and sometimes they do not even get a call to say they have got hours—actually, sometimes they do not even get a call. I have a screen grab here from someone’s iPhone, where a message says, “You’re not needed today.” That is all it says. It was sent at 12.40 in the afternoon, so they sometimes do not even get a call from their employer to say they are not required.

Many Members have spoken about the increasing numbers of contracts, so I will not run over that again. However, I would like to concentrate on the law behind the issue. A body of law sets out what someone is classified as when they are at work. They are either an employee, a worker, or self-employed. We shall set aside the fourth, new category of someone who is an employee shareholder, as that is a different debate altogether. If we look at those three categories, it is clear what someone who is self-employed is. There is a whole body of case law about what the definitions of an employee and a worker are. Many would argue that someone on a zero-hours contract is, in fact, a worker, but that worker needs to have some kind of mutuality of obligation, and there cannot be a mutuality of obligation if the worker has to turn up for work at their expense, but the employer has no need to give them any hours. That does not seem to me to be any sort of mutuality.

[Andy Sawford]

I agree that the important point about an employment contract is that there must be a mutuality of obligation, but the contract also must impose an obligation on a person to provide work. Therefore, I cannot understand why it is not unlawful as it stands, in the current body of law.

[Ian Murray]

There is an argument about whether zero-hours contracts are currently unlawful, but mutuality of obligation is case-law terminology and is therefore not written in statute. That is how, over many years, the case law has built up about the definition of employment tribunals, in terms of whether someone is in work or, indeed, whether they are a worker, an employee or self-employed. So there is a definition. My hon. Friend the Member for Wansbeck has said that what we are talking about is not a job. It perhaps is not a job. It cannot be right for people to be in this situation and not end up with any hours.

Let us consider some of the damaging effects. For staff, zero-hours contracts have huge drawbacks compared with permanent regular work. There is no guaranteed level of regular earnings that provides any certainty with regard to meeting bills, meeting rent or planning for the future. The need to respond to calls to attend work, frequently at short notice, disrupts life outside work and places a particular strain on families in terms of arranging care for dependants. The Government have put a heavy emphasis on being family-friendly, but we have yet to see any evidence of that. Zero-hours contracts fly in the face of the flexible working legislation that the Minister, to be fair to her, has pushed through and championed in government. They slightly contradict that aspect of employment.

There is a detriment to business as well. That is why I cannot see why business wants to use zero-hours contracts, particularly in some of the areas that have been spoken about. There must be reputational damage to employers who use these contracts. There must be an inability to attract and to retain high-quality staff. There is undoubtedly a direct correlation between continuity and the quality of the services involved. Some hon. Members have spoken clearly about health and social care and how continuity and quality of services are significantly affected. A loss of training and skills development tends to accompany zero-hours contracts, particularly if people have to pay for their own training, which is a huge issue with these contracts.

There is an overarching ethos and ideology. The Government have a one-track mind on this issue. They look at regulation and employment law as a burden on business. We have seen that with the Beecroft report. I am delighted that my hon. Friend the Member for Wansbeck used the phrase “Beecroft by the back door”—we have copyrighted that now. This is Beecroft by the back door. There are all these ideological moves, in terms of the legislative programme that the Government are pushing through at the moment, that are simply an attack on workers’ rights and the ability of people to earn a living. Their central argument about removing workers’ rights in order to encourage businesses to grow surely cannot be right. It flies in the face of the evidence. Let us say that we accept that the Government have created 750,000 private sector jobs in the past two years as a fact, whether it is challengeable or not. Those jobs have been created under the current framework of employment rights, so that flies in the face of what they are saying.

[Alison McGovern (Wirral South) (Lab)]

I apologise to fellow hon. Members for not being able to be here at the start of the debate. Does my hon. Friend agree that good regulation could protect employers who do not want to see this sort of practice? It could prevent a race to the bottom, which is what I think we are seeing in the care sector.

[Ian Murray]

That is a valuable intervention because that is what many employers are telling us and what many business organisations are saying: when we undermine workers’ rights, we are undermining as well the businesses that are looking after their staff. I ran my own business before coming into this place. Any business person—any person running a good business—gets up every morning of every day and wants to look after their staff; they know that their staff are their greatest asset. There is a danger here for the Government, and the hon. Member for North Norfolk (Norman Lamb), the Minister’s predecessor, said this quite clearly in a newspaper. Admittedly, it was six weeks before he got the job as the Minister responsible for employee relations, but he said that there was a real danger of undermining job security, which undermines consumer confidence, which sets us up in a spiral of economic decline.

Let me pick up some of the issues that my hon. Friend the Member for Sunderland Central raised. She referred to the disproportionate effect on women. Clearly, we have to look at that. The explosion in the number of zero-hours contracts has had a disproportionate effect on women, and that is probably because of some of the sectors in which we have seen this, such as the care sector and the hospitality sector. These are industries with high percentages of female employees. It is difficult to know whether it is a response to demand for flexible hours, better enabling female professionals to return to work after maternity leave, but it cannot be viewed as a positive trend at a time when equality in the work force is becoming more vital than ever. The Government have to consider whether what is happening is consistent with some of the other policies that I have mentioned in relation to flexible working.

There is also the issue of tax credits. The Government have been very clear about resolving some of the issues in relation to welfare. Their view was that the tax credits bill was too high, but the tax credits system was put in place to ensure that work paid, so again the reality flies in the face of some of the rhetoric and ideology. How exactly does the working tax credit issue interact with some of these zero-hours contracts? How often should HMRC update its system for someone who is on a zero-hours contract? Must they be on a zero-hours contract for a certain number of months? What happens when they get an injection of hours at the last minute? How is all that put together? There are also issues in relation to Jobcentre Plus. If someone is on a zero-hours contract and by law they are neither an employee nor a worker, are they actually in employment; can they claim jobseeker’s allowance? All those issues must be dealt with.

We have heard about the number of staff in this place who are on zero-hours contracts. A press release was issued this morning by my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan). He said that 155 staff in this place were on zero-hours contracts. There are a number of case studies. This issue does not just involve the hospitality or care sectors. Edinburgh university, in my own constituency, has recently done an analysis that shows that 47% of lecturers in the college of humanities and social science are on zero-hours contracts, so there is a real problem there. I know that the University and College Union is taking it up with the university of Edinburgh.

Many hon. Members have spoken about the NHS, so I will not cause delay by making further comments on that, but may I turn to the Government’s recently announced review of zero-hours contracts? The announcement that the Secretary of State and the Minister were to look at this issue was very much welcomed. We must congratulate the Minister on at least going that far, but we need to know whether the Government will issue a call for evidence. Many trade unions have done so much work on this issue. My hon. Friend the Member for Corby (Andy Sawford) mentioned USDAW. It has done a tremendous amount of work on pushing this issue forward. The Government really have to issue a call for evidence. I believe that their review involves only three officials in the Department for Business, Innovation and Skills, so it would be good to issue a call for evidence.

Will the review consider the issues in relation to tax credits? Will it consider specifically the interaction of zero-hours contracts with young people and women in particular? The Minister may not be aware, but there was unanimous agreement from panellists at the Work Foundation’s recent conference on this topic that the review, in its current form, was too lightweight and would not provide the Government with the hard data that they needed to reform the system. I would be interested to hear the Minister’s response.

You have heard from Labour Members, Ms Dorries, the real concerns about zero-hours contracts and the impacts that they have on family life, on income and on people’s ability to plan their daily lives. This is simply an issue of fairness. It cannot be right to demand that someone travels to their place of work and then tell them that they do not have any work. I will be very interested to see whether the Minister will put together a body of work that looks at the mutuality of obligation and whether this is a case in which someone is not an employee, a worker or self-employed and therefore is deemed to be unemployed.

15:47

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a pleasure to serve under your chairmanship, Ms Dorries, and to respond to what has been a lively and good debate. I congratulate the hon. Member for Sunderland Central (Julie Elliott) not only on securing it, but on putting the arguments in a straightforward but well researched way. Over a period certainly of months and quite possibly longer, she has been a real campaigner for and champion of these issues. It is a credit to her that she has persevered in raising them. I very much welcome the time and effort that she has already put into this issue and her bringing it to the House today to give us all the opportunity to discuss it and highlight some of the problems.

The turnout reflects the concern that many people feel about this issue. I will discuss later how the Government are looking at it, but such a debate can be incredibly helpful to bring forward Members’ contributions, which of course can feed into that information that the Government are collecting from other sources.

In basic terms, of course we understand that zero-hours contracts can work well for some people, giving them flexibility in the hours that they work. Equally, we are well aware that they do not provide the certainty that many people feel that they need. Those people need to know what they are going to earn, so that they can manage their finances and, indeed, their lives. Hon. Members have given many examples this afternoon, and the Department has received a number of letters that reflect some of the concerns. Hon. Members will also be aware of the media commentary and stories, some of which have been quoted today as well.

It is important to be clear: zero-hours contracts will suit some individuals, but not everyone. A range of problems has been raised today, such as people accepting a job under such a contract when it did not suit them because they felt that they did not have a choice.

[Andy Sawford]

Will the Minister give way?

[Jo Swinson]

I will give way, but I am keen to make progress, so that I can respond to the points raised in the debate; I hope that hon. Members will let me.

[Andy Sawford]

I thank the hon. Lady for being generous in giving way. Zero-hours contracts are welcomed by some only because they afford flexibility; it is the flexibility they want, not the zero-hours contract. We ought to make that distinction.

[Jo Swinson]

I take the hon. Gentleman’s point, but for some people that flexibility is very much tied to the zero-hours contract, because they can work a significant number of hours some weeks and perhaps not at all other weeks. I shall give examples of people who that arrangement might suit. I appreciate that there are different ways to achieve flexibility, but zero-hours contracts are one such way, and if used properly, they do not need to be a problem. The hon. Member for Sunderland Central mentioned flexibility being a one-way street, which is a good way to put it. If there is only a one-way street, that suggests that the contract is not equal on both sides. Genuine two-way flexibility can work very well for employees and employers.

I was touching on some of the problems and areas where zero-hours contracts do not work well. Perhaps an individual took on such a contract but, because they had other work commitments, such as a part-time job or other responsibilities, had to turn down work fairly regularly, which leads to them not being offered work because they were seen as inflexible. That situation is a two-way street not working as a two-way street, which is not right. The hon. Member for Wigan (Lisa Nandy) raised the case of a lady who had been told that if she did not work a particular set of hours, she would not get work in future. The hon. Lady mentioned the rather horrendous suggestion that the lady had to leave her children in a car park, and my heart goes out to someone in that situation. That scenario—an implied threat hanging over someone, if they do not take on particular work—is not right. On a zero-hours contract, the employee should be genuinely free to turn down work.

As has been mentioned, people rely on income to prove that they can take out a mortgage, for example, or to prove that they are able to make regular rental payments to rent a flat, so zero-hours contracts can be problematic, if people cannot prove that regular income. For those reasons, officials in the Department for Business, Innovation and Skills are looking into such contracts, to gather further information over the summer to better understand how they work and the issues involved. It is important that we establish what the problems are before we change policy.

Lots of figures have been mentioned today, particularly on the recent sharp increase in zero-hours contracts since 2004. Those figures are accurate, but it is important for context to point out that zero-hours contracts are not new. Hon. Members have talked about them today as if they are an evil invention of the current Government, but they have been around for many years. According to the graphs from the 2000 labour force survey, the overall number of people and the percentage of the work force using such contracts was slightly higher in 2000 than for the same quarter in 2012. I know Hansard does not allow graphs, but the graph shows that the use of zero-hours contracts was high in 2000, gradually reduced towards 2004 and has risen since then, with a couple of blips along the way where the graph is slightly spiky. That is the pattern, so, although the recent increase has brought some problems into sharp relief, these contracts are not a recent issue.

The Labour Government looked at zero-hours contracts. Their White Paper said:

“The Government wishes to retain the flexibility these contracts offer business and believes that the National Minimum Wage and Working Time Directive will provide important basic protections against some of the potential abuses.”

Some of those abuses have been outlined today, and I will shortly come to the points raised, but it is important to challenge the assumption that such contracts are always a bad thing. They can be helpful if an individual and an employer genuinely want to come to an agreement about a contract. For students, who might not be able to commit to a fixed work pattern due to their timetables, zero-hours contracts may be helpful in giving them good work experience. They can also be useful for semi-retired people who want to work occasionally, but not on a fixed weekly basis. Zero-hours contracts are useful in some situations, but it is important that they are not abused.

The Government want to ensure that people on jobseeker’s allowance are in no way forced to apply for zero-hours contracts. I want to stress that that is not happening. It is not the case. There is no sanctioning of benefit if people do not apply for such jobs, because decision officers at the Department for Work and Pensions cannot mandate claimants to apply for them. If jobseekers wish to take one, they are free to apply, but the decision-maker guidance sets out clearly that

“if a claimant refuses or fails to apply for or accept employment that is for less than 24 hours a week, the claimant will have good cause”,

if that is the reason for not applying.

I shall turn to some specific points that Members raised. We will obviously work alongside the DWP in the Government review, to address the eligibility for support issues. Universal credit should make it easier for people to get Government support based on the number of hours they work, without, for example, the cliff edge of 16 hours, but we need to work closely with other Departments on that. The hon. Members for North Tyneside (Mrs Glindon) and for Sunderland Central and for Edinburgh South (Ian Murray) raised the impact of zero-hours contracts on women. Resolution Foundation research shows that the use of such contracts is fairly evenly distributed between men and women: women have about 53% of the contracts and men have 47%, so the figures are perhaps not quite as skewed as suggested.

[Alison McGovern]

Will the Minister give way?

[Jo Swinson]

I am sorry, but I want to respond to the points raised.

The hon. Member for Sunderland Central mentioned living life on call. If an employee is on call at their place of work, they should be paid; the legislation is clear. Some of the cases raised today are breaches of legislation. I will come on to the pay and work rights helpline. The provisions in the working time regulations on breaks proportionate to the time spent working give some protection to workers. Although lunch breaks are not paid in zero-hours contracts, that does not mean that people should not get time to take a break at work, and the working time regulations set that out clearly.

Care workers not being paid for the time spent travelling between houses was raised. If care workers have wages deducted for that time or have to pay for photographs, uniforms and so on, they might be working for less than the minimum wage, particularly if they are not on a high wage. It obviously depends on the case. Employers of people who are very well paid may not be in breach of national minimum wage guidance and legislation, but where employers are in breach, I urge people to contact the pay and work rights helpline on 0800 917 2368 or search for “pay and work rights helpline” online. HMRC can enforce the legislation, and it takes breaches of national minimum wage guidance and legislation seriously. It is important that such cases are reported, because employers need to be taken to task if they are exploiting workers.

Four out of five people on zero-hours contracts are not looking for another job, which suggests that not everyone on such contracts is unhappy. There are clearly cases where that is the case, but the figures suggest that it is not true that people are trapped on the contracts. They can terminate the contract in the usual way. I agree with the hon. Member for Wigan that employers who abuse zero-hours contracts are likely to be poor employers, but “employers who abuse” is not the same as employers who use zero-hours contracts. There is a difference.

Various hon. Members mentioned a ban on zero-hours contracts. Although we need to look at the evidence, there are immediate challenges to that proposal. The hon. Member for Wigan mentioned small-hours contracts. If we ban zero-hours contracts, what would be the minimum—one hour, two hours, four hours, eight hours? If someone genuinely wanted to work for a small number of hours, should we stop them from being able to do so? When we look at the suggestion, it begins to unravel. It is useful to look at international examples, and the hon. Member for Corby (Andy Sawford) cited some.

Business, Innovation and Skills officials are speaking to a variety of stakeholders, including industry bodies that represent sectors where such contracts are used and trade unions, which, as was mentioned, have a lot of information, to examine the extent of the use and the abuse of zero-hours contracts. We will work with other Departments. There is no call for evidence at this stage, but we do not rule it out for the future. Research shows that doing our homework before issuing a call for evidence is useful. I welcome the interest the debate has sparked, and I am sure that we will return to the topic when we have the further information from the BIS fact-finding review.

HMS Concord (Yangtze River Incident)

Tuesday 9th July 2013 Westminster Hall

15:59

[Graeme Morrice (Livingston) (Lab)]

It is a pleasure, as always, to serve under your chairmanship, Ms Dorries. I am delighted to have secured this debate on what is an important topic to many people, and I hope that during the short time available we can provide some insight into the truth that the past 64 years have failed to reveal.

I would like to take right hon. and hon. Members back in time to 1949, to the Yangtze river of China during the Chinese civil war, and an historic event that has taken on the name “the Yangtze incident.” The event happened at a time when Great Britain was at peace, but it took us to the brink of a third world war. Much has been written about the incident, including a book that was made into a film, with Richard Todd in the starring role. Neither the book nor the film, however, comes anywhere near the truth of the story that is yet to be told.

This is not a story about one ship, the Royal Navy frigate HMS Amethyst, and her daring escape after three months’ incarceration by communist forces on the Yangtze river. It is the untold story of HMS Concord, a C-class destroyer that Commander-in-Chief, Far East Station, Admiral Sir E. J. Patrick Brind deployed into China’s Yangtze river as part of his endeavour to bring about the escape of HMS Amethyst.

I will first explain the position with regard to the civil war in China. Government policy at the time was governed by the Moscow declaration of December 1945, in which the United Kingdom, the United States and the Soviet Union declared a policy of non-intervention in China’s internal affairs. The known facts are that China was split into two warring parties, the Communist People’s Liberation Army, led by Mao Tse-tung, and the nationalist army, under the Kuomintang. As the Chinese civil war raged on, the communists began to make headway on the shores of the Yangtze river near the city of Nanking, and warned that any foreign ships in the river would be attacked. Right hon. and hon. Members might wonder what the importance of that is, and the answer is simple: it endorses the fact that the Yangtze river was a known war zone.

I said at the outset that I would like to take us back in time. The date was 20 April 1949. A British warship, HMS Concord, was stationed at Nanking, to act as guard ship to the British embassy and to evacuate staff and other British nationals if necessary. She had been there for some time, and her relief was long overdue and her stores depleted. The relief ship was His Majesty’s Australian Ship, Shoalhaven, which was at Shanghai and should have relieved HMS Concord on 16 April. The relief did not take place; the Shoalhaven was stood down.

HMS Amethyst, en route to Nanking up the river Yangtze to relieve the guard ship HMS Concord, came under heavy fire from the north bank. At nearby Rose island she ran aground, was severely damaged and suffered heavy casualties, with more than 50 members of the crew killed, dying or seriously injured. The captain was mortally wounded and the first lieutenant, though wounded, took command. The communists continued to fire at Amethyst and, to save further loss of life, about 60 lightly wounded and uninjured crew members were evacuated ashore, but further evacuation stopped when those in the water came under fire. Those put ashore eventually arrived in Shanghai and were treated in hospital.

At this juncture, it should also be remembered that before all of that two other ships, the frigate HMS Black Swan and the cruiser HMS London, were involved, along with HMS Concord, in an attempt to assist Amethyst’s escape. Due to the narrowness of the Yangtze river, none of the ships was able to manoeuvre and they were, in effect, sitting ducks for the communist field guns. All three ships suffered heavy damage and casualties in the attempts, and it was decided that to proceed further would be disastrous for them and their crews. The order was given to return to Shanghai.

On 21 April, HMS Amethyst was refloated, and on 22 April Lieutenant Commander Kerans arrived on board from Nanking, where he was assistant naval attaché, and took command. Amethyst remained incarcerated for 100 days, and the fact that HMS Concord entered the Yangtze to aid Amethyst in the aftermath of her escape has been denied. The involvement of HMS Concord was hidden or deleted from any public or official record.

[Caroline Dinenage (Gosport) (Con)]

I thank the hon. Gentleman for securing this important debate. One of my constituents is a veteran sailor from HMS Concord, and his concern has always been that the Ministry of Defence denied that the ship was ever in the Yangtze. Does the hon. Gentleman agree that Sir John Holmes’s medal review, which acknowledges that the presence of HMS Concord is now no longer in doubt, goes some way towards proving that my constituent and other such gentlemen have, for many years, been right?

[Graeme Morrice]

Yes, indeed. I accept that point, and I am grateful to the hon. Lady for her intervention. I know that she has a personal interest in the matter, particularly regarding the award of medals, and I will touch later on the Sir John Holmes review.

Concord’s logbook was removed, and without evidence to the contrary nothing could be proven, until now. Despite efforts to prevent the truth from emerging, personal accounts of HMS Concord’s part in the events, given by my constituent Mr William Leitch of Livingston and members of the HMS Concord Association, provide an overwhelming insight into the risks that Concord was subjected to when ordered into the Yangtze river. Mr Leitch has been in touch with me on the issue over the three years since I was elected to Parliament, and he is delighted that I am able to have this Adjournment debate. He will no doubt be watching live on the internet.

What follows has always been denied by the Government, the Foreign Office and the Admiralty. When it was obvious that negotiations for a safe passage downriver were leading nowhere, Lieutenant Commander Kerans informed Admiral Brind in a coded signal that he planned to break out that evening. Admiral Brind, without reference to the Admiralty or the Foreign Office, signalled to HMS Concord, which was patrolling in the South China sea, to proceed upriver to meet Amethyst and, should the Woosung forts open fire, Concord was to return fire in support of Amethyst. When Amethyst made her escape on the night of 30 July 1949, one other ship, the destroyer HMS Concord, entered the Chinese territorial waters of the Yangtze to escort and cover the ship past the massive guns of the Woosung forts, which were the last obstacle before reaching the open South China sea.

The duty quartermaster was ordered to go around the ship and tell everyone, by word of mouth—not piping it over the tannoy as the sound would carry over the water and could alert the enemy—that the ship would up anchor and proceed upriver. The Concord was challenged by a nationalist gunboat and ordered not to travel any further. Stopping until the nationalist ship had left the vicinity, the Concord then sailed past the heavily armed Woosung forts to meet Amethyst. At the forts, Concord, on sighting Amethyst, sent the signal, “Fancy meeting you here”, to which Amethyst replied,

“Never, repeat never, has a ship been more welcome.”

Lieutenant Commander Kerans then signalled Admiral Brind, with a copy to the Admiralty:

“South of Woosung… Have rejoined the fleet… No damage or casualties… God save the King.”

Having passed the Woosung forts without their opening fire, the Concord, still in the Yangtze river, transferred supplies and 147 tons of fuel to the Amethyst, which had only 7 tons left. Both ships made it into the neutral waters of the South China sea and set course for the British province of Hong Kong.

The Concord was soon met by HMS Cossack, whose captain boarded the ship, removed its log book and took with him any evidence of the Concord’s involvement. The move to expunge any mention of its involvement with Amethyst was in motion. Admiral Brind went public and informed the news media that he had decided to authorise and endeavour, despite the risk, to bring about HMS Amethyst’s escape from China’s Yangtze river.

Hon. Members may wonder why there was so much concern to hide the fact that Concord had dashed up the Yangtze to assist Amethyst. The answer is simple: to prevent an international incident when cold war tensions were high. Had the Communists been aware that Concord had gone to the aid of Amethyst and entered Chinese territorial waters, the political consequences might have been catastrophic. Admiral Brind going public on what amounted to a covert mission that he had authorised would obviously upset the diplomatic apple cart.

After Concord and Amethyst had cleared the Yangtze river into the open sea, Sir Ralph Stevenson, the British ambassador in Nanking, sent a telegram to the Foreign Office, with copies to the commander-in-chief Far East station and the Singapore, Hong Kong, Shanghai and Canton embassies. He stated:

“No repeat no publicity should be given to the fact that H. M. Ship Concord entered Chinese territorial waters… It might help to lessen the possible repercussions upon British communities in Communist occupied territory if public statements could stress that the escape of H. M. Ship Amethyst was due to the initiative of the officer in command in accordance with the best traditions of a sailor responsible for the safety of his ship and the welfare of the ship’s company and that his intention to do so was not revealed to any of us out here.”

In other words, “If the balloon goes up and politically everything goes pear-shaped, we blame Lieutenant Commander Kerans and hang him out to dry.”

That telegram removed any official mention of the Concord’s involvement in the Yangtze incident. The move to expunge any mention of Concord’s involvement with Amethyst was going full speed ahead. Although Admiral Brind had ordered Concord to enter the Yangtze and escort Amethyst past the Woosung forts, he had no alternative but to comply with Ambassador Stevenson’s instructions. Consequently, a press release was issued and this report appeared in the Evening News on Saturday 6 August 1949:

“A Navy spokesman stated that the destroyer Concord had been waiting at the mouth of the Yangtze and was prepared to go up river to the aid of the Amethyst if needed”.

It is clear from the evidence that on the date and at the time that Admiral Brind gave the order, he committed HMS Concord and the ship’s company to a situation in which the risk to life and limb exerted by enemy forces was significantly above what UK armed services personnel might routinely be expected to tolerate. In recognition of the action, the officers and ship’s company of HMS Amethyst, together with those who served on three other Royal Navy ships that took part in the early stages of the incident, were awarded the Yangtze 1949 clasp to the Naval General Service Medal 1915.

I am concerned that that aspect of the incident is being sidelined. The committee responsible for compiling the 1949 Yangtze campaign awards scheme—the Sir John Holmes review—was not invited to look into HMS Concord’s role in the incident covering the dates from 28 to 31 July 1949. In other words, officially Concord was not there. I hope that hon. Members will appreciate how frustrating that is. The Minister should understand the strength of feeling behind the Concord veterans’ claim that they should be eligible for the NGSM Yangtze 1949 clasp.

The unrecognised heroes of the Yangtze incident—victims of Government skulduggery—are not claiming heroism or bravery; they simply believe that some official recognition should be instituted. Today, a large question mark hangs over the Yangtze incident. I fear that it appears to have been a cover-up that may be ongoing to this day. Indeed, this debate may already have some people cringing in high office within the Government and the Admiralty.

To sum up, for 64 years the true story of HMS Amethyst’s dramatic escape from China’s Yangtze river has been suppressed. The House may now wish to have a full account of the circumstances in which His Majesty’s ships were fired on in the Yangtze river with grievous casualties and damage. I urge the Government to abandon diplomatic caution and investigate the circumstances in the process of awarding medals to those involved in the Yangtze campaign and, in particular, investigate whether the process was corrupted by the exclusion of relevant and important documents relating to the role of HMS Concord in the Yangtze campaign on 30 and 31 July 1949.

I look forward to hearing what the Minister has to offer and, perhaps more importantly, to whether he can confirm that the Government will conduct a review with due diligence and propriety. The House deserves to be told the truth and given an accurate account of HMS Concord’s role in the 1949 Yangtze incident.

16:16

Sitting suspended for Divisions in the House.

16:38

On resuming—

[The Minister of State, Ministry of Defence (Mr Mark Francois)]

It is a pleasure to serve under your chairmanship this afternoon, Ms Dorries.

I congratulate the hon. Member for Livingston (Graeme Morrice) on securing this Adjournment debate, and I thank him for providing me with an opportunity to speak on this matter. I will try to make the Government’s position clear.

I will begin by speaking briefly about the Yangtze incident, drawing on the official accounts from the time. On 20 April 1949, HMS Amethyst was sailing up the river Yangtze to relieve HMS Consort, which was stationed at Nanking as the guard ship for the British embassy during the Chinese civil war. While en route, HMS Amethyst came under fire from a communist gun battery. Amethyst returned fire, but shells hit the wheelhouse and the bridge, killing or injuring everyone except the Yeoman of Signals. The commanding officer, Lieutenant Commander Skinner, was mortally wounded and later died ashore. The damage to the wheelhouse had jammed the steering gear and the ship ran aground. Unfortunately, the doctor and a sick berth attendant were also killed when the quarterdeck was hit. HMS Amethyst continued to return fire with the only one of her three twin-mounted guns that could be brought to bear on the battery.

On receipt of Amethyst’s signal that she was aground and under fire, HMS Consort sailed from Nanking and reached the Amethyst at 1500 hours. Consort also came under fire and sustained casualties. Consort’s captain decided that it would be impossible to take Amethyst in tow, and Consort continued down the Yangtze.

On 21 April, HMS London and HMS Black Swan were ordered up the Yangtze to aid Amethyst. Both ships came under fire at point blank range: London was repeatedly hit and holed in her superstructure and bridge. The Chinese pilot was killed, the navigating officer mortally wounded, bridge communications were cut, five fires were started and numerous casualties were sustained. The ships were ordered back down the river. On her way down, London’s fire on the Communists was effective but she was fired at again and suffered more casualties.

On the evening of 21 April, a Royal Air Force Sunderland flying boat alighted near the Amethyst and succeeded in transferring an RAF medical officer and medical supplies, before being forced by gunfire to take off again. Around the same time, the British naval attaché, Lieutenant Commander Kerans, took command of the Amethyst and started negotiations with the Communist authorities.

During these initial two days, the Royal Navy suffered three officers and 42 ratings killed, and seven officers and 104 ratings wounded. Amethyst remained under the guns of the People’s Liberation Army for 10 weeks, with vital supplies being withheld from the ship.

In late July, Lieutenant Commander Kerans decided to break Amethyst out of the location where she had been since 20 April and to regain the open sea. On the evening of 30/31 July, taking the opportunity of a dark night and a favourable tide, the ship slipped anchor and, following the passenger ship Kiang Ling Liberation, sailed down river. The shore batteries opened fire once again. HMS Concord was ordered up the river to provide assistance and, if necessary, fire support.

Concord’s ship’s log for July 1949, which is available at the National Archives at Kew—I have a copy with me this afternoon—shows that on the evening of 30 July she was at 10 minutes’ notice for steam, later reduced to two hours’ notice. At 0145 hours on the morning of 31 July, she moved to a position ready to proceed up the river and at 0345 hours she weighed anchor and proceeded into the river. After sailing 57 nautical miles, she sighted Amethyst at 0525 hours. Concord turned round and provided escort as the two ships passed down river. This manoeuvre was successful and from the time Concord sighted Amethyst there was no enemy action and both ships returned safely. As her log records show, Concord stood down from action stations at 0715 hours, and at just after midday the main engines were switched off. As the hon. Gentleman rightly reminded us, at the mouth of the river, Lieutenant Commander Kerans sent the following signal from Amethyst:

“Have rejoined the fleet south of Woosung, no damage or casualties. God Save The King.”

A number of veterans of the Yangtze incident have been campaigning for several years for an independent review of the policy and for the award of the Naval General Service Medal with clasp Yangtze 1949 to HMS Concord’s ship’s company. The hon. Gentleman is a strong and vocal supporter of those veterans, as demonstrated by today’s proceedings, and a while ago he wrote to my predecessor about this subject on behalf of one of his constituents.

For many years, the policy of successive Administrations was that no consideration would be given to reviewing the qualifying criteria for existing medals more than five years after the events these awards were instituted to recognise. That general policy remains in place, but given the strong feelings of veterans from a number of campaigns regarding several medallic issues, the Prime Minister asked Sir John Holmes, a retired and respected senior diplomat, to conduct an independent, comprehensive military medals review. He was supported in this by Brigadier Brian Parritt CBE, retired. One element of Sir John’s work was a specific review of the eligibility of HMS Concord’s ship’s company for the Yangtze clasp, and what I say now draws heavily on his conclusions.

It is clear from contemporary documents that the Naval General Service Medal with Yangtze clasp was awarded for

“specified service and the exceptionally trying and dangerous conditions in which their duty was carried out by the Amethyst, Consort, London and Black Swan and those members of the Army and Royal Air Force who were involved in the short period 20 April to 22 April 1949”.

In considering this matter, the Holmes review accepted that HMS Concord did enter the Yangtze on 31 July 1949, as my hon. Friend the Member for Gosport (Caroline Dinenage) and the hon. Gentleman said. For the avoidance of all doubt, I am happy to place that on the record this afternoon. While there, Concord met HMS Amethyst and escorted her out of the estuary. It is, of course, recognised that there was a degree of risk involved in this, given the shore batteries in particular. However, the ship’s log makes it clear that HMS Concord was not fired upon at any point.

[Graeme Morrice]

Is it not officially recorded that the river was also mined and therefore that there was substantial risk to all vessels on the river?

[Mr Francois]

I am not denying that there was an element of risk involved in this, but it is nevertheless a matter of record that the other ships involved in the action were fired on by the Chinese shore batteries, and also a matter of record that Concord was not.

The independent Holmes review concluded that those making the decision in 1949 regarding eligibility for the medal would have been aware of Concord’s actions, but did not consider these sufficient in themselves to justify a recommendation of an award of the clasp to the ship’s company. If there was a wish to include Concord in the specified list, there was ample time to do so in August, October and November 1949, when the Committee on the Grant of Honours, Decorations and Medals reviewed the qualifying criteria for the medal.

The Holmes review considered the award of the clasp to HMS Concord’s ship’s company thoroughly and concluded that there was insufficient evidence to show that the omission of the ship as a qualifying unit for the clasp was wrong or unreasonable, and that there was no new reason to overturn the original decision. Consequently, the review upheld the original position taken at the time. The review also concluded that there was no evidence to support claims that the ship’s company was overlooked deliberately, for diplomatic or political reasons. The findings have since been endorsed by the Honours and Decorations Committee, in late 2012, and Sir John wrote to Mr Peter Lee-Hale, the chairman of the HMS Concord Association, in January this year, setting out the reasons for his conclusions.

I am advised that for many years the men of HMS Concord wanted this position reviewed again by an independent authority—someone independent of the Ministry of Defence. The Holmes review has now taken place. It was an independent review that went back to the original documents at the time. As a result, I am reassured that this matter has now been subject to a comprehensive and thorough review by impartial authorities and, although I recognise the depth of feeling about this matter, well expressed by the hon. Gentleman, and fully acknowledge the efforts of the ship’s company, I can only reiterate that there are no plans, I am afraid, to reconsider the qualifying criteria for this medal.

I entirely accept that the hon. Gentleman is acting in good conscience, as are all those who advocate a change. I therefore recognise that the Government’s position, which I have re-stated today, will no doubt be disappointing for the veterans of HMS Concord and their families. However, the actions of Concord’s crew in 1949 have been brought to the public’s attention through the coverage of their long campaign for additional recognition. This debate will place another entry in the parliamentary record.

In conclusion, I wish to take this opportunity to once again pay tribute to HMS Concord’s contribution to the defence of our nation and to her crew, whose actions were fully in line with the proud traditions of the Royal Navy.

Complex Regional Pain Syndrome

Tuesday 9th July 2013 Westminster Hall

16:49

[Iain Stewart (Milton Keynes South) (Con)]

It is always a pleasure to serve under your chairmanship, Ms Dorries. I am grateful for the opportunity to highlight how regional sympathetic dystrophy, now known as complex regional pain syndrome, affects those who suffer from it and to press for more research into the condition, so that a greater number of people may be properly diagnosed and treated. If Members forgive me, I will use the acronym CRPS throughout the debate for brevity and ease of description.

The earliest descriptions of CRPS apparently date back to the American civil war, but I became aware of it only through my constituent, Kevin Scardifield, who suffers from the condition. He contacted me because his experience of CRPS and the quality of care that he received led him to believe that there is neither an adequate understanding of the condition by NHS clinicians, nor good-quality care for sufferers such as him on the NHS.

Before I proceed, it might be helpful if I explain CRPS and its symptoms. The NHS Choices website describes CRPS as

“a poorly understood condition in which a person develops a persistent (chronic) burning pain in one of their limbs.”

It continues:

“The pain usually develops after an injury—which in most cases is a minor injury—but the pain experienced is out of all proportion to what you would normally expect.”

It is through an injury that my constituent developed the condition in 2009. He was undergoing carpal tunnel release surgery when the local anaesthetic failed to work and he broke his hand against the clamp when he jerked so hard because of the pain.

To give a full account of the symptoms experienced by sufferers of CRPS, I will quote directly from a letter that Mr Scardifield sent to me:

“The pain of this condition is so great that there are recorded cases of sufferers self-amputating in a desperate attempt to escape the excruciating agony. Others have had their circulation so badly damaged that they have developed gangrene and have had to have amputations to save their lives. In either case it has caused the condition to spread further into their bodies.

According to the…McGill Pain Index, it is the world’s most painful incurable condition; it is almost impossible for us to understand exactly how painful that is. Try and imagine a 3 bar electric fire with a metal grill—how long do you think you could hold your hand against the grill with one bar on? Now try and imagine that fire is inside your hand, one bar is a good day for a sufferer, three bars is a bad day and there is no off switch.

Try and imagine a pain so great and a grip so weak that you cannot pull open a packet of crisps yourself, a sneeze that turns into a scream of agony. Knowing that you will never be able to pick up and hold or play with your newly born child or grandchild because one hand is useless and they could cause your condition to spread or start somewhere new.”

My constituent recounts that his injury was missed, not only by the surgeon in subsequent visits but by the hand therapists in approximately 50 visits. Eventually, he was diagnosed as having CRPS following a referral to the hand therapy unit of Milton Keynes hospital.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to the House for consideration. I have a great many constituents who have the problem, which concerns me. Does he believe there is now a greater need for doctors to be trained to tell the difference between fibromyalgia, which some people think CRPS is, and the actual disease itself? If so, does he think the NHS should initiate training among doctors and surgeons to ensure that that happens? Should there be more research on how the pain starts and where it comes from?

[Iain Stewart]

I have much sympathy with what the hon. Gentleman says, and if he bears with me, I will address training and research funding a little later.

The NHS Choices website sets out the quality of care and treatment that CRPS sufferers should receive due to the complex nature of the condition. My constituent should have been provided with a care team comprising a physiotherapist, an occupational therapist, a neurologist, a psychologist, a social worker and a pain relief specialist. He informed me that he has not received such care, as most health professionals whom he has encountered do not even know the condition’s acronym.

That leads me to my principal argument. If NHS clinicians do not sufficiently understand the condition, how will they be able to diagnose it properly and ensure that patients are adequately treated and cared for? The NHS Choices website says that it is hard to estimate exactly how common CRPS is because many cases go undiagnosed or misdiagnosed. I think the hon. Gentleman was referring to that point.

My constituent contends that possibly 250,000 people in England have not been properly diagnosed. He is understandably impassioned about the issue and has been carrying out his own research using American sources—it appears more research is being conducted into the condition in America.

From my own research, I learned from one study that as many as one in 3,800 people in England may be affected by CRPS. Therefore, going by the 2011 census estimates, 14,000 people could either have been misdiagnosed or remain undiagnosed. Although that might appear to be a small number by comparison with my constituent’s estimate, it does not diminish the issue’s importance.

The core principles of the NHS state that good health care should meet the needs of everyone and should be based on clinical need. Kevin Scardifield is unable to do the everyday things that other people take for granted. He was a police officer before the onset of the condition—a profession he greatly loved but had to give up. So debilitating is the condition that, by the middle of last year, he had been able to leave the house only six times, which was just for a few yards to the GP.

I am sure that Members can appreciate why this is such an important issue and why Kevin Scardifield has been campaigning hard for proper diagnosis and treatment. Since he made me aware of the condition, I have made a number of representations to the Department of Health, the local hospital, the primary care trust—now the clinical commissioning groups—and even the Department for Work and Pensions.

I am grateful to the Minister and his predecessor, the right hon. Member for Sutton and Cheam (Paul Burstow), for their replies to my constituent’s concerns when I brought them to their attention. Had my constituent felt that his concerns had been fully addressed, however, we would not be having this debate, so if the Minister will forgive me, I will raise a number of specific issues. First, as I have mentioned, people are either being misdiagnosed or remain undiagnosed because NHS clinicians do not appear to have sufficient awareness of the condition.

[Stuart Andrew (Pudsey) (Con)]

I congratulate my hon. Friend on raising the issue. Although I take an interest in health issues, CRPS is new to my attention. Only today, I was contacted by a lady from Leeds who is a sufferer, and listening to her story was very harrowing. Is my hon. Friend surprised, as I am, that there is only one specialist centre in the UK? That centre is in Bath, which is a long way from many places. If CRPS is diagnosed early, there is a high chance of it going into remission, which would be great for the NHS and, more importantly, for the patients involved.

[Iain Stewart]

My hon. Friend makes an important point, and I suspect that if we spoke to all our colleagues we would find that they, too, have been contacted by constituents with this condition. One of the points that I will make in a few moments is on the need for greater research and specialist services, so that the types of benefit that he rightly describes can be identified and delivered.

Secondly, the number of people diagnosed with the condition is unknown. Indeed, the Department of Health has informed me that it does not hold such records. My constituent informs me that, in 2010, he was told by NHS Direct that just over 11,000 people had been diagnosed in the United Kingdom. In 2012, he came across some information in the CRPS guidelines prepared by the Royal College of Physicians that quoted research suggesting a higher incidence of CRPS in Europe. On the back of that, he again contacted NHS Direct, and this time he was informed that it had been ordered to stop keeping records and to delete existing ones, as that responsibility would be undertaken by the Office for National Statistics. The ONS, however, replied that no such responsibility had been passed to it. Will the Minister clarify that issue and assure me that there is a strategy in place adequately to capture the number of people being diagnosed with CRPS? Will he also look into claims that specialists are failing to highlight the seriousness of the condition, particularly its potentially degenerative nature?

Thirdly, there does not seem to be an agreed pathway within the NHS for the treatment and care of those diagnosed with the condition. If there is, it was not reflected in the care that my constituent received. Will the Minister ensure that all NHS trusts and clinical commissioning groups follow the guidelines?

Fourthly, compared with the United States and other European countries, we are not doing enough to research the condition with a view to finding a cure and ensuring an improved quality of life for CRPS sufferers. While preparing for this debate, I observed that there was more information on the condition on US-based websites than on UK-based ones. I have also been unable to find UK charities or support groups for CRPS. Everyone can be proud of the fact that since the start of modern clinical trials, 39,179 trials have been made or are in progress to find a cure for cancer. The UK has carried out about 2,299 of them. The UK Charity Commission has 976 cancer charities on record, and the NHS spent more than £375 million between 2008 and 2012 on researching a cure for cancer. Clearly, that is a wonderful amount of research, but during the same period, only 76 trials on CRPS have been conducted worldwide. Holland, with a population of just over 16.5 million, has carried out three trials, and Switzerland, with a population of 8 million, has carried out two. The UK has a population of more than 60 million, yet I have been unable to locate a record of our carrying out any trials.

In addition, the NHS does not appear to have invested much in researching CRPS. I understand that one project was carried out last year in Bath, to which my hon. Friend the Member for Pudsey (Stuart Andrew) referred, but it was not aimed specifically at finding a cure, and it was funded by an American charity. Will the Minister look into funding for more UK research into the condition? Specifically, will he consider my constituent’s suggestion that a post be created within the Department of Health for a CRPS officer to liaise with specialist clinics around the world to collect, collate and disseminate papers and studies on the condition? My constituent explains that it would prove useful, as it was not until 19 years after the US first stated that guanethidine blocks were ineffective on RSD sufferers that our own specialists came to the same conclusion.

I hope that the Minister will address those matters when he replies, and I hope that this debate will help draw attention to this important issue, so that more people are properly diagnosed and adequately treated. I also hope that I have been able to do justice to the needs of sufferers such as my constituent. May I suggest that the Minister find time at some point in future to meet them, so that he can properly understand the sheer pain and agony that they face?

17:03

[The Minister of State, Department of Health (Norman Lamb)]

I congratulate my hon. Friend the Member for Milton Keynes South (Iain Stewart) on securing this debate on an issue of intense importance to people who suffer from complex regional pain syndrome. The condition can be debilitating, with a devastating effect on sufferers and their families. I know that there are those, including my hon. Friend’s constituent, who campaign tirelessly to raise awareness of the condition. The description that he gave of what people go through—attempts at self-amputation, for example—are unimaginable.

I pay tribute to Mr Scardifield for his persistent campaigning to raise awareness. It is highly laudable that he has chosen to campaign and maintain the pressure for increased understanding. The experience that my hon. Friend described—the diagnosis was missed by several clinicians, and there was no proper care team or personal care plan—is of concern. I am grateful to him for alerting me to the extent of the challenge faced by his constituent. One great benefit of Adjournment debates such as this is that they ensure that Ministers and officials focus on a particular condition that might not otherwise get the attention it needs. I am grateful for this opportunity. I hope that this debate will prove informative for those here who wish to learn more about the condition and be helpful to those affected, as I say more about the help and support that ought to be available for CRPS sufferers and the research into the condition that is currently under way.

Although it has been recognised as a medical condition for more than 100 years, diagnosing CRPS at its earliest stages remains a problem, as my hon. Friend rightly said, because it is often misdiagnosed or completely undiagnosed. The explanation is threefold. First, CRPS is relatively uncommon and patients do not routinely present to GPs with it. When the Department looked at the representations that we have received on the subject over the last few years, the number of individuals who have approached us is small. The fact that the condition is relatively uncommon and that GPs do not come across it that often creates a problem in terms of their capacity to diagnose it accurately.

Secondly, the range of symptoms associated with CRPS are shared with a number of other, more common conditions, so that when patients do present, they may not be correctly diagnosed in the first instance. Thirdly, there is no single diagnostic test that accurately identifies the condition; a diagnosis is made primarily by excluding other conditions with shared symptoms that can be accurately diagnosed. Those difficulties also mean that there are no reliable figures for the number of people living with the condition, and estimates produced by researchers and clinicians vary considerably, as my hon. Friend said in his speech.

I understand his concerns about having a clear picture of the number of people affected by CRPS. I will approach NHS England to ask whether there is any scope to improve our understanding of how many people are diagnosed with the condition. Ultimately, I think that we can all agree that a better understanding of the extent of the condition and the numbers affected would be a considerable advantage. Let us explore whether it is possible to achieve greater accuracy.

As my hon. Friend may be aware, since 1 April 2013, NHS England has been responsible for delivering improved outcomes for people with long-term conditions such as CRPS.

[Jim Shannon]

On the subject of statistics and information, does the Minister intend to make contact with the regional Administrations, whether in the Northern Ireland Assembly, the Scottish Parliament or the Welsh Assembly, to ensure that all the information comes together so we can galvanise action and respond better?

[Norman Lamb]

I will certainly explore the possibility of understanding how much information is available to the devolved Administrations to increase our understanding of the prevalence of the condition. They may be in exactly the same position as England, where our understanding of the prevalence is ultimately still limited, but let us explore that further.

NHS England draws on a wide range of clinical advice when developing commissioning policies and statements. It has a specialised pain clinical reference group to provide expert clinical advice on pain issues. I will therefore put forward my hon. Friend’s concerns about the need for CRPS expertise.

Turning to the identification of CRPS, an increasing range of guidance is available to improve awareness of it among members of the public and health professionals to support early diagnosis. NHS Choices, to which my hon. Friend referred, provides comprehensive advice on the causes, symptoms and treatment of the disease. More detailed clinical guidance is provided via the NHS Evidence website.

In May last year, the Royal College of Physicians published a guideline for clinicians on CRPS, setting out best practice on the identification and management of the disease. The guidance was developed with the involvement and endorsement of 21 key organisations involved in the care of people with CRPS, including the Royal College of General Practitioners, the British Orthopaedic Association, the British Pain Society, the British Society of Rehabilitation Medicine and the British Society for Rheumatology, to name but a few. I am confident that that collaborative guidance will prove useful in supporting clinicians to identify and treat patients with CRPS more effectively. When such guidance, produced by clinicians, is developed, one does not achieve a sea change in understanding overnight. It takes time to get the message across, in particular throughout the whole of primary care. The production of the guidance, however, is the starting point, and it will aid clinicians in diagnosing and treating appropriately.

Once a patient has been diagnosed with CRPS, a range of treatment options is available. Unfortunately, there is no cure for the condition, but many patients with pain disorders can be managed through routine primary and secondary care once they are appropriately diagnosed. For patients with CRPS, treatment can involve: physiotherapy; occupational therapy; a neurologist to examine the effect on the nervous system; sometimes a psychologist, who may be appropriate, because of the psychological problems caused by living with CRPS, as well as with a host of physical health conditions; a social worker for advice about what extra help and services are available; and a doctor or other health care professional trained in pain relief, which is critical.

NHS England is aware that more needs to be done to identify those patients with the most severe and complex chronic pain who need access to nationally commissioned specialised services. NHS England’s specialised pain clinical reference group is working with the royal colleges and the British Pain Society’s guidelines to ensure that the needs of those patients are appropriately met.

I am aware that the absence of clinical guidance from the National Institute for Health and Care Excellence is a real concern of patients with CRPS. I am advised, however, that NICE is consulting on a short clinical guideline on the pharmacological management of neuropathic pain, including CRPS. The draft guidance, setting out recommendations for further research, highlights the need for more research into CRPS. Final guidance is expected for publication shortly, in October of this year. In addition, a quality standard topic on pain management in young people and adults has also been referred to NICE for development. Quality standards are a concise set of statements designed to drive and measure priority quality improvements within a particular area of care; they support commissioners to be confident that the services they are purchasing are high quality, cost-effective and focused on driving up quality.

My hon. Friend specifically raised research into CRPS. The Government are supporting a range of research projects into the condition, including a major trial of low-dose intravenous immunoglobulin treatment, funded via the Medical Research Council and costing more than £650,000. The investigators involved have previously treated patients with IVIG and reported encouraging results on pain relief in a pilot trial. IVIG may provide pain relief for patients for whom classical treatments are not satisfactorily effective. If IVIG treatment is proved effective, the trial may also stimulate research on the efficacy of IVIG in treating other chronic pain syndromes.

The National Institute for Health Research clinical research network is also supporting a multi-centre international study to define recovery and the priorities for recovery from the perspective of patients with CRPS. The NIHR welcomes high-quality funding applications for research into any aspect of human health, including CRPS, and judges them on an objective basis.

More generally, I reassure my hon. Friend of the Government’s commitment to improve outcomes for the 15 million-plus people in England who are living with a long-term condition, including those with CRPS. Through the mandate—the set of Government priorities for NHS England—we have asked NHS England to make measurable progress towards making the health service among the best in Europe at supporting people with ongoing health problems to live healthily and independently, with much better control over the care that they receive.

Through the NHS outcomes framework, we will monitor the performance of the NHS in supporting people with long-term conditions, such as CRPS, to live as normal a life as possible and to improve their quality of life. Improvements will be measured in three main areas: how well the NHS is performing in supporting people to look after themselves; how well a person is able to live as normal a life as possible; and how successfully the NHS manages long-term conditions by looking at unnecessary hospital admissions and excessive lengths of stay in hospital. The improvement areas are mirrored in the clinical commissioning group outcomes indicator set—apologies for the jargon—which will be used to hold CCGs to account for and to provide information for the public on both the quality of services and the health outcomes achieved through commissioning.

At service level, the new NHS improvement body, NHS Improving Quality, has made the development of evidence-based tools for the management of long-term conditions a key improvement programme for 2013-14. Interventions will involve care plans, care co-ordination, use of technology, risk stratification, self-care and, crucially, the role of carers. That work will be evaluated and best practice identified to help drive improvement in the management of long-term conditions such as CRPS in every local area.

I thank my hon. Friend once more for securing today’s debate. I very much hope that our discussion has been helpful to him and to his constituent. I am more than happy to discuss further how we can improve outcomes for people suffering from such a pernicious condition.

Question put and agreed to.

17:18

Sitting adjourned.

Written Statements

Tuesday 9th July 2013 Written Statements

Tuesday 9 July 2013

Scientific Advisory Council

Tuesday 9th July 2013 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne)]

In accordance with Cabinet Office guidance on public bodies, I have launched a review of the Defence Scientific Advisory Council. This review will examine the Council’s form and function as well as its corporate governance procedures. The review is due to be completed later this year and I shall inform the House of its outcome.

Parliamentary Written Answer (Correction)

Tuesday 9th July 2013 Written Statements

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

I would like to inform the House that a written answer I gave on 18 March 2013, Official Report, column 372W to the hon. Member for Witham was incorrect. The hon. Member asked the Secretary of State how much was paid to officials in (a) his Department and (b) its non-departmental public bodies in bonuses and other payments in addition to salary in each of the last five years; how many officials received such payments; and what the monetary value was of the 20 largest payments made in each year.

The data in the first table in the response was partially incorrect and reported a figure for departmental spend that was too high, due to an administration error with the datasets. The error has now been identified and corrected. The departmental spend was significantly lower on bonus and other payments than previously stated. The original and corrected tables are shown below. All other data provided in the response is correct.

Question

To ask the Secretary of State for Energy and Climate Change, how much was paid to officials in (a) his Department and (b) its non-departmental public bodies in bonuses and other payments in addition to salary in each of the last five years; how many officials received such payments; and what the monetary value was of the 20 largest payments made in each year. [148024].

Original response

The details of bonus and other payments made in addition to salary by the Department of Energy and Climate Change for 2011-12 are shown in the following table:

Managing Radioactive Waste Safely

Tuesday 9th July 2013 Written Statements

[The Minister of State, Department of Energy and Climate Change (Michael Fallon)]

I am pleased to announce today the publication of the third annual report of the Government’s managing radioactive waste safely (MRWS) programme. The programme is focused on implementing the geological disposal of higher activity radioactive waste.

The Government remain firmly committed to geological disposal as the right policy for the long term safe and secure management of higher activity radioactive waste, and continues to hold the view that the best means of selecting a site for a geological disposal facility is an approach based on voluntarism and partnership.

In line with Secretary of State’s written ministerial statement of 31 January 2013, Official Report, col. 54WS, the Government have been considering what lessons can be learned from the experiences of the MRWS programme in west Cumbria and elsewhere. We have invited views on the site-selection aspects of the ongoing MRWS programme, and the responses to this “call for evidence” will inform a consultation later in the year.

The third annual report can be found at:

https://www.gov.uk/government/publications/managing-radioactive-waste-safely-implementing-geological-disposal-annual-report. I have also written to the chairs of the Energy and Climate Change Select Committee and the House of Lords Science and Technology Committee, and I have made available copies in the Libraries of both Houses.

Fuel Poverty

Tuesday 9th July 2013 Written Statements

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

Today we published “Fuel Poverty: a framework for future action”, which sets out the Government’s intention to adopt a new, more accurate definition of fuel poverty. This follows the publication, in March 2012, of the final report of the independent Hills review. We have also tabled amendments to the Energy Bill to put action to address fuel poverty on a more sustainable footing.

The review, conducted by Professor Sir John Hills, provided us with a new understanding of the problem of fuel poverty. Professor Hills’s work demonstrates that fuel poverty is a long-term and structural problem requiring an ongoing effort to mitigate it. We believe it is right to reflect this by adopting the new measurement approach proposed by Professor Hills, which will support a renewed focus on those with the lowest incomes living in the worst homes. This new approach aligns fully with the Government’s wider objectives of saving energy, promoting growth and decarbonising the housing sector.

At the same time, we are proposing amending the statutory framework underpinning fuel poverty. The existing fuel poverty target, contained in the Warm Homes and Energy Conservation Act 2000, has the eradication of fuel poverty as its end goal. This is the wrong type of target to focus on given the nature of the problem. Nor is such an approach compatible with the definition we are adopting. We are therefore proposing a new target that focuses on improving the energy efficiency of the homes of the fuel poor.

I believe there is real merit in giving a strong degree of statutory backing to a fuel poverty target and our proposals reflect this. On balance we believe the best way to do this is through secondary legislation. This is reflected in amendments the Government have tabled to the Energy Bill currently before Parliament.

It is also clear that we cannot achieve meaningful progress under this new framework against a target date of 2016. We will put forward our proposals on the date, level and precise form of this new target in due course, should our amendments be approved by Parliament. Our proposals for that target will themselves be subject to debate in both Houses of Parliament.

Overall, these proposals will ensure that as we continue to roll out groundbreaking policies to drive improvements to the energy efficiency of the housing stock and to ensure the fuel poor are not left behind.

We will of course continue to deliver the policies which we know are making a difference to tackling fuel poverty. The energy company obligation, which runs alongside the green deal, ensures that help goes to low-income and vulnerable households to enable them to heat their homes more affordably on a long-term basis. The affordable warmth and carbon saving communities policies together should generate expenditure in home thermal efficiency improvements worth around £540 million per year, supporting around 230,000 low-income households annually.

The warm home discount scheme, worth over £1.1 billion over four years, requires energy companies with over 250,000 domestic customers to give a discount on energy bills to their vulnerable customers and those on the lowest incomes. As part of the scheme, this winter over 1 million of the poorest pensioners automatically received a discount on their electricity bill of £130 before 31 December 2012. The Government’s spending review announcement of an increased budget of £320 million for the warm home discount for 2015-16 shows our commitment to continuing action to tackle fuel poverty.

We believe this strong package of measures will help protect the most vulnerable in society against the effects of fuel poverty.

Libya (Bilateral Support)

Tuesday 9th July 2013 Written Statements

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

On 19 June, my right hon. Friend, the Prime Minister, informed the House that at the G8 summit in Lough Erne, the United Kingdom, with other G8 nations, offered to train more than 7,000 troops to help the Libyan Government disarm and integrate militias and improve security and stability of the country. I wish to inform the House that as part of this, the UK has offered to train up to 2,000 Libyan armed forces personnel in basic infantry skills.

The Government firmly believe that a stable, open and democratic Libya contributing to wider regional stability and security is in the UK’s interest. That is why we are working closely with the US and other European countries, to lead the broader international effort, co-ordinated by the UN support mission in Libya (UNSMIL), to support Libya’s democratic transition and the Libyan authorities’ efforts to make visible improvements in public security in Libya.

The training of 2,000 Libyan armed forces personnel is part of a broader package of defence and security assistance that we have developed with the US, France and Italy to support the Libyan Government’s efforts to increase the effectiveness and capacity of its security and justice sector institutions; and to ensure the state’s monopoly on security. Other aspects include increased training for the Libyan police and further support to improve Libya’s border security through the EU border mission. The Libyan Government specifically requested the UK to provide this training for the armed forces because of the UK’s vast expertise and reputation in this field. The Libyan Government have agreed to pay for this training.

This further assistance builds on the UK’s existing and planned support to Libya on such areas as security; building accountable and human rights compliant security and justice structures; creating transparent and effective financial management, strengthening private sector development and economic governance systems in Libya.

Under current plans prepared by the Ministry of Defence, up to 2,000 Libyan armed forces personnel will be brought to the UK. They will visit in a series of smaller groups and will be trained by British Army personnel in basic infantry skills and junior leadership training at the Bassingbourn barracks in Cambridgeshire. We estimate that each course will be for a minimum of 10 weeks. The vetting of trainees will be a key component of this plan. We have requested the Libyan authorities to screen fully all trainees for medical, physical and behavioural suitability. We have sought guarantees from the Libyan authorities that all those successfully trained will return to Libya to be reintegrated into the Libyan armed forces.

The Foreign and Commonwealth Office is working with the Home Office and Ministry of Defence to ensure that security and immigration controls will be maintained on those who arrive to undertake the training. Trainees who do not pass the vetting or immigration assurance processes will not be allowed to travel to the UK.

Detailed planning is under way and we continue to work on the specific terms of our assistance with the Libyan Government. We will also be engaging closely with the local authorities and community. I will update Parliament further as these plans develop.

Civil Penalty Scheme

Tuesday 9th July 2013 Written Statements

[The Minister for Immigration (Mr Mark Harper)]

Last week we published proposals to regulate migrant access to health services and prevent access by illegal migrants to privately rented accommodation, with measures to be taken forward in the Immigration Bill. Today we are launching a consultation on proposals to strengthen and simplify the civil penalty scheme to prevent illegal working. The consultation will run for six weeks. A copy will be available in the House Library and on the Home Office website at: http://www.ukba.homeoffice. gov.uk/policyandlaw/consultations/.

Illegal working encourages illegal immigration. It also undercuts legitimate businesses through illegal cost-cutting activity by rogue employers, and is often associated with other forms of exploitative behaviour—including harmful working conditions for employees and tax evasion. The Government are committed to taking action to effectively tackle illegal working. The Prime Minister and the Deputy Prime Minister have recently proposed that the civil penalty against employers who exploit illegal labour should be doubled.

Employers already have a responsibility to check that their employees have the right to work in the UK and, since 2008, this has been underpinned by a civil penalty scheme. This has been successful in requiring employers to make right to work checks and imposing a sanction on those who do not. We are proposing to further refine these requirements to get tougher on employers who continue to exploit illegal labour and increase the sanction to reflect the harm they cause. We are also conscious of the burdens on legitimate business, so we are also proposing a number of measures to significantly reduce the administrative costs of complying with the requirement to make right to work checks. Legitimate businesses will benefit in two ways: from tougher sanctions against rogue employers and from our intention to make it easier for compliant businesses to fulfil their duties.

The Immigration Bill will make it more difficult for illegal migrants to live and work in the UK. We want to ensure that people come to the UK for the right reasons. As we extend a warm welcome to the many migrants who make such an important contribution to life in the UK, we want to see tough action against those who have no right to be here, and also against the unscrupulous employers who exploit them.

Crossrail

Tuesday 9th July 2013 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)]

The Crossrail project has made significant progress over the last year and has now moved firmly into its main construction phase. There are currently around 8,000 people working at over 40 construction sites across London and six tunnel- boring machines are active underground, with the final two due to launch soon. As of 3 July over 14 km of tunnelling had been completed—representing around 33% of the final total. The project is now over 40% complete. Many significant milestones have been reached including two successful tunnel breakthroughs at Canary Wharf station. The project is well on the way to achieving the target of completing the first tunnels by the end of this year.

While we remain focused on the delivery of the infrastructure, work is now also well underway on planning for and delivering an operational railway. In March a change was announced to the funding of the procurement of the rolling stock and depot contract from one which involved a significant element of private finance to one that is fully publicly funded. This step was taken to ensure that the trains are ready for the opening of the new railway. The overall schedule for the award of the Crossrail rolling stock and depot contract remains unchanged, with a targeted contract award date of mid-2014.

Transport for London (TfL) will be responsible for the operation of the Crossrail services and is leading the procurement of the Crossrail train operator (CTOC). The procurement process has already begun with the pre-qualified bidders having been announced in June. The next step will be the publication of the invitation to tender in September this year, with the aim of awarding the concession in September 2014 and the start of operations between Liverpool Street (high-level) and Shenfield in May 2015. The Department is also working closely with TfL to ensure that the requirements of CTOC are reflected in the new or extended franchises which will operate on the Great Western and Greater Anglia routes.

Crossrail services via the central tunnel are on schedule to be operational from December 2018 with full services operating from late 2019.

The Crossrail board continues to forecast that the costs of constructing Crossrail will be within the agreed funding limits. We expect Crossrail to cost no more than £14.5 billion, excluding rolling stock costs.

All major contracts (excluding the rolling stock and depot contract) have now been awarded. To date, Crossrail Ltd has awarded direct contracts with a value of approximately £6 billion. UK businesses have benefited from the award of 97% of the contracts in the Crossrail supply chain, with 58% of contracts awarded to small and medium-sized enterprises and 43% awarded beyond London and the south-east.

During the passage of the Crossrail Bill through Parliament, a commitment was given that a statement would be published at least every 12 months until the completion of the construction of Crossrail, setting out information about the project’s funding and finances.

In line with this commitment, this statement comes within 12 months of the last one which was published on 10 July 2012, Official Report, column 22WS. The relevant information is as follows:

Drug Driving

Tuesday 9th July 2013 Written Statements

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

In May 2012 the Government introduced primary legislation to Parliament that would create a new offence of driving with a specified controlled drug in the body above the specified limit for that drug. The Crime and Courts Act 2013 sets out the framework for the new offence.

Regulations now need to be made to specify the drugs to be included in the legislation and the limits to be specified. I have today published a consultation seeking views on these regulations. The proposals follow a report published in March this year by a panel of medical and scientific experts which provided specialist advice to the Government on the effects of specific drugs on drivers’ ability.

The introduction of the new offence will reduce the amount of time, expense and effort involved for the police and the courts when prosecutions fail because of the difficulty of proving that a driver is impaired by a particular drug.

In the consultation we have proposed a zero-tolerance approach to deal with those who drive under the influence of illegal drugs as this sends the strongest possible message that you cannot take drugs and drive.

In taking a zero-tolerance approach to these drugs, the Government propose to set the limits at a level that does not catch someone who has consumed a very small amount of an illegal drug inadvertently. In considering what approach to propose for each illegal drug and what limit to set, the Government have weighed up a number of factors including the evidence about the use of the drug when driving, wider drugs policy, and the findings and recommendations from the expert panel.

After considering all of the above we propose to take a zero-tolerance approach to the following eight controlled drugs which are known to impair driving: cannabis, MDMA (ecstasy), cocaine, ketamine, benzoylecgonine (primary metabolite of cocaine), methamphetamine, lysergic acid diethylamide (LSD), 6-monoacetylmorphine (6-MAM—heroin and diamorphine).

We have also put forward our approach for dealing with drivers who use drugs which have recognised and widespread medical uses but which can also affect a patient’s ability to drive and are sometimes misused. We know that the vast majority of people who use these drugs are doing so responsibly and safely and that is why our approach does not unduly penalise drivers who have taken properly prescribed medicines. The limits we propose to set follow the recommendations of the expert panel, which in the vast majority of cases will avoid the new offence catching out drivers who have taken properly prescribed or supplied drugs in accordance with the directions of a healthcare professional or the drug manufacturer. This will avoid inconveniencing the public and taking up police time.

Taken together these proposals will make our roads safer for everyone by making it easier for the police to tackle those who drive after taking illegal drugs and clarifying the position for those who take medication.

The consultation starts today and closes on 17 September 2013 and copies will be laid in the Libraries of both Houses.

HS2

Tuesday 9th July 2013 Written Statements

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

I can announce to the House today my decisions regarding safeguarding phase one of HS2—the route between London and Birmingham. Safeguarding directions protect the route of HS2 from conflicting development, and also give many of those who own property in the safeguarded area the right to serve a blight notice and request that the Government purchase their property under the terms of the compensation code.

Between October 2012 and January 2013 my Department consulted on issuing safeguarding directions for phase one of HS2. In total, 3,761 responses were submitted during the consultation period. Following careful consideration of those responses, I have today issued, under the Town and Country Planning (Development Management Procedure) (England) Order 2010, safeguarding directions to local planning authorities (LPAs) along most of the route of phase one of HS2.

LPAs to whom safeguarding directions apply are required to consult the named authority—in this case High Speed Two (HS2) Limited—on undetermined planning applications in respect of land that is within the safeguarded area. If a LPA is minded to grant planning permission otherwise than to give effect to HS2 Ltd’s comments then the planning application is referred to the Secretary of State for Transport who is able to direct a final decision on the planning application. The purpose of safeguarding is not to prevent development along the route of HS2, but to ensure that any development that does take place is consistent with our plans for the railway.

Safeguarding is also a trigger for statutory blight procedures under the Town and Country Planning Act 1990. Owner-occupiers of properties within the safeguarded area who want to move may now apply to sell their property to the Government by serving a blight notice. If they meet the relevant criteria they can expect to receive the unblighted open market value of their home, a home loss payment of 10% of the value of their home—up to £47,000—and reasonable moving costs. We do not expect that all properties within the safeguarded area will be required for the railway. Compulsory purchase powers to acquire properties needed for the railway will be set out in the hybrid Bill and can not be exercised until that Bill has Royal Assent.

Information on compensation specifically aimed at those who own property within areas safeguarded for HS2, including application forms, is available at, http://www.hs2.org.uk/ or by phoning the HS2 Ltd enquiries line on 020 7944 4908.

I have placed a summary of the responses to the safeguarding consultation in the Libraries of both Houses, and am publishing a command paper detailing the Government response to the consultation on safeguarding HS2. Both are available at http://www.hs2.org.uk/ safeguarding.

It should be noted that sections of the HS2 route in both Bromford and Ealing have not yet been safeguarded, pending a decision on whether there should be bored tunnels in these locations. These proposed design changes are the subject of a consultation launched in May 2013. I expect to announce my final decisions later this year.

Without HS2, key rail routes connecting London, the midlands and the north will soon be overwhelmed. HS2 will link eight of Britain’s 10 largest cities, serving one in five of the UK population. But the Government have always recognised the impact of HS2 on those living along the line of route. Issuing safeguarding directions brings certainty to many owner-occupiers living in the safeguarded area who can now apply to have their homes bought. I can assure the House that we will seek to process blight notices swiftly so that those who qualify can move as quickly as possible.

Workplace Pension Reform

Tuesday 9th July 2013 Written Statements

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I am pleased to announce that later today the Government will publish their response to the call for evidence on the impact of the annual contribution limit and transfer restrictions on the National Employment Savings Trust (NEST).

Automatic enrolment into workplace pensions represents a step change in the pensions landscape. A crucial part of the automatic enrolment landscape is NEST which was set up by Government to ensure all employers have access to a high-quality, low-cost option for workplace pension provision. While the market has always provided for larger firms and higher earners, NEST was created specifically to ensure that smaller firms and low to moderate earners also have access to quality pension provision.

To ensure that NEST focused on this “target market” the previous Government legislated to constrain NEST in two particular ways—an annual contribution limit, currently £4,500 a year, and restrictions on transfers in and out of NEST, which prevents bulk transfers of existing schemes and limits transfers by individual scheme members.

In summer 2010 the Department for Work and Pensions commissioned an independent review—“Making automatic enrolment work”—to consider whether the framework for automatic enrolment was fit for purpose. The review concluded that the basic architecture, including NEST, was appropriate, but that the constraints on NEST should be lifted in 2017.

More recently the Work and Pensions Select Committee recommended in 2012 that the constraints should be lifted at once, expressing concern that some firms might not be able to use NEST, resulting in consumer detriment. Government responded in late 2012 with their call for evidence to seek views on the future of the NEST constraints.

Requiring NEST to focus on this target market has been very successful. As a large number of medium and smaller firms will start enrolling their workers in the next few years, now is the time to focus on helping these firms get ready. With its special focus on those workers with lower earnings, NEST will be a key part of the solution as it has thought hard about its design; it has aimed its research, communications, use of language, investment and decumulation strategies at its target market. It is working, and we need this to continue. Therefore, to make sure we achieve our aim of getting people saving, we have decided that NEST must continue to focus on its target group without any distractions.

The responses to the call for evidence revealed a perception that the restrictions placed on NEST prevent it from serving the low to moderate earners and smaller employers it was intended for. The reality is quite the opposite. With mandatory contributions of just 2% on a band of earnings, with at least 1% from firms, no employer contributing at this level or the full 8% will exceed the annual contribution limit.

However, we need to look to the future and ensure NEST remains influential in the marketplace, by continuing to help drive up standards and best practice. The minimum contribution will rise to a combined contribution of 5% from October 2017 and 8% from October 2018. Therefore, in line with the recommendations of the independent “Making automatic enrolment work” review, I intend to legislate as soon as parliamentary time allows to lift the contribution limit from 2017. This will give employers the certainty they need that NEST will continue to be an appropriate scheme for them and their workers when minimum contributions rise, or should they choose to contribute more.

With regard to individual transfers, we agree that NEST should be part of the automatic transfer solution for which we are currently legislating. Therefore we intend to lift the restrictions on individual transfers in and out of NEST to coincide with the start of the “pot-follows-member” regime. The ban on bulk transfers will remain in place until the end of the main roll out period for automatic enrolment in April 2017, when it will then be lifted.

We believe that the creation of NEST has played a crucial role in the early success of automatic enrolment. NEST has focused on its target market and has innovated to serve the needs of those in that market. As automatic enrolment moves on to cover medium and smaller firms we want NEST to continue its excellent work, while signalling now that beyond 2017 NEST will be put on a similar footing to other providers in the wider pensions market.

The Government response document will be available on the gov.uk website later today (https://www.gov.uk/government/publications), and I shall place copies in the Libraries of both Houses.