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Oral Answers to Questions
(10 years, 9 months ago)
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Sir Bob Russell (Colchester) (LD)
1. What assistance his Department provides to UK technology companies with exports; and if he will make a statement.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
My Department helps UK technology exporters through UK Trade & Investment. In 2012-13, UKTI helped more than 3,000 companies with technology-related exports, and it is set to help more than 3,500 in 2013-14.
Sir Bob Russell
I am grateful to the Secretary of State for his answer. He will be aware of my concern that officials in his Department are perhaps not operating a level playing field, in that American companies exporting products from their country are treated more favourably than companies in this country producing exactly the same products. Will he give me some clarification as to what is going on?
Vince Cable
First, I should explain that the Minister for Universities and Science, my right hon. Friend the Member for Havant (Mr Willetts), who might have answered this question, is currently at Chequers for a Cabinet away day. My hon. Friend the Member for Colchester (Sir Bob Russell) is an assiduous defender of his constituents, their companies and their jobs. He has discussed this matter with me, and I have pursued it. It is not the case that Britain is more difficult than the United States when it comes to clearing export licences, but I have none the less established that we should dispense with some procedures relating to quarterly reporting, and we will do so. We will also work with the company in question to try to establish whether an open general licence can operate in this case.
Nick Smith (Blaenau Gwent) (Lab)
A survey by the Federation of Small Businesses has found that only one in five of its members uses UKTI services. What steps will the Secretary of State take to encourage UKTI to work more closely with small businesses?
Vince Cable
The hon. Gentleman is correct to say that our overall export performance would improve considerably if more British companies were exporting. The big contrast with Germany is that roughly twice as many of its small and medium-sized enterprises are involved in exporting. UKTI has been substantially reformed in the past couple of years, and it now has a much more small and medium-sized company focus. It has activities around the country, and we have a lot of evidence that its outreach is substantially improving. I hope that it will reach the companies in the hon. Gentleman’s constituency too.
Mr Iain Wright (Hartlepool) (Lab)
At the last Business, Innovation and Skills questions, the Secretary of State admitted:
“The figures on exports are not great”.—[Official Report, 13 June 2013; Vol. 564, c. 470.]
Since then, the UK trade deficit has widened to the point at which it is now the largest trade gap in the European Union, and the widest it has been since 1989. Following on from the question from my hon. Friend the Member for Blaenau Gwent (Nick Smith), will the Secretary of State tell the House whether he is happier with export performance this month? What changes to policy or priorities will he now make to facilitate an export-led recovery, or does he not think that changes are necessary?
Vince Cable
Monthly variations are not the issue, but there is an underlying problem. British exporters are currently doing extremely well in the big emerging markets. We have rapid export growth to countries such as Russia, China, India and Brazil, for example, but exports to the eurozone are weak, for obvious reasons. We accept that there are underlying weaknesses. We have not had the recovery of export volume growth that we would expect following a substantial devaluation. Much of this relates to the way in which supply chains were hollowed out in the long period of manufacturing decline, but we are trying to rebuild them through the industrial strategy.
Mr Marcus Jones (Nuneaton) (Con)
2. What recent support his Department has given to the automotive industry.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
The automotive industrial strategy was launched on Friday by the Department in association with the Automotive Council. In partnership with industry, we will invest around £1 billion over 10 years in a new advanced propulsion centre.
Mr Jones
I met a number of business people from the motor manufacturing supply chain recently, and the main theme of the meeting was skills, and what we could do to help to increase the skills in the sector, in which there is now a real resurgence. Will my right hon. Friend explain a little more about his strategy? Will he tell us what part skills will play in it, and what more we can do to help the supply chain?
Vince Cable
My hon. Friend is absolutely right. The Automotive Council has identified skills shortages as a key problem. As a result of the adoption of the strategy document, the industry has committed itself to a significant growth in the number of apprenticeships. We have already seen a considerable increase, but he is right to suggest that this is an issue not simply for the big original equipment manufacturers but for the supply chains, and a lot more needs to be done to make the car industry seriously competitive through skills.
Mark Pawsey (Rugby) (Con)
Will the Secretary of State comment on the success of the sector and the impact on the supply chain? On Friday, I had the benefit of meeting a small business in my constituency, Automotive Insulations, which supplies products to, among others, Jaguar Land Rover and Bentley. It is looking to move to a new 60,000 square foot building, to employ a further 60 people and to generate £1 million- worth of investment over the next few years.
Vince Cable
This is indeed a very successful industry. Over the last couple of years, we have had commitments to something in the order of £6 billion-worth of new investment. One factor has undoubtedly been the confidence that the Government are fully supportive of the industry and are working with it through the Automotive Council. The confidence factor is indeed spreading into the supply chain. There are very good economic reasons why a significant amount of the supply chain that has been offshored should now be onshored—and that process is beginning. We want to do everything we can to encourage it.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
3. What recent assessment he has made of the performance of the regional growth fund.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
The regional growth fund is a success. Last week, I published our first annual monitoring report, which shows that job creation in rounds 1 and 2 is on track. With our accelerated timetable, we have now completed the contracting process with all but a handful of beneficiaries in rounds 1, 2 and 3. Last week, I also announced that in round 4, 102 selected bidders will have access to over £500 million. Overall, this Government have committed over £2.6 billion to areas that most need private sector-led growth and employment.
Eric Ollerenshaw
We have now had four rounds of the regional growth fund, and the north-west has done very well out of it, for which I am grateful to the Minister. Will he confirm that the Government will continue to use this as a mechanism to narrow that north-south divide, which of course grew so much wider under the previous Government?
Michael Fallon
I thank my hon. Friend for his important report on the north, and I congratulate him on his appointment as a small business ambassador. The spending review last month confirmed that there will be further rounds of the regional growth fund in 2015-16 and in 2016-17, totalling over £300 million in each case.
Alison McGovern (Wirral South) (Lab)
If the regional growth fund is to be at all successful, it must not only create jobs but improve the skills base in our country. What checks has the Minister put in place to make sure that this actually happens?
Michael Fallon
The regional growth fund makes grants not simply to projects and individual companies, but to programmes organised by local enterprise partnerships and other private sector organisations, many of which focus on improving the level of skills in these particular areas.
Mr Philip Hollobone (Kettering) (Con)
Would my right hon. Friend be kind enough to accept an invitation to visit the site of the proposed junction 10A on the A14 near Kettering, which has attracted the interest of the Department of Energy and Climate Change, the Department for Transport and the Department for Communities and Local Government? An investment of £30 million in the regional growth fund could trigger private sector investment of more than £1 billion.
Michael Fallon
Happily, I have not fully finalised my summer plans, so I shall add to them this visit to a motorway junction. [Laughter.] My hon. Friend makes a serious point: there is clearly a bottleneck that needs to be removed. I will see if I can accept my hon. Friend’s invitation.
Mark Menzies (Fylde) (Con)
4. What steps he is taking to encourage traineeships.
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
Following the spending review, we have extended the traineeships programme to young people up to the age of 24. Yesterday, we published the framework for delivery, and the first traineeships will start next month. We have already had strong interest expressed from employers such as Mercedes and Brompton Bicycle Ltd. We very much look forward to taking the programme forward.
Mark Menzies
Skills delivery is at its best when it is led by employers and by businesses. Can my hon. Friend assure me that that will remain the case throughout?
Matthew Hancock
Absolutely. It is vital to make sure that the skills system is focused on the needs of employers so that people who go through that system go on to get an apprenticeship and a good job. That is exactly what the traineeship scheme is designed to achieve.
Sheila Gilmore (Edinburgh East) (Lab)
The Government suggested that trainees might be eligible for jobseeker’s allowance while they are undertaking their traineeships. Has the Minister sorted out the details with the Department for Work and Pensions because, at the moment, someone studying for more than 15 hours a week would not be eligible for the benefit?
Matthew Hancock
The hon. Lady makes an important point because the link to the benefits system, particularly for those aged over 18 who are in traineeships, is vital. In the framework for delivery set out yesterday, she will have seen the details, ensuring that eligibility for JSA and eligibility to get a traineeship are aligned. Of course, with the introduction of universal credit and changes in the jobcentres, we are making it easier for people to get training while also looking for work. Work experience is a vital part of that and a vital part of traineeships.
Dan Rogerson (North Cornwall) (LD)
Employers are being encouraged to provide travel support for young trainees. Will the Minister look closely at the issue of young people living in remote rural areas, and ensure that they, as well as those who happen to live near their employers, are given fair access to traineeships?
Matthew Hancock
Not only will I look at that issue closely but I have already done so, because it is a vital aspect of traineeships. Traineeships are there because far too many people leave school or college without the skills that they need to secure a job or apprenticeship. Of course we are reforming the school system to sort out that problem, but we must also ensure that everyone has an opportunity to acquire the character traits and skills that they need in order to get a job, and transport is a vital part of the practicalities of making that happen.
Graeme Morrice (Livingston) (Lab)
5. What steps he is taking to protect the universal service obligation under plans for the privatisation of Royal Mail.
Chris Williamson (Derby North) (Lab)
12. What steps he is taking to protect the universal service obligation under plans for the privatisation of Royal Mail.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
The Government’s overarching objective is to secure the future of the universal postal service. The minimum requirements of the universal service are enshrined in primary legislation, which means that the six-days-a-week, one-price-goes-anywhere service to every address in the United Kingdom can only be amended by Parliament. That protection will continue to apply following any sale of shares in Royal Mail.
Graeme Morrice
The Government’s Royal Mail privatisation has been opposed by a broad coalition, including employees of Royal Mail, the Countryside Alliance, the National Federation of SubPostmasters, and even the Conservative think-tank the Bow Group. Moreover, the results of a recent poll showed that the vast majority of the British public oppose it as well. Is it not time that the Secretary of State abandoned his plans for the fire sale of Royal Mail in the face of that overwhelming opposition?
Michael Fallon
Last week’s announcement confirmed our plans to allow this very successful British business access to private capital for the first time, and to deliver what Parliament agreed more than two years ago, namely that 10% of the company should be in the hands of the work force.
Chris Williamson
Despite those assurances, the public have seen that previous ideologically driven and badly executed privatisations have led to substandard services and price increases. The fact is that the polls show that the vast majority of the British public oppose this privatisation. Why is the Minister riding roughshod over the wishes of the British people?
Michael Fallon
Parliament has already decided that Royal Mail should have access to private capital. We are implementing that decision of Parliament, and the decision to put 10% of the shares in the hands of the employees. The level of service is protected under the Postal Services Act 2011, and any change in ownership does not affect control over the price of stamps or the future of the six-days-a-week service.
Andrew Bridgen (North West Leicestershire) (Con)
It is clear that there are none so deaf as those who do not want to hear. My right hon. Friend has stated on many occasions—but perhaps he will reiterate it for the benefit of the House—that, regardless of ownership, Royal Mail will remain the designated universal service provider.
Michael Fallon
Yes, and my hon. Friend need not take my word for that. It is in the statute. It is a duty of the regulator, Ofcom, to ensure that the service is protected, and that can only be changed by a vote in Parliament.
Andrew George (St Ives) (LD)
I am grateful for my right hon. Friend’s reassurances, but my constituents in the remoter reaches of west Cornwall, and indeed on the Isles of Scilly, want to be reassured about the delivery of not only first and second-class letters and postcards, but packages. They fear that the cost of those services will become prohibitive. What can be done to protect my constituents from exorbitant charges?
Michael Fallon
The best protection that I can offer my hon. Friend is to ensure that Royal Mail’s finances are put on a sustainable, long-term footing, and that it has access to the capital that it needs in order to innovate, compete and respond to changing technologies. Its parcels business is already growing rapidly, but it is in a competitive marketplace, and we need to free it so that it can operate like any other commercial company.
Mr Mike Weir (Angus) (SNP)
As the Minister will appreciate, a universal service depends not only on deliveries but on uplift points, and there are serious concerns about the post office network and in particular whether post office locals will all be able to provide the parcel service. If that comes to pass, what powers do Ofcom or the Minister have to intervene to make sure that service is available?
Michael Fallon
I am proud to be part of a Government who have put an end to the post office closure programme we saw in the last few years. That has been brought to an end, and the post office network is being put on to a better footing, but the regulator Ofcom has all the powers it needs to ensure that the universal, six-days-a-week, everywhere-in-the-UK service is fully protected in the future, irrespective of any change in ownership.
Richard Graham (Gloucester) (Con)
6. What progress he has made on a sale of shares in Royal Mail.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
On 10 July the Secretary of State laid a report in Parliament and made an oral statement setting out our decision to sell Royal Mail shares through an initial public offering in this financial year. Shares will be available to both institutional and retail investors, and 10% of the shares will be available free of charge to eligible employees so that they have a real stake in the business.
Richard Graham
As my right hon. Friend the Minister has already heard this morning—and there are postcard campaigns to confirm it—a large amount of misleading information is being given to my constituents in Gloucester and elsewhere in the country: claims that the Royal Mail and the Post Office are the same entity, and that the Queen’s head will go, the universal service disappear and prices rise. Does my right hon. Friend agree that those of us who want to see Royal Mail succeed deplore this campaign of misleading information and want the innovation from new capital investing in new equipment, such as to track parcels that will enable Royal Mail to succeed in the way all of us in this House want?
Michael Fallon
Given that Parliament has already decided that this is the right future for Royal Mail, I hope the Opposition will now join in dismissing some of the unnecessary scaremongering, and make clear what would happen if there was ever the horror of a future Labour Government: do they intend to renationalise the Royal Mail?
Mr Dennis Skinner (Bolsover) (Lab)
It is not misleading to say that when the share-owning democracy of Mrs Thatcher was launched in the ’80s and ’90s and all those public utilities were sold off and many of the employees received shares—just like the possibility of that on this occasion—the net result is that those public utilities, almost without exception, are now owned by as many as 30 countries. What guarantee has the Minister got that this will not happen to Royal Mail as well?
Michael Fallon
In a public offering it is not possible to prevent others from subscribing for the shares, but we hope that Royal Mail, given now the freedom— later this year, we hope—to access private capital, will be put on to a longer-term sustainable footing and will be able to develop its business not just here in Britain, but overseas.
Mr Jim Cunningham (Coventry South) (Lab)
I remember what happened when Rolls-Royce was privatised and the work force were given shares—I did not accept any, by the way. Within about two years those shares will be sold. This is only a sop to the work force.
Michael Fallon
I have yet to hear whether the Opposition want to renationalise any of these businesses—Rolls-Royce or British Telecom or British Airways. I think they at least owe it to the 130,000 employees of Royal Mail to make clear whether they would renationalise the business.
Mary Macleod (Brentford and Isleworth) (Con)
7. What recent progress he has made on employment law reform.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
We are making good progress on our review of employment law. On Friday the Government published an update including a call for evidence on whistleblowing and outlining that the new employment tribunal rules of procedure will come into effect on 29 July. We are also making changes through the Children and Families Bill to extend the right to request flexible working to everyone and introduce a radical new system of shared parental leave.
Mary Macleod
In the last few weeks two Opposition Front-Bench Members have been to my constituency to talk to businesses, and I am so glad they are taking their lead from the Prime Minister, who was there in 2011 to talk to small businesses about simplifying employment legislation. Will the Minister build on the great work this Government have been doing in simplifying the process of doing business for entrepreneurs by reducing the amount of red tape and admin?
Jo Swinson
I commend my hon. Friend on her work championing small business in her constituency and beyond. She is absolutely right that we need to drive through the implementation of the reforms we have already outlined. She will be pleased to note that the CBI-Harvey Nash employment trends survey shows a significant improvement in employer perceptions of the burden of employment law. That is good for British business and good for job creation, too.
Julie Hilling (Bolton West) (Lab)
According to the OECD, the UK already has one of the most lightly regulated labour markets among developed countries; only the USA and Canada have lighter regulation. Why on earth are we trying to water down employment rights even further?
Jo Swinson
The first thing I would say to the hon. Lady is that our lightly regulated employment market is an asset to the British economy. It helps the economy to grow and it is one of the reasons why, despite the very challenging economic circumstances we have seen and despite the fact that unemployment is still too high, we have seen employment rates bear up rather better than in some other countries. It is important that we simplify employment law—I would have hoped that there would be cross-party agreement on that—but of course it is also important for a functioning economy that we ensure that basic protections remain in place for workers.
Mr Speaker
Order. In conformity with long-standing convention, the hon. Gentleman cannot come in a second time on substantive questions. His enthusiasm and appetite are appreciated and he can try his luck during topical questions.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
8. In how many of the past 24 months net lending by banks to British small businesses has (a) risen and (b) fallen.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
The Bank of England now publishes monthly estimates for lending by UK banks to small and medium-sized companies. Those figures show for the 24 months up to May 2013 an increase in net lending in two months and a decrease in the others. The Government are working to increase the lending available to SMEs through the new business bank and, with the Bank of England, through the funding for lending scheme.
Tom Blenkinsop
Does the Secretary of State agree with the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon), that there is no evidence that the funding for lending scheme is helping small business?
Vince Cable
The funding for lending scheme primarily benefits mortgage lending, but changes were made in April to make it accessible to asset-based finance, for example. Several of the new challenger banks are now taking advantage of it, and it is beginning to make an impact on SME lending.
Mr David Nuttall (Bury North) (Con)
I visited the bank recently and was told that all people who come to it are given a fair hearing and that small business men are getting the loans they need. Is it not the case that what got the banks into this mess was irresponsible and over-optimistic lending and that what we need now is prudent and responsible lending to small businesses?
Vince Cable
Of course, we need prudent, responsible lending, but I subscribe to the view, which I hear frequently around the country, that many SMEs find it difficult to access finance from the banks and that we cannot just let the situation remain as it is. That is why we are in the process of establishing the business bank, which is currently marketing £300 million. There is substantial interest in investing in that project.
Jim Shannon (Strangford) (DUP)
In the last period of time, it has been quite understandable that there have been problems with getting loans from banks, but another problem has been with small and medium-sized businesses being paid in time. It has been suggested that some £30 billion is outstanding in payments from big business to small business. What steps are being taken by the Secretary of State to help small business get moneys paid on time by big business?
Vince Cable
My colleague the Minister of State has launched an initiative to ensure rapid settlement, particularly down the supply chain. We name the big companies that do not settle their debts properly in that way. We also have a programme of supply chain financing, the advanced manufacturing supply chain initiative, which will help the settlements to which the hon. Gentleman refers.
Toby Perkins (Chesterfield) (Lab)
Two years ago, there was a crisis in small business lending. We have just heard from the Secretary of State that in 22 of those 24 months, it has got worse. The Institute of Chartered Accountants in England and Wales is the latest to acknowledge that the Government response to the SME funding crisis is totally inadequate, using a British investment bank that funnels existing inadequate schemes through our uncompetitive banking system. Is it not time that the Secretary of State admitted that the Government will never deliver the scale of change needed and threw his weight behind Labour’s plan for a new generation of local banks with local decision making, based on the key features of the German Sparkasse model? Let us get the real change that British small businesses desperately need.
Vince Cable
I am a great fan of the German Sparkasse system, and it is a pity that we never had it in Britain. If the hon. Gentleman looks back on the record of the previous Labour Government, he will recall that in 2000, they had a report prepared for them on the inadequacies of British business lending and the enormous problems created by the fact that four banks accounted for all the business. The Government of the day, despite urging from myself and others, did absolutely nothing about the problem. As a result, we went into the banking crisis with massively over-concentrated ownership and damaged banks that are no longer able to perform properly. We are seeking reform, supporting new challenger banks though the business bank, and dealing with a problem that should have been dealt with a decade ago.
Mr Laurence Robertson (Tewkesbury) (Con)
9. What recent assessment he has made of the take-up of apprenticeships.
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
There were 520,000 apprenticeship starts in the academic year 2011-12. That is almost double the number in 2010. Our priority is to make apprenticeships both widely available and the very best quality, rooting out poor provision and enforcing a minimum duration. As we speak, 750,000 people are on an apprenticeship, which is a record: it is more than at any time in our history.
Mr Robertson
I am grateful to the Minister for that response. As he knows, I have a lot of engineering companies in my constituency, the largest being GE Aviation, which has more than 100 apprentices. Nevertheless, those companies find it difficult to recruit young people. Is the Minister satisfied that schools have adequate incentives to promote the concept of apprenticeship schemes, and will he consider awarding them recognition status marks for each apprenticeship that is taken up?
Matthew Hancock
We introduced a new duty on schools to provide independent and impartial advice in September, and Ofsted is looking at, and will report on, how well that is being implemented. I pay tribute to my hon. Friend, who brings together companies in his constituency to promote skills and working together, so that even though companies compete locally and nationally with their products, they come together on the skills issue to make sure that they give new skills to young people, rather than poaching from each other.
Kerry McCarthy (Bristol East) (Lab)
The Minister’s Department has found that one in five apprentices currently receives no training. There has also been a reported rise in employers’ non-compliance with the national minimum wage for apprentices. Does he agree that for apprenticeships to be of value, apprentices need decent training, and need to be paid a decent wage? What is his Department doing to ensure that that happens?
Mr Robin Walker (Worcester) (Con)
Will the Minister join me in welcoming the initiative of Worcestershire housing associations, which created an 18-to-30 apprenticeships and job fair, bringing together local employers and the National Apprenticeship Service? Does he agree that the huge increase in apprenticeship take-up is one of the reasons why youth unemployment in Worcester is down 30% from its peak under Labour?
Matthew Hancock
It is very good news that youth unemployment is falling—there was a 20,000 fall announced yesterday—but it is still too high, and there is still much more to do. I pay tribute to my hon. Friend’s work, and the work of others across the House, to make sure that apprenticeships and traineeships are available in future to help with that.
Mr Gordon Marsden (Blackpool South) (Lab)
Does not the Minister’s rhetoric on apprenticeships hit the buffers in reality? No amount of his crowing or tweeting alters the latest facts: there is a 13% drop in 16 to 18-year-olds starting apprenticeships, and a 6% drop across the board. He has failed to take up our plans to create thousands of new apprenticeships via Government procurement, and he has also failed to get a deal with Department for Work and Pensions Ministers. The Association of Colleges said yesterday that 14 to 19-year-olds taking up his new traineeships, so that they can move on to apprenticeships, are not likely to have any money to live on. When will he stop dithering and start delivering?
Matthew Hancock
We are delivering the new traineeships from next month. Given the need, after years of inaction, to bring together support for work experience and skills for those approaching the job market, I would have thought that the hon. Gentleman would welcome that. I would have thought that the Opposition would have supported the rise in the number of apprenticeships to record levels since the election.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
10. What the outcomes were of his Department’s summit meeting with payday lenders on 1 July 2013; and if he will make a statement.
Ann McKechin (Glasgow North) (Lab)
11. What the outcomes were of his Department’s summit meeting with payday lenders on 1 July 2013; and if he will make a statement.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
The Government’s payday lending summit provided an excellent opportunity to deliver a strong message to the payday industry to get its house in order. It focused particularly on the Financial Conduct Authority’s priorities for reducing consumer harm when it becomes the regulator in April, ahead of its consultation on its credit rulebook this September.
Jonathan Reynolds
I welcome the Minister’s answer and the summit, but let us be honest—the Government have consistently ducked clamping down on predatory pricing and extortionate interest charges, despite the amendment secured last year in the House of Lords that gives the regulators the ability to control costs and loan duration. Notwithstanding the spin of holding a payday lenders summit, when is the Minister going to promise to act so that families across the country can be protected from these predatory activities?
Jo Swinson
Significant action is being taken. The Office of Fair Trading has referred the industry to the Competition Commission because of widespread non-compliance. It is taking its own enforcement action, which has already resulted in a third of the lenders that have responded so far—the rest are due to do so this month—leaving the market altogether as a result of the tough action being taken. We have given the FCA stronger powers to enable it to ban products, impose unlimited fines and order money to be paid back to consumers who have been ripped off. That is a pretty comprehensive package of action to clamp down on this unscrupulous and irresponsible lending behaviour.
Ann McKechin
If other jurisdictions, such as Florida, already have effective real-time recording systems that stop borrowers accumulating unpayable debts, why cannot we have such a system here, now?
Jo Swinson
Such systems rely on the industry to be able to update them. The industry is looking at and working on that. We have credit reference agencies, which work well in many of the credit markets, but the real-time issue that the hon. Lady raises is a genuine one and more difficult to set up than the systems in place. We are encouraging the industry to address that, because it will help to improve affordability assessments.
Miss Anne McIntosh (Thirsk and Malton) (Con)
Is this issue not also about the level of household debt—households running into debt and not knowing how to manage a household budget? Much more information should be available to take people away from payday lenders.
Jo Swinson
My hon. Friend makes an extremely important point. We are introducing financial education in schools, which is an important development to make sure that people have the tools to make decisions, but it is also important to note that half of the people who take out a payday loan are already showing signs of financial stress. So although we need to tackle the problems of payday lending, we also need to tackle the problems that get people there in the first place, and make sure that they have good access to the free and confidential debt advice available. I encourage anyone in financial difficulty to seek help sooner rather than later.
Ian Murray (Edinburgh South) (Lab)
A recent report by the Office of Fair Trading accused payday lenders of causing “misery and hardship”. The Minister herself said that
“the scale of unscrupulous behaviour . . . and the impact on consumers is deeply concerning”
and that the Government
“wants to see tough action”.
Despite an amendment in the other place last year, to which my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) referred, to give the regulators the ability to curb costs, the Minister is still failing to act. The public will note with interest that a major donor to the Conservative party, Adrian Beecroft, has a significant interest in this industry. Is that what is holding the hon. Lady back from stronger regulation? She is in severe danger of becoming known as the Minister for APR.
Jo Swinson
The short answer to the hon. Gentleman’s question is no, because the Government are taking significant action. I think he misunderstands; the OFT report shows the biggest set of problems in the industry. I know that much of the focus ends up on the APR headlines, but the surveys and the consumer organisations working with the issue day in, day out show the problems around issues such as affordability assessments, continuous payment authority abuse and abuse of the way in which roll-overs are used. The FCA has said specifically that it is looking to plug any gaps in regulation in all those areas when it takes on the role of regulator next April. We do not have to wait very long to see its draft rule book, which will be published this September.
Neil Carmichael (Stroud) (Con)
13. What recent assessment he has made of the value of supply chains to the UK economy.
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
In the UK and across the world, supply chains are diverse, complex and global. Their value is huge and their importance is vital. Support for supply chains is studded through our policy and underpinned by the industrial strategies.
Neil Carmichael
In contrast to the Labour Government, this Government are clearly doing something to build capacity in our supply chains. I welcome that and I see evidence of it in my constituency. May I stress the importance of making sure that supply chains are developed in our regions to ensure that we have a truly balanced economy, not just between manufacturing and services, but across our regions?
Matthew Hancock
Absolutely. I pay tribute to my hon. Friend’s work on promoting the importance of supply chains, not least because of the high proportion of manufacturing in his constituency. We will make sure that they stay at front and centre of what we do in the Department.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
One of the biggest infrastructure projects in this country over the next 20 years will be the construction of High Speed 2. That, through the supply chain, has potential benefits for businesses and workers not just along the route of HS2, but throughout the entire UK. What steps is the Department taking to engage in discussion with the Department for Transport to ensure that those supply chain benefits are indeed available throughout the entire UK?
Matthew Hancock
There are continual discussions between the Department and the Department for Transport about making sure that great benefits accrue not only when we build important infrastructure, but during its construction. We must ensure that there is good value for money, but value for money should be considered in the broadest possible sense.
Martin Vickers (Cleethorpes) (Con)
14. What recent assessment he has made of the prospects for economic growth in the Humber sub-region.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
We are working hard to support the Humber local enterprise partnership to deliver the priorities for growth set out in their plan for the Humber. In round 4 of the regional growth fund £21.3 million was allocated to two successful bids from the Humber, one of them from the local authority in my hon. Friend’s constituency.
Martin Vickers
The local economy is experiencing something of a renaissance. Only yesterday, I and colleagues from neighbouring constituencies met a representative from Scunthorpe-based Wren Kitchens, which is looking to take over the former Kimberley Clark factory at Barton-upon-Humber, which closed earlier this year with the loss of 500 jobs. The hope is that, within two or three years, those jobs will be replaced one-for-one. It is a major site and there were fears that it would turn into a rusting hulk. Will my right hon. Friend, or one of his ministerial team, commit to visiting the factory when it opens in the near future?
Vince Cable
I praise my hon. Friend for the work that he has done. He has already taken me to his constituency and shown me the plans for the area. The Kimberley Clark closure was a major blow and it is good to hear that it is being replaced. Last week I was with the Humber local enterprise partnership when it met in Hull. We discussed some of these plans, particularly the enormous potential of the energy sector in the North sea. I am certainly very happy to visit that factory in due course.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
15. What steps he is taking to promote sustainable economic development in the North East.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I welcome the most recent reduction in unemployment in the north-east. Across the region we have offered support of £330 million to 101 projects and programmes through the regional growth fund with the potential to safeguard or create 66,000 jobs. We are also working with the North Eastern local enterprise partnership to agree a local growth deal based on Lord Adonis’s recent report.
Chi Onwurah
The north-east has real strengths in sustainable process energy and transport industries, but lacks the funds and the skills to support them. Since the demise of the regional development authority, there has not been an effective champion to bring this about. The regional growth fund is not getting the money through quickly enough. What is he going to do to change that, so that the skills and the finances are available to industry in the north-east?
Michael Fallon
If I may say so, the hon. Lady is taking a rather pessimistic view of her region. There is plenty of money flowing from the regional growth fund to projects, two of which I have visited on the Tyne. There is plenty more support to come through the structural fund allocation, which has also gone to the local enterprise partnership, and through the invitation that has gone to the region to bid for the single local growth fund from 2015-16.
Hugh Bayley (York Central) (Lab)
16. What outcomes his Department is seeking through its science and society budget.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
Our science and society programme successfully engages people of all ages and backgrounds with science. It includes 25,000 science, technology, engineering and mathematics ambassadors providing positive role models for students to increase and widen participation in science; the biggest ever Big Bang Fair in March this year; and public dialogue supported through Sciencewise to inform public policy.
Hugh Bayley
The Science Museum Group, which includes the National Railway museum in York, has had its budget cut by a quarter over the last two spending reviews. It does immensely important work in encouraging young people to take an interest in science, leading to careers in science. Will the Minister meet people from the museum to consider how the science and society budget could be used to fund some of their outreach work, especially with young people?
Jo Swinson
As the hon. Gentleman knows, the science budget has been protected because we absolutely recognise the importance of science and research to the future economy and in encouraging people to take on science. The lead sponsor Department for the Science museum and museums generally is the Department for Culture, Media and Sport, and colleagues in DCMS will have been engaging significantly with the Science museum and others. I am sure that the relevant Minister will be very happy to meet—
Jo Swinson
I will happily do so. I am answering on behalf of a colleague, but I will happily have that meeting.
Mr Speaker
Order. We are ahead of ourselves, notwithstanding the sedentary chuntering. All relevant personnel are present and correct so we will proceed with topical questions.
Hazel Blears (Salford and Eccles) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
My Department plays a key role in supporting the rebalancing of the economy through business to deliver growth while increasing skills and learning.
Hazel Blears
The Secretary of State will be aware that legislation is in place, supported by the Government, to ensure that when commissioning public services we seek social value as part of a wider value-for-money framework. That means local jobs, local supply chains, apprenticeships and local labour. How will the Secretary of State ensure that in his area, through the regional growth fund and massive investment in infrastructure, we get the same kind of social value to support our regional and local economies and get young people back to work?
Vince Cable
I recognise the considerable value of the Public Services (Social Value) Act 2012, and I acknowledge the right hon. Lady’s role in promoting its take-up. The Department has a unit that is currently promoting social enterprise, which lies at the core of this issue. Some 68,000 such enterprises now employ 1 million people, and I was at the launch of that unit last year. For our overall policy, we try through the industrial strategy to ensure that procurement is strategic and takes into account long-term training and innovation requirements.
Guto Bebb (Aberconwy) (Con)
T2. My right hon. Friend is well aware of the scandal of mis-selling interest rate derivatives to small businesses, but despite the establishment of the Financial Conduct Authority redress scheme in January, not a penny has yet been paid out to small businesses. On Tuesday, one small business was offered a redress package for a technical fault of £1.3 million, but the offer was made on condition that no payments would be made by the bank in question unless the business also settled the consequential loss claim. Will my right hon. Friend take up that issue with the FCA and ensure that technical redress is paid prior to any agreement on consequential losses?
Vince Cable
My hon. Friend is right that this is a major scandal and it is being pursued through negotiation with the banks. As he rightly says, there are major anxieties about the terms of the settlement and some of the products currently excluded from it. I will see the head of the FCA next week to pursue the matter in some detail on behalf of my hon. Friend and his colleagues, and I acknowledge the enormous work he has done in the background to bring these problems to proper attention.
Mr Chuka Umunna (Streatham) (Lab)
Businesses, particularly on the high street, have found the trading environment very tough while the economy has flatlined for three years under this Government. Does the Business Secretary agree that increasing parking enforcement charges at this time would be nonsensical and drive customers away from businesses in our town centres at the very time they need that custom?
Vince Cable
Of course there has been a major problem in many of our high streets as a result of the recession, and particularly as a result of the development of internet commerce, which has changed the pattern of shopping. As the hon. Gentleman knows, parking charges are primarily an issue for local authorities, but the Department has developed a strategy with the retail sector to help it develop areas of growth, including export business.
Mr Umunna
The Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), said this week that the Government are consulting on proposals to increase the maximum parking enforcement charges that local authorities may levy outside London—a competence for which they are responsible. Apparently, the Secretary of State for Communities and Local Government thinks that would be a bad idea, but he is in no position to lecture given that Conservative councils impose higher parking charges than others. We are clear that massively hiking parking enforcement charges at this time for businesses and their customers amounts to a stealth tax on our high streets. Why does the Business Secretary not stand up for our businesses and kill off that proposal?
Vince Cable
I already have responsibility for one of the biggest Departments in Government, and taking over responsibility for parking charges from my colleagues and local councils would be an exercise in departmental imperialism that I will not embark on. I note the hon. Gentleman’s question and I am happy to talk to my colleagues in government about it, but he is missing the bigger picture of how we help the retail sector adapt to the massive technological changes that are taking place, and the perverse fiscal incentives that currently operate.
Mark Menzies (Fylde) (Con)
T3. What efforts are the Minister and his Department taking to support small and medium-sized businesses in Lancashire in the export market?
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
My hon. Friend might know that more resource has been made available to UK Export Finance. It is important now to ensure that more and more SMEs understand that export finance assistance is not just something for the large companies, such as Rolls-Royce and BAE, but available to SMEs up and down the country. We will market our efforts there more intensively.
Dr Alan Whitehead (Southampton, Test) (Lab)
T7. Does the Business Secretary agree that the target, set by the Treasury on a moving basis, to be met before the UK Green Investment Bank can actually become a green investment bank—that public sector debt must be falling as a percentage of GDP—presents serious challenges for people planning green and low-carbon investments for the future? If so, will he take the opportunity of the recess to seek an urgent meeting with the Chancellor to see whether he can change that formula, so that the UK Green Investment Bank can actually become a green investment bank in the not-to-distant future?
Vince Cable
I think the hon. Gentleman might have missed some recent announcements. The UK Green Investment Bank is now succeeding and expanding rapidly, having already committed £700 million or more. In the spending reviews for 2015-16 and 2017-18, the Treasury has committed to providing an extra £800 million of funding and to beginning borrowing, initially through the national loans fund, in order to meet the objective I think he wishes to achieve.
Christopher Pincher (Tamworth) (Con)
T4. Boomerang Plastics is an innovative recycling start-up based in Tamworth and looking to expand, but one of its challenges is finding the right space to expand. What are Ministers doing with the Department for Communities and Local Government to encourage developers to construct the right sorts of business parks and to encourage local authorities to offer the right sorts of planning rights to allow firms such as Boomerang to find the space to grow and expand?
Michael Fallon
My hon. Friend raises an important point. It will be for his local enterprise partnership, as part of its local growth strategy, to ensure sufficient space for the development of business parks, so that companies can grow successfully without constantly having to move from their premises and can expand next door.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
There is considerable concern among the further education college sector about the potential low take-up of the post-24 advanced learning loans and the impact that that will have on people’s finances. What assessment has the Minister made of this issue, and what help will he give to those colleges, if indeed there is such a low take-up?
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
Since we launched the loans in April, there has been a robust take-up, and we are working hard to ensure not only that colleges are aware of the opportunities presented by loans to help over-24s to learn at higher levels, but that people are aware of the opportunities available to improve their skills.
Greg Mulholland (Leeds North West) (LD)
It has now been confirmed that the chief executive of the British Beer and Pub Association, the lobbyist for the large pub companies, made two false statements to the Business, Innovation and Skills Committee and said on television that the Government had figures for pub closures, which they do not. The opponents of much needed reform are conducting a campaign of misinformation. What assurances can I get from the Minister that the claims being made, which are simply not backed up by evidence, will not be taken into consideration when the decision is made?
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
My hon. Friend, who has been a strong campaigner on this issue, will know that the Government have conducted a consultation on the proposed statutory adjudicator and code for pubs, which has had more than 1,100 written responses, while we have had more than 7,000 responses to the online survey. Clearly, ploughing through and analysing all that information is taking a little time. He raises concerns about the issues with the Select Committee, but obviously Select Committees can ask further questions of witnesses, if they have concerns. I am happy to meet him, however, to discuss his concerns further.
Mr Bob Ainsworth (Coventry North East) (Lab)
Does the Secretary of State have any plans to look at the Insolvency Act 1986? Hedge funds appear to have the ability to acquire companies, to empty them of their assets, to appoint administrators of their choosing and to proceed without fear of being pursued vigorously. That certainly seems to be what is happening at Coventry City football club. Will he look at the situation and the framework of the law?
Vince Cable
Yes, we are doing just that. I spoke on Monday about that question in the general context of trusted business. We are, indeed, looking at the insolvency provisions. We are looking at insolvency practitioners’ fees, at some of the potential conflicts of interest that arise in that industry and at the regulatory framework.
Fiona Bruce (Congleton) (Con)
T6. Small businesses in Congleton and across the country struggle with the burden of regulations from Brussels. Will my right hon. Friend update the House on the work of the business-led taskforce on EU regulation, which he is chairing?
Michael Fallon
Yes, the Prime Minister and I met the taskforce last week, and I will be meeting it again tomorrow. We have issued a call for evidence, which gives companies large and small the opportunity to provide us with concrete examples of European rules and regulations, including new proposals, that pose unnecessary barriers to the growth of British businesses and need reform. I encourage all hon. Members to ask businesses in their constituencies to submit examples and evidence to the taskforce.
Kate Green (Stretford and Urmston) (Lab)
Ministers are considering responses to the consultation on the recasting of the waste electrical and electronic equipment directive. There are real concerns that the interests of large producers will prevail, so would Ministers be prepared to meet me and representatives of the independent recycling organisations, which have deep concerns, to discuss their concerns?
Michael Fallon
Yes, I would be happy to do that. I know that the consultation has instigated a number of concerns across the sector. I have spoken at one of the conferences involved, and I would be happy to meet the hon. Lady.
Julian Smith (Skipton and Ripon) (Con)
HSBC has shut its branch in Masham and is now doing the same in Pateley Bridge, deep in the Yorkshire dales, in one of the most rural counties in England. In discussions with senior bank executives, will my right hon. Friend make the case for rural areas, lest we get into a banking-free, financial services-free zone in our most remote locations?
Vince Cable
I note what my hon. Friend has said. Of course, it is worth recalling that banking services are being disseminated through the post office network, and one of the consequences of our being able to save that network from large-scale closures is that banking services are available now even in the most remote rural areas.
Paul Blomfield (Sheffield Central) (Lab)
Will the Secretary of State say what discussions he has had with the Home Office about the introduction of cash bonds for student visas, which has had a lot of negative press coverage overseas? Does he agree that the introduction of such bonds, either for student visitor visas or for tier 4 visas, would further damage international student recruitment?
Vince Cable
I am in constant contact with the Home Office about such matters. It is worth pointing out that the concept involves offering the possibility of a bond to people who have otherwise been rejected in the course of a visa application, so if it operates according to that spirit, it should ease, rather than make more difficult, access to visas.
Iain Stewart (Milton Keynes South) (Con)
May I thank my right hon. Friend for his Department’s decision to locate the world’s first Transport Systems Catapult centre in Milton Keynes? Does he agree that it will help to establish this country as one of the world’s leading development centres for transport systems?
Vince Cable
The Government have every reason to be proud of the catapult programme, which is now expanding quite rapidly. We are thereby able, through the Technology Strategy Board, to concentrate research excellence in particular locations. Some, such as those for renewable energy and advanced manufacturing, are now at an advanced stage of development, and I am delighted to hear that my hon. Friend is pleased with the location of the automotive centre.
Mr Jim Cunningham (Coventry South) (Lab)
Will the Secretary of State get together with the Secretary of State for Culture, Media and Sport to have a look at the way in which the Football League applies its regulations to private ownership of football clubs, because there is a diabolical mess at Coventry at the moment?
Vince Cable
Coventry seems to have some problem in that area. I come from the city of York, which went through this misery, as many towns have done in the English league. I can certainly have a look at that; it is not immediately clear to me where I fit into the picture, but I am interested in football and want to see it healthy.
Mark Pawsey (Rugby) (Con)
On employment law reform, does the Secretary of State agree that there would be a significant boost to our country’s small businesses if the cost of attending employment tribunals was reduced, given that, according to his Department, the average cost of successfully responding to and defending a claim is £6,200?
Jo Swinson
The hon. Gentleman is right to raise that issue. It is fair to say that employment tribunals are costly in terms of time, money and stress for everybody involved, both employers and employees, so what we are trying to do through our employment law reforms is reduce the number of cases going to tribunal. We are streamlining the rules of procedure, which should also help to reduce costs, but the really important savings will come from getting more cases resolved through early conciliation, which is what the Government are pressing ahead with.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
This morning the Globe group of parliamentarians held a seminar highlighting the risk of financial instability as a result of the overvaluation of fossil fuel reserves internationally and nationally without taking account of international climate change commitments. Will the Government contact regulators to ensure that they take into account the risks of instability and ensure that we do not see the bursting of a carbon bubble in the way we saw dotcom bubbles burst and other collapses in the markets?
Vince Cable
That falls well outside my area of competence, but I have a personal interest in it. One thing I learnt from my years in the oil and gas industry is that it is very unwise to predict movements in the price of oil, whether up or down. The hon. Gentleman raises an important and fundamental question that I am interested in and will pursue if it is relevant to my Department.
Mary Macleod (Brentford and Isleworth) (Con)
Brompton Bicycle Ltd in Brentford is a brilliant example of British manufacturing and engineering. It has been growing at 25% a year over the past three years, sells 40,000 bikes a year and exports 80% of what it makes to 44 countries. Will the Minister meet me and Brompton Bicycle Ltd to talk about how it can find the funding to buy new premises in order to grow even further?
Michael Fallon
I would be happy to meet my hon. Friend and Brompton Bicycle. I am already aware of how successful and ambitious a company it is. We will do what we can to help it expand further.
Petition
Mr Aidan Burley (Cannock Chase) (Con)
I have great pleasure in presenting this petition in support of a fully used and fully utilised Cannock Chase hospital. Along with other petitions and pledges in similar terms, it has been signed by thousands of my constituents, and constituents of neighbouring colleagues.
I also want to pay tribute to Deborah Hubbard, a former nurse at Cannock hospital, who has amassed more than 12,000 signatures through the “Supporters of Cannock Chase Hospital” Facebook page, for her tireless campaigning to keep services in our local hospital.
The petition expresses the desire of my local community in Cannock Chase, who raised much of the money for the hospital to be built in the first place, to ensure that Cannock hospital is not overlooked in the review that is being carried out by Monitor and the trust special administrators. As colleagues will know, they are looking into the future provision of health services in Staffordshire, following the abolition of the failed Mid Staffordshire NHS Foundation Trust.
The petition reads:
The Petition of residents of Cannock Chase,
Declares that the Petitioners support Cannock Hospital and wish to ensure that it becomes a centre of excellence for elective surgery, fully used, and with a secure and professionally managed future, within the NHS.
The Petitioners therefore request that the House of Commons urges the Department of Health to ensure Cannock Hospital becomes a centre of excellence for elective surgery and has a secure future.
And the Petitioners remain, etc.
[P001216]
Business of the House
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ms Angela Eagle (Wallasey) (Lab)
Will the Leader of the House give us the business for some time in the middle of September?
The Leader of the House of Commons (Mr Andrew Lansley)
The business for the week commencing 2 September is as follows:
Monday 2 September—Launch of the second report from the Procedure Committee on private Members’ Bills, followed by a debate on a motion relating to the future for postal services in rural areas, followed by a debate on a motion relating to the all-party parliamentary cycling group’s report, “Get Britain Cycling”. The subjects for these debates have been nominated by the Backbench Business Committee.
Tuesday 3 September—Second Reading of the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill.
Wednesday 4 September—Opposition day [6th allotted day]. There will be a debate on an Opposition motion. Subject to be announced.
Thursday 5 September—A general debate on high-cost credit, followed by a general debate on the north-east independent economic review report. The subjects for these debates have been nominated by the Backbench Business Committee.
Friday 6 September—Private Members’ Bills.
The provisional business for the week commencing 9 September will include:
Monday 9 September—Consideration in Committee of the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill (Day 1).
Tuesday 10 September—Consideration in Committee of the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill (Day 2).
Wednesday 11 September—Conclusion in Committee of the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill. The Chairman of Ways and Means is expected to name Opposed Private Business for consideration.
Thursday 12 September—Business to be nominated by the Backbench Business Committee.
Friday 13 September—Private Members’ Bills.
I should also like to inform the House that the business in Westminster Hall for 9 and 12 September will be:
Monday 9 September—General debate on an e-petition relating to age-related tax allowances.
Thursday 12 September—General debate on UK trade and investment.
As this is the last business questions before the summer recess, may I, on behalf of the House, thank all its staff for their hard work? I hope that they have a good and very well-deserved break before we return at the beginning of September.
Ms Eagle
I thank the Leader of the House for announcing the business for the first two weeks in September.
It is Nelson Mandela’s 95th birthday today, and I am sure that all Members across the House will want to wish him well as he fights his illness in hospital.
Last week I said that this Government have a blind spot when it comes to women. The Leader of the House told me that he did not agree, so what does he have to say about yesterday’s mocking of the right hon. Member for Chesham and Amersham (Mrs Gillan), who was miaowed and clawed at behind her back while speaking in the Chamber because of the outfit she was wearing? Does he think that this boorish behaviour by his Back Benchers is acceptable?
As the House adjourns for the summer recess this afternoon, may I take this opportunity to thank you, Mr Speaker, and all the House staff for the support provided to Members and their staff throughout the year? We are very grateful to all House staff for the support that they give us.
Before everyone heads off to their constituencies for the recess, I would like to give some end-of-term awards. The Man of the People award goes to the Chancellor for his posh burgers and mockney accent. The Bungle of the Year award goes to the Defence Secretary for his spectacularly bad attempt at making a statement to the House on Army reserves. The most contested category, Smear of the Year, was this week snatched by the late entry by the Health Secretary, ably assisted by his barnacle-scraper, Lynton Crosby.
With the Lords due to sit until the end of July and the Commons not due to return until early September, it is clear that this Parliament is no more joined up than this Government. With the two Houses now completely out of kilter, it is practically impossible for Joint Committees to meet. Does the Leader of the House really think that that is a desirable state of affairs, and will he make sure that this practice is brought to an end?
I note that we are to discuss the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill in the first two weeks back. The Bill is not even 24 hours off the press but it is already being derided by campaigners, charities and lobbyists alike for failing to regulate over 80% of the industry. The Government’s Bill is a cheap, partisan attack on Opposition funding. It is constructed solely to divert attention from the real lobbying scandals of their dodgy donors dinners in Downing street.
It has been a bad week for Australians both in the Ashes and in No. 10. At Prime Minister’s questions on Wednesday, the Prime Minister once more pointedly avoided answering the question of whether he had discussed the plain packaging of cigarettes with Lynton Crosby. The Leader of the House may remember saying when he was Health Secretary:
“The evidence is clear that packaging helps to recruit smokers, so it makes sense to consider having less attractive packaging. It’s wrong that children are being attracted to smoke by glitzy designs on packets.”
Why has he changed his mind on this issue? I wonder whether he agrees with the hon. Member for Totnes (Dr Wollaston), who tweeted yesterday:
“I’ve seen how election strategists drive current policy & simply untrue to suggest otherwise. It’s why we must know who else pays them”.
Quite so. It is clearly now in the public interest that the House is given full information about Lynton Crosby’s influence. At a minimum, he should publish his client list immediately. Will the Leader of the House support our calls for an inquiry into whether the ministerial code has been broken?
In his hysterical attacks on trade unions in the past few weeks, the Prime Minister has been emulating Senator McCarthy, but this week it has been more like Big Brother from “Nineteen Eighty-Four”. In that masterful novel, George Orwell wrote that the Party’s slogan was:
“He who controls the past controls the future. He who controls the present controls the past.”
I think that we might just have found the Conservative party’s new motto.
We may be living in Tory Orwellian times in which the Government think that Newspeak trumps reality, but we will not let their propaganda go unchecked. They can make all the claims they like about the NHS, but we know that it was they who did not act on 14 failing trusts. They can pretend that plan A is working, but we know that we have had a weaker recovery than during the great depression and that long-term unemployment is at a 17-year high. They can blame anyone other than themselves for as long as they like, but the British people will not be fooled. If the Conservatives want to play Orwellian games for the next two years, they can carry on as they did last week, but they should not think for a minute that they will get away with it.
Mr Lansley
I am grateful to the shadow Leader of the House. I am not sure whether, in the midst of what she said, there were any requests relating to the future business, but I will try to answer the points that she raised.
Most pleasurably, I join the shadow Leader of the House in sending our congratulations to ex-President Mandela on his 95th birthday. He is an inspiration and an extraordinary man. The extraordinary nature of his capacities is further illustrated by the promising progress in his health. That is something in which we can all take pleasure.
The hon. Lady asked about the relationship between sittings in this House and in the other place. I am happy to discuss the operation of Joint Committees with colleagues across both Houses. That is something that we should certainly look at. However, it is for this House and the other place to determine when they sit. The other place does not sit in September, whereas we rise earlier for the summer and sit in September. We have different approaches, but they are not necessarily disjointed because there are differences in the flow of business in the two Houses that make them perfectly sensible.
The hon. Lady talked about the lobbying Bill, which was published yesterday. It will indeed have its Second Reading and pass through Committee in the first two weeks back in September. I was surprised by what she said; I do not understand how the Bill can be an attack on Opposition funding since it says nothing about Opposition funding. The only thing that is in the Bill—
Mr Lansley
It is not in the Bill. Let me make that clear to the hon. Lady.
I wrote to the Leader of the Opposition earlier this week because he said in a speech that he wanted the participation of trade union members in the political funds of trade unions to be a deliberate choice. If that is what he wants, the Bill is available as a legislative framework to enable it to happen. If he believes in it, he should be willing to legislate for it. We have made him that offer and he should respond to it. In practical terms, if he wants to take up that offer and demonstrate that he means what he says, he needs to come back to us in the next three or four weeks to enable those amendments to be available for the Committee stage in September.
The hon. Lady talked about the NHS. I have listened to the exchanges, but the shadow Leader of the House should not have entered into the argument about our not doing anything in relation to the 14 trusts. I know about the matter because I have been Secretary of State for Health and shadow Secretary of State for Health. I was shadow Secretary of State when the then Secretary of State and Minister of State stood at the Dispatch Box and told us that Mid Staffs was an isolated incident and that nothing comparable was happening anywhere else in the NHS. They dismissed the idea that there were systemic problems in the NHS—they waved it away. I stood at the Dispatch Box for the Opposition on 30 November 2009 and asked why the then Secretary of State was dismissing the problems at the Basildon and Thurrock hospitals and saying that nothing would be done about them.
When I was Secretary of State, I stood at the Dispatch Box and made it clear that we were taking responsibility by moving NHS trusts towards foundation trust status not on the basis of their finances and governance, but on the basis of achieving quality. I said that we would use the NHS Trust Development Authority to make that happen. Agreements were put in place with NHS trusts to make that happen. I am sorry, but I will not take any lectures from the Labour party on that issue.
I will also not accept lessons from the Labour party on standardised packaging, which again relates to my former role as Secretary of State for Health. I saw what the Leader of the Opposition wrote to the Cabinet Secretary yesterday. I am afraid that it proceeds from a complete misunderstanding or misapprehension of the position. As Secretary of State for Health, I made no bid to the then Leader of the House for a place for such legislation in the Queen’s Speech for this Session. Why was that? As I said in the consultation that I launched on standardised packaging, I had an open mind. My successor as Secretary of State and other Health Ministers have come to the Dispatch Box and said that the Government have continued not to make a decision. As there was no bid from the Department of Health for a place in the Queen’s Speech, there cannot, by definition, have been any decision to take it out. I am afraid that this has all proceeded from a misunderstanding.
To be more cheerful, I hope the hon. Member for Wallasey (Ms Eagle) enjoys the sunshine in Wallasey over the summer. When she is thinking about the Opposition day debate, I am sure she will find that she still has a number of possible subjects to choose from in September. Perhaps she will choose to have a debate to celebrate the Government’s cutting net migration by a third, or a debate to celebrate the fact that the latest unemployment figures are down and employment is up, with 1.3 million more new jobs in the private sector. We are creating jobs in the private sector nearly five times as fast as jobs are being lost in the public sector. Perhaps she will choose a debate to celebrate the crime survey statistics published this morning that show a year-on-year reduction of 9%, taking the figures down to their lowest level since the survey began. That is all being achieved under this Government.
Finally, the hon. Lady talked about a motto. Let me remind her that at the Labour party conference last year, its motto was apparently going to be “one nation”. I have looked, but in this calendar year in this Chamber the Leader of the Opposition has never uttered the words “one nation”. We know why he has not done so. The Labour party is not a one-nation party; it is a trade union party, not the party of one nation. It is owned by the trade unions and it does not represent the people of this country.
Mr Speaker
Order. As usual, I am keen to accommodate the interests of hon. and right hon. Members, but may I remind the House that we have two statements to follow from Chairs of Select Committees, and thereafter two well subscribed debates scheduled to take place under the auspices of the Backbench Business Committee? That means there is a premium now on saving time. We require economy from Back and Front Benchers alike, first to be exemplified, I hope, by Mr Robert Halfon.
Robert Halfon (Harlow) (Con)
Thank you, Mr Speaker. It is now 13 months since the brutal murder of my constituent Eystna Blunnie, and her unborn daughter, who died at the hands of her ex-boyfriend. Domestic violence continues to be a worrying issue in Essex, with a 14% increase in prosecutions in 2011-12. The Crown Prosecution Service has acknowledged that it should have done more in this case. May we have an urgent debate on domestic violence to stop such tragedies ever happening again?
Mr Lansley
I am sure the House will join my hon. Friend in his shock, and that of his constituents, at what happened to his constituent and her unborn daughter. It was a sad and tragic event. It is precisely for the reasons he describes that the Government are doing everything they can to provide support to victims of domestic violence and abuse. The Home Office has produced the violence against women and girls action plan, including a ring-fenced budget of nearly £40 million for multi-agency risk assessment conferences operating over 250 areas across the country. We want an end to all violence against women and girls, and we expect every report to be taken seriously, every victim to be treated with dignity and every investigation to be conducted thoroughly and professionally.
Natascha Engel (North East Derbyshire) (Lab)
When will the Leader of the House bring forward his proposals for improving the Government’s e-petition system by bringing it in-house and establishing a petitions Committee?
Mr Lansley
I am grateful to the hon. Lady for her question. I hope to be able to bring forward proposals on the basis of consensus. I welcome the Political and Constitutional Reform Committee’s report, which is published today. However, I do not share its view that petitions could fuel cynicism. I think it is demonstrable from the Hansard Society’s latest audit of political engagement that the public recognise that the House is debating the issues that matter to them more. The petitions process and the work of the Backbench Business Committee have been instrumental in making that happen. I note, for example, that of the 21 petitions that have reached the 100,000 signature threshold, 20 have either been debated or are scheduled for debate. We can do more and I have said that we can. I am sure we can do that not by transferring petitions to Parliament, with the Government standing back and leaving the process alone, but by engaging together so that the public can petition their Parliament while also seeking action and a response from their Government. I am sure we can work together to make that happen.
Mr David Nuttall (Bury North) (Con)
In the light of the poll just published by the Bruges Group, which shows that 71% of those expressing a preference said that Britain would be better off being a member of the European Free Trade Association than remaining a member of the European Union, may we please have a debate on the potential benefits of becoming a member of EFTA?
Mr Lansley
My hon. Friend will know that if we make progress and get the European Union (Referendum) Bill—which is currency before the House, but which the Labour party, not having voted against it on Second Reading, is now seeking to frustrate by filibustering in Committee, although I am sure Labour will not succeed in that—we will enable a debate not only in this House but in the country so that the people can make a decision. From my point of view, one of the instrumental questions in that debate will be about how the people of this country believe in free trade and see its advantages. That can be achieved, not least through a renegotiation of our membership of the European Union. As my old boss of many years ago, Lord Tebbit, said, he voted for a Common Market in 1975 and he would like to have one.
Mr Bob Ainsworth (Coventry North East) (Lab)
Will the Leader of the House find time for a debate on football governance? Football League appears to be incapable of sticking to its own rules and policies. It has allowed Coventry football club to be taken away and moved to Northampton without having seen a plan for its timely return, and it allowed player registrations to be moved out of the company registered with the league itself through the golden share, against its own rules. If Football League is incapable of sticking to its own rules, the Government should look into that. Will he find time for a debate?
Mr Lansley
I heard what the right hon. Gentleman and his hon. Friend the Member for Coventry South (Mr Cunningham) had to say to the Business Secretary. He and other Members, including my hon. Friend the Member for Nuneaton (Mr Jones), have raised these issues at Business questions in the past, and I know they raise strong feelings. I cannot promise a debate in Government time, but I know that on a number of occasions there has been a compelling case, for many reasons, for the House to consider football governance. It is also something that Members might like to approach the Backbench Business Committee about. I will also talk to my right hon. Friend the Secretary of State for Culture, Media and Sport and see what she can do to respond to hon. Members on this issue.
Tessa Munt (Wells) (LD)
Yesterday the Minister for Schools announced a welcome increase in the pupil premium, targeted at children in difficult circumstances. However, Somerset county council is proposing cuts to its school transport budget, which will hit low-income families, and wants to ask schools to cover 50% of the school transport costs for those young people from the pupil premium they receive. That seems particularly mean and insensitive at a time when those Conservative councillors are giving themselves a 3% pay rise, so will the Leader of the House allow time for a debate? Does he agree that it is unacceptable to claim the pupil premium for that purpose?
Mr Lansley
My hon. Friend invites me to enter into a debate on decisions that are properly those for Somerset county council. If she wants to raise this issue on behalf of her constituents, it would be appropriate to do so on the Adjournment, so perhaps she can seek that opportunity. However, I entirely share the sense of achievement that yesterday’s statement takes us to the point where we are fulfilling the coalition agreement to provide an additional £2.5 billion in support of the pupil premium for the benefit of the most disadvantaged pupils. [Interruption.] I would have thought that that would be something to celebrate on the Opposition Benches, but I was struck by how few Opposition Members were able to come to the Chamber yesterday and express even a sense of appreciation for the resources being provided to support some of the children who are most in need of additional support in our schools.
Mike Gapes (Ilford South) (Lab/Co-op)
Will the Leader of the House take the time to study early-day motion 336, tabled in my name, on Crossrail step-free access?
[That this House strongly welcomes the construction of Crossrail but notes with concern that seven stations on the new Crossrail line, Seven Kings, Manor Park, Maryland, Hanwell, Langley, Iver and Taplow are not planned to be step-free to platforms; notes that despite the assurances given by the Mayor of London (MoL) to the London Assembly on 14 March 2012 that full disabled access will be a facility at each of the Crossrail stations in Redbridge, no estimates have been made of the costs and benefits and no plans put forward by the MoL or Transport for London (TfL) to introduce step-free access at Seven Kings station; calls on the Government and TfL to ensure that funding is made available urgently to ensure step-free access at Seven Kings; considers that the lack of planned step-free access on parts of Crossrail undermines the Government’s aim that by 2025, disabled people have access to transportation on an equal basis with others; believes that in the context of an ageing population, the benefits of accessible transport to disabled and older transport users, parents and non-disabled transport users outweigh the costs of installing lifts; further believes that the exclusion of disabled and older passengers from their local Crossrail station contributes to the marginalisation of disabled and older people in public life; and further calls on the Government, Network Rail and TfL to make Crossrail a truly accessible rail line.]
In that context, may we have an early debate on the failure of the Mayor of London, Boris Johnson, to keep his promise that there would be step-free access at Seven Kings station in my constituency, and on the decisions taken by Transport for London over the past three years to stop work on the lifts at Newbury Park underground station?
Mr Lansley
I will of course look at the early-day motion to which the hon. Gentleman refers. These matters are specifically the responsibility of the Mayor of London, so I cannot promise a debate on them, but in order to help him I will convey his remarks to the Mayor and see what his reply might be.
Miss Anne McIntosh (Thirsk and Malton) (Con)
May I add my congratulations to Nelson Mandela on his 95th birthday? He is a truly remarkable man.
May I tempt the Leader of the House to give us a date for the Water Bill? We were expecting its Second Reading this month, but I note from the business forecast that it is not even scheduled for September. We have heard alarming reports today of possible disruption to our water supplies if there is a drought, and we are still awaiting the reservoir safety guidance from the Government, so it would be helpful if we could have a date.
Mr Lansley
I am grateful to my hon. Friend for her question. It is always difficult for me to resist temptation, but in this instance I am afraid I cannot offer her any guidance on future business beyond what I have already announced. As she knows, however, it is a signal achievement that we have brought forward the Water Bill, including the much sought-after provisions that will enable flood insurance to be obtained by those at risk.
Keith Vaz (Leicester East) (Lab)
A recent report has shown that the University Hospitals of Leicester NHS Trust was the fourth worst performing trust in terms of accident and emergency services, yet five of its chief executives have left over the past 10 years and received substantial pay-offs. Does the Leader of the House agree that it is wrong to reward failure? When may we have a statement on these matters?
Mr Lansley
My right hon. Friend the Secretary of State for Health has been assiduous in coming to the House to make statements on how he is trying to secure the best quality of care for patients and tackling failures, some of which are of very long-standing. The right hon. Gentleman will know that I have visited Leicester University hospitals in the past, and I am very familiar with the circumstances that he has described. I will not go into detail, but I will say that if we are going to make the progress that we need to make in many of our hospitals, we need to bring new leadership to the fore in the NHS. Some of our measures to promote a leadership college in the NHS were particularly designed to bring more clinicians to the point at which they will be able to take chief executive posts across the NHS. There are some excellent examples, including Julie Moore at the Queen Elizabeth hospital in Birmingham, and we need more like her who are in a position to give the hospitals the leadership that they need.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Plymouth university’s Peninsula medical and dental schools have been a great success, and the university is keen to expand its excellent health student offer by establishing a new school of pharmacy to help to address health inequalities in the region. Some might say that we are producing too many pharmacists in the UK, but may we have a debate on pharmacy schools, to give us a better understanding of which regions are losing out?
Mr Lansley
I have had the benefit of visiting the Peninsula medical school, and seen some of the work being done there alongside Derriford hospital and the dental hospital in Truro. I wish it well in its work. We are working towards reforming pharmacists’ pre-registration training in line with the recommendations of the modernising pharmacy careers programme board. I cannot promise a debate at the moment, but my hon. Friend is right to suggest that there is a case for a discussion on pharmacy numbers and training. The House has not considered the matter for some time, and it would be relevant to do so.
Ann Clwyd (Cynon Valley) (Lab)
Thousands of people —including, I hope, everyone in this Chamber—will be heading off shortly for their holidays and are likely to use the motorways. May we have a statement about the regulation of motorway service stations, because all of us who regularly use the motorways know that getting refreshments there is an enormous rip-off. Buying petrol there is an enormous rip-off. Somebody should be regulating these motorway services; it is most unfair to people with families who simply cannot afford to eat at them.
Mr Lansley
I can feel a John Major moment coming on, if the right hon. Lady recalls that.
I will mention the issue that the right hon. Lady has quite properly raised with my colleagues in the Department for Transport—not least because they might have a better answer than I do. For both the public services and the private sector, we always need to look where there is any degree of monopoly of supply. It is important for such issues to be looked at from time to time by the Office of Fair Trading.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
Some months ago, I asked the Leader of the House for a statement on very slow departmental responses to parliamentary questions. My right hon. Friend worked his magic back then, so I wonder whether he could apply the same lubricant to the Ministry of Justice, which is now six weeks overdue in responding to constituent inquiries, including a named day question.
Mr Lansley
My hon. Friend will know the importance I attach to prompt responses to Members and I have sent the Procedure Committee some of the latest data on performance in the last Session. I can tell my hon. Friend that his question to the Ministry of Justice has been answered today.
Jim Shannon (Strangford) (DUP)
Major health problems of diabetes, dementia, cancer, heart and stroke challenge us all. Health is a devolved matter for Northern Ireland. Would the Leader of the House agree to a statement or a debate to facilitate an exchange of information from the devolved Administrations to enable a joint strategy for all to be developed for all of the United Kingdom of Great Britain and Northern Ireland?
Mr Lansley
I know from personal experience that the devolved Administrations and the four countries of the United Kingdom work closely together on health matters and co-ordinate closely, while respecting the devolution settlement. I will see what plans Ministers from the Department of Health have on the specific issues that the hon. Gentleman raises and ask them to respond to him.
Mr Andrew Turner (Isle of Wight) (Con)
Doctors and other professionals are held to account for failures in their performance. Will the Leader of the House find time for a debate to discuss how senior, highly paid council officers can be held to account for the profound damage they cause to education and other services when they leave a trail of incompetence and then just wander away?
Mr Lansley
I can see how people might feel strongly about particular instances of that, but this is happening in the context of a democratically elected organisation. Councils are accountable to their electors, and the officers of any council are directly accountable to the members of that council and the leadership of that council. It is really to councillors themselves and the leaders of a council that my hon. Friend should look on this matter.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
The Leader of the House may be aware of the disappointing increase in the number of service personnel diagnosed as suffering from post-traumatic stress disorder. Given that we sent these service personnel into dangerous conflict areas, we must have a duty of care to look after them when they come home. May we have a debate to assess the size of the problem and what we can do to help our service personnel in their moment of need?
Mr Lansley
I am aware and I know many Members are very much aware and concerned about issues relating to the mental health of service personnel and veterans. The Prime Minister commissioned a report from my hon. Friend the Member for South West Wiltshire (Dr Murrison)—the “Fighting Fit” report—and we have implemented every single one of its 13 recommendations. That puts us in a much stronger place to provide support, and I know that my colleagues in the Department of Health and in the Ministry of Defence will continue to respond on this issue.
Mary Macleod (Brentford and Isleworth) (Con)
With all secondary schools in Brentford and Isleworth being either good or outstanding, I want to commend the work that head teachers and the Secretary of State for Education have done to improve standards. A recent CBI report last month, however, said that 39% of businesses were struggling to recruit STEM workers. May we have a debate on creating a better career service in schools and on how to engage more businesses in education so that we get the right skills for the future?
Mr Lansley
No doubt my hon. Friend will recall a recent debate on careers services that was initiated by the Backbench Business Committee. I agree with her about the importance of this issue. I think that the promotion of traineeships by my colleagues at the Department for Education will be of particular benefit in improving the skills, for employment purposes, of people who are as yet unable to gain access to apprenticeships or college education, but we are also supporting employee engagement in skills through, for instance, the employee ownership of skills pilot. Thirty-seven companies were successful in round 1, and Government investment of up to £90 million was matched by £115 million of private investment.
Chris Bryant (Rhondda) (Lab)
May we have a debate about the relationship between general practitioners and the Department for Work and Pensions? My constituent Fiona Howells is in a really difficult quandary. Atos has decided that she should no longer receive any benefits because, it says, she is fit for work. She is appealing against that decision, which is fair enough, but she has been told that she must provide evidence from her GP. She has been to her GP, who has told her that Bro Taf local medical committee has declared that GPs are not in a position to administer or police the benefits system, and consequently should write no letters—no letters at all—for their patients for tribunal purposes. That strikes me as very callous and unfair. It means that not only are people’s crutches being kicked away, but the carpet is being pulled from underneath them.
Mr Lansley
If the hon. Gentleman has not already raised the issue with the DWP, I shall be glad to secure a reply relating to those circumstances. However, the management of the processes involved in medical assessment for benefits has improved following the Harrington reviews. The Government are continuing to consider the important “fitness for work” report by Dame Carol Black and David Frost—which concerns, in particular, issues relating to GPs and helping people back into work—and hope to introduce measures as a result.
Greg Mulholland (Leeds North West) (LD)
It has not been a bad week for the Australians when it comes to rugby league. They won the women’s, armed forces, police and student world cups in the festival of world cups, while France won the wheelchair world cup. There are exactly 100 days to go until the men’s rugby league world cup, which will be the first major sporting tournament in this country since the London 2012 Olympics. May we have a statement from the Sports Minister about Government support, and will the Prime Minister agree to adopt “Jerusalem” as the anthem for England?
Mr Lansley
I am grateful to the hon. Gentleman for reminding us about both those rugby league world cups. I look forward to watching the men’s rugby league event in the autumn. He may wish to raise the other issues during Culture, Media and Sport questions on the Thursday of the week when we return from the recess.
Kevin Brennan (Cardiff West) (Lab)
Further to our exchange last week about a debate on Prime Minister’s questions, may I ask whether we could, during that debate, consider renaming them “Prime Minister’s answers”? The Prime Minister seems to think that the possessive apostrophe means that his job is to ask the Leader of the Opposition and other Members questions rather than to answer them.
Mr Lansley
I thought that the Prime Minister gave excellent answers to questions yesterday, but if there is a problem with Prime Minister’s questions, the hon. Gentleman might like to worry about who is on his own Front Bench rather than on ours.
Guto Bebb (Aberconwy) (Con)
May we have a statement on the revolving door that exists between the Financial Conduct Authority and the financial sector that it is supposed to regulate? It was announced today that Julia Dunn had moved from the FCA to Nationwide, and on Monday it was announced that Christina Sinclair was moving from the FCA to Barclays. Many small businesses that were mis-sold interest rate derivative products need to be reassured about the fact that the designer of the redress scheme has moved to one of the main sellers of those products.
Mr Lansley
I will of course raise my hon. Friend’s concerns with my hon. Friends at the Treasury. As he will, I hope, have seen in the course of the debate on the Financial Services (Banking Reform) Bill, they are very exercised about these matters and are determined to ensure the highest standards of conduct in the banking and financial services sector, following up on the parliamentary commission.
Diana Johnson (Kingston upon Hull North) (Lab)
We would be outraged if a black person was refused membership of a sports club based on their skin colour, so please may we have a debate on why it is acceptable for Muirfield to ban women from joining its club, and does not that bigoted bunker mentality make the British Open less than open and less than British?
Mr Lansley
Yes, Mr Speaker, the hon. Gentleman is incorrigible.
I entirely agree with the hon. Lady: I think it is entirely reprehensible. We may not be able to have a debate about it, but she has raised the issue and she is right to do so.
Mark Pawsey (Rugby) (Con)
May we have a debate about the procurement policies of Government agencies? Small businesses are the lifeblood of our economy, but are often excluded from tendering for public sector contracts, although there is some good practice, and I am sure the Leader of the House would wish to join me in paying tribute to Rugby borough council who last week received an award from the Federation of Small Businesses in recognition of its small-business friendly procurement policy.
Mr Lansley
Yes, I do take this opportunity to join my hon. Friend in congratulating Rugby borough council on its award from the FSB. The point he raises is very important, and that is why we are taking forward recommendations in Lord Young’s report to simplify and standardise bidding, payment and advertising of contracts, and to reduce complexity costs and inconsistency when trying to sell to more than one local authority. That will include the abolition of unnecessary bureaucracy such as prequalification questionnaires for small tenders. We hope to ensure greater access for SMEs to all the procurement that is available across the public sector.
Toby Perkins (Chesterfield) (Lab)
Following yesterday’s performance by the Prime Minister—and bearing in mind that when we return in September for three days of the second week we will discuss not any of the issues around lack of growth in our economy, but how our politics is done—can we have any confidence at all that he and this Government will take seriously the real concerns about the way the Conservative party is funded? My right hon. Friend the Member for Doncaster North (Edward Miliband) made it clear that the Labour party is going to deal with its issues; when are this Government going to deal with their issues around party funding?
Mr Lansley
I am quite interested that the hon. Gentleman says he wants to talk about issues relating to funding in September. I have just announced business relating to transparency of lobbying, non-party campaigning and trade union administration. That will be at the forefront of business here. The point he makes is that he does not want to talk about growth in the economy, and his right hon. Friend the Leader of the Opposition did not raise issues relating to growth in the economy and employment. Why? Because we are seeing growth: we are seeing increases in employment and we are seeing unemployment coming down because we are seeing a healing economy, one that is in complete contrast to the earlier 7.2% reduction in gross domestic product, a consequence of the bust that happened under the last Government.
Nick Smith (Blaenau Gwent) (Lab)
Payday lenders Wonga lend £1 million a year in Blaenau Gwent borough, so may we have a debate in Government time on support for the better value credit unions, to help vulnerable families?
Mr Lansley
The hon. Gentleman will be aware that the Backbench Business Committee has selected a general debate on high-cost credit to take place on Thursday 5 September, and I am sure that will afford him an opportunity to make his points.
Mr Jim Cunningham (Coventry South) (Lab)
May we have a statement regarding the changing of the goalposts in relation to Remploy employees being able to make social enterprise bids in Coventry and Birmingham? Why have they been lumped together and put out to private tender?
Mr Lansley
The hon. Gentleman will recall that the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Wirral West (Esther McVey), has made two statements in relation to Remploy in recent weeks, but I will of course raise the point he mentions with her.
Bill Presented
Representation of the People Act 1981 (Amendment) Bill
Presentation and First Reading (Standing Order No. 57)
Thomas Docherty presented a Bill to amend the Representation of the People Act 1981 to amend the period of imprisonment which disqualifies a person from membership of the House of Commons; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 6 September, and to be printed (Bill 99).
Backbench Business
Communities and Local Government Committee Report: Private Rented Sector
Mr Clive Betts (Sheffield South East) (Lab)
I beg to move,
That this House has considered the publication of the First Report from the Communities and Local Government Committee, on Private rented sector, HC50.
I am delighted to present the report of the Select Committee on Communities and Local Government on the Floor of the House and I thank the Backbench Business Committee for giving me this opportunity, the first for our Committee. I thank all the Committee members for their unanimous support for the report, the Committee staff, particularly Kevin Maddison, for their excellent work, and our specialist adviser, Professor Christine Whitehead.
Why did we carry out the inquiry? We had two main reasons. First, the private rented sector is growing. In 1999, fewer than 10% of households rented privately. By 2011-12, the figure was more than 17%. More households now rent privately than are in the social rented sector. Secondly, the sector is home to a growing range of people, including, increasingly, families with children. In view of that growth and the changing nature of the sector the Committee thought it was the right time to consider how the sector could better meet the needs of those who live in it.
We make the point consistently that many landlords do an excellent job and our efforts should be targeted at the rogues who let substandard accommodation, often to those in real housing need. During our inquiry, we visited Germany. We are not calling for the German system to be adopted en bloc in this country but there are lessons to learn. We saw the advantages that a mature market brings for landlords and tenants: widespread understanding of rights, good-quality housing and a broad equilibrium of supply with demand.
In England, in contrast, the rapid growth of the sector has left in its wake regulation and legislation that was introduced in response to problems from decades ago. Our report identified a number of areas in which we believe action is required. First, we call for better, simpler regulation—not more of it. More than 50 Acts of Parliament and 70 pieces of delegated legislation relate to the sector. The result is a bewildering array of regulation that few landlords or tenants have a hope of understanding. That needs to be consolidated in a much simpler, straightforward regulatory framework. We have seen what the Government have done to simplify planning regulation: why cannot they do the same thing in this case? That is an obvious question to ask the Government and the Minister for Housing, who I see in his place on the Government Front Bench.
Once a new regulatory framework is in place, we need to publicise it. The Government should work with landlords, tenants and agents groups on a campaign to promote awareness of the new framework once it is produced. We call for a standard, easy-to-understand tenancy agreement on which all agreements should be based. Included with that should be a factsheet setting out clearly the respective rights and responsibilities of the tenant and landlord. We heard far too much evidence that people simply do not understand their rights and responsibilities.
We also say that councils should have the freedom they need to enforce standards and the law. First, they need more flexibility over the introduction of licensing schemes. We heard evidence that these are over-bureaucratic and restrictive in the way they can be used. Secondly, councils should have the power to require landlords to be part of an accreditation scheme. We saw an excellent scheme in operation in Leeds, but the landlords who were part of the scheme and tenants drew attention to the fact that those landlords who caused problems were generally not a member of the scheme. Such schemes should as far as possible be self-funding, with extra charges for those who do not comply. We must ensure that the overall burden of costs shifts to unscrupulous landlords and we call for a review of the level of fines and consideration of the use of penalty charges as ways to improve standards and act against bad practice.
In addition, we were concerned about public money, through the housing benefit system, being used effectively to subsidise landlords who do not meet legal requirements. We therefore propose that local authorities should be able to recoup housing benefit when landlords have been convicted of letting substandard property. To ensure we have a balance and that we are consistent, tenants should also have the right to reclaim rent paid in similar circumstances from their own resources.
A real concern—we probably had as much evidence about this as about anything else in our inquiry—was the need to crack down on sharp practice by some letting agents.
Mark Pawsey
Does the Chairman of the Select Committee agree that one of the most compelling pieces of evidence that we received on that issue came not in a formal evidence session but when we met tenants? A person told us that if he and a colleague were to visit an estate agent’s office where people were selling houses on one side of the room and letting properties on the other, one set of agents would be regulated and the other set would not, despite the fact that both parties going into the agency were looking to do the same thing: find their own home.
Mr Betts
Absolutely, and the hon. Gentleman anticipates my next point. In the report, we welcome the Government’s commitment to a redress scheme, and we hope that our report helps to shape it, but we felt that we could go a little further. On the exact point that he makes, it is quite surprising to people who look at the issue afresh that letting agents are subject to less regulation than estate agents. We believe that they could be put on exactly the same basis. A key point is that the Office of Fair Trading has powers to ban estate agents who behave badly; the same power should be introduced for letting agents.
We also looked at the fees charged by letting agents and found that many of them were unreasonable and unclear. The first step has to be transparency. Wherever a property is advertised to let—in a window, on a website or in a newspaper—it should be accompanied by a full breakdown of the fees that a tenant is likely to have to pay. No more hooking the tenant with a property that they like, and then, once they are interested and are looking to sign the tenancy agreement, letting the hidden fees come out, little by little—drip, drip. We are talking about costs that the tenant never anticipated, and that can run into the hundreds of pounds. Also, there should certainly be no more charging the landlord and the tenant for the same service; that is completely and utterly unacceptable, and should be banned.
An important step in bringing the market to maturity and aligning supply with demand would be to meet the clear need for longer tenancies. The common industry standard is six months. That might be suitable for many mobile, younger people; it is certainly not adequate for the many families in the sector who want a secure home. One renter who came to give evidence to us told us that their 10-year-old daughter had already moved house seven times in her life. That is simply not acceptable. If families move home, it means moving school, and we need to tackle that sort of insecurity.
We need to look at and remove the barriers, real and perceived, to longer tenancies. Limitations in mortgage conditions need to be lifted. We were encouraged by the news that Nationwide building society has begun to allow longer tenancies; we welcome that. We have to ensure that letting agents work with landlords and tenants to make sure that they are aware of the different options for tenancy length. Too many letting agents seem to be hooked on getting repeat fees for short lets. They are almost like the football agent who benefits from constant transfers, rather than players staying at a club for a long period. In return for offering longer tenancies, landlords should be able to evict tenants who simply refuse to pay a lot more speedily.
We looked at safety standards. Safety is absolutely paramount. Landlords who let out death traps must face the consequences. The gas safety regime has gone a long way to making homes safer, but electrical safety is still a blind spot. The Government should develop an electrical safety certificate for private rented properties. It would confirm that wiring had been checked and was in good order, and we think that the check should take place at least every five years. We also call for a requirement that all private rented properties be fitted with a working smoke alarm and a carbon monoxide detector with an audible alarm.
Placing homeless households was another issue to which we gave consideration. Councils can now discharge their duty to homeless households by placing them in the private rented sector without their consent. When councils do this, they must ensure that the accommodation is suitable. As a matter of good practice, they should inspect properties before using them to house homeless families. We are aware that some councils are placing homeless households away from their local area. Where this is necessary, there should be a statutory duty of full discussion, including sharing appropriate information with the receiving authority and, of course, with the prospective tenant.
The Government need to look at how the housing benefit bill is spent in the private rented sector. There are obvious concerns in all parts of the House about the rising bill. We heard from Blackpool about how the market has failed there because housing benefit levels are set artificially high, as the calculation of local housing allowance, which determines benefit levels, includes surrounding rural areas where rents are higher. We heard wider concerns about the interaction between housing benefit and rents. Housing benefits can drive rents up across an area, which in turn leads to upward pressure on local housing allowances, creating a vicious circle and increasing costs for the taxpayer, who picks up the bill. We recommend that the Government conduct a wide-ranging review of the local housing allowance.
We looked at the issue of tax evasion. Very often the tax authorities and councils operate in different worlds. We called for greater co-ordination between councils and the tax authorities, which could go a long way to cracking down on tax evasion, both capital gains tax and income tax. It would be especially effective in areas where a licensing or accreditation scheme was in place and details about the landlords were known. We call on the Government to promote a more joined-up approach to tackling tax evasion, which would benefit us all.
Jack Dromey (Birmingham, Erdington) (Lab)
I warmly congratulate both the Chair of the Select Committee and the all-party Select Committee on this very important report which, while recognising the very important role that the private rented sector has to play in meeting housing need, calls for it to change, introducing greater security, more predictable and affordable rents, and higher quality and effective regulation of the letting agents. Do the Chair and the Select Committee share my hope that the Government will respond quickly and constructively to the Select Committee’s recommendations?
The Minister for Housing (Mr Mark Prisk)
I tried not to intervene earlier, but I want to make it clear that we welcome much of the evidence and ideas in the report. As the Chairman of the Select Committee knows, we are making major progress in terms of investment and righting the wrong arising from the absence of any redress scheme, which was the case before. We have now corrected that. I look forward to having a conversation with the Chair and other Committee members to see how we can push matters further forward.
Mark Pawsey
Does the Chair of the Select Committee agree that it was pleasing that we did not receive any evidence at all from anybody calling for any form of rent regulation or rent control? We recognise that there are problems with some landlords and that people would like to see lower rents, but at no time was a convincing case put to us in respect of rent control.
Mr Betts
The hon. Member is right. We concluded that rent control was not feasible. We were concerned that it could drive some good landlords out of the sector and deter new investment. We certainly agree with the Government that we need to get more investment in the sector. Where we looked at rents, it was in the context of housing benefit and landlords not getting away with receiving rent for substandard properties which they were prosecuted for.
Renting can be an attractive alternative to owner occupation, but we need a mature market that meets many more renters’ needs. We need to drive bad landlords out of the sector altogether and to bring all property up to an acceptable standard. The Committee believes that the measures set out in our report will help to achieve this vision. We look forward to the Government’s response and hope that they will respond positively to our recommendations.
Question put and agreed to.
Political and Constitutional Reform Committee: Wright Reforms
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Graham Allen (Nottingham North) (Lab)
I beg to move,
That this House has considered the publication of the Third Report from the Political and Constitutional Reform Committee, on Revisiting ‘Rebuilding the House’: the impact of the Wright reforms, HC 82.
I am delighted to see you, Mr Speaker, in the Chair for this debate, which has some historical resonance. In 1642, our legislative predecessors fought a bloody civil war to control Executive power. They would be aghast at how their hard-won victory had been eroded and overturned and at how the Government are still not directly elected yet control a legitimately elected Parliament, right down to the minutiae of its daily agenda. They would be surprised at the mindset of many individual Members of Parliament, many of whom remain blissfully unaware of the difference between being in an independent Parliament rather than an Executive sausage machine.
The third report of the Political and Constitutional Reform Committee does not propose a new civil war, or even a proper separation of powers, but we do reserve the right to heckle the Executive steamroller.
I report to the House that we have examined the work of the Wright Committee, named after its Chair, our distinguished former colleague, Dr Tony Wright. I declare an interest, as a member of that Committee. Wright urged major change, calling on the House to give Back Benchers more say in setting the House’s agenda. Wright recommended the establishment of two new Committees: the Backbench Business Committee and a House Business Committee, which would itself have Back-Bench representation. Wright also proposed the introduction of elections for Chairs and for members of Select Committees, and called for various improvements to the petitions system.
The Wright Committee’s proposals were initially blocked by the then Labour Government—the heirs to Tom Paine and the Fabians had long since given themselves up to Sir Humphrey. But then a new Government—yet to be reprogrammed, and with a radical Leader of the House—acted swiftly to implement some of the key proposals.
It is important briefly to recap on some of those proposals, as many new Members may take as obvious what in fact took years to achieve. They will need to work hard to retain these minor improvements and to have a sense of what their generation needs to build for those parliamentarians who come after them.
The election of Select Committees by Members of Parliament in a secret ballot, rather than their being appointed, was one of the biggest steps forward. The second achievement was the election of Select Committee Chairs by MPs in a secret ballot of the whole House, meaning that they now speak for Parliament and their colleagues, not for the Government or the alternative Government. Our report welcomes the consequent advances in the effectiveness and quality of Commons Select Committees, which is broadly recognised by those who gave evidence to us in our proceedings. Yet the report says that some issues remain and must be addressed if the momentum towards an even more effective set of Select Committees is to be maintained.
It is unacceptable that Government Bills are scrutinised by Committees appointed by Government appointees not elected or even approved on the Order Paper of the House. As a minimum, the House should be asked to endorse—and, where it so wishes, amend—those who are proposed for membership of Government Bill Committees. The legislative scrutiny process in Bill Committees is so unchallenging and so irredeemable that some of us actually helped to invent pre-legislative scrutiny to try to bring some order and some sense to it. Our report underlines that pre-legislative scrutiny must in future be standard practice—an integral and mandatory part of the process of consideration for every Government Bill.
Angela Smith (Penistone and Stocksbridge) (Lab)
Does the Committee endorse the use of the Select Committee system for pre-legislative scrutiny, which Labour believes to be incredibly important in ensuring that legislation is rigorous and fit for purpose?
Mr Allen
Proper pre-legislative scrutiny can be undertaken in many ways, including by Select Committees, elected Committees, or a properly elected Bill Committee. It is not beyond the wit of Members of this House to come up with a system that is far better than having colleagues sitting and reading their newspapers, being told what to do and not to intervene. It is our role to intervene during the progress of legislation in order to make it better, and we should not be told by the Government that that is inappropriate behaviour for Members of Parliament.
Mr Christopher Chope (Christchurch) (Con)
Does the hon. Gentleman accept that one way not to do pre-legislative scrutiny is for the Government to publish a Bill one day before we rise for the summer recess, and then in the first week back to have Second Reading followed by Committee stage on the Floor of the House on three successive days, without any chance for Members to scrutinise the Bill?
Mr Allen
The hon. Gentleman—indeed, my hon. Friend from the Political and Constitutional Reform Committee—makes a valuable point, and I suspect he alludes to the lobbying Bill that is being produced with great haste, although no response has been sent to the Committee about the work it did over a year ago in examining that Bill and helping to make it better. Now we are being told that there is no time for pre-legislative scrutiny. We are trying to squeeze it in this afternoon, when we have been told that Members can go home—“It’s a one-line Whip, you can all clear off”—and we are trying, desperately, to get proper parliamentary scrutiny of a Bill that has changed considerably, and answers have not been given to the sensible proposals for improvement made by the Committee. We are then meant to come back after the break and dive straight into Second Reading and consideration of that Bill. It is apposite that at this moment we have a good example of how not to pass legislation, and to produce, in effect, a dangerous MPs Bill, as opposed to a dangerous dogs Bill.
Mr Jenkin
I congratulate the hon. Gentleman on his report and his statement to the House. Will he say a bit more about the selection of Standing Committees? Was not one of the most damning incidents of this Parliament when a newly elected GP was unable to serve on the Standing Committee scrutinising the Health and Social Care Bill? Does he have any remedy for that?
Mr Allen
Had Members of Parliament been allowed to elect the members of a Public Bill Committee, as they should be called, I find it difficult to imagine that colleagues across the House would not have recognised the great talent that was wasted by a process intended to give the Government—in this case the coalition Government, but it happens in every Government—an easy ride as the Bill went through Committee. That is not the way to improve legislation or ensure we do not come back in a year to amend law that was made in haste and without proper expert advice of the sort the hon. Gentleman mentions.
I am delighted that my hon. Friend the Member for North East Derbyshire (Natascha Engel) is in her place because I want to say something about the Backbench Business Committee, which is a substantial achievement of the Wright reforms. It demonstrated, as Wright and members of that committee intended, that Parliament is perfectly capable of maturely and competently running part of its own agenda. Once the children have been given a little responsibility, we can see how good they can be. Perhaps we now need to go further and build on the serious and considered approach that my hon. Friend has been instrumental in achieving—she may want to comment on that.
Natascha Engel (North East Derbyshire) (Lab)
I was saving my comments for when we discuss e-petitions, but one recommendation in the excellent report published today by the Political and Constitutional Reform Committee, and something that the Backbench Business Committee has really felt the lack of, concerns the presence of members from minority parties. How does my hon. Friend think that recommendation should be brought forward so that we can have full membership from the minority parties on the Backbench Business Committee?
Mr Allen
I will gladly give way again to my hon. Friend, who I know wants to make a point about e-petitions. She raises a serious point about the representation of minority parties, which is in a sense an unwitting casualty of the way we decided to elect members to Select Committees. That should be put right, and, to do that, the report makes certain recommendations. One possibility would be a reserve place that the Speaker could nominate to remedy any obvious injustice, but there are many other possibilities. If MPs were allowed to get on with it, we could deal with it ourselves, without the Government, whom after all we are meant to scrutinise, telling us how to do it. Parliament is perfectly capable of resolving the issues she raises.
The Deputy Leader of the House of Commons (Tom Brake)
I welcome the report’s publication and thank the hon. Gentleman for pursuing these matters so assiduously. Wright urged major change, much of which we have delivered; indeed, the hon. Gentleman has already referred to things such as the Backbench Business Committee, pre-legislative scrutiny and more time on Report. I suspect that the unfinished business that he is about to come on to is the House Business Committee, and I can assure him that there is not a closed door on that. We have put forward certain tests, however, that I hope he will respond to positively before pursuing the matter further.
Mr Allen
We are always grateful for any crumbs handed to us from the Executive and we are extremely grateful for those things gifted to us, even if—I must say—they have come after extensive struggle, campaigning and organising over many years. I am grateful that some of these minor things have been proposed, but we need to do far more for ourselves, without the benefit of the assistance of the Government. The work of my hon. Friend the Member for North East Derbyshire on the Backbench Business Committee proves, if it need be proved, that we are perfectly capable of running more of our own affairs.
I will come on to the House Business Committee shortly, but I am genuinely grateful to the Deputy Leader of the House of Commons for saying that the door is open. We will continue to press and push gently at the door and provide him with a road map that will not frighten the horses but will give MPs some say over the rest of their agenda.
There remain areas where we could help the Backbench Business Committee even more. Timetabling Back-Bench business on Thursdays, as often happens, lowers its status. Much, if not all, of that business could, and should, be taken at a time when the House is better attended. When the Front Benchers have had their spotlight, they have little interest in keeping Parliament well attended. We got a pager message yesterday telling us we were on a one-line Whip, which basically meant, “You can clear off, if you want to”, rather than listen to a Select Chair introduce an important report on local government and to other important issues that do not get the attention they should.
In this respect, despite Wright, the House remains subordinate to the Government. In that, we do not acquiesce; the fundamental principle remains that all time in here should be regarded as the House’s time. We believe that the present procedure for setting the agenda for most of the House’s business, which is not under the auspices of the Backbench Business Committee, is inadequate and disrespectful to Parliament, remaining in clear violation of the principles in the Wright report. The need for reform is obvious and urgent, so we remake—not make for the first time—the case for a House Business Committee, which has been accepted and signed up to by the Government. I shall quote the coalition agreement.
Mr Allen
I will be glad to, if the hon. Gentleman will allow me to read out this quotation about the solid commitment to a House Business Committee that his coalition Government have signed up to. It reads:
“We will bring forward the proposals of the Wright Committee for reform to the House of Commons in full – starting with the proposed committee for management of backbench business. A House Business Committee, to consider government business, will be established by the third year of the Parliament.”
That is a direct quote from the coalition agreement between the two governing parties, but it has not yet been fulfilled.
John Hemming
I congratulate the hon. Gentleman on his work. Does he agree that one of the difficulties at the moment is that procedure is often used to prevent the will of the Executive from being tested against the will of the whole House, and that we need the opportunity for the latter to be tested, not prevented from being expressed by the use of procedural mechanisms?
Mr Allen
Most western democracies have a separation of powers, which allows an independent legislature to hold the Government to account. That is all we ask. Gladstone once said that the role of Parliament is not to run the country, but to hold to account those who do. It is an absolute injustice, and it flies in the face of natural justice, that those who are meant to be scrutinised are appointing and selecting those who are meant to carry out the scrutiny. Parliamentarians across the House must continue to try to do something about that.
Mr Jenkin
I am struck by the evidence that the hon. Gentleman cites in paragraph 76 of his report from Dr Meg Russell, who said:
“A House Business Committee already exists inside Government. It meets weekly. I used to attend its meetings when I was a special adviser to the Leader of the House.”
Why cannot this Committee be answerable to this House instead of just being a creature of the Executive?
Mr Allen
We are always trying to help the Executive—it is like the shrunken mouse trying to help the highly strung 800 lb gorilla to see the way forward. None the less, we will try to be as helpful as possible. My Select Committee has proposed a number of ways forward to the goal that was signed up to by the coalition parties, and they are outlined in our report. We show an immediate way forward. The Deputy Leader of the House said that we need to meet a number of tests to have a House Business Committee, but I am amazed at that, given the solid promise made to the electorate. It is another little obstacle, but I believe we have helped ourselves overcome that. If he reads the report, which is out today, he will find a menu of possibilities that will help him to fulfil that solemn promise, which his party and the other party in the coalition made to the electorate.
The Government should always get their business in this House, and we have never said anything other than that. However, the House Business Committee could be used for consultation rather than decision; that is one of the options. As our report outlined carefully, the opportunity is there for the Government even to have the nuclear weapon of voting down any business that they felt had somehow crept through all these safeguards and got to the Floor of the House—they would still have that nuclear weapon of saying no. It would never be used, but we included it as a final reassurance.
My Committee believes that colleagues from all parts of this House should take confidence from the progress of the Backbench Business Committee and use that as a base from which to build an ever-stronger and more independent House of Commons and Parliament.
Madam Deputy Speaker (Dawn Primarolo)
Order. May I gently say to the hon. Gentleman that the Backbench Business Committee recommended up to 15 minutes for this debate and we have other business to get through? I know that he is covering important topics of interest to Members of the House, but I ask him to bear it in mind that we have a very busy afternoon, with other Back Benchers waiting to speak.
Jane Ellison
I look forward to reading the report in full with great interest. Does the hon. Gentleman agree that his idea about consulting the House Business Committee might allow timetabling to be done much further in advance for Back-Bench debates for which Members need to prepare more thoroughly? One good example of that was the assisted dying debate, for which Members were given almost a month’s notice and, as a result, we had a well attended and well informed debate.
Mr Allen
The hon. Lady makes a strong point that I agree with wholeheartedly. We will all be better able to plan our week ahead, our month ahead and our long-term calendar, if people listen to representations such as the one she makes.
Finally, on petitions, we must separate Government petitions from Parliament petitions. It is no good the Government having a website and then fobbing stuff off on to Parliament, implying that if people can get 100,000 signatures, they are pretty much entitled to a debate. It is not the role of the Government to do that. These things should be distinct; there should be a clear separation of petitions to Government to get stuff done by the Executive and our own petitions process in this House—electronic, too—which would allow Parliament to be lobbied and allow debates to be requested, with no further implication and no lack of clarity about the fact that 100,000 signatures may or may not entitle someone to a debate. The current position is wrong, false and deceiving, and it adds to the cynicism out there.
A lot of progress has been made, but there is a lot of unfinished business. I urge Members to be vigilant, for what we have won can be taken away. We must work together across the House to ensure that the inroads made by the Wright Committee lead ultimately to an effective and independent Parliament so that both Parliament and the Executive become fit for purpose.
Question put and agreed to.
EU-US Trade and Investment Agreement
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
John Healey (Wentworth and Dearne) (Lab)
I beg to move,
That this House has considered the economic implications for the UK of an EU-US Trade and Investment Agreement.
I was glad to secure this debate, with the support of the hon. Members for Aberconwy (Guto Bebb) and for Carmarthen East and Dinefwr (Jonathan Edwards), and I am glad to open it within a week of formal negotiations starting in Washington on a comprehensive trade deal between the European Union and the US or, as we have been led to refer to it, a transatlantic trade and investment partnership. It is fitting that the debate should be taking place in Back-Bench business time, because I think that underlines the strong cross-party support for a full and fair trade deal, so long as it is clear that there will be benefits to British consumers and workers as well as British businesses.
Julian Smith (Skipton and Ripon) (Con)
I pay tribute to the right hon. Gentleman for his work in setting up the all-party group on European Union-United States trade and investment and ensuring that this activity has been cross-party. The Prime Minister played a major role in making the agreement a major part of EU-US negotiations, but the right hon. Gentleman really put the cross-party approach front and centre.
John Healey
I am grateful to the hon. Gentleman. He is right that the UK has for some time been one of the prime movers in the argument for a comprehensive transatlantic trade deal, which is a point I will return to later.
The fact that this debate has been initiated by Back Benchers from both sides of the House does not absolve the Government from the responsibility to ensure that the public are properly informed about the negotiations and the potential for this deal, or that the House has a regular opportunity to debate progress and scrutinise the actions the Government are taking to secure a successful agreement. That cross-party, and indeed all-party, support and interest was evident two months ago when, as the hon. Member for Skipton and Ripon (Julian Smith) mentioned, we set up the all-party group, which I am fortunate enough to chair. We are working closely with the well-established and well-regarded British-American Parliamentary Group, of which Mr Speaker is the distinguished chair. We have set up working relations with the TUC, the CBI and Which?, and we have now been offered welcome administrative and policy support from BritishAmerican Business, which of course is the joint US-UK chamber of commerce.
The aims of the all-party group are: first, to provide a focus for UK parliamentary cross-party support for a comprehensive trade and investment agreement; secondly, to contribute to better public understanding of the potential benefits that such a deal could bring to consumers, workers and businesses across Britain; and thirdly, to strengthen the scrutiny that Parliament can exercise over Government actions towards securing such a successful agreement.
Mr William Cash (Stone) (Con)
The right hon. Gentleman may know that the European Scrutiny Committee is looking at the whole question of the scrutiny of this agreement and, indeed, other free trade agreements. One of the problems is that the negotiating mandate is not available to Parliament on the conventional basis until the conclusion of the agreement. We are pursuing that matter with the Prime Minister, and I have just received a letter from him about it. I shall refer to that in my speech.
John Healey
I am grateful for and interested by that intervention. I will come to the general questions of the relationship between the UK Parliament and the UK Government and the requirement for a better and more formal system of scrutiny of decisions and involvement in the European Union. I will be interested to hear the hon. Gentleman’s remarks when he contributes to the debate.
Finally on the all-party group, we see this as active but time limited to the period of negotiations towards what we hope is a successful conclusion of the deal. Personally, I hope that Presidents Obama, Van Rompuy and Barroso are right when they declare that they want this deal done within two years.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Does the right hon. Gentleman agree with the Ifo Institute that the UK has the most to gain from a transatlantic free trade agreement, but the problem is that we are likely to be hampered by the foot-dragging and protectionism of other EU member states? Given that non-EU member states in Europe already have free trade agreements with the United States, it remains an option for us to leave the EU and enjoy our own free trade agreement with the United States. Can he think of one reason why we do not have a free trade agreement with the United States like that of Switzerland? Is it because we are in the EU?
John Healey
If the hon. Gentleman looks, for instance, at the Bertelsmann Institute’s report, he will see some interesting evidence on the assessment of the potential impact of a comprehensive deal. It points out that the countries that are in Europe but not part of the European Union are likely to lose out the most. Britain could gain tens or even hundreds of thousands of new jobs in the long term through an agreement. In contrast, countries such as Iceland are set to lose at least 1,000 jobs, while Norway is set to lose about 11,000 jobs. In other words, the countries in Europe that are not party to the agreement are likely to lose out in future. The evidence is rather different from that which the hon. Gentleman cites.
John Healey
I will, and then I will make some progress, because I am conscious that the Deputy Speaker might want me not to delay the House for too long.
Mike Gapes
I must declare that I went to Korea last month, and my entry will be in the Register of Members’ Financial Interests. Is my right hon. Friend aware that as a result of the EU-Korea free trade agreement there has been a significant increase in British trade with and exports to South Korea in the past year? We will therefore clearly benefit from being part of the European Union negotiation with the United States.
John Healey
My hon. Friend has a great deal of expertise and experience in this area, and he makes a strong case. I think that there is a cross-party view, irrespective of views on the British place within Europe, behind the value of well-negotiated and fair trade deals. The example of the Korean deal demonstrates that a deal negotiated through the European Union has particular benefits to Britain.
This debate is welcome though somewhat overdue. About three months, ago I contacted the House of Commons Library to ask for a briefing on the EU trade and investment deal. I said to the researcher, “I’m sure you’ve got something on the stocks; perhaps you could just update the standard briefing that you’ve got.” The response was, “We don’t have one. No one’s asked about this before.” The Library subsequently produced a very good briefing, as well as a very good briefing for hon. Members for this debate. That briefing, combined with the research that the Centre for Economic Policy Research has produced for the European Commission and the impact assessment produced by the Department for Business, Innovation and Skills, underlines just how important and ground-breaking this deal could be. Simply put, these are the biggest, most ambitious, best prepared bilateral trade negotiations ever. This would be the first ever such deal between economic equals. In other words, the partners have no significant imbalances in power or wealth.
Why do I say that these are the biggest negotiations? Together, the European Union and the US account for about 30% of global trade and almost half the world’s output. The more reliable of the studies and assessments suggest that if the deal is done, it could bring a boost to the UK’s national income of between £4 billion and £10 billion, and a boost to our exports of between 1% and 3% a year.
Why are they the most ambitious negotiations? The transatlantic trade and investment partnership aims not just to remove the remaining tariff barriers to trade between the EU and the US, but to reduce the non-tariff barriers by aligning the regulations, rules and standards to which we operate. It also aims to open the markets in services and public procurement.
Finally, why are they the best prepared negotiations? Really serious work has been going on for almost two years since the high-level working group on jobs and growth was set up between the EU and the US in November 2011.
It is important to remember that this is potentially a deal on trade and investment. Although the two-way trade between the EU and the US is worth about $1 trillion a year, the two-way investment flow is worth about $3.5 trillion each year. Of course, trade and investment have both been sole competences of the EU since the 2009 Lisbon treaty.
Mr Jenkin
I am interested in that aspect of the agreement. Historically, the UK has been able to access foreign direct investment free of EU interference. If such investment becomes subject to an international agreement, it will effectively become an exclusive EU competence. The other member states have been very jealous that we get so much foreign direct investment. How can the right hon. Gentleman be so sure that the deal will not be used to hamper flows of foreign direct investment into our country, because that would affect us far more than our fellow member states?
John Healey
Investment is already an EU competence. The deal is not about controlling the flow of investment, but about creating the conditions in which greater investment can flow across the European Union, including to Britain. All the impact assessments, including the one that the hon. Gentleman cited earlier, suggest that that would happen if we secured a comprehensive agreement.
Gordon Banks (Ochil and South Perthshire) (Lab)
Does my right hon. Friend agree that the UK economy would benefit from an opening up of the US economy, and that the Government should seek to gain access to that marketplace for our small and medium-sized enterprises to provide a stimulus to the UK economy?
John Healey
I suspect that in my hon. Friend’s area, as in mine, many of the important and good small and medium-sized companies depend on trade and export for their success. The agreement certainly has the potential that he mentions, but realising it requires the Government to ensure that it does benefit small and medium-sized firms.
One or two of my friends have said to me recently, “Look, you are a Labour politician on the centre left. Why on earth are you supporting a deal that looks set to reinforce the cause of global capitalism?” I have three answers to that. The first, quite simply, is jobs. The success of many good south Yorkshire firms depends on increasing opportunities for export and trade. This deal could bring that boost to jobs and the economy in south Yorkshire, as well as the whole of Britain.
Secondly—this may break the sense of cross-party unity—I see the deal as a way of regulating global capitalism. It is indisputable that the EU and the US have some of the highest standards of consumer safeguards, environmental protection, employment rights, legal process, trade rules and regulations. Together, as the two biggest economies, we have the opportunity to set standards and regulations that could become the benchmark, or gold standard, of any bilateral and multilateral deals.
Julian Smith
Will the right hon. Gentleman confirm that he is not talking about formal regulation? There is a huge opportunity for mutual recognition of standards, but we are not looking for Marxist-style overarching regulation of the world.
John Healey
The hon. Member for Stone (Mr Cash) mentioned the negotiating mandate that has not been formally published, but has, in an unorthodox way, been made available. That certainly does not talk about a Marxist global system. However, given the size of the economies and the potential scale of the agreement, setting mutual recognition standards on workers’ rights, environmental protection, consumer safeguards, trade rules and legal process can set the standard we expect, and lead other parts of the world on, in future deals.
Mr John Spellar (Warley) (Lab)
Does my right hon. Friend not agree that that last exchange was enormously revealing? There is a tendency in part of the Conservative party to follow the Tea party Republicans: the sort of 19th century Republicans that let the robber barons run loose. They even step back from that great Republican President Teddy Roosevelt, who took pride in being a trust buster. They are the party of the robber barons. They are the party that supports the tax evaders. They do not want to regulate at all.
John Healey
My right hon. Friend makes a strong and vivid point. It will be interesting to see the degree of unified purpose and support on the Opposition Benches, and the divergent, not to say conflicting, views on the Government Benches.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
I intervene not necessarily to score a political point, but to make the point that between the World Trade Organisation, the International Labour Organisation and UN conventions, the EU and the US are already signed up—and are trying to sign up other countries, such as China—to raising important standards. Is that not what we want the treaty to advance?
John Healey
Indeed. In this post-global financial crisis period, and the global downturn in trade that followed, there is a crisis in citizen and consumer confidence in business. Reasserting that confidence will require standards and agreements that people believe will benefit them, their families and their areas, and are not just deals done by politicians and big business in the backrooms of Brussels.
John Hemming (Birmingham, Yardley) (LD)
Will the right hon. Gentleman give way?
John Healey
The hon. Gentleman is the only Liberal Democrat in the Chamber, so I am delighted to give way.
John Hemming
I thank the right hon. Gentleman for giving way and congratulate him on his all-party work, which he is very good at. I agree that the views on the Government Benches are not united. I have a lot of sympathy with the idea of maintaining minimum standards.
John Healey
I am grateful for that continuing cross-party support at least. [Interruption.] The Minister is chuckling away; I look forward to hearing what he has to say a little later.
I have a third answer to my friends who ask why I am backing the deal, and it is this. I am pro-European and pro-internationalist, and I think this potential agreement underlines more clearly than anything the benefits for Britain of being part of the European Union. Those benefits would be simply unavailable if Britain left the European Union and tried to go it alone.
John Healey
I will give way to the hon. Gentleman; then I would like to quote President Obama to him.
Neil Parish
Does the right hon. Gentleman not see that there is sometimes a conflict between international trade and the situation in Europe? My experience is that sometimes the way in which Europe organises trade is far too prescriptive and can be a barrier to greater international trade, rather than progressing it.
Madam Deputy Speaker (Dawn Primarolo)
Order. Before the right hon. Gentleman quotes President Obama, I would gently remind him that he has been speaking for 20 minutes and I will have to set a time limit on Back-Bench contributions in this debate, so I would be grateful if he began to bring his comments to a conclusion.
John Healey
Thank you, Madam Deputy Speaker; I will indeed. I think I have spoken for probably not quite 15 minutes, given the interventions I have taken, but I am conscious of what you have said.
When President Obama was with our Prime Minister in Washington in mid-May, he put it very delicately:
“I think the UK’s participation in the EU is an expression of its influence and its role in the world, as well as, obviously, a very important economic partnership.”
However, his officials were much blunter. They made it clear that there would be little appetite in Washington and no deal for Britain if it left the European Union. I have already said to the hon. Member for Harwich and North Essex (Mr Jenkin) that some of the research suggests that European countries that are not part of the European Union would lose out most in the event of such an agreement.
However, this agreement must be well regulated and command public confidence. It will not and cannot be a deal done in the diplomatic backrooms, because Congress and, now, the European Parliament must approve the terms of any agreement. The European Parliament has already shown its mettle in rejecting the anti-counterfeiting trade agreement that was recently negotiated, including with Japan, Australia, Canada and the US. Unanimity, and not just a qualified majority, may well be needed in the Council of Ministers to approve some parts of any future agreement in, say trade in services, intellectual property, foreign direct investment and anything to do with social, education or health services. There is also a case for expecting any agreement to involve mixed competences. In other words, there could be a contestable case that member states, rather than the European Parliament and the Council of Ministers, will have to ratify any elements of such an agreement dealing with, for instance, intellectual property, transport or investor-state dispute mechanisms.
Let me begin to wind up. There are four things that the Government could do to help to secure a successful, well negotiated agreement that commands wide support. First, they should swallow hard, accept that we are in the hands of the European Union and throw their weight behind the Commission’s negotiators. That means—I say this to the Minister—no public criticism, no freelance discussions with the US and no distancing ourselves from the deal while it is being negotiated.
Secondly, the Government should map and publish the jobs linked to foreign direct investment and exports in every area of Britain. The US does that on a state-by-state basis for every member of Congress and every Senator. Even the British embassy in Washington, together with the CBI, has produced a state-by-state analysis of the jobs there that are linked to exports to the UK. Surely we can do that for ourselves in Britain as well.
Thirdly, the Government should deal with the fears that will arise during negotiations that could derail public or parliamentary support for the agreement. These include concerns about the NHS being opened up to big US health care companies and concerns about employment, consumer or environmental standards being weakened. There might also be concerns about the investor-state dispute system—even though the EU and the US have long established traditions and well proven systems of due process, the rule of law and respect for property rights—particularly when an ISDS is being abused in the way that Veolia, the French company, is abusing the system in trying to sue the Egyptian Government for raising the national minimum wage.
Fourthly, the Government should make the process open and transparent to the public and Parliament. In the US and the European Parliament, the negotiators are holding briefing sessions—in the Parliament and with the Parliament—before and after each set of negotiations. They are also doing that with wider interest groups and making public some of the position papers as they go into the negotiations. I would like much more formal reporting and accountability of the UK Government to Parliament on EU matters. Other countries, such as Germany, Portugal and Denmark, have formal legal agreements with their Governments and Parliaments covering negotiation mandates, the provision of documents, and notification and reporting arrangements. It would help to build wider confidence in, and strong democratic influence on, our involvement in the European Union if we followed that sort of model. We can start on this European trade and investment agreement.
Today we are at the start of the negotiations on what could be a groundbreaking US-EU trade deal. We are at the start of the debates that this House will have and the scrutiny that we must offer of the Government’s contribution to those debates. This is the first such debate but—I hope and expect—certainly not the last.
Madam Deputy Speaker (Dawn Primarolo)
Order. Given the number of Members who wish to participate, the time limit will be seven minutes, but it might be necessary to review that as we progress through the debate.
Mr William Cash (Stone) (Con)
It is quite a big ask to do it in seven minutes, Madam Deputy Speaker, although I will not attempt to go through all the issues for that reason. I am extremely aware of the time constraints, so I will try to concentrate on the main issues and set out some headline points that are worth bearing in mind.
Curiously enough, I approach this issue in line with the EU constitution, by applying the precautionary principle. I would not want to be over-enthusiastic about something until I knew what the terms were. There has been a great deal of hype about this issue and some exaggerated views expressed. I would be cautious, for a variety of reasons, about making any assumptions that such an agreement will ever happen, given the Doha round and all that happened there. Nor would I wish to become over-excited about it necessarily bringing the benefits that have been described, because nobody knows.
Part of the reason for that is that the negotiating mandate is not available, as I said in an intervention. As Chairman of the European Scrutiny Committee, I have correspondence with the Prime Minister and the Minister for Trade, Lord Green. At the moment, the whole thing is under discussion. Let me quote from a letter I received on 10 July from the Prime Minister, in which he said:
“Both the EU and the US are aiming for the maximum level of ambition”—
I am always keen on ambition, as long as it does not vaunt itself—
“in these trade negotiations.”
The letter continues:
“This means that all sectors are within scope, except, as I mentioned, the audiovisual sector”—
that was in reply to a point I made the other day in response to a European summit statement—
“although there is the option to include the sector at a later stage in the negotiations.”
The letter continues:
“The areas normally covered in a trade agreement with a developed nation will be included. This ranges from trade in goods, services, public procurement, to regulatory issues and rules in intellectual property rights, sustainable development and customs. Some of the issues covered are areas of Member State competence or shared competence; the EU’s negotiating mandate was therefore agreed by consensus.”
Whenever I hear the word “consensus” in the context of EU administrative arrangements, I get slightly concerned, to say the least, because it means that a deal has been done behind closed doors. We know that the negotiating mandate is being discussed behind closed doors, and we need to know who is going to benefit most from these arrangements, and in which sectors.
We have only 12% of the votes in the qualified majority voting arrangements. This is an exclusive competence of the Commission, which drives the entire operation. It has no particular interest in what goes on in the United Kingdom, and I am entirely dubious about the claims that this agreement would generate £10 billion-worth of advantage to the UK. I do not know whether it will, and I do not think that the people who are saying that know. As Chairman of the European Scrutiny Committee, I would like to insist—so far as I can—that we be given all the necessary information.
Julian Smith
Does my hon. Friend agree that the 12 or 13-person team from the Department for Business, Innovation and Skills and the Foreign Office that focuses on trade should try to achieve some of the things that he is looking for when influencing the UK’s position in this deal?
Mr Cash
I am sure that they will do their best, but whether they will do well enough has yet to be established. If we do not know what is going on during the negotiations —and if we do not even know what the mandate is—I must express my concern on that count alone.
I shall continue to quote from the Prime Minister’s letter:
“As David Lidington told your Committee when he appeared before it on 4 July, while the confidential nature of such negotiations means that formally depositing documents is not possible”—
which I have to say concerns me greatly—
“Ministers will keep the Committee abreast of significant developments in writing and we are happy to offer the Committee informal, private briefings on the progress of negotiations.”
We will be monitoring all this. I see that the Chairman of the Business, Innovations and Skills Select Committee, the hon. Member for West Bromwich West (Mr Bailey), is in the Chamber, and I would be happy to exchange ideas and thoughts with him on this. He was a member of the European Scrutiny Committee with me for many years.
Mr Jenkin
Does my hon. Friend agree that the challenge will be to reconcile the differing objectives of the member states? That will be extremely difficult because, as a major European economy, we uniquely depend on imports, and we export more to the rest of the world than all the other member states except Germany. At the same time, we are dependent on trade with the EU. We have a unique set of circumstances and a unique economy, and it is going to be extraordinarily difficult to reconcile our requirements with those of the other, very different economies of the EU in one single agreement.
Mr Cash
I very much concur with that.
A number of extremely learned articles have been written about this matter, and they show that many European countries stand to be gravely disadvantaged by the deal. I cannot claim that we would be exclusively enhanced by it, but many of the Parliaments and trade associations of many other countries will also be watching these developments. Several countries will be given quite a jolt. An article entitled “Transatlantic free trade: boon or bane for economic cohesion in the EU” states:
“in a broad free trade agreement, trade activities between Great Britain and Sweden as well as between Great Britain and Spain are expected to drop by about 45%. Likewise, Sweden’s imports and exports with Spain and Finland will decline by 40%, and Irish-Dutch trade relations will shrink by 35%.”
All those factors must be taken into account.
However enthusiastic we may be about the concept of free trade, it is important to ask whether the deal is actually to be beneficial to the United Kingdom. It is our task to secure such benefits, and not only that of the EU. We also trade with the whole of the Commonwealth, and our trade relations with the emerging countries, the Commonwealth and the rest of the world have been improving. We have a net surplus of trade with the rest of the world of about £15 billion a year, according to the latest figures for 2012. However, we have a trade deficit with Europe. The figure for 2011 was minus £47 billion; it is now minus £70 billion. The Germans, on the other hand, had a surplus in 2011 of £30 billion, and it is now £72 billion. Many people believe that the United States will benefit the most from the deal, and those figures suggest that it will weigh up all those factors when dealing with these questions. This is a potentially difficult situation that will have to be dealt with.
An article in the Financial Times states:
“There would also be damage around the world from a sweeping US-EU deal. Advanced countries such as Canada, Australia and Japan would suffer, as would many emerging economies. Mexico and Chile, which have strong trading ties with the US, would be among the worst hit, along with most of Africa, Asia and Latin America—with the exception of Brazil.”
Brazil is in a lot of difficulty at the moment, however. The article continues:
“China’s trade flows with the US would shrink”.
There are many elements of all this that need to be thought out.
In the short time left, I shall draw the House’s attention to an article in Economia by Zaki Laïdi, entitled “Europe’s bad trade gamble”. Mr Laïdi is Professor of International Relations at the institute of politics known as Sciences Po in France. I am not saying that he has all the answers, but his article is well worth reading and can be obtained from the Library.
There are many conflicting views of the benefits that could be derived from the deal. The European Scrutiny Committee has made inquiries of the Government, and I would dispute the advantages of the EU-Korea free trade agreement. We know what the position is with regard to the EU, but unfortunately we cannot make any comparison with that arrangement to substantiate the claims of advantages for the UK.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I congratulate my right hon. Friend the Member for Wentworth and Dearne (John Healey) on securing this debate. It is fair to say that, although the issues we are discussing have exercised the financial press, their implications have not yet achieved high levels of visibility among the general public. I hope that this debate will at least go some way towards rectifying that. Given the limited time available, I will not talk about the more general issues. Instead, I shall focus on the implications of an EU-US trade agreement for my own area. My right hon. Friend mentioned the need for the Government to demonstrate what the potential impacts would be in local areas, and the fact that some of the issues would be of particular importance to the west midlands and the black country has not hitherto been recognised.
Historically, the area’s manufacturing has been dominated by the car industry, which has suffered for many years but is now undergoing a renaissance, largely as a result of the foreign direct investment by the Tata brothers and the revival of Jaguar Land Rover. It gladdens my heart when I see those vehicles queuing up at the docks awaiting export. About 80% of the cars we produce are exported, and the US is the second-largest market after Europe for those exports. Jaguar Land Rover holds second and third place with its Land Rover and Jaguar models, but if they are considered together, it holds first place.
Mr Spellar
I thank my hon. Friend and good neighbour for giving way. As a fellow black country MP, I know that it is good that foreign buyers are buying from Jaguar Land Rover, but would it not be even better if British public bodies, especially the police, bought from Jaguar Land Rover rather than from Mercedes and BMW, which they tend to prefer?
Mr Bailey
I know that my right hon. Friend has campaigned on this issue for many years and I totally agree with him. We need to look properly at procurement policies to realise that point, but I will not get tempted further down that path now.
As far as I can see, the big issue for the motor industry is that, for the UK and the US, tariff barriers are relatively low but that is not quite the same as the barriers between the US and the EU. One of the challenges for the British negotiators as part of the US team is to ensure that the EU does not concentrate only on overt tariff barriers. If that is the case, there will be a general benefit, but the EU will benefit disproportionately. In case anyone considers this to be an anti-EU argument, let me make it absolutely clear that I think we have a far better chance of prosecuting a good deal as part of the EU negotiation than we would if we were not part of it—but this particular issue does need to be addressed. The fact is that the removal of non-tariff barriers within the US is considerably more important for stimulating exports or reducing costs, and the British Government must concentrate on those as part of the EU negotiating team.
Let me highlight a few areas where I believe the British Government need to get behind those who are already engaged in this work. The first relates to how the myriad of technical regulations—quite understandably in respect of road safety and the environment—dictate a range of different regulations in different countries. Standardising them provides a big challenge. I know that the European Automobile Manufacturers Association and the American Automotive Policy Council are working on this at this moment, but it is up to the Government to see that that work comes to a positive conclusion and give it all the support they can.
Secondly, on the global scale, the United Nations is working on standardising global technical regulations. Although this might not be part of the specific brief of the EU negotiating team, it would be helpful if the EU and the US, working with the UN, standardised their approach so that the standardisation of regulation applies not just within the EU and the US but throughout the rest of the world. That would provide a further impetus for both sides.
Another issue affecting our dealings with the US is the disparate and federated nature of its regulatory bodies. There are national federated bodies involved in regulations on environmental protection and road safety, but there are, of course, state bodies as well. That provides a specific challenge to get the sort of coherence and pace of reform that we need to conform to the timetable.
Mr Cash
Would the Chairman of the Business, Innovation and Skills Committee consider whether there will be a fast-track agreement in Congress, as this has been an issue of some contention? In that context and within the framework of the constitutional arrangements of the United States, it is important to bear in mind that the commercial rights of the states themselves are important, too.
Mr Bailey
The hon. Gentleman raises an important point. Provision exists within the US constitution for a fast-track process. To conform to the timetable we are looking at, that would certainly be necessary, and it is up to our negotiators to ensure that it happens.
The standardisation of the customs procedures is another issue. Manufacturers often complain that many hours are lost as a result of non-standard procedures, so this should be a potentially fruitful area for negotiation.
Finally, let me acknowledge that although the details are all terribly difficult, extremely technical and often obscure, their impact on trade and thereby on countries’ economies, jobs and growth is very significant. The Government therefore need to do everything they can to work with the organisations engaged in resolving these highly technical problems.
I mention the BIS publication, “Estimating the Economic Impact on the UK of the Transatlantic Trade and Investment Partnership (TTIP) Agreement between the European Union and the United States” final project report, which I am sure the Minister knows by heart. It spelt out the disproportionate level of benefit that would accrue to the motor industry and companies such as Jaguar Land Rover and their suppliers in my area of the black country from a successful reduction of both tariff barriers and the sort of non-tariff barriers to which I have alluded. On an optimistic view of a 75% reduction in non-tariff barriers, car exports could go up by as much as 26%—a 26% increase on the already vigorous and buoyant production from Jaguar Land Rover in my area. That would be of enormous benefit for economic growth and jobs.
I believe that by working with the EU to expand our market to 800 million people—half the world’s gross domestic product and a third of the world’s trade—the motor industry could be incredibly successful. I hope that the Government will map out the benefits of such a free trade agreement for areas such as mine.
Jonathan Evans (Cardiff North) (Con)
It is a great privilege to follow the hon. Member for West Bromwich West (Mr Bailey), and I agree with much of what he had to say. Let me take the opportunity to congratulate the right hon. Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for Aberconwy (Guto Bebb), who played such an important part in creating the new all-party group, whose establishment is both timely and necessary if we are to realise some of the prizes that should flow from a new transatlantic trade deal. Let me make it clear, bearing in mind some of the speeches we have heard, that I regard myself as an old-fashioned Tory. I believe in free trade, and I think it crucial for parliamentarians here in the UK and throughout Europe to be well aware and fully informed of all the arguments and implications at the very earliest opportunity.
Mr Cash
It is inevitable. When my hon. Friend referred to himself as an old-fashioned Tory, I was bound to reflect on the fact that nobody was much more protectionist than Disraeli and that nobody was more in favour of free trade than John Bright and Richard Cobden, who were of course Liberals.
Jonathan Evans
I cannot help thinking that we are missing my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). I had thought that we were likely to get on to the corn laws at some stage of this debate, but let us move that issue to one side.
The negotiations will be led by the European Commission, which is inevitable as we currently stand, and the White House. Legislators in Europe, however, will in many instances have the final say on whatever emerges from these negotiations, so I view early engagement with parliamentarians as of real importance. I also want to welcome the willingness of Ministers—we have already seen it from my noble Friend Lord Green and my right hon. and learned Friend the Minister without Portfolio—fully to engage with us. I welcome, too, the commitment of President Obama to place the delivery of this new trade partnership as a key objective of his final term, but it is important to understand that the aim of creating a truly free transatlantic market is not a recent phenomenon.
As colleagues may know, after an all too short period of service in this House during John Major’s premiership, I served as a Member of the European Parliament, leading the Conservative delegation, and I was later elected by the European Parliament as the president of its relations with the US Congress. I took up that post eight years ago, and from then on it was clear to me that many legislators on both sides of the Atlantic had already devoted decades of effort to bringing about much closer economic co-operation between the United States and Europe. I pay particular tribute to two British MEPs who will leave the European Parliament next year for the unswerving commitment that they have shown to the promotion of that trade partnership, and to the achievement of a truly free transatlantic market.
My Conservative colleague James Elles, who served six terms in the European Parliament, was the founder of the Transatlantic Policy Network, a forum for debate between Atlanticist legislators which I believe has played an important role in bringing us to where we are today. One former US chairman of the TPN is Chuck Hagel, who now serves at the heart of the US Administration as Defence Secretary. There is no doubt that many other members of the Obama Administration share the objectives that have been promoted by the TPN.
Another former TPN chairman who will leave the European Parliament next year is the Labour MEP for the South East, Peter Skinner. It may be strange to hear it said from these Benches, but I am pleased to say that Peter is one of the best-regarded parliamentarians in Brussels. We worked very closely together in the Economic and Monetary Affairs Committee of the Parliament, and also later when I served as chair of the advisory board of the Transatlantic Economic Council, set up by Chancellor Merkel and President Bush in 2007. I well recall encouraging Peter to join me in establishing better links with our US friends, words that he took quite literally—I mention this particularly in the context of an earlier intervention—when he met his future wife Kimberley, a Penn State republican, during one of our parliamentary visits.
Much of the background research on the massive opportunities for economic growth to be gained from an EU-US an agreement has been done by the Centre for Transatlantic Relations at Johns Hopkins university in Washington. Daniel S. Hamilton and Joseph P. Quinlan from the university produce an annual report on the transatlantic economy. I know that my hon. Friend the Member for Skipton and Ripon (Julian Smith) has seen that document, which surveys jobs and trade and investment between the US and Europe, and whose details make a powerful case for closer transatlantic co-operation. I shall ensure that my hon. Friend the Member for Stone (Mr Cash) receives a copy, because I think it crucially important for him to see it.
The Prime Minister has said that a successful transatlantic agreement could be the biggest trade deal in history. I have heard some cynical observations about the figures, but much of the analysis shows that not only will the agreement constitute a gain for Europe and for the United States, but there will be gains elsewhere as a result of the growth in the world economy that will follow.
No one doubts the challenge that we face in achieving agreement. As may have become evident during today’s debate, we sometimes hear protectionist voices, which can be at their most seductive during times of austerity. I know that comments have been made about the “Buy America” legislation which exists in no fewer than 21 states. The latest state to pass such legislation is Maryland, whose legislators seem to be unaware that some 70,000 people in the state work directly for European companies, that $13 billion from Europe is invested in Maryland annually, and that every year $3 billion worth of goods are exported from Maryland to Europe. Immediately after signing the new “Buy America” law, the Maryland state governor flew to the Paris air show to urge Europeans to buy defence products made—believe it or not—in Maryland. You couldn’t make it up.
Narrow protectionism does not protect jobs in Maryland or anywhere else in the United States, and it does not do so in this country either. Reference has been made to the effectiveness of laws of that kind. I think it worth observing that Government procurement agreements made by the United States at the World Trade Organisation grant EU countries full reciprocity with Maryland providers and manufacturers. I believe that, in this instance, “Buy America” laws are not just wrong-headed but a blatant deception of US and Maryland voters. Let me add that my warning against protectionism is just as appropriate in the case of the French voices that successfully compelled the European Commission to remove audio-visual services from the scope of the negotiation.
Finally, let me say a little about the financial ties between Europe and the United States. At this point I should draw the House’s attention to my entry in the Register of Members’ Financial Interests, although my own interests will not be affected in any way by this particular deal. Those financial ties represent a market share of between 66% and 86% of global financial sectors, which render this deal crucially important to the United States, and to us here in the United Kingdom. Delivering the deal by 2014 requires a tight timetable, but I urge Ministers to continue to engage with us as we proceed with our work.
Gordon Banks (Ochil and South Perthshire) (Lab)
I consider this to be a very important issue. I want any new trade agreement between Europe and the United States to have a substantially positive impact on the economy of Britain and, indeed, that of Scotland. I think we can all agree that international trade deals are vital to the creation of long-term economic growth and jobs in a world that is becoming smaller and smaller.
I was pleased to note that the negotiations on this agreement were formally launched, at Lough Erne on 17 June, under the UK presidency of the G8. When the G8 last met in the United Kingdom, it was hosted by Gleneagles, which is in my constituency and which is perpetually linked with our attempts to deliver improvements in the world through the millennium development goals. I hope that Lough Erne may be remembered for playing a massive role in the equalising of access to the United States market for United Kingdom and, indeed, European Union businesses.
I congratulate my right hon. Friend the Member for Wentworth and Dearne (John Healey) on securing the debate. As he told us earlier, the United States and the European Commission have suggested that the deal could be completed by the end of 2014. As we know, it is a very complex deal. I may be a pessimist, but I rather fear that at some point we may be dragged into the 2016 presidential election campaign if we hit a road block, and I hope that matters do not stagnate during 2014 and 2015. I assume that, once the deal is done, it will have to be ratified in this place and in another 28 national Parliaments—including the United States Congress—as well as in the European Parliament, and I am also slightly concerned about the time that will be taken by its journey through 30 Parliaments.
Free trade agreements are very important to Scotland. For instance, the agreements between the European Union and Singapore and between the EU and Colombia and Peru are vital to the Scotch whisky industry, which exported £4.3 billion worth of whisky last year. The United States is the top whisky export marketplace: more than £700 million-worth was exported to it in 2012. It goes without saying that there is no expectation that the negotiations will have any damaging effect on Scotch whisky exports, but I have given that example to demonstrate how important and valuable such agreements can be when UK businesses seize the opportunity to promote the best of British around the world.
It is possible that at the time the agreement is approved, Scotland will be facing an independence referendum. I fear that, if Scotland votes for independence, we shall be very short-term beneficiaries of this piece of work. Perhaps the Minister will tell us at some point whether he has received any representations from the Scottish Government about the challenges that Scotland would face if it became independent and, being outside the European Union, could not benefit from the agreement. Indeed, one has to wonder what would happen to all the benefits of all the other free trade agreements negotiated by the EU if Scotland became independent. What would be the impact on, for instance, Scotch whisky production, exports and jobs?
Let me now return to more mainstream arguments. As my right hon. Friend pointed out, it is important for us to be able to explain the benefits of the deal to the population of the United Kingdom so that our constituents understand what it means to them in their daily lives.
The deal has the potential to be the largest trade deal of all time because the building blocks of trade between the EU and the US are already in place. As my right hon. Friend the Member for Wentworth and Dearne said earlier, one major British car manufacturer has already told Danny Lopez, the British consul general in New York, that it will save about £130 million annually from the elimination of tariffs as part of this deal. There are real gains and benefits for the UK and UK manufacturing from this difficult set of negotiations, therefore. The Government must ensure there is a road map that allows British SMEs to reap the benefits of this deal, because we will get real growth in this economy from the manufacturing and exporting SMEs.
It is difficult to conclude without referring to an issue that has hung over this debate: our membership of the EU. I do not always agree with the statements of Ministers in this Government, but I was pleased to hear the Minister without Portfolio say it would be very difficult for a trade agreement of this sort to continue if the UK left the EU. He might want to remind some of his party colleagues of the benefits of being part of the world’s largest trading bloc. That is important to the UK.
Gordon Banks
I fundamentally disagree. The Minister without Portfolio will tell the hon. Gentleman where he is wrong in his thinking. There is no doubt that if he speaks to the Scotch whisky industry it will tell him about the benefits of being in a large trading bloc. The Scotch whisky industry has benefited, and if the hon. Gentleman will not take cognisance of that, he will not take cognisance of anything.
This is a really important opportunity for the UK. I want it to be important for Scotland, and I want it to be important for Scotland in the UK and in the EU.
Guto Bebb (Aberconwy) (Con)
It is a pleasure to contribute to this debate, and I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on securing it through the Backbench Business Committee. I am also very pleased to be involved with the all-party group on European Union-United States trade and investment, because it is important that we debate this issue sooner rather than later, as the House should take responsibility for what is potentially a very important treaty.
My hon. Friend the Member for Stone (Mr Cash) raised the important issue of scrutiny. That starts by having a debate on the Floor of the House in which Members can highlight important issues of concern. We have already heard a great variety of comments, which shows this House is making an important contribution to the scrutiny of this issue.
The debate has also been memorable because it marks the first time I have ever heard my hon. Friend the Member for Skipton and Ripon (Julian Smith) described as a member of the Tea party. It is a shock that that description should be applied to him because if I were asked to identify the Conservative Member who would be least likely to be a member of the Tea party it would be him. I think the comment was made in jest, however.
There are issues to be discussed in respect of this trade and investment deal between the EU and the US. I was intrigued by the comment of my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) that small countries could negotiate such deals better than the EU. That would be worthy of discussion, and I am sure the all-party group would be delighted if my hon. Friend were willing to contribute to our discussion by debating that issue.
Jonathan Evans
Specifically on that point, does my hon. Friend think it might be useful to invite the minister-counsellor from the US embassy in London, who has already made it clear that the concept of some separate UK-US trade deal is a non-starter?
Guto Bebb
That comment has indeed been made, and the all-party group could have a good debate on these issues. I am happy to have this argument. That is why we wanted to establish the all-party group and to have this debate. We need to ensure all the views in this House are heard.
I am a believer in free trade as I think it is beneficial. The concerns raised by some Members on the Government Benches are not about free trade, however: they are about whether the agreements would enhance free trade. That is a reasonable concern to have, and it needs to be scrutinised by this House. If we are to negotiate a free trade agreement between the EU and the US, we need to make sure it is a genuine free trade agreement.
The main town in my constituency is Llandudno, and the largest secondary school in Llandudno is Ysgol John Bright, which is named after an individual who believed strongly in free trade. To have concerns about whether this agreement would enhance free trade is not to oppose the treaty; it is more about making sure that what we create will benefit not just the economy of the UK, but the global economy. I say that because I agree that a genuine free trade agreement between the EU and the US will not just have an impact on the states in Europe and the United States; it will have a global impact as well. These issues are worth discussing, therefore, and that is why it is important that we have this debate at this point in time.
I have concerns about the time scale of two years for this agreement. I had the good fortune last night to be in discussions with one of the Canadian Prime Minister’s advisers, because one concern that must be expressed is that for a long period—certainly since I have been elected to this place—we have been involved in discussions between the EU and Canada in an attempt to reach a satisfactory trade agreement between those two trading blocs. Unfortunately, as yet, despite promises on numerous occasions that we were very close to an agreement, no agreement has been reached. We are being told by some individuals involved on this side of the pond that the issues are all to do with concerns about Canadian farmers and agriculture, yet when I was discussing this issue last night with that representative of the Canadian Prime Minister the concerns were all about the demands of the EU in terms of our agriculture. This two-year time frame presents a real challenge for us, therefore. If an agreement cannot be secured after so much time between the EU and Canada, there is a real question about whether the EU-US agreement can be secured within two years.
The two-year time frame should be applauded for its ambition, however. We should go into all negotiations with an ambitious timetable, but we also need to be realistic and acknowledge that that agreement with Canada is not yet in place. It would be a great achievement if we could have that agreement in place to show the way forward for a genuine free trade agreement between the EU and the US.
Julian Smith
Does my hon. Friend agree that pace is important, however, lest lobby groups and trade groups—especially very dynamic ones in America—get their act together and start slowing things down to the point of halting progress?
Guto Bebb
I thank my hon. Friend for making that excellent point. It is one of the key concerns in relation to the fact that we are still waiting for a Canada-EU agreement, because the more the issue is highlighted, the more it seems that the opponents come forward with further concerns about why the agreement should not go ahead. As I have said, I do believe we should support this ambitious target, but I highlight the fact that the experience in relation to Canada has not as yet been particularly positive.
I also think we should express concern at the ability of some countries in Europe to highlight their protectionist views in relation to this proposed agreement. It is a concern that the audio-visual sector has been excluded from negotiations. That is also a positive issue in many ways, however, because the decision to move ahead with talks has been made despite the fact that the European side has excluded that sector. We are aware of why that specific area has been excluded, but it is encouraging to see that one problem has not necessarily resulted in a decision that the whole negotiations should be stopped.
That shows a pragmatic attitude, which we saw when I was in Washington last year. People on the Hill felt that this was an opportunity to create a genuine agreement between the EU and the US. That is noticeable, because there was a feeling when we were there that the time to strike on such an important issue is when people can see the advantages. When the economies of the western world are doing well, the need for such an agreement is perhaps less.
Last summer in Washington, it was very apparent that people felt that the States still required fundamental changes to their economy. They saw the opportunity for freer trade with the EU as important and thought that it would lead to a much better agreement on much better global trading. An important point about free trade between the EU and US that has not been made this afternoon is that we would end up with an agreement on regulations, for example, that would be acceptable in many parts of the global economy. If the EU and the US were to agree on certain consumer protection standards that were acceptable to those two large trading blocs, they could be the basis for agreements on a raft of other issues that would allow other parts of the global economy to aspire to enjoy the benefit of global free trade and of an EU-US trade agreement by working to the same standards rather than undercutting them.
Mr Cash
I want to make a simple point. Some of the commentators—I would include myself—are slightly concerned that the objectives from the European point of view are driven less by the question of free trade and more by the idea of becoming a linchpin of the moves towards political union so that they can stitch up deals all over the world under the Lisbon treaty, which would then result in a greater opportunity for political union. Does he agree that that is a possibility?
Guto Bebb
I would be reluctant to agree with that rather negative view of the reasons behind the trade agreement. Again, one of the reasons I was keen to be involved in the all-party group was to ensure that we discuss such issues openly. If there are significant concerns of that nature, it is important that they are aired and that we instigate a public discussion.
Let me finish on the issue of whether such a trade agreement will have an effect on our relationship with the European Union. I am often made despondent by the behaviour of the EU and I believe that we need to renegotiate the relationship between it and the UK. We need to show the people of this country once more that the EU could benefit us, rather than being problematic, a drag on economic growth and a cause of deep frustration. As someone who represents a constituency that is dependent on small businesses, I see that small businesses clearly feel frustrated by much of what comes out of Europe.
The agreement is a hugely important opportunity for the EU to show the people of the UK that the EU can provide us with much more trade, which is what we want from our relationship with our European partners, and much less of the other stuff, which is so problematic. This is a challenge to not just the United Kingdom but our European partners to show that we can create something in the EU that will benefit the economies of Europe and the rest of the world. That is the challenge that the EU needs to stand up to. If it fails, it will make a huge problem for the future of our relationship with the EU.
Mr John Spellar (Warley) (Lab)
I congratulate my right hon. Friend the Member for Wentworth and Dearne (John Healey) and the hon. Member for Aberconwy (Guto Bebb) on securing the debate and on setting up the extremely important all-party group on European Union-United States trade and investment.
Let me start by putting the subject in context. Even though the Chamber was rebuilt after the second world war, the ghosts of the 19th century and the debate on free trade seem still to be haunting it in today’s debate. I was slightly surprised that the hon. Member for Stone (Mr Cash) did not pay tribute to the work of Robert Peel, who, after all, represented a neighbouring Staffordshire seat in Tamworth.
I want to look more at the period after the second world war, when the architects of the new world order fully understood that an open economy and world trade were important not only for prosperity but for peace. They had seen the significant problems in the inter-war period—the time of Montagu Norman, austerity, competitive devaluation and, in particular, the Smoot-Hawley Tariff Act in the United States and competitive trade wars around the world—that resulted in a diminution of world trade from $5.3 billion in 1929 to $1.8 billion in 1933. That world financial crisis led inexorably to the rise of fascism and Nazism and into the second world war.
The post-war negotiators realised their responsibilities, particularly Keynes, whose searing intelligence and insight is lacking in some of the international discussions now. First, the negotiators recreated an international financial architecture through a World Bank and an International Monetary Fund, which were the preconditions for the other changes of freer trade, barrier reductions, the post-Korean boom, the consumer society—at which many elitists sneered at the time—and the huge surge in technical development. They also depended on significant transatlantic initiatives. We had the creation of the European Coal and Steel Community, which then merged into the European Community, but before that we had the Marshall plan and the creation of NATO, and both were key parts of the changes brought about by that towering genius of foreign affairs and the British Labour movement, Ernest Bevin, who could see the opportunities —perhaps even more than some of those whose names are associated with them, such as George Marshall—for creating a new world situation. He saw them not as separate developments, but as interwoven and inseparable.
Now we face new challenges following the global financial crisis and the new architecture of the world economy. Although many underestimate them, the Atlantic ties are still enormously important. Many of the world’s democracies and the most productive economies are on either side of the Atlantic, as well as the most technologically advanced countries. Half of the world’s GDP would be encompassed by such an agreement.
Yesterday, the Commons debated Trident, and we also recently debated NATO and its future post-ISAF and Afghanistan. As we negotiate an evolving international architecture, trade and security go hand in hand. It is not just about the formal relations but about the cultural links, which are especially important and significant for the United Kingdom—as many Members have mentioned, we are uniquely placed to benefit from such arrangements —finance, business, security and defence. For the UK more than any other EU country, this is important.
As hon. Members, particularly the hon. Member for Cardiff North (Jonathan Evans), have remarked, President Obama and his officials have made it very clear that they are not interested in doing a number of minor deals with different countries. They see the negotiations between the EU and the US as crucial and they see the advantages. That does not mean that we should enter into the negotiations naively. They will be tough; the Americans are tough negotiators. We should drive a very hard bargain. There is also a danger that some on both sides of the Atlantic will seek to smuggle in a neo-liberal policy to try to undermine many protections for consumers and workers.
Mr Cash
Is the right hon. Gentleman aware of an article by Fred Smith in Forbes Magazine from about 10 days ago? It illustrates the fact that the United States is concerned about the importation into the agreements of regulatory and environmental standards. That might be a sticking point.
Mr Spellar
There is the possibility of many sticking points. That is why it is so important to keep an eye on the bigger picture of the huge benefits. Talks of this kind can always be undermined by a number of niggling details, and therefore by local campaigning. That is not unimportant, and we need to recognise that there will be losers as well as winners, but we should also recognise the huge benefits, not just for the US and the EU, but for the world economy. That is possibly what happened in the talks between the EU and Canada, and we need to be concerned about that. A number of difficulties have started to bog down those negotiations for those reasons.
An American official associated with the negotiations said that the talks needed to be
“done on one tank of gas.”
They need to move forward. Regard has to be paid to the checks and balances, but no one should deny the overall impact and huge benefits.
We also need to look at how we make sure that the benefits are shared with others in the world. No one should underestimate the huge impact that the expansion in world trade has had, not only on the economies of developed countries, but on the hundreds of millions who have been taken out of poverty all around the world, not least in China, where about 400 million people have been lifted out of poverty. We have also seen the largest migration of humanity in history from the countryside to the cities. The benefits have to be shared, and we need to ensure that the architecture of the agreement does not close off that avenue.
Having sounded that cautionary note, I think that we should wish the talks well, and I hope that they are conducted with speed and a degree of urgency. I hope that they go into the fast track with that one tank of gas. I say: “It’s time—let’s get rolling.”
John Hemming (Birmingham, Yardley) (LD)
First, I refer the House to my entry in the Register of Members’ Financial Interests. I do not think that I have any relevant financial interests on this occasion. I am a member of a copyright society, and I have traded with America in the past, but I do not think I have a direct financial interest; obviously, my constituents have a substantial financial interest in the subject, because I am the Member of Parliament for Birmingham, Yardley, and although there are no Jaguar Land Rover plants in the constituency, it is next to the JLR plants in Solihull and Castle Bromwich. An agreement could mean 26% more exports of vehicles, which would reduce yet further unemployment in my constituency, and that is obviously something that I would like.
The UK and the US were, in many ways, the first countries to promote and extend free trade worldwide, as we see it today. That vision has been furthered by our membership of the EU, and we have been a driving force in extending and widening the free market. There have been set-backs, both in the UK and the US. Both countries have toyed with protectionism—that is even going on at the moment—often with negative effect. More recently, the EU and the US have had periods of fracture. The dispute over the two biggest aircraft manufacturers in the world, Boeing and Airbus, at the World Trade Organisation was not good. The US obligations to scan shipping containers and the “Buy America” provisions have also served to undermine trade. The EU emissions trading scheme for airlines was seen as unilateral by international partners, despite decades of inaction on the issue.
Bars and grills have an exception from music licensing rules in the US; that exception exempts 70% of bars and restaurants and almost half of shops from having to pay copyright royalties, and that remains a key outstanding issue. That exemption was found incompatible with the agreement on trade-related aspects of intellectual property rights, yet it remains in force, and no compensation, however minimal, has been made available to European and British artists since 2004. Interestingly, people are critical of China for not abiding by intellectual property law, but the US has an issue in that regard as well.
Jonathan Evans
That is sometimes called the music case. It is interesting; the US Government did pay some compensation on behalf of those people who are breaching the law, but they have not paid it since, so there is a clear precedent for their recognising that they are in the wrong.
John Hemming
Yes; I think $3.3 million was paid before 2004, which is why I said “since 2004”. The US Government recognise that there is an issue, but the problem continues none the less. I think that the US has been critical of China, but it should sort out its own issues as well.
I am sure that the House will echo my call for American Congress to uphold its obligations under existing international trade laws, respect intellectual property and use this process to salve wounds. A disregard for intellectual property only encourages others to have a similar disregard. It would be quite wrong for our laws to ignore American intellectual property, and it is about time the United States returned our courtesy.
Despite those set-backs, this new free trade agreement is to be strongly welcomed as a once-in-a-generation opportunity for the UK that will bring benefits of around £10 billion a year to our economy, help to build a stronger economy, and create many much-needed jobs. It is proof that our participation in the European Union does not restrict us from trading with the rest of the world.
Although the EU and US combined account for more than half of the world economy, our agreements with Korea have seen EU exports to Korea go up by 16.2%. For the first time in 15 years, we have a trade surplus with Korea, and UK exports to Brazil, India, China, Russia and South Africa have jumped from £12.7 billion in 2007 to £27.1 billion last year.
Being a member of the largest free trade area in the world creates jobs and opportunities for British industry around the world, and our relentless drive to widen and deepen the single market has created prosperity for the many, not the few. We simply get a better deal when we work with the world’s trade superpower—the EU—than when we act alone, which is why we should work with our allies to concentrate on reform and ensure that the European budget spends more on boosting jobs, research, development and infrastructure, as we did with the multi-annual settlement up to 2020.
The coalition Government are to be commended for ensuring that there is an overall cut in the budget and an increase in job-boosting measures. We need these negotiations fast-tracked, and I hope that Her Majesty’s Government are able to impress both on our allies in the US and our European partners the need to enter these negotiations in a spirit of can-do—with the “single tank of gas” approach mentioned earlier.
We have seen the greatest slow-down in world growth since the 1930s depression, and stalled starts must not be tolerated. My party, the Liberal Democrats, wants to see a relentless focus on jobs and growth. I personally do not believe that we can delay the discussion with the electorate on our role in the European Union, but I am unashamed to make the case for working with Europe to boost our economy.
Lilian Greenwood (Nottingham South) (Lab)
I am sure that, like me, the hon. Gentleman has seen that the CBI’s director general recently said that we pack a bigger punch in securing trade deals when we are inside the EU, rather than outside. He clearly set out that the US wants that bigger prize. Is that not exactly why the uncertainty about our future position in the EU is really unhelpful to British business?
John Hemming
I disagree. I think that we owe it to the British people to give them a vote. There is uncertainty until that has happened. It has been far too long since the vote in the 1970s, and we need a referendum on the issue, although I am happy for it to wait until 2017. I would most likely vote to remain in, but that does not mean that I do not support a referendum. The issue needs to be resolved by us asking the British people.
It is in our national interest and the interests of the wider world to encourage free trade through Europe and increase prosperity for all, because it undoubtedly works. We must uproot direct barriers to trade; end import tariffs, business restrictions on services and regulatory barriers; and make it easier for investment to reach both sides of the Atlantic. Where joint positions on rules governing competition, state-owned enterprises, raw materials, energy, small and medium-sized enterprises, and transparency do not exist, it would be beneficial if joint positions could be established, so that we can form a new global standard of excellence in trade.
The potential benefits of an agreement are huge. The US is our second-largest trading partner, with two-way trade totalling £129 billion in 2011, while £200 billion has been invested by US companies in the UK. It is in our vital economic and national interests to ensure that we expand our economy, and this US-EU free trade agreement should receive support from all sides of the House.
I accept that there are complexities, and I have sympathy with the argument that we should not have a rush to the bottom internationally, so I am sympathetic to the idea of looking more widely than just at issues to do with tariff barriers in discussions. However, from the point of view of the financial interests of my west midlands constituents who work either directly in the motor business or in the supply chain, it is clear that an agreement would be a very positive step forward in most respects and should therefore be supported. However, it is good that the all-party group on EU-US trade and investment has been created, because the fear in such processes is that if we do not look at the issues until the agreement is brought about, what can we do about them? I welcome the fact that the right hon. Member for Wentworth and Dearne (John Healey) and his colleagues asked for this debate, because we need to discuss the agreement before it is decided; otherwise, it is too late. However, generally, the agreement seems a good idea.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
I always come to debates about the EU with a copy of the consolidated texts of the EU treaties, as amended by the treaty of Lisbon in January 2008. That usually stops people talking a lot of hot air because they have not taken the trouble to read the treaties.
The question of competence is settled. The treaty on the functioning of the European Union states in article 3(2):
“The Union shall also have exclusive competence for the conclusion of an international agreement when its conclusion is provided for in a legislative act of the Union”.
It is clear from that where competence lies. We should therefore get behind the EU because, whether we like it or not, since Lisbon the EU has been given this responsibility. If it did not carry out its responsibility or if it did not seek those agreements, we would be right to criticise the EU for not using the strength that it has to benefit members of the Union.
There are remarkable opportunities available and I am grateful to my right hon. Friend the Member for Wentworth and Dearne (John Healey) and the hon. Member for Aberconwy (Guto Bebb) for securing the debate and setting up the all-party group. A trade agreement will run on for a number of years and must be studied in detail as it does. There are important opportunities for jobs and growth, and I can give examples from my constituency. Syngenta is a Swiss company that does its research in England and develops products that are made in factories in my constituency. It sells $1.5 billion worth of one product to the world, mostly used in the US to prevent soya rust, which is very important. We also have Ineos, made up of former parts of BP, which is seeking to buy ethane from the US, where it is now one tenth of the price of ethane from the North sea, to produce the chemicals required for industry.
Those firms would be helped massively by a tariff agreement, but, as my right hon. Friend the Member for Wentworth and Dearne said, a trade agreement is not just about tariffs; it is about standards. The standards of the EU are set out in the treaty on the European Union in article 3(5):
“In its relations with the wider world, the Union shall uphold and promote its values and interests and contribute to the protection of its citizens. It shall contribute to peace, security, the sustainable development of the Earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and the protection of human rights, in particular the rights of the child, as well as to the strict observance and the development of international law, including respect for the principles of the United Nations Charter.”
What could be opposed in setting out to establish a free trade agreement with another massive nation that has similar values? If we think that is not the way to go, perhaps we are talking about having the type of agreement used by companies in Bangladesh, where the Rana plaza collapse revealed the use of buildings that were utterly unacceptable. That is the reality. If companies are not bound by trade agreements that contain priorities and strictures, then, as has been said, the result is a race to the bottom—the lowest standards, the greatest abuse of labour, and the least protection for the people who produce the goods that we use in our country.
Combining the EU article with the standards of the International Labour Organisation and the World Trade Organisation and with the conventions of the UN would result in an ethical trading alliance, and what a massively strong ethical trading alliance the EU and the US would be if we could bring that about. President Obama has declared that he intends to eradicate modern-day slavery, and already California has a transparency of supply chains Bill that makes firms audit for supply chain abuses and ILO labour abuses. Apple recently admitted that it had found child labour in part of the manufacturing process of the iPad in China, which it must now eradicate because of US law. It would be wonderful if we could spread that across the rest of the trading nations that we deal with.
There are many things to be gained from a trade agreement, apart from jobs and prosperity. However, concerns were expressed by the Labour Government during the negotiations on the Lisbon treaty, when we got a derogation on the provision of services of special interest. The health service was specifically named in the Lisbon treaty as something that would be controlled by the Government. Sadly, it is the Government here who are abusing the health service by bringing in not just free trade, but a Hayekian free-for-all in the provision of services in the health services.
Julian Smith
Does the hon. Gentleman accept that Labour allowed the private sector into the health service in Britain, which had positive effects in many cases?
Michael Connarty
I do not think the hon. Gentleman was in the House at the time. The Labour Government said that we would use private services when they were available for people who needed public health services. It was not a case of giving provision over to the private sector. Now there is an open door for the private sector. It is a Hayekian model. Hayek was the driver for Mrs Thatcher’s advisers—the idea that there was no need for a state and that any service that was required could be brought in from the free market. If one reads Hayek—I am an economist—he even went as far as saying that armies should be hired, instead of a state having an army of its own. He also advocated private prisons, and sadly we moved down that road under a Labour Government.
The free trade agreement is regulated. Under the EU treaty, the EU will have to provide for the protection of services of special interest. Every Government in the EU will then be allowed to decide whether to have private sector involvement in their health service. It is interesting to note that in the EU-Canadian trade agreement which has just been accepted, the health service is not part of the agreement. That is a decision of the Canadian Government rather than of the EU, but it may have been influenced by the fact that the EU has that provision for protecting services of special interest.
For me there must be conditions, and I liked the four conditions set out by my right hon. Friend the Member for Wentworth and Dearne—putting our weight behind the EU team, not being a drag on the process, and so on. I have three conditions. One is transparency. The hon. Member for Stone (Mr Cash), in his role as Chair of the European Scrutiny Committee, is quite correct to say that the Committee should be able to see the process stage by stage, but that alone is not adequate. Parliament must hear about it. There should be special reports from the Minister for Europe, the Foreign Secretary and even the Business Secretary to tell Parliament what is happening, what has been negotiated at any stage and what the potential decisions are. We do not want a secret process.
There must be accountability. Instead of one proposal at the end of the process, perhaps there should be staged proposals coming back to Parliament, where certain sections of the trade agreement are taken before the House and debated by a Select Committee or on the Floor of the House. For me, there should be conditionality. Everything that happens in the European Union should be conditional, the condition being that we do not end up with an agreement that subverts what we signed up to in our last treaty. It cannot be an attempt to rewrite the treaties by the back door, so we must always ascertain whether the conditionality of any trade agreement or any other agreement will undermine the rights contained in the documents to which I referred.
We want a more prosperous world, but one that is based on fairness and on the improvement of the conditions of the people who supply us with our goods and services and those who work in industries and enterprises in the EU and in this country.
Julian Smith (Skipton and Ripon) (Con)
I shall not speak for long, as I am still reeling from the accusation that I am sympathetic to the Tea party.
It is important that I start by paying tribute to the Prime Minister, the Chancellor and the Government as a whole for putting an EU-US trade agreement and talks at the centre of the strategy for the EU and for growth, which this Government are so relentlessly pursuing. All of us in the House understand the importance of America, and we need to make the case to the country and to British business that although there is rightly a pivot east in trade and activity—to the BRIC countries and other emerging economies—the American economy, with 310 million people with a per capita income of $48,000, and an energy sector that looks as though it is going to get incredibly competitive over the coming years, is a phenomenal opportunity for Britain. It would be wrong just to accept that we already have a relationship which is established and going quite well.
Companies in my constituency, such as Silver Cross Prams which produces traditional prams that hon. Members may have used or been in in the past, sell across the world, but in America they have to go through pages and pages of health and safety and other procedures in order to sell their already safe and already EU-recognised product in America. If Jet2, which flies out of Leeds Bradford airport, wants to fly to an American city and then on to another American city, it is unable to sell seats on the domestic US side, which has an impact on its business. Principle Healthcare sells drugs, vitamins and other products that are perfectly safe and have been rigorously tested here in the UK and in Europe, but when it tries to sell to America, it must start the whole procedure yet again.
I have great respect for the right hon. Member for Wentworth and Dearne (John Healey), but I was worried by some of his remarks. The idea that this agreement should try to have top-down formal regulation of all these things is quite wrong because to get the pace we have been talking about, we need to think much more about mutual recognition. If we have safe drug products in America and safe drug products in the EU, how do we recognise those regulatory processes? That is not to say that we should have a free for all but that we should recognise and be pragmatic about what we do. One of the strongest messages I have for the Minister is a request that he utilise his innate pragmatism to influence these negotiations.
The second push I would make is on something we have talked about: pace. There are moves afoot already in America—we have seen the French examples and there will be others from all interested parties—to slow things down and to have carve-ups and opt-outs. We must make the case for pace and ensure that we stick to the rigorous timetable set in place by the negotiators. I also think that the point made by the right hon. Gentleman is key: this debate cannot be a closed shop in this place or in Brussels or in America. We must take the argument to our citizens and businesses and explain to them the importance of the jobs that will be created by the agreement and by enhancing our relationship. The benefit for EU supporters is that if we can do that for this agreement, we can use that information and build on that argument as we make the case for Britain continuing to be an active member of the EU.
Finally, although we have a number of Ministers who are active in this negotiation on the British side, I hope that my hon. Friend the Minister answering today’s debate will be at the forefront of some of these discussions as they take place over the next couple of years.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Just to say we are overshooting on time. The other debate is well over-subscribed, so there will be a six minute limit.
Mr William Bain (Glasgow North East) (Lab)
This debate is very timely because of the discussion about where the UK’s future economic growth is going to come from: away from an overreliance on domestic consumption, which is now creeping back into the economy, and shifting once again, we hope, towards exports and manufacturing. Although the value of the pound is a fifth lower than it was at the onset of the economic crisis, unlike in previous downturns exports from this country have not risen but fallen. Completing a trade and investment area between the US and the EU will create more opportunities in this country for businesses and investors to grow out of the crisis. That will add to the 36 other countries with whom the EU already has a trade agreement in place.
The EU exports more in goods and services than it imports from the US, and 30% of the EU’s foreign direct investment is in the US, too. The estimated benefits to Europe of successfully negotiating a free trade area with the US would boost growth across the Union by 0.9% a year, and, according to an assessment by the Department for Business, Innovation and Skills, would provide £10 billion in direct economic boost to the UK.
The effect of a successful agreement would align technical standards; harmonise labelling and product specification standards; protect intellectual property; improve access to Government procurement schemes; cut agricultural tariffs; and, most important, help our largest manufacturing industry in this country—the food and drink sector. But to extract the full benefit from such an agreement, if it is successfully completed, the UK has still to be a full member state of the European Union. If we want to shape the terms of this trade and investment partnership, we can do so only from inside, not from the margins or, even worse, by excluding ourselves completely.
The Prime Minister was happy to accept President Obama’s hospitality on a recent visit to the United States, but it might help British business even more if he accepted some of President Obama’s friendly advice, too. The President, in his press conference on 13 May, said:
“We discussed with the Prime Minister the importance of moving ahead with the EU towards negotiations on the Transatlantic Trade and Investment Partnership. Our extensive trade with the EU is central to our broader economic transatlantic relationship which supports more than 13 million jobs… I believe we’ve got a real opportunity to cut tariffs, open markets, create jobs and make all of our economies even more competitive.”
According to The Guardian, a senior US official commenting after the Washington visit of the Prime Minister said:
“having Britain in the EU will strengthen the possibility that we succeed in a very difficult negotiation, as it involves so many different interests and having Britain as a key player and pushing for this will be important. We have expressed our views of Britain’s role in the EU and they haven’t changed.”
The indications are that it will take between 18 months and two years to reach an agreement but perhaps as long as 10 to 15 years for the full effects of a successfully agreed accord to come into force. But perhaps before the end of the arbitrary time scale that, unfortunately, many Government Members wish the House to follow on an in/out EU referendum, the UK would already be seeing some of the gradual benefits accumulating from that transatlantic free trade area, only potentially to be forced out of it shortly afterwards as a result of such a referendum. The House of Commons Library has confirmed that all EU trade agreements would have to be renegotiated by the UK if it left the EU, so by leaving the EU and leaving the advantages of this agreement that we hope to see very soon, the UK would lose access to over 130 free trade agreements, which would not only have a negative impact on the economy but imply huge costs in individual renegotiation.
As my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) said, the same logic applies to the plans to see Scotland leaving the UK, thereby harming our Scotch whisky and food exporters and seeing them lose the enormous potential benefits of the free trade agreement with the United States.
I hope that these negotiations will be completed speedily and effectively. I hope that they will equip our manufacturing sector with access to a larger free trade area. This debate has been important in emphasising the responsibility that the UK Government and the devolved Governments have in these islands to ensure that this future source of sustainable economic growth and high-skilled employment for all our constituencies is not put at risk by ambitions to erect constitutional barriers in a world in which they are increasingly irrelevant.
Paul Blomfield (Sheffield Central) (Lab)
I add to the congratulations to my right hon. Friend the Member for Wentworth and Dearne (John Healey) and to the hon. Member for Aberconwy (Guto Bebb) on securing this debate. What a difference a week makes, or maybe two weeks. Here we are today debating something of importance in relation to our membership of the European Union, focusing on the benefits of our membership, and the Government Benches are empty, in such contrast with the excitable packed Benches we saw—[Interruption.] Practically empty. I apologise to those few Members who are there. The contrast, however, is not with the Opposition Benches today but with the Government Benches two weeks ago. Today we are debating a serious and important issue to do with our membership of the European Union.
Julian Smith
The hon. Gentleman says this is a serious and important matter, but does he agree that giving the British people a say on Europe is also serious and important?
Paul Blomfield
I thought the debate a couple of weeks ago was more about resolving internal differences in the Conservative party than a wider concern for the views of British people.
What an irony it is that too many Government Members want to lead us out of Europe, just at the moment that the already substantial benefits from our membership of the EU are set to become even better. I might even feel sorry for the Prime Minister if these problems were not of his own making. He knows that our future lies in Europe, just as our past always has done, and he wants this country to be at the heart of the European Union and his party to stop banging on about Europe. He knows the importance of this trade deal, but he made an early mistake back in 2005 when, lagging behind in the leadership contest for his party, he threw red meat to Conservative Members who would take us out of the EU with a promise to leave the European People’s party. He was warned by his Conservative allies in Europe—
Jonathan Evans
Perhaps I should point out to the hon. Gentleman that I was leader of the Conservatives in the European Parliament at that time, and the Conservative party was never in the European People’s party at any time.
Paul Blomfield
The Conservative party’s alliances when the hon. Gentleman was in the European Parliament were better than those it has made subsequently.
Paul Blomfield
Let me make some progress, My point is that the Prime Minister did not understand that the more red meat he threw to those on his right, the more they would want. We find ourselves being pushed towards the exit door of the European Union at a time when the case for membership has never been stronger.
Let me turn to the trade deal and the comments made earlier by the hon. Member for Stone (Mr Cash), who sadly is no longer in his place, when he sought to diminish the importance of our trade with the European Union. The EU is the UK’s main trading partner and comprises around 52% of the UK’s total trade in goods and services. Of course growing markets in China and India are important, but those two markets account for 5.6% and 1.6% of our current trade. Through the Department for Business, Innovation and Skills, the Government estimate that 3.5 million jobs in Britain are linked, directly or indirectly, to our trade with EU member states.
Let us look to the future. It has been estimated that by 2020 the UK will have fallen to the ninth largest economy in the world. In contrast, the EU is the largest economy in the world, home to 7.4% of the world’s population and accounting for almost 20% of world GDP. The EU is not important to the UK simply for that reason, but also because of the access it provides to other markets. The EU is the top trading partner for 80 countries and currently has free trade agreements with more than 40. That process is continuing, and the EU is currently negotiating agreements with more than 70 countries, including important UK partners such as India and Japan, as well as growing economies such as Brazil. According to the CBI, the European Union has negotiated trade agreements that cover around 30% of trade outside the EU area, and it is in the process of raising that figure to 70%.
It has been estimated that the deal we are considering today will generate around €119 billion of benefits to the EU and create 2 million jobs. As my right hon. Friend the Member for Wentworth and Dearne pointed out in his opening remarks, that could benefit the UK economy by up to £10 billion a year. My hon. Friend the Member for West Bromwich West (Mr Bailey) was right to point out that current tariffs averaging around 4% are quite low, but given the volume of trade, the benefits are significant. Even more significant—my right hon. Friend the Member for Wentworth and Dearne referred to this—is the alignment of regulatory standards and the opportunity that offers not only for trade between these two important blocs, but in raising standards internationally.
My right hon. Friend was also right to highlight concerns about the potential privatisation of public services—a threat that has been targeted wrongly at this deal. It is important that we reassure those who are worried about the impact of this deal on public services, and the health service in particular, which might disappoint some Conservative Members who would like to see much greater privatisation.
In the free trade agreements that the EU has negotiated, public services exemptions are provided in two ways: first, by provisions that refer to
“services exercised under Government authority”—
the police, for example, and the justice system—and, secondly, by provision for public utilities, which would cover health care. The former provisions are automatically excluded from all trade agreements. The latter are not automatically excluded but reservations are attached that allow EU member states to maintain public provision or limit access to a certain number of providers—both domestic and foreign—in those sectors.
It is important that we send a clear message that the EU-US trade agreement in itself cannot lead to further privatisation of health care in this country. The policies of this Government will do that—or perhaps not, if they are successfully defeated. The trade agreement could, however, lead to a significant boost to the UK economy. It would be the most significant bilateral agreement, and our combined economies are worth almost 40% of world GDP. We must be honest when responding to comments made by some Government Members who are no longer in their seats, and recognise where we stand internationally. The UK alone would not have the negotiating clout of the EU in striking the sort of deal that would benefit all member states, including the UK. As with so many other things, we are stronger together in Europe, and this deal is yet another reason why we must be at the centre of the European Union.
Mike Gapes (Ilford South) (Lab/Co-op)
It is a pleasure to follow my hon. Friend the Member for Sheffield Central (Paul Blomfield). I agree entirely with what he said and I particularly endorse his remarks about public procurement and the importance of the national health service. It is vital that debates on this issue make it clear that the trade agreement will not be used as a way of justifying the privatisation policies of the Conservative and Liberal Democrat coalition, by blaming it on the requirements of some European-US deal.
Julian Smith
I reiterate the question I asked earlier. Does the hon. Gentleman accept that the Labour party in government regularly used the private sector to deliver better services, where necessary, in the NHS?
Mike Gapes
I accept that because of the problems we had when we came to office, we had to get extra capacity. My constituents in Ilford benefited from the independent treatment centre that was established on the site of King George hospital. They had operations on their knees and noses that would not have been available previously because of the lack of capacity in the NHS. I make no apology for the fact that my constituents benefited from the investment and policies of the Labour Government, but that is not what this debate is about.
I want to make three points. First, in an earlier intervention I referred to the European Union-South Korea free trade agreement which, as the Foreign Secretary recognised in the House a few months ago, has not just been of great benefit to the European Union as a whole, but the removal of 97% of the tariffs that existed between Korea and the European Union led to a significant increase in British exports to Korea.
Mr Cash
I alluded to that in my speech. After inquiry, the European Scrutiny Committee was informed that it was difficult, if not impossible, to make a true comparison between the apparent benefits to the EU in general and the advantages to the UK individually, apart from in the car industry, where there appeared to be a distinct benefit.
Mike Gapes
On 23 April, the Foreign Secretary said:
“The free trade agreement with South Korea eliminated nearly 97% of tariffs, and some British businesses are now enjoying a huge increase in exports to South Korea as a result. We want to see the same thing happen on an even greater scale in relation to the United States.”—[Official Report, 23 April 2013; Vol. 561, c. 743.]
I suggest the hon. Member for Stone (Mr Cash)has some comradely discussions about these matters with the Foreign Secretary in the next meeting of the 1922 committee or somewhere else.
I want to emphasise a point made by the hon. Member for Skipton and Ripon (Julian Smith) about the significance of reducing the regulatory obstacles. Many of my constituents work in financial or banking institutions in London. TheCityUK has published a paper saying that it
“strongly supports the efforts being made in the US and the EU towards a Transatlantic Trade & Investment Partnership.”
It believes that that needs to be comprehensive and should cover all aspects of the economy, and it highlights the absurdities of different regulatory regimes, the additional costs this imposes on both sides of the Atlantic and the serious delays involved.
In another publication, British Influence highlights how the pharmaceutical industry has completely different requirements on the acceptability and availability of drugs in the US and Europe, meaning that drugs that have already gone through one rigorous testing procedure must then go through another one. That is not necessarily anything other than an obstructive measure to preserve markets for certain companies by squeezing out competitors. If it can compete on quality—and our pharmaceutical industry is certainly high quality—industry in Europe and Britain will be well capable of competing on a level playing field in an American market.
There will be people in the US, as in Europe, who will try to resist and obstruct these measures. We have heard some of those voices today, unfortunately. The reason for that is partly ideological, but it is also linked to pork-barrel politics, the two-year congressional election cycle and all the other difficulties people have in winning public office in the US, so this will not be an easy process, and these negotiations will take time; it is a bit optimistic to think they could be over in two years, and they will not be helped if the EU adopts a minimalist position or says it wishes certain items to be taken out of the negotiations at the start. That will play into the hands of those in the US who also want to play that game.
It is a bit like the Conservative party’s position on renegotiating our membership of, and repatriating powers from, the EU. We cannot take things à la carte, and in the negotiations between the EU and the US, we will not get all we want; it will be a difficult process, and it could well be undermined significantly by diversions, such as those relating to Scotland, to which my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) referred. It could also be undermined, however, if British negotiators, obsessing about other issues, divert their efforts and energies away from getting the best deal for British business and investment and trade in the United States, as my hon. Friend the Member for Sheffield Central pointed out earlier.
According to The Daily Telegraph, the Prime Minister said that
“if Britain weren’t in the EU you would not directly benefit from an EU/US trade deal”.
That is the fundamental point. If we embark on a process of renegotiating terms with, or withdrawing from, the EU, we will damage our position within an internal EU process and our long-term relationship with the US. As the US President, the ambassador and others have made absolutely clear, the US believes it to be in the interests of its co-operation with Europe that the UK play a full part within the EU. If we want to get an EU-US trade and investment treaty, we need to support it wholeheartedly.
Mr Iain Wright (Hartlepool) (Lab)
I congratulate my right hon. Friend the Member for Wentworth and Dearne (John Healey) and the hon. Member for Aberconwy (Guto Bebb) on using their strong persuasive abilities to convince the Backbench Business Committee to agree to this important debate. This issue has not had the prominence it deserves, and I pay tribute to right hon. and hon. Members for redressing that situation. Given the potential of this agreement, this is an important discussion.
This has been an important and, on the whole, positive debate. The sheer size of the American and European economies means that the potential prize of a significant free trade agreement is huge. As my right hon. Friend the Member for Wentworth and Dearne said, together the EU and the US account for just under half of global GDP and about a third of world trade. About $2.7 billion of goods and services cross the two continents every single day—a trillion dollars every year. The proposed free trade agreement could be the biggest bilateral trade deal in world history, both in terms of its value and in the range of subjects, sectors and markets covered. Given the size of the sums involved, even modest reductions in barriers would lead to huge amounts of money—$325 billion—that could be ploughed into extra jobs, more investment and higher economic growth.
As has been said, a potential trade and investment agreement would yield an estimated increase in UK national income of between £4 billion and £10 billion a year over the next decade. That is huge and worth fighting for.
Mr Cash
Lord Mandelson said that when he was trade commissioner the over-regulation of business cost 4% of Europe’s GDP and about £6 billion a year to the British economy. Is that not something we should be tackling, and does the hon. Gentleman agree that some of his figures are based on estimates?
Mr Wright
The hon. Gentleman makes an important point. I was about to say that, as mentioned several times, the nature and structure of trade between the EU and the US is such that we do not have substantial or excessive trade barriers between the two blocs. Most of the gains would come from a reduction in non-tariff barriers. In response to his point, I would add that I am keen to see regulatory convergence.
Reductions in non-tariff barriers would result in reduced costs for producers and traders and so increase productivity, leading to greater investment and higher gains per worker. Forecasts predict that increased trade would lead to higher wage rates of between 0.2% and 0.5% for workers in this country. Again, that is a prize worth fighting for. If the free trade agreement were to focus more on tariffs than non-tariff barriers, the gains for the UK would be substantially less, as the Chair of the Business, Innovation and Skills Committee said.
What has been clear from today’s debate is that there is a huge amount of ambition in this House for this agreement, so will the Minister confirm that the scope and ambition of the agreement that will be negotiated will be as wide-ranging and comprehensive as possible, in order to ensure the maximum gains for British companies? Will he ensure that Britain is pushing for negotiations to be focused on where that maximum gain will be, which, as I have said, is on the elimination of non-tariff barriers? Will he give us an idea of the scope and scale of agreement he hopes to achieve?
Right hon. and hon. Members have rightly been talking about how the House can be involved in this process. Will the Minister tell us how he hopes to keep the House informed of progress on the agreement? My right hon. Friend the Member for Wentworth and Dearne talked about this, but will the Minister tell us a bit about what he has planned for the scrutiny of the negotiations by this House? How can we debate this matter on a periodic and, we hope, positive basis?
Will the Minister also give the House a sense, wherever possible, on when he expects the talks to be concluded? I know that that is difficult, but it has been mentioned several times in the debate, and the US vice-president has said that he hopes talks can be agreed on “one tank of gas”, which means the completion of negotiations within 18 to 24 months. This is obviously a big priority for the Obama Administration, as I think it is for the British Government, but will the Minister give us a sense of when he thinks the process will be concluded? My hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) asked about this directly, but how will this House ratify the deal? Will that be done by a full, substantial debate in Government time on the Floor of the House so that we can question and scrutinise the deal carefully?
I wish to focus on a few specific industries that could benefit enormously from a comprehensive and ambitious free trade agreement. The motor vehicles sector, which has been mentioned, is forecast to see considerable growth as a result of an ambitious transatlantic trade and investment partnership—TTIP. Estimates predict a rise in exports of between 15% and 26%. That will obviously help the German manufacturers, but we certainly should not discount the impact it will have on our important and growing automotives sector, where we are producing great-quality, high-premium cars that the rest of the world are keen to buy. That was mentioned by my hon. Friend the Member for West Bromwich West (Mr Bailey).
In that regard, I hope the Minister will reassure us that regulatory convergence to ensure great export growth will be at the top of the agenda in the negotiations. I hope he will agree that a vehicle considered safe to drive in Europe should also be considered safe to drive in the US. Will he ensure that duplication of safety and environmental standards is dealt with and that negotiations prioritise mutual recognition agreements and equivalence standards? Will he also address the point, not entirely confined to the automotive sector, that differing regulatory arrangements apply at a state, federal level? Will negotiations ensure that state differences are dealt with, too? That point will apply to many industries, such as those producing electrical goods, chemicals and cosmetics. My area has the highest concentration of chemical engineering in western Europe, and if Europe and the US had mutually accepted standards, the potential for the chemicals industry in the north-east would be enormous.
The global aerospace industry is dominated by Europe and the United States, and particularly by Airbus and Boeing, as was seen in the recent sales at the successful Paris air show. Britain is the largest player in this industry in Europe and is second only to the US in the world. The European aerospace industry generates a third of the EU’s manufacturing exports, and we in this country are at the heart of it. We have to maintain our competitive advantage. The industry is subject to fierce competition from other nations. China is particularly ambitious about launching an aerospace company—COMAC—to rival Boeing and Airbus. Does the Minister accept—this is an important point—that an ambitious free trade agreement between the US and the EU would actually help to maintain our competitive advantage in this field, as consistency of international regulatory standards should give existing firms and their supply chains an important lever to use? That was certainly the conclusion of an important Chatham House report on manufacturing published this week.
Services are a key part of the British economy; we are the best in Europe on services. Will the Minister comment on the nature of the agreement in that area? For example, a UK lawyers’ qualification is not fully recognised in the US, which is an impediment to UK lawyers’ practising. If the EU and US recognised each other’s professional qualifications, a great boost would be given to trade, which would particularly benefit the British economy. Will he discuss that a little?
The scale of the prize indicates how important it is that Britain has a leading role to play in Europe, as my hon. Friend the Member for Glasgow North East (Mr Bain) said. Does the Minister agree with Sir Mike Rake of the CBI, who said that there is an overwhelming case for Britain being at the heart of Europe for the sake of our businesses? Does he agree with my hon. Friend the Member for Ochil and South Perthshire, who indicated that he agreed with the Minister without Portfolio that it would be curtains for our ability to play any leadership role if we exited the EU? The right hon. and learned Gentleman said in a recent article:
“Irony of ironies, it is of course the EU that is making deals with the United States and Canada possible. It should come as no surprise that Obama’s officials have commented that they would have ‘very little confidence’ for a deal with the British alone.”
Does this Minister agree?
Will the Minister also address the warnings from the Obama Administration that if the UK leaves Europe, we will exclude ourselves from a EU-US trade deal worth billions and that it would be unlikely that Washington would try to negotiate a separate trade agreement with Britain? A senior White House official is quoted as stating:
“Having Britain in the EU...is going to strengthen the possibility that we succeed in a very difficult negotiation, as it involves so many different interests and having Britain as a key player and pushing for this will be important...We have expressed our views of Britain’s role in the EU and they haven’t changed…TTIP negotiations underscore why we think it’s important that it continues.”
Is it not clear from White House officials that the United States believes that one of the key reasons for the special relationship is that we are in the EU, and that it would be naive and impractical to suggest that we could negotiate a separate trade deal that could have the same potential positive effect on jobs and growth?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I would just like to be of help, because the shadow Minister has taken 10 minutes so far and he said he would only take that long. He will have reached 11 minutes in a moment, so we should be careful.
Mr Wright
Thank you, Mr Deputy Speaker. I will mention one final thing and then draw my comments to a close.
Several hon. Members, including my hon. Friends the Members for Linlithgow and East Falkirk (Michael Connarty), for Sheffield Central (Paul Blomfield), for Glasgow North East and for Ilford South (Mike Gapes), have mentioned the NHS. Will the Minister confirm that the free trade agreement will not be a green light to private health companies in the US to take over services within the NHS? Will he absolutely rule out that happening?
This agreement is a huge prize and the whole House is keen to see success on it. I hope that the Minister will be as ambitious as the House is on this, because the potential for jobs, growth and prosperity, on both sides, of the Atlantic is immense.
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
It is a pleasure to wind up this debate. It has run over time, for which I apologise to hon. Members taking part in the next debate, but that is testament to the importance of the subject and the exceedingly high-quality contributions. More important than the quality of the rhetoric has been the unanimity of argument in favour of an EU-US trade deal. Of course important questions need to be addressed, and I will deal with as many of those as I can in the time available, but all speakers have been in favour, in principle, of pushing to make this deal happen, and that message should go out loud and clear from this House. As a passionate supporter of free trade, believing that free trade and capitalism has been the greatest force for prosperity ever invented by man, I am proud to be part of a political consensus in this country in favour of free trade. That is one of our great political and economic strengths.
On that note, I pay tribute to the right hon. Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for Aberconwy (Guto Bebb), not only for securing this debate, but for starting up the all-party group on European Union-United States trade and investment to make sure that a forum is available for all Members to discuss the issues relating to the TTIP deal. The launch of the negotiations started last week, and they are a once-in-a-generation opportunity to secure the biggest bilateral trade agreement in the history of the world. As many hon. Members have said, it would bring significant economic benefits, in growth and jobs, to both sides of the Atlantic.
There are also compelling strategic reasons for the agreement, as the right hon. Member for Warley (Mr Spellar) and the hon. Member for Linlithgow and East Falkirk (Michael Connarty) argued, putting the proposal in its historical context. It would be good not only for trade but for the relationship between our two continents. A successful conclusion could allow the EU and the US to agree common standards and rules fit for the 21st century. The principle of mutual recognition is an important one, and perhaps the mutually recognised standards would form the basis for standards around the rest of the world, given the sheer scale of a free trade area between the EU and the US.
We heard Opposition Members argue passionately in favour of the EU and against giving people their say, not least the hon. Members for Linlithgow, for Sheffield Central (Paul Blomfield), who gave a spectacularly passionate argument against allowing people their say in a referendum, and for Glasgow North East (Mr Bain). I think that the TTIP is central to our vision of a reformed EU that is more competitive and better able to deliver jobs and growth for its citizens, and for that proposition to be put to the British people in a referendum is a strong strategy for the way forward. Opposition Members talked about Barack Obama’s White House officials saying this and that, but I will go by the words of the man himself, who fulsomely supported the strategy of renegotiating our relationship and putting it to the people in a referendum.
The EU-US trade deal would be the biggest in the world, and it would build on our strong relationship.
Mike Gapes
The Minister just said that President Obama had supported a referendum. Perhaps he will give us the source of that statement.
Matthew Hancock
The source of the statement was President Obama. He said during a press conference with the Prime Minister—I do not have the precise quote, but I have the substance of it—that he thought it was right to try to renegotiate a relationship before deciding to leave. I will write to the hon. Gentleman with the precise quote. I think that it is better to listen to a politician, rather than officials representing a politician.
Crucially, the free trade deal must genuinely support free trade, which I think it will. My hon. Friend the Member for Aberconwy commented on that, channelling Bright. Negotiating an ambitious programme is vital. Many numbers have been quoted in the debate. We are already negotiating trade deals with Canada, India and Japan, each of which represents 2% of our exports. The United States represents 15% of our exports. I think that sums up the scale and importance of the proposition.
The relationship is already exceptionally close and deep. The US is the top export destination after the rest of the EU, and the US and the UK are each other’s largest foreign investors, supporting over 1 million jobs in this country, and US investment stock in the UK is worth around £200 billion, which is eight times the size of US investment stock in China. The scale is important, the Government’s ambition is high, and all areas are in scope. Of course, as has been mentioned, the audio-visual sector has been set to one side, but there is the potential to include it if negotiations go in that direction.
With regard to whether regional jobs data can be made available, the hon. Member for West Bromwich West (Mr Bailey) and the right hon. Member for Wentworth and Dearne argued strongly that we need to ensure that we make the argument for the deal. We will look at publishing regional jobs data in as robust a way as possible. Arguments were made, not least by the hon. Members for Hartlepool (Mr Wright) and for Birmingham, Yardley (John Hemming) and my hon. Friend the Member for Skipton and Ripon (Julian Smith), giving specific examples of how the deal would help British businesses and jobs and be a positive force for the economy and prosperity. It is some of the specific examples that were given that make the case most eloquently and strongly.
Mr Jenkin
Will the Minister address the concern, raised by my hon. Friend the Member for Stone (Mr Cash), that there are already vast disparities of economic potential in different parts of the EU, which has caused massive trade imbalances between member states? The danger is that a genuine free trade deal would exacerbate those tensions? Will the incentive in the EU not be for a more protectionist deal than we would want? How will he address that?
Matthew Hancock
The incentive in the EU is for liberalisation, because overall the analysis of the European Commission and the analysis that we commissioned on the impact on the UK indicated a positive impact on every member state. Of course there are winners and losers, but the overall impact on each part of the EU will be positive. That is what the Commission’s analysis showed.
Matthew Hancock
Yes, of course. I was just about to move on to scrutiny, which came up in many Members’ contributions and is important. I agree with my hon. Friend the Member for Stone (Mr Cash) about the uncertainty of forecasts and numbers, but I will give the Committee the analysis. The Committee will play an important part in scrutinising the negotiations. Of course, as many Members have said, the negotiations will be led by the Commission, so we must ensure that we do not get in the way of positive developments of substance by publishing things that the Commission would not want us to publish, but within those constraints we will ensure that we engage with the Committee, and indeed with Members on both sides. I think that it would be positive to have debates such as this one as the process goes forward.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The Minister has now been speaking for 10 minutes, so I am sure that Bob Stewart can save himself for later.
Matthew Hancock
Let me just run through as quickly as I can some of the other points that were made.
The objective in the negotiations, including in TTIP, will be to have commitments in health services that are broadly in line with existing international trade agreements, so I can reassure Members on that point. It is true that this is an ambitious project, but our goal is that it should be concluded within 18 to 24 months. The US interpretation is that it should be concluded on one tank of gas, and we wholeheartedly agree. The British Government will put in place whatever support is necessary for the Commission to help that happen. The benefits will come not only as a result of reducing tariffs, although they are relatively low, but from non-tariff barriers, mutual recognition of regulation and the treatment of intellectual property, which has been mentioned.
We are under no illusions that this will be easy, but we are well placed and have a strong political commitment. In the first negotiating round, which took place last week, good progress was made. A framework for the negotiations was agreed and an initial productive exchange of views on ambition and approach across each dossier was achieved. As the Prime Minister has said, it is a once-in-a-generation prize and we are determined to seize it to ensure that the benefits of free trade can increase and strengthen jobs and prosperity in this nation and around the world.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I call Mr John Healey. You have up to two minutes, but please be brief.
John Healey
This debate has confirmed a strong cross-party interest in the negotiations—specifically, in the areas that will loom large in any deal, in how we make sure that we get the strongest benefits for Britain, in the historical and political background to free trade, and in Government reporting and accountability to Parliament during the process. It is clear that these negotiations will be tough, that an agreement is not certain, and that the benefits will depend on the content of any agreement. That is all the more reason for Parliament getting behind the negotiations and following them closely.
We have heard 13 Back-Bench speakers. I apologise to those who were unable to give us the full benefit of their expertise because of the time limit. As the hon. Member for Aberconwy (Guto Bebb) said, it is clear that scrutiny starts with this debate. As we heard from the hon. Member for Stone (Mr Cash) and my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty), these negotiations are a stage-by-stage process that require in this House stage-by-stage reporting from the Government and scrutiny. This debate is a marker for the months ahead, and this subject is one to which we must return.
Question put and agreed to
Resolved,
That this House has considered the economic implications for the UK of an EU-US Trade and Investment Agreement.
Summer Adjournment
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr David Amess (Southend West) (Con)
I beg to move,
That this House has considered matters to be raised before the forthcoming adjournment.
Before the House adjourns for the summer recess, I should like briefly to raise a number of points.
I feel that I was duped over the war with Iraq, and I will certainly not be duped again with regard to Syria. I am totally against any involvement in that country, although I praise and highlight the work of organisations such as the United Nations, the Red Cross and Christian Aid. We want to hear much less from Mr Blair and Mr Clinton in terms of any advice that they might be giving. Unless they are prepared to have some of their children sent home in body bags, they should remain silent.
On Iran, I have long been in favour of peaceful regime change.
Sir Edward Leigh (Gainsborough) (Con)
On Syria, will my hon. Friend make the very important point that the community that will suffer most in any armed intervention by the west is one that is protected by the Assad regime—namely, the Christians? It is the last major Christian community left in the middle east outside Egypt.
Mr Amess
I absolutely agree with my hon. Friend. However, I hope that the House will understand if I do not give way any more because I have promised the Deputy Speaker that I will be very quick and set a good example.
The new President of Iran, Mr Rouhani, seems to have been given a wonderful welcome, including in the press. Now that he has the office of President, I caution the House to judge him by his deeds, because his track record is not particularly wonderful.
The Maldives were a British protectorate and for 30 years a dictator ran the country. On 7 September, there are new elections. Given that we have a real interest in the Maldives, it is very important that those elections are held properly and fairly so that this nascent democracy is given all possible support.
I was delighted that one of my colleagues was introducing a Bill to amend the Freedom of Information Act 2000, but rather perplexed when the Bill was not presented. It is absolutely ludicrous that people can make freedom of information requests but we are not allowed know their names and addresses. The House must change that as a matter of urgency. It is completely gutless when people are not prepared to be named and reveal their identities.
I served on the Health Committee for 10 years, and during that time we initiated a debate on obesity. Given all the current talk about obesity, it is as if it has only just been invented. I urge the House to go to the House of Commons Library and look at the report that the Health Committee produced in 2003. If those recommendations had been followed, we would not be in the situation we are in now.
The Warm Homes and Energy Conservation Act 2000, which I was privileged to pilot through the House, reduced the number of people in fuel poverty from 3.5 million in 2010 to 3.2 million in 2011, but there are still far too many. Although it is very warm at the moment, I hope that we will not take our eye off the ball in reducing the deprivation that some of our senior citizens feel when it comes to being warm in their homes.
Space exploration is something that interests us all. I am sure that all hon. Members can think of one or two people they would like to send up in a rocket, hopefully not to return. I would not think for a moment that the UK Space Agency would rival its counterpart in America, although I am very glad that a British astronaut has now joined the programme. Given that we are spending a huge amount of money on the High Speed 2 rail project, I hope, in the context of profitability, that we will look carefully at space exploration in future.
Mr Ray Woodcock is a local resident who raises a lot of money for charity by bungee jumping. On 18 August, he will be beating the Guinness world record for bungee jumping over water at a Welsh quarry, jumping a total of 400 ft. I know that all hon. Members will wish him well.
I recently had a meeting in my office with representatives of Coloplast, which was the first company in the world to develop the ostomy bag. They recently celebrated bowel independence day, which encourages GPs to offer newer technologies more regularly. I hope that the relevant Health Minister will look into this matter and support the company’s endeavours. On the same day, I met representatives of the Multiple Sclerosis Society, who informed me of the positive results that the MS risk sharing scheme has shown since its introduction in 2002. I hope that the scheme will be strengthened further in future and that my right hon. Friend the Health Secretary will look into the matter.
I was appalled by this week’s announcements about a number of hospitals. As I know Basildon and Thurrock University Hospitals Trust extremely well, I feel very strongly that Monitor has played a significant role in what has happened in this tragedy. The people who run Monitor must be held to account by this House.
Monorails do not seem to be particularly popular in this country, but they do offer another way of getting round our busy cities. I am certainly going to encourage the good residents of Southend to have a monorail, and I hope that other hon. Members will be interested in this matter.
Essex bowling club is currently celebrating its 106th year. It is a wonderful club that has had a few trials and tribulations, particularly with the Inland Revenue. I am sending a message to the Deputy Leader of the House saying that I expect someone from the Treasury, as a matter of urgency, to extend the courtesy of meeting my constituents from Essex bowling club and helping them with their tax affairs.
We have all seen the commissioning of reports such as Chilcot and Leveson, and there is great news coverage at the time. Millions and millions of pounds have been spent on those reports. What has happened about the Chilcot report? Absolutely nothing. What has happened about the Leveson report? Absolutely nothing. This is a disgrace in relation to taxpayers’ money. I expect the House to take this issue seriously and to make sure that we get these reports delivered here as soon as possible. I assure the House that if there were an Amess report in years to come, I would not rest until action had been taken.
I conclude with Southend’s bid to be City of Culture. I was very disappointed that neither Southend nor anywhere in the south of the country was on the shortlist of four. All I can suggest to the House is that the Unite trade union probably had something to do with rigging the ballot. That said, I am now announcing that Southend-on-Sea will be the alternative City of Culture in 2017. We will do it through private enterprise, and I hope that everyone will visit Southend to see it.
I wish you, Mr Deputy Speaker, your fellow Deputies, the Speaker of the House, all the Attendants, and everyone who works here a wonderful summer after what has been a tremendous success in terms of sporting endeavours. If anyone is at a loose end, I would welcome them to come and see how Southend-on-Sea rocks.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Let us see whether we can rock the House with Mr Jim Cunningham on an eight-minute limit.
Mr Jim Cunningham (Coventry South) (Lab)
When I applied to speak in this debate, I was not aware that I would secure a meeting, along with my right hon. Friend the Member for Coventry North East (Mr Ainsworth), with the Minister of State, Department for Culture, Media and Sport, the right hon. Member for Faversham and Mid Kent (Hugh Robertson). I therefore intend to be conciliatory in speaking about what has happened to Coventry City football club.
Many people will be aware of the long-running dispute between Coventry City football club and the owners of the stadium in Coventry, the Ricoh arena. We had a debate earlier this year on the matter so we need not go into the details of the dispute again. I also raised the matter earlier during Question Time.
The situation has developed and matters have come to a head. Coventry City FC is now due to play its home games at the Sixfields stadium in Northampton. Neither I nor the people of Coventry have anything against Northampton and I am sure that it is an excellent stadium. However, the fans will have to make the round trip at great expense, which will be beyond many of them financially. Coventry has been the home of the club since it was founded and I am sure that Members can imagine the great disappointment among Coventry fans and residents that the club is having to leave its home city.
I want to make three points. First, I understand that all sides in the dispute are having a good deal of difficulty in having productive negotiations. I do not wish to go into the reasons why that might be. However, I believe that it is vital to bring all sides of the dispute to the negotiating table. A compromise arrangement can still be thrashed out that would enable the club to continue playing at the Ricoh arena. I am only asking for a temporary solution to be found until a long-term solution can be reached. I call on all the parties involved to put aside their grievances and work constructively together to see whether an interim agreement can be reached.
I believe that the sports Minister is well placed to mediate in the dispute and I have called on him to do so. Earlier today, my right hon. Friend the Member for Coventry North East and I had a productive meeting with the Minister in which we put across our views on the situation. I obviously respect the privacy of that meeting, but I will just say that we now know that he will certainly be talking to the Football League.
Time is running out before the season begins and I hope that the discussions will ensure that the club stays in Coventry.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
If I am lucky enough, like my hon. Friend, to catch the eye of the Chair, I hope to make some broader points about the power of football supporters within their clubs. Does he agree that the supporters of Coventry City, who are organised through the Sky Blue Trust, have done a sterling job in supporting him and my right hon. Friend the Member for Coventry North East (Mr Ainsworth) in campaigning for Coventry City to be able to play within the bounds of the Coventry conurbation?
Mr Cunningham
I certainly pay tribute to the fans of Coventry City. They have had great patience and have given me and my right hon. Friend the Member for Coventry North East a lot of support. I cannot praise them highly enough. They are now in the situation of having to travel 70 miles to a stadium outside Coventry, which will cost a significant amount. With the economic situation these days, people are finding it hard to make ends meet, to say the least. The fans have been very loyal to the club over many years, in good times and in bad.
Secondly, the Football League has given approval for the club to play at Northampton. I understand that that might be contrary to the Football League’s own regulations, but we will have to wait and see about that. I disagree with the decision to grant approval because I do not believe that all avenues of negotiation have been exhausted. Until a week ago on Monday, I thought that there was a very good chance that we would make progress with the three main parties in the process. However, when the Football League gave its approval, that took the pressure off all sides to get together and resolve the situation. That was a weapon that the league could and should have used.
I believe that there should be an inquiry into whether the Football League’s regulations have been fully complied with. However, if we assume that they have been complied with, it is still shocking that the situation has reached this late stage without the Football League taking action. To let the situation unravel to the point where a football club cannot play in its home city without the league intervening seems to me to be ridiculous. There should be a review of the Football League’s regulations to ensure that cases such as this one and that of Wimbledon are not repeated.
Thirdly, on a related point, we all know how serious a problem debt can be for football clubs. Debt, rent disputes, company buyouts and takeovers can all be felt by the team and the fans. It is time for a review of the company law relating to football club ownership to take into account the fact that football clubs are not simply businesses. They are not commodities to be bought and sold to make a profit. They mean more than that to the players, the many people involved in a club and, importantly, the fans. It is a great shame when fans can no longer watch their team because of the financial decisions of a few business people. I believe that there should be a review of the law relating to football club ownership and clubs’ financial arrangements. It should not be possible to get into this sort of situation without anything improper or illegal occurring. At some point, Government regulations should prevent this late stage from being reached.
I hope that all Members who are present agree that urgent discussions are essential if a compromise is to be reached that will keep the club in Coventry next season. I urge all sides in the dispute to come together for the future of the club and I call on Ministers to consider carefully this issue and the changes that might prevent such a situation from occurring again.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
I hope to share with the House two positive stories from Hornchurch and Upminster, but given the time constraint, it might be only one.
First, I should like to praise the excellent public library service in the London borough of Havering and to highlight the positive impact of books in developing early years literacy. Havering council takes its libraries very seriously. I commend in particular its cabinet member for culture, heritage and sport, Councillor Andrew Curtin, who takes them even more seriously. He has fought hard, not just to protect library funding but to support our excellent library staff, to improve the quality of service even further and to increase membership.
In January, Havering ran a universal membership pilot as part of the project run by the Department for Education to examine ways for children to join the library automatically at a certain point in their lives. The council worked with 10 schools across the borough. Tickets were created for all reception children and the reader development team went into the schools with a selection of books for children to borrow. The children started with mini membership, which meant that they could borrow just one book and would face no fines. The children also received an information pack, which included an invitation to parents to come and meet professional staff who could teach them how to help their children to read and offer advice on which books to borrow. Volunteers were available during the February half-term to talk to children about the books that they had read.
Havering library service is also working with the registrar of births to join all new babies born in the borough. They have signed up 856 babies in the pilot period. Activities for babies and parents assist in early language development and fine motor skills, and combat social isolation. Read and rhyme sessions for three to five-year-olds improve concentration and listening skills, and help to make the transition to school successful. There are also workshops for parents and carers entitled “How to read to your children and instil a lifelong love of reading in your child”.
The positive approach of Havering council has resulted in a huge surge in library membership in both the junior and adult sections, with 67% of the borough now signed up. For adults, especially those who live alone, the library is a social contact point. It has computers that are available for job searches, informal learning and online courses, and, of course, an endless choice of books to borrow.
I want to stress the importance of books in developing early years literacy and all the benefits that that brings. I remember vividly my first ever visit to the public library. It was stressed to me as I walked along beside my mother that, “When we are in the library, we have to whisper.” The library was a traditional municipal building with wood panelling, not unlike the Chamber, which was a bit intimidating for a five-year-old, but it was a treasure trove because it was full of books. We did not own any books at home, and to see wall-to-wall books was wonderful. Even better than that, I was allowed to borrow them. I could choose them, take them home and read them. A very important lady stamped the back of the book to tell me when I had to bring it back—the whole thing was absolutely thrilling. I could not wait to get home and start reading. It was the beginning of my lifelong love affair with books.
Children who enjoy reading are more likely to have a good vocabulary, and the importance of good communication skills cannot be overstated. Reading develops imagination, creativity and ideas. Children learn to spell and absorb information without realising it, if they enjoy reading as part of their daily lives. They can be transported into other worlds and experience a gamut of emotions: excitement, fear, joy, sympathy and optimism. Characters in books display the good and bad in people, and set examples of courage and kindness, happiness and despair. Children who are introduced to books and acquire a love of reading in their early years are likely to continue to keep it all their lives. They are better informed and broader minded for it, and will be better equipped to face the many challenges that school and life bring.
There is no excuse for any child in this country to be deprived of books. No matter how modest the family income, the public library offers a limitless range of books for everyone. I commend the London borough of Havering for its progressive library service.
My second story—I see that I just have time to tell it—concerns my visit to Stubbers adventure centre in my constituency this week to see the National Citizen Service in action. The NCS is a Government-funded scheme for year 11 and 12 students and 16 and 17-year-olds who are not in education, that lasts about four weeks. The first week is spent away on an outward bound course doing challenging activities like rock climbing and canoeing with other young people from different backgrounds they have never met before. It builds confidence and interpersonal skills. Importantly, it is great fun.
The second week, which was when I visited, is residential. Other new skills are acquired: putting up a tent, personal financial management, learning how the community is made up and planning a local social action project. The students were full of ideas. They planned how to put them into action and raised the money they needed. They also found out who to contact for permission or information. It was wonderful to see such enthusiasm.
The third and fourth weeks are a lesson in practicality, organisation, overcoming setbacks and difficulties, and maintaining effort—all real life skills that will stand them in good stead. At the end of the course they all receive a graduation certificate signed by the Prime Minister, and parents often make comments like, “I don't know what you did with him, but he is completely transformed.”
Schools can help to raise awareness of NCS, which takes place during school holidays so there is no cost, either in time or money, to schools. They can pass on information or invite the NCS to speak to pupils, so that the opportunity to take part is available to 16 and 17-year-olds from all backgrounds. It really is a worthwhile experience.
Siobhain McDonagh (Mitcham and Morden) (Lab)
I would like to share a shocking case with the House on behalf of my constituents George Shaw and Paula Davidson, who for 18 years have been the proprietors of the Fillings sandwich shop in Streatham Hill.
In March 2005, Mr Shaw was unloading his van outside his shop. He saw a man looking into his front window and became concerned that the man was about to steal his van. He then felt a sharp pain in his back: he had been shot. The man had been looking at the bank, which he intended to rob, on the other side of the street through the reflection of the shop window. This man, Mr O, fled in a minicab. It took some time for the police to arrive, but there was CCTV footage from the buses that passed along the street and there were witnesses who were prepared to give evidence, in spite of it being a violent crime. One would think that it was an open and shut case.
It took the police a week to find Mr O. They found him in the Republic of Ireland, where he was also wanted by the police. He was found guilty of a violent crime in Ireland and was imprisoned there for five years. He was later extradited back to the UK and went on trial in 2010. Mr Shaw and Ms Davidson tell me that in the five years between the shooting and Mr O being returned to Britain they were not kept informed and had no idea what was going on. To this day, they are confused as to why Trident investigated the case, as it was not a gang or black-on-black crime. A few days before the trial in 2010, they received a two-line e-mail telling them to be prepared for a case at the Old Bailey, and to be ready to give evidence.
Mr O was being tried for a number of violent crimes, including, I understand, a dangerous assault on a woman in a pub in Brixton. When Mr Shaw got to court, he learned that the police had lost all the evidence: they had lost the gun, the bullet and the CCTV from the buses. The people who were prepared to give evidence turned up in fear. They sat outside for 10 days completely uninformed about what was going on. Mr Shaw and Ms Davidson had never had anything to do with the police or the criminal justice system before, and this was an overwhelming experience for them. Mr Shaw had suffered greatly. He had been in hospital for weeks, and he continues to have a very large hernia as a result of the injuries he sustained. Nobody explained what was happening. As far as he knew, Mr O was not being prosecuted for his near murder.
On the advice of Victim Support, Mr Shaw came to see me in March 2011. I wrote to the Independent Police Complaints Commission to ask it to investigate. On 19 December 2012, Mr Shaw and Ms Davidson met Mick Foote, the detective superintendent in Trident gang crime command. Last week, they received a letter explaining that nobody was at fault for losing the evidence, and that nothing could be done to bring Mr O back to trial.
On Mr Shaw’s behalf, and to give some credibility to our Government system and our public services, I ask that Mr Shaw be informed of where Mr O is imprisoned and when he will be released. Not unreasonably, Mr Shaw and his wife are frightened that Mr O will be released. He is a man of violent conduct and might come back to their shop. I would like the police to meet Mr Shaw and Ms Davidson and explain exactly what happened, and what support they should have expected, from the crime taking place to the date when the trial took place, and what support they should have reasonably expected while the trial was going ahead.
If victims experience this level of bemusement in such a serious case, what happens in smaller cases? My constituent has run his sandwich shop on Streatham High road for 18 years and has had no involvement with the criminal justice system. He feels he has been treated like a criminal.
Mark Pawsey (Rugby) (Con)
I rise to draw attention to an issue to which I drew attention in the last debate on matters to be raised before the Adjournment, which took place on 26 March. On that occasion I drew the House’s attention to concerns about the consequence of an EU directive on people’s ability to continue to use what was then, and still is, a relatively new product, namely electronic or e-cigarettes. Members will remember that an e-cigarette is an alternative to a conventional tobacco cigarette and consists of an electronic inhaler that vaporises a liquid into an aerosol mist, enabling the user to enjoy nicotine in a far safer form.
I return to this topic because, in addition to the EU legislation, there is a now a proposal by the UK’s Medicines and Healthcare products Regulatory Agency for e-cigarettes to be considered as medicinal products. The EU directive seeks to lay down a legislative framework for the manufacture, presentation and sale of tobacco products. However, e-cigarettes are not tobacco products. Bringing them into line with their more dangerous counter- parts—standard cigarettes—will see the consumption of e-cigarettes drop. That means that people who currently use them safely will no longer be able to do so. If the MHRA’s proposal goes through, e-cigarettes will have to go through an expensive and time-consuming procedure to be approved as medicines. If that procedure makes them more difficult to obtain, smokers will simply continue to smoke tobacco.
It is important to remember that e-cigarettes were not developed as a medicinal product. Indeed, I heard them described at a seminar the other day as simply an “enjoyable consumer product”. However, their regulation as medicinal products would raise costs, reduce the diversity of products available, slow down innovation and inhibit creativity, and, in doing so, make them less appealing to the very people hoping to switch to them. These are by-products of the law of unintended consequences. More people will revert to tobacco.
Beyond that, the MHRA recommendation is for people “not to use”—that is its advice—the current generation of e-cigarettes available on the market. Its group manager of vigilance and risk management of medicines told a press conference held to announce the MHRA’s recommendations:
“We can’t recommend these products because their safety and quality is not assured, and so we will recommend that people don’t use them”.
However, that was despite the MHRA’s impact assessment giving no evidence of any harm caused by the use of e-cigarettes. In fact, Professor Robert West of University college London says that for current e-cigarettes “the risk is negligible”. Indeed, the NHS’s website states that their toxicity is one thousandth that of tobacco cigarettes.
One consequence of the MHRA’s recommendation has been that a major supermarket chain removed e-cigarettes from its pharmacy shelves, while a survey of 700 pharmacists has shown that 99.5% are declining to stock e-cigarettes because of the announcement. There is an emerging industry manufacturing e-cigarettes, which predicts that the reduction in their use caused by the MHRA’s recommendation will cost the NHS £2.5 billion, owing to fewer people giving up smoking tobacco. E-Lites, the largest producer of e-cigarettes, now forecasts a substantial reduction in the growth of the market. On its figures, 390,000 fewer people will be using e-cigarettes by the end of the year, compared with what would have happened without the MHRA’s recommendation.
Bob Stewart (Beckenham) (Con)
Someone has to regulate e-cigarettes, but if they are not regulated as a medicine or cigarettes, who will do it?
Mark Pawsey
E-cigarettes are currently regulated in the same way as standard consumer products, and are subject to local authorities, trade descriptions and so on.
Users are concerned that it will become harder for them to access e-cigarettes in their bid to wean themselves off smoking, as the alternative of e-cigarettes will simply be more expensive. The directive is also of great concern to a number of small businesses, in particular a business based in my constituency called Smoke No Smoke, to which I referred when I last spoke on this issue. Its entrepreneurial owner, Jim Lacey, is facing a threat to the future of the business that he has worked so hard to build up. The feedback from his customers is that they will be unable to access the product. There is a danger that that will force the e-cigarette trade underground. If e-cigarettes were produced in an illegal market, it would be difficult for people to know where they had come from.
This is not the time to introduce these regulations. I urge the Government to look more closely at what they can do to avoid the implementation of the directive.
Heidi Alexander (Lewisham East) (Lab)
The end-of-term Adjournment debate is normally used by Members to raise matters of constituency interest or to highlight particular campaigns, but I would like to do something slightly different today. I want to talk about the European Union (Referendum) Bill. Two weeks ago, when the House debated the Bill’s Second Reading, I wished to speak but, as hon. Members will know, the debate was somewhat oversubscribed. I shall therefore outline my views on the Bill today, and set out my reasons for abstaining in the vote two weeks ago.
I remain to be convinced that there is a desperate clamour for a referendum on Europe, either in my constituency or in the country as a whole. Since I was elected in 2010, 20 of my constituents have e-mailed me to say that they want a referendum. During that same period, more than 1,000 people have contacted me about the NHS and more than 50,000 people signed my petition against changes at Lewisham hospital. My constituents are not generally shy about telling me what they think. They tell me how tough it is to find work, how they are struggling because their tax credits are being cut, and how they cannot afford their rent, let alone a mortgage. I do not dispute that our membership of the European Union is an issue for some people—I suspect, incidentally, that there is some geographical variation in the levels of concern—but I really question whether the time being spent on the issue in Westminster is proportionate to the scale of interest and concern that exists in the country as a whole.
We now have a Bill going through the House that would commit us to having a referendum on the UK’s membership of the EU in four years’ time. I am not a particular fan of referendums—I think that the majority of people who vote actually elect politicians to do a job and want us to get on with it—but I am not opposed in principle to the idea of a referendum on Europe. But to legislate now for a referendum in four years’ time just seems like a huge leap in the dark when we do not know what changes to our relationship with Europe will have been sought or agreed.
If I were a business owner looking for a European base or seeking to expand my European operation, the idea that the UK might not be in the EU in four years’ time would surely make my search for a regional hub or headquarters much easier. Why set up shop in a country that might have cut its ties with the world’s largest single trading bloc, four years down the line? Legislating now for a referendum in 2017 will create huge economic uncertainty, which this country could well live without.
We also have to be clear that the majority of those who have led the campaign for an EU referendum want to take us out of Europe. That is not true for everyone, but it is the overriding motive of most referendum proponents. I, for one, do not want to associate myself with such a cause. I believe that the UK has to be at the heart of Europe, leading it, reforming it and making it work for the 21st century. The European Union is far from perfect. We need to tackle the waste and bureaucracy, and it needs greater democratic accountability. We can all point to x regulation or y regulation that we might want to see changed, but in my view, the overall economic and social benefit to our country that results from our membership of the EU outweighs those negatives.
Some of those who advance the case for withdrawal seem to think that, if we left, we would automatically get all the gain but none of the pain. I do not think that that is true. We would have to pay billions to access the free market, yet we would have no say over the rules that govern it. As much as we might want to strike free trade deals with the big global economies, their priority surely would still be the EU and not an isolated UK. And what of our bargaining power? Do we honestly think that by going it alone we would carry the same weight in negotiations and be able to strike the same deals in the interests of the British economy?
I was just one year old when the last referendum on Europe took place. I recently asked my dad whether he had voted. I had never spoken to him about it before—as in many families up and down the country, Europe was not the usual topic of conversation at the dinner table—but he told me that he had voted yes. I asked him what he made of the current debate on Europe. His response was, “It’s a bit like a football match, Heidi. You can’t hope to influence the outcome simply by shouting from the sidelines.” The Prime Minister’s European game plan is not just about hollering from the sidelines because half his side really want to play for a different team. To cap it all, half of them have already admitted defeat before the first whistle has even been blown.
The world has moved on since the last referendum on Europe. Thankfully, it has moved on, too, since my grandfather and my husband’s grandfather found themselves on opposing sides in the second world war. I believe that the case for being part of Europe is stronger now than it was in either 1945 or 1975. In an increasingly complex world where big challenges cross international borders and where enormous multinational companies have greater financial powers than many countries, we need governance structures that exist above the nation state to discuss the problems, explore solutions and build consensus. That is not to say that we should be subordinate to such structures—far from it—but the UK has to be part of the dialogue.
The truth is that the real reason for the European Union (Referendum) Bill is UKIP. UKIP’s rise is as much about people’s disillusionment with politics as it is about our membership of the EU. It is about immigration, welfare, fierce competition for scarce jobs and the lack of genuinely affordable housing. At its heart, it is about the public looking at their politicians and seeing, by and large, a bunch of people who all look the same and sound the same—but do not look and sound like them. It is easy for UKIP—a party that has just one all too notable face and seemingly no internal dialogue or debate. All UKIP politicians do is say the populist thing, take the TV cameras to the pub with them and convince people that they are more like them than the bunch of suits in Westminster.
The European Union (Referendum) Bill says more about the fears and obsessions of the Conservative party than it does about the hopes and aspirations of our country. It is a potentially dangerous distraction from the issues that really matter to people and to our country’s future. That is why I did not support it two weeks ago and why I wanted to put my views on the record today.
In the 30 seconds remaining, I would simply like to wish you, Madam Deputy Speaker, and all the staff of the House of Commons a very happy summer recess.
Sir Bob Russell (Colchester) (LD)
If people are still looking for a book to read during the summer recess, I would recommend “You Can’t Hide the Sun” by the Beirut hostage, John McCarthy. He provides a very disturbing and worrying account of life for Palestinians post-1948. He pulls back the curtains, goes behind the scenery and reveals what is really going on in that troubled part of the world.
By the time we return to Parliament in September, it is quite possible that a serious situation will have got even worse. The Israeli Parliament has voted for what can be described only as ethnically cleansing between 40,000 and 60,000 Bedouin. Clearly, the removal of such a large number of humanity will be undertaken only at the point of a gun. If ethnic cleansing were going on anywhere else in the world, the world’s leaders would be voicing outrage. The national and international media would have television cameras there reporting this crime against humanity, yet we have a deafening silence from political leaders in this country and in the United States of America.
It is the Americans who allow this sort of thing to go on, as they have since 1948. President Obama has failed to ensure that ethnic cleansing does not take place by the Israelis and the Israeli Parliament against the Bedouin. It is, of course, a track record that goes back over many years. The illegal occupation of the west bank and East Jerusalem; the obvious apartheid legislation of the Israeli Government; the ignoring of countless United Nations resolutions, the Geneva convention and international law: these are everyday occurrences for Palestinians living in the Occupied Palestinian Territories. Our Government have been silent. Two weeks ago, in this very Chamber, when I invited the Foreign Secretary to condemn Israel for the ethnic cleansing of the Bedouins, he declined to do so, and I therefore asked him a parliamentary question on 11 July.
Bob Stewart
I want to place on record that I personally condemn what is happening to the Bedu. I used to live in the area. I think it is disgraceful that there are two kinds of people—Israelis and the others—on the west bank, and that the law is different for each of them. It is appalling.
Sir Bob Russell
I am extremely grateful to my hon. and gallant Friend, because he brings to the Chamber a very distinguished military record. He is a soldier whose reputation is such that he would never find himself up before the International Court of Justice. I am bound to say that some of the military leaders and Israeli political leaders would face the Court for what they have done, and for what they are doing.
In my parliamentary question, I asked the Foreign Secretary
“how many representations he has received in opposition to proposals by the government of Israel to forcibly remove 40,000 Bedouin from their historic lands.”
In fact, the figure may be 60,000 by now. A Minister replied:
“The Foreign and Commonwealth Office has received over 600 representations from members of the public on this issue.”—[Official Report, 11 July 2013; Vol. 566, c. 355.]
I will not be silenced on the issue. I am speaking here on behalf of the 600 or more people who have written to our Government, and I am speaking, I hope, with the blessing of all people of all faiths around the world who deplore what is being done. I want specifically to praise the work of the American-based organisation Jewish Voice for Peace, because, like that organisation, I want to see peace in the Holy Land. I want to see people of all faiths and religions and of none living in harmony. I am bound to observe, however, that the actions, past and present, of the Israeli Parliament are more akin to what went on in apartheid South Africa. The world did not like what went on in apartheid South Africa, but the world is silent about what is going on in Israel/ Palestine.
Where are the words of opposition from President Obama and the United States Administration? There are none. Where are the words of opposition from the Government of the United Kingdom? There are none. What is the European Union doing, other than having friendly trade relations with Israel? Earlier this year, there was the extraordinary situation of an international European football tournament taking place in Israel. The last time I looked at the map of the world, Israel was not in Europe.
I hope that, out there, President Obama, the Archbishop of Canterbury, the Pope, our Prime Minister or whoever will prevail on the Israeli Parliament. It must be made clear that the forcible removal of up to 60,000 Bedouins—in addition to everything else that has been done over the years—does not bring forward peace in the middle east, but sets it back. I want to see a peaceful Holy Land, but I think that leaders must speak up.
I hope that, if nothing else, I have drawn attention to what is happening to the Bedouins. The BBC is not covering it, our national newspapers are not covering it, ITV is not covering it, Sky News is not covering it, Channel 4 is not covering it. If 60,000 people were being subjected to ethnic cleansing in any other country in the world, it would be the lead news. Shame on our national media for pulling a curtain across the stage so that people do not know what is going on.
I ask Members please to acquire a copy of “You Can’t Hide the Sun” by John McCarthy, and to read it and find out what is going on in that part of the world. They will not find that out through the British media.
Mr Kevin Barron (Rother Valley) (Lab)
I hope I do not have to take my full eight minutes, but I sat in this House yesterday listening to Prime Minister’s Question Time, and my hon. Friend the Member for Caerphilly (Wayne David) asked the Prime Minister why he had not replied to a letter he had sent to him in February, to which the Prime Minister replied:
“I will look urgently at this case, because I reply to hon. Members’ correspondence right across the House, and I always will.”—[Official Report, 17 July 2013; Vol. 566, c. 1090.]
Last month, I brought up at Prime Minister’s Question Time the fact that I had written a letter to the Prime Minister on 8 May this year about public health and Lynton Crosby’s involvement, or non-involvement, in public health matters. I asked several questions, including:
“Have you ever discussed cigarette packaging policy with Lynton Crosby? Have you ever discussed minimum alcohol pricing with Lynton Crosby?”
The last question was:
“Were the Government’s legislative priorities discussed at the meeting which reportedly took place at Chequers on Thursday 21 February, involving you, George Osborne, Ed Llewellyn and Lynton Crosby?”
I have not yet, months later, had a reply from the Prime Minister to that letter.
As I said, I brought the matter up at Prime Minister’s Question Time on 19 June. I told the Prime Minister I had written to him on 8 May and had not yet received a reply, and briefly mentioned that the letter was about Lynton Crosby and alcohol and standard packaging of cigarettes. He did not reply, instead saying:
“I can tell you, Mr Speaker, that Lynton Crosby has never lobbied me on anything.”
If that is the case—if he believes that—why he cannot reply to my letter of 8 May is beyond me. The Prime Minister continued:
“The only opinions that I am interested in are how we destroy the credibility of the Labour party, on which he has considerable expertise, though I have to say that he is not doing as good a job as the Labour party.”—[Official Report, 19 June 2013; Vol. 564, c. 891.]
It is perfectly clear what agenda Mr Crosby is setting. Members may recall that in yesterday’s debate on managing risk in the NHS, I intervened on my right hon. Friend the shadow Health Secretary, saying:
“My right hon. Friend knows well…that in the past two months there has been a marked change in the coalition Government’s approach on the national health service. It started with the absurd argument that the problems in accident and emergency departments were the result of the 2004 GP contract. Is it not more likely that what is happening is that Mr Lynton Crosby is telling Government Members to squeeze the lead that Labour has had over the Conservative party for many decades on the NHS?”—[Official Report, 17 July 2013; Vol. 566, c. 1177.]
That is exactly what is happening. I went on to mention that that is not only demoralising NHS staff and frightening NHS patients, but is doing enormous damage to the credibility of politicians up and down the land. I got an e-mail yesterday from a Conservative Member who was tabling an early-day motion. He said he thinks we should get party politics out of the NHS. I agree.
I am concerned about the non-reply to my letter for several reasons. The Prime Minister gave his view on this matter on 23 March 2012 in a No. 10 press release:
“The Prime Minister is leading Government action to tackle binge-drinking culture by supporting proposals a minimum unit price for alcohol.”
It says the Home Secretary is involved in that, and the Prime Minister is quoted as saying:
“So we’re going to attack it from every angle. More powers for pubs to stop serving alcohol to people who are already drunk. More powers for hospitals not just to tackle the drunks turning up in A&E—but also the problem clubs that send them there night after night. And a real effort to get to grips with the root cause of the problem. And that means coming down hard on cheap alcohol.”
We had a statement yesterday from the Home Office, again, which is most likely to view alcohol as a law and order issue. I wish that people would view alcohol as an issue of health and the damage it is doing to the young generation. Thirty years ago, people of my age—men in their 60s—died of alcohol-related diseases. Young men and women in their 20s are dying of cirrhosis of the liver now: not just one or two, but many of them. We must take a hold of this problem and the Prime Minister and the Government are not doing that.
During the alcohol strategy consultation statement yesterday, the hon. Member for Totnes (Dr Wollaston) asked a question that relates directly to getting a grip on the price of alcohol. She asked whether the Minister was aware of the evidence from Sheffield, which is where the original review was carried out on alcohol pricing and consumption in areas such as my constituency, which is just outside Sheffield. The review stood the test many years ago and stands the test now, so to hear Ministers say that there is no evidence on alcohol pricing and consumption is complete nonsense. I fear that Lynton Crosby and the people he has worked for in the past have more on that.
The hon. Lady asked:
“Is the Minister aware of the evidence from Sheffield that was published this morning and shows that the impact of having a threshold at duty plus VAT would be a decrease in consumption of one 400th of 1%?”
That is what the Government announced yesterday on health and alcohol, notwithstanding how A and Es up and down the land are swamped with people who have overindulged in alcohol not just on Friday and Saturday nights but midweek, too. Never mind the disease that alcohol creates; it creates chaos on our streets and in the hospitals, too. The hon. Lady went on:
“In other words, it will be meaningless.”—[Official Report, 17 July 2013; Vol. 566, c. 1122.]
She is absolutely right.
I said yesterday that at the weekend the Faculty of Public Health withdrew from the Government’s responsibility group on the use of alcohol, as have Alcohol Concern, Cancer Research UK, the UK Health Forum and many other organisations. The Government are backing down and taking notice of industry, and the areas that affect public health are being left. Everybody ought to know that the dangers to public health in this century, as opposed to past centuries, are caused by individual lifestyles. The Government are ducking taking action on individual lifestyles in favour of industry. I thought I ought to put that on the record and I hope that one day I will get a reply to my letter.
Fiona Bruce (Congleton) (Con)
This week, I have had a work experience student in my office. Members might say that there is nothing unusual about that, but this young man is different. He is from North Korea. Abandoned by his family as a child, he lived on the streets from the ages of eight to 14, scavenging food. He tried to escape his hopeless life to flee his country only to be caught by Chinese soldiers, returned, imprisoned, tortured, hung upside down, repeatedly beaten and left virtually for dead. He was just 16. He told me:
“They would have killed or imprisoned me for life, but I was still a minor.”
He managed to escape yet again, but was hunted down in China by the police and imprisoned there, where he attempted suicide. Later, after a long international journey involving the selfless kindness of many people, he arrived in the UK, where he is now a student with a hope and future, although he still bears the scars of his early life in many ways. He is still only 24 years old.
He is one remarkable young man from North Korea whose life, after years of terrible suffering, is now changed for ever. Dare we hope for the same for his people? The answer must be a resounding yes. We should indeed hope for a better future for the people of North Korea and do more than just watch and wait for it. We should act. I hear Members ask: but how? In these few minutes, may I suggest some actions at governmental, organisational and individual levels?
As time is brief, I do not propose to refer in detail to the egregious violations of human rights in that country, and the indescribable suffering of the people of North Korea—they have been described in earlier debates in this House and in another place—but I will mention the disappointment at the way in which young Kim Jong-un has dashed hopes and squandered the opportunity for the fresh start that his leadership could have provided. Despite that, there is still hope, and it is right to work for change.
How can we help? First, through practical support for the hundreds of North Korean escapees here in Britain, such as the young man I mentioned, who encounter the shock of trying to integrate into a free society. We can help to educate and equip them for the regime change that will surely come. When it does, there will be a need for leaders in North Korea who understand both its tragic past and the essential concepts for building a free society, such as the rule of law and democratic and human rights. I urge the Foreign and Commonwealth Office to engage with the North Korean diaspora in that way.
Philanthropic business people can consider supporting social enterprises in North Korea. There are isolated examples of such enterprises, including a shoe factory. Business start-ups provide potential soft power interventions, including through improved employee conditions, such as the very basic one of insisting that wages are paid direct to employees, and not via the state, with its inevitable deductions. At grass-roots level, North Korean people want DVDs, USB drives, radios and mini-computers to be sent to them. The regime’s information blockade is crumbling, as through these items North Koreans have much better awareness of the realities of life in the outside world than they would have done even five or 10 years ago.
On a structural level, improved equipment, technology, and production methods for farms are needed. Support for the constructive work of non-governmental organisations such as Oxfam is to be commended. Could the Department for International Development not consider supporting such NGOs? The excellent work of the British Council, which, on a relative shoestring, has taught English to 3,900 North Koreans over the past 13 years, is to be commended and would merit greater support, as would academic and cultural exchanges. The Pyongyang university of science and technology welcomes UK academics to teach there, and we can all join the all-party group on North Korea in calling on the BBC to start broadcasting into North Korea as soon as possible.
As individuals, we can support effective advocacy organisations such as Christian Solidarity Worldwide; I invite hon. Members to read Ben Rogers’s excellent article, which is on the Conservative Home website today. We can highlight the plight of foreign nationals such as Kenneth Bae, who is in jail in North Korea, and support the planned new grass-roots group, North Korea Campaign UK, which is to be modelled on the successful Burma Campaign UK, a country from whose recent experiences we should draw cautious optimism. Hon. Members should look out for this campaign’s launch in the media, which will take place on 27 July to coincide with the 60th anniversary of the Korean war armistice. It is often called the forgotten war, and I pay tribute to the 1,000 men who lost their lives in it; that is more British forces than died in the Falklands, Iraq, and Afghanistan combined.
All this—opening doors, building relationships, strengthening contacts, and opening as many channels of communication as possible through constructive and critical engagement—is the approach promoted in Lord Alton’s substantial new book, which he wrote with Rob Chidley. It is called “Building Bridges: is there Hope for North Korea?” At the risk of recommending yet more fairly heavy reading for MPs over the summer, I recommend the book; it really will impress. It suggests ways forward on the humanitarian and security challenges facing North Korea today—what Lord Alton calls
“Helsinki, with a Korean face”.
That means adopting the approach that Britain and the US took in the Soviet Union at the height of the cold war, and building bridges, not walls, between people.
Sir John Stanley (Tonbridge and Malling) (Con)
I applaud my hon. Friend’s choice of subject. Is she aware of the annual international meeting of parliamentarians that focuses exclusively on gross human rights violations in North Korea? I have the privilege of representing the House at the next meeting in Warsaw in a fortnight’s time.
Fiona Bruce
I am delighted to hear that my right hon. Friend is attending that convention; I received an invitation, but was unable to attend.
I commend, too, the work of British officials who, behind the scenes at UN and EU level, in partnership with others, have helped to secure the recently established UN commission of inquiry to investigate crimes against humanity in North Korea—a real step forward. May I urge them, in addition, to press for the stopping of forcible repatriation of North Korean refugees from China, knowing as we do that they face the kind of experiences that I have described today?
May I encourage colleagues in the House to join the increasingly active all-party group on North Korea to help make the suffering of the people of North Korea, in the most persecuted country on earth, a thing of the past, and in the words of the young music group Ooberfuse to “vanish the night”? That is a song that the group wrote as a result of coming to one of the all-party group meetings. The phrase “vanish the night” refers to the fact that if one looks down on satellite pictures of North Korea compared with South Korea, one will see that North Korea is almost totally black. There is no light shining out from the streets in North Korea.
I finish with some words from Lord Alton’s wonderful book. Referring to the example of Burma, he says:
“What seems a faraway dream can happen more quickly than one might imagine.”
Events, he comments,
“can move much more quickly than we might sometimes anticipate.”
Speaking of young students such as the North Korean work experience student whom I mentioned at the start of my speech, Lord Alton says:
“We owe it to their generation—to the North Koreans who die trying to escape across the Tumen and Yalu rivers and those who still languish in prison camps—to take every opportunity to bring Korea closer to the dream of reunification. This requires opening up as many channels of communication as possible. We must do everything we can to saturate North Korea with goodwill.”
He goes on:
“The Korean proverb tells us that ‘to begin is half the task’ . . . We must build bridges, not walls.”
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I am grateful to you, Madam Deputy Speaker, for giving me the opportunity to take part in this pre-recess debate. It is a pleasure to follow the hon. Member for Congleton (Fiona Bruce). I certainly endorse her hope that the Department for International Development will use some of its resources to facilitate more positive communications of the sort that she describes with North Korea. I hope she will forgive me if I do not promise to read the heavy tome that she recommended on my summer holidays, but I thought she made a very interesting and important contribution.
As my intervention on my hon. Friend the Member for Coventry South (Mr Cunningham) indicated, in my speech I shall press the case for more action to support the right of football supporters to have a say in the governance of the football club that they follow, and to call for a higher proportion of television revenues to be directed into grass-roots support. As my hon. Friend made clear in his intervention, Coventry City is just the latest example of a club where supporters’ concerns are being ignored. The particular concern of the supporters’ trust—the Sky Blue Trust—and other supporters of Coventry City more generally is the owners’ desire to shift their club for a number of years some 35 miles away from where it currently plays, with all the difficulties for Coventry City supporters that that will signify.
I welcome the fact that my hon. Friend the Member for Coventry South and my right hon. Friend the Member for Coventry North East (Mr Ainsworth) have met the Minister. I understand that Coventry City supporters are shortly to take part in a demonstration outside the Football League to demonstrate their concern to the powers that be in the Football League. Given that the Football League’s strap line is “Real football, real fans”, one hopes that it will listen to the concerns of Coventry City fans and intervene.
Mark Pawsey
As the MP for a constituency that neighbours Coventry and with many supporters in my constituency, I very much hope that the Coventry City issue will be resolved. Does the hon. Gentleman agree that if Coventry City plays 35 miles away, there might be an opportunity to persuade Coventry City supporters to watch the oval ball game in the city of Coventry at the Butts stadium and see the Coventry rugby club restored to the power in the land that it once was?
Mr Thomas
If the hon. Gentleman will allow me, I will stick to the more general point about the need to give football supporters more say in the governance of their club. Nevertheless, he has made his point and I am sure that Coventry rugby club’s supporters will be delighted that he chose to make it.
The successes of Swansea City and Bayern Munich last season emphasise, in their very different ways, the success of clubs where supporters have a very direct and significant role in how their football club is managed. Swansea City is unique in the Premier League in terms of the involvement of fans in the boardroom. I think that it is high time that that situation changed. The Co-operative party, which I am lucky enough to chair, championed in the late 1990s the idea of football supporters’ trusts to help football supporters co-operate to buy stakes in the running of their clubs. Now many Football League clubs and, indeed, many non-league clubs—the famous cases of AFC Wimbledon or FC United through to the likes of Exeter and Chester—are directly run by their supporters through the mechanism of a supporters’ trust.
The involvement of supporters’ trusts on the boards of clubs helps to ensure that that authentic voice of the supporter is heard when the role of the club in the local community is being discussed, when ticket prices are being debated or when players’ wages and contracts are being agreed. Supporters’ trusts help to ensure that longer term thinking about the future of the club and the need for sustainable finances over the long term are being considered. They help to deliver added social value to their localities and, indeed, on occasion they can boost enterprise in the area.
The Football Association has been under pressure for some time from football supporters to bring forward reforms to football rules to give fans more influence. To date, they have resisted any measures that challenge the autonomy of Premier League club owners. The FA Council’s summer meeting took place last Saturday and sadly was no different from previous such meetings. So if the supporters’ voice is really going to be heard, it seems to me that three key measures are required for change.
First, legislation is needed to make it easier for supporters’ trusts to buy their club. There ought to be a right to buy for supporters’ trusts that allows them to purchase a club at the point of a club entering administration and before receivership at a fair market valuation.
Secondly, for most supporters of Premier League clubs, administration is not likely to happen any time soon and there is no obvious sign either that, despite warm words from some Premier League club owners or managers, a stake in the ownership of Premier League clubs is likely to be sold to supporters’ trusts. Legislation is also needed to embed a right to observe in law. In other words, if a proportion—say 10%—of season ticket holders at a Premier League or Championship club belong to the registered supporters’ trust, that trust ought to have a right to attend and observe board meetings at the club, to receive board papers and to be able, as a result, to question and hold to account the club’s owners and senior staff.
Both these measures would help to embed supporters in the heart of decision making about a football club’s future. Such decisions about the future of a football club should not be the sole preserve of wealthy owners. We need to remember that such clubs have been built on the back of ordinary supporters’ money and commitment and they surely have a right to have better access to the key decisions and decision makers in their club.
The third measure to which I draw the House’s attention is the funding of grass-roots sport, and other related football causes. In 2001, the Premier League agreed to give 5% of its total broadcast income to the provision of grass-roots facilities, and to encourage better provision for supporters. It now claims that that was just for one TV deal, and only for domestic broadcasting rights. I wonder whether we need a back-stop legal power to ensure that that 2001 deal continues into the future. Without such a back-stop power, the Premier League and Football Association have been able to reduce the amount of money given each year to the Football Foundation directly from football clubs.
The need for more investment in grass-roots sport, and perhaps for a lever to change the minds of owners and their defenders in Premier League and FA boardrooms, points to a need for a legal power to impose a levy. If such a levy were ever to be used, it must clearly be kept well away from the Treasury. I hope we would never need to use such a power, but perhaps the Minister would consider the possibility of a back-stop statutory power to get the FA and Premier League to be more serious about funding for grass-roots sport in the future. With a £5 billion broadcast deal, it is not unreasonable to expect the Premier League to offer 5% of its income for investment in grass-roots coaching and facilities.
Sir John Stanley (Tonbridge and Malling) (Con)
My constituent, Mrs Rene Chung, is not an illegal immigrant, although that is how she has been treated, in part, by the Home Office and the UK Border Agency—I am glad to see that the Chair of the Home Affairs Committee, the right hon. Member for Leicester East (Keith Vaz), is in his place.
Mrs Rene Chung is a Canadian citizen and she has been living in the UK, perfectly legally, since 2008. She is married to a British citizen and she is a top-flight business woman. She contributes to Britain’s economic performance, and no doubt to the revenues going into the Exchequer through the tax system. For her job it is essential that she travels. The chief executive of the company for which she works—an international, executive search and selection company—recently wrote to the Home Secretary as follows:
“Ms Chung works as a Senior Consultant for me, and as a valued member of my company, she holds expert knowledge about our clients and their businesses, and she also has valuable experience of interviewing and assessing the suitability of candidates for our clients. Ms Chung is also responsible for business development and she is required to support me in “pitch” meetings which involves visiting clients’ offices all over Europe. Our business travel occurs about two times a month, and is usually planned at very short notice i.e. one week notice or less. It is important for me to stress that Ms Chung’s ability to carry out her basic job responsibilities is directly linked to her ability to travel. Ms Chung has performed extremely well in my company for the past four years, and she has proven to be an asset to the company. It is therefore important for me to request that Ms Chung is allowed to continue travelling regularly for business.”
I will not detain the House with the details of Rene Chung’s case, but I want to highlight three points. First, Mrs Chung has been waiting for more than a year for the renewal of her spouse visa application—in my view, an unacceptable length of time. Secondly, the Home Office has already made a disastrous error in handling her case by incorrectly deeming Mrs Chung’s application to have been withdrawn—the Immigration Minister has apologised for that in his latest letter to me. Thirdly, and most disgracefully of all, when Mrs Chung recently returned to Gatwick, following a business visit to Europe, she was locked up for six hours and released only after her passport had been confiscated. Such conduct is more redolent of an authoritarian police state than what we expect in a democratic Britain that pays proper regard to basic human rights.
When it comes to supporting economic growth in the business community, the Home Office is wholly apart from the rest of the Government, who are doing all they can to support economic growth in the business community—some signs of success are, I hope, beginning to show through. On the other hand, as far as I can see, the Home Office takes absolutely no account of the need to support the business community, including individual business men and women trying to contribute to our economic growth. It is blindingly obvious that it should introduce a fast-track procedure for processing applications for visa renewals of people with a clear legal right to be in this country and for whom travel is essential to their work. I put it to the Home Secretary that fast-track processing should be put in place forthwith. In cases such as Mrs Chung’s, I see no reason why visa renewal applications should not be processed within a maximum of four weeks.
Finally, I want to make a complaint to the Immigration Minister about a recent answer he has given to me. I appreciate that he has probably got the worst job in the Government and is probably grossly overburdened, but on 11 July he gave me a seriously misleading answer. I tabled a question to the Home Secretary asking when I would receive a reply to a total of four letters I had sent to her about Mrs Rene Chung’s case. The Minister replied:
“I wrote to my right hon. Friend on 3 July 2013.”—[Official Report, 11 July 2013; Vol. 566, c. 367W.]
The answer was misleading, because it related only to the first letter I wrote to the Home Secretary. I have received no reply to the remaining three letters. I ask my hon. Friend the Immigration Minister to make the appropriate correction in Hansard and, most particularly, to reply forthwith to the three outstanding letters I have sent to the Home Secretary about Mrs Rene Chung’s case, to return her passport to her forthwith and to renew her spouse visa application forthwith.
Helen Goodman (Bishop Auckland) (Lab)
On a point of order, Mr Deputy Speaker. I have just learned that the Department for Culture, Media and Sport has laid an order under the Communications Act 2003 to reduce the number of public service broadcasting reviews from a regular review every five years to perhaps only one a decade. The order is not available in the Vote Office and cannot be read on the parliamentary website. It is less than an hour before the House rises for the last time for several weeks. Can you give me any guidance or advice, Mr Deputy Speaker, on what to do?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Unfortunately not. It is a matter for the Minister, but I am sure that if anything is untoward, the Vote Office will investigate. The point is certainly on the record now, however, and I am sure we are all aware of the communication—or rather, on this occasion, the lack of it.
Keith Vaz (Leicester East) (Lab)
It is a pleasure to follow the right hon. Member for Tonbridge and Malling (Sir John Stanley), one of our most distinguished parliamentarians. I had thought I might get away from talking about home affairs issues, because I want to talk about health, but the case he raises is shocking. I can assure him that as soon as this debate is over I will telephone the head of immigration and visas, Sarah Rapson, to draw the case to her attention. I will also send a copy of the Hansard record of this debate to the Home Secretary, because I am extremely disappointed to hear what I have heard. As the right hon. Gentleman knows, the Select Committee on Home Affairs examines these issues carefully. We have just published a report on the UK Border Agency, and it seems to me that there is no excuse for the way in which his constituent Mrs Chung has been treated or, indeed, how he has been treated in the way answers have been given to him. I can assure him that I will do those things. We have in the Chamber today two former members of the Home Affairs Committee, the Deputy Leader of the House and the hon. Member for Colchester (Sir Bob Russell), who know that we will pursue these matters, as we have done in the past.
I turn now from home affairs to health, and to declare my interest as a type 2 diabetic. I want to raise the issue of obesity and diabetes, and the continuing war on sugar, which was started earlier this year when I presented my ten-minute rule Bill on this important matter. Obesity is the nation’s No. 1 health problem and it is a growing problem in our children. A report published last year found that a third of primary school leavers were either overweight or obese, and that obesity is a major factor in the development of type 2 diabetes. I do not need to remind the House of the deadly nature of type 2 diabetes, or that 80% of type 2 diabetes cases are preventable and 10% of the NHS budget is spent on dealing with diabetes complications. I just wish that earlier in my life I could have been tested for diabetes, because if I had discovered at an earlier age that I had diabetes or a propensity to it, I might not have contracted type 2 diabetes or, at least, I might have delayed its onset.
I hope to raise one aspect of the Government’s policy, which is the responsibility deal. It is a flagship Government policy that tries to get fizzy drinks and sugary drinks companies to own up to their responsibilities. Some 536 organisations have signed up to the 28 voluntary pledges initiated by the Leader of the House when he was the Health Secretary, but, as we have seen, all that glitters is not gold. Although it is a good thing to have asked the companies to sign up to responsibility in this area, the substance of the deal has not materialised. As Dr Aseem Malhotra of the Royal Free hospital, one of the country’s leading cardiologists, said, the deal is nonsense, with companies saying they are going to reduce sugar content but failing to do so. This is a voluntary arrangement, so there is no compulsion and these companies are not being held to account. As we know, diabetes, unchecked, could result in all kinds of other complications. Professor Jaspal Kooner, one of the country’s leading cardiologists, has talked on a number of occasions about the effects of diabetes on those with heart problems.
What we eat is important., so as well as trying to prevent type 2 diabetes, we must consider how we can examine carefully what we eat and we drink. You and I are frequent visitors to the Tea Room, Mr Deputy Speaker, and when we go to pay for our cups of tea and the healthy food that we both eat, we are confronted by baskets of chocolate biscuits. In the fridge there are cans of Coca-Cola, each of which contains between eight and nine teaspoons of sugar, which is almost the maximum recommended daily intake of 38g. We need to be very careful about how much sugar we consume, which is why it is so important that we take this issue seriously.
Last Friday I was able to present Abbey primary school in my constituency with a silver star, because it is first primary school in Leicester to ban sugary drinks and promote a healthy diet and exercise for its children. If any right hon. and hon. Members are looking for a summer campaign when they return to their constituencies, I hope that they will try to get their schools—they might be off for the summer holidays, but they can make preparations for the new term—to ensure that the meals they provide and the drinks they have in their fridges are healthy.
Dame Angela Watkinson
The right hon. Gentleman is a wonderful advocate for the prevention and treatment of diabetes. He and I have shared our views about the importance of medication management in schools. Most of the schools in my constituency—I am sure that the same is true in his—are very aware of healthy eating and the quality of school meals is very good, but we need to raise awareness among parents, because young children have very little control over what food they are offered at home, and it is those meals that can often cause the problem.
Keith Vaz
The hon. Lady is absolutely right, and she has raised the issue in the House on a number of occasions. It is also the responsibility of parents, because they do the purchasing. We had a debate this week about a minimum unit price for alcohol. When parents walk down the aisles of one of the major supermarkets, as we all do from time to time, they will see huge plastic bottles of Coca-Cola and other fizzy drinks. Those of us with children always want to try to keep them happy, and they will demand to have those drinks, and we will try to placate them by buying them, but that is a slippery slope.
Jason McCartney (Colne Valley) (Con)
I would like to place on the record my thanks to the right hon. Gentleman for organising the Silver Star charity event here in Parliament, where I had my blood tested. Does he agree that early testing of blood sugar levels not only in this House but across the country can help prevent some of the future harm of having type 2 diabetes?
Keith Vaz
The hon. Gentleman is absolutely right. I do not know his test results, of course, because they are confidential, but I am sure that he came out with flying colours. Others Members did not manage that. At least one Member discovered that he had diabetes that day, and he would not have known had he not been tested. I pay tribute to Silver Star, UK Diabetes and all the other organisations involved. It is a very simple test. In fact, I think that you were present at the last Silver Star event, Mr Deputy Speaker, and found to be in perfect health—thank goodness—but it was perhaps not the same for others.
My message to the House today, as we approach the summer recess, is that this is perhaps a time when parents and children tend to lose their inhibitions and enjoy the summer, especially on a day like today. I would love to thank the Government for bringing us sunshine over the past 14 days, and I am sure that the Deputy Leader of the House will claim credit for it when he comes to wind up the debate, along with the Wimbledon win and all the other things that are going on. I am very pleased to see the former Chair of the Health Committee, my right hon. Friend the Member for Rother Valley (Mr Barron), in his place because he worked very hard in that role to remind people of the necessity of prevention. Prevention is better than cure. Preventing diabetes by ensuring that the companies are held to what they say they will be responsible for and reducing sugar levels in our drinks is absolutely vital.
My appeal to right hon. and hon. Members across the House is to join the war against sugar. Let us all be part of this great crusade to make our great country healthy and strong again.
Jason McCartney (Colne Valley) (Con)
It is an honour to follow the right hon. Member for Leicester East (Keith Vaz). Again, I praise him for the excellent campaign that he has been running on type 2 diabetes.
I want to cover two big constituency issues in the next eight minutes. One of them is very positive, but first I have some recent disturbing news. Areas of Meltham in my constituency have been left without postal deliveries this week after a horrific dog attack left a postman needing plastic surgery on his arm. In fact, the wound is so severe that it has been described as potentially life-changing. When we return from the summer recess, I will be asking whether we can have an urgent debate on how we can reduce dog attacks on our brave postmen and women and keep the post being delivered. Rather ironically, it is Royal Mail’s dog awareness week. The statistics show that there have been 5,500 dog attacks on Royal Mail postmen and women since 2011. I have just had an update from the local police, who say that today they have seized the dog that attacked the postman and tests are under way to see whether it is a banned breed. I know that Members of the House would like to join me in sending their best wishes to postman Jason Lee as he recovers from this shocking dog attack.
Today and over the next couple of days, we will probably hear journalists use the phrase, “As MPs head off on their seven weeks of summer holiday”. As we all know, those cynical journalists should know better.
Sir Bob Russell
Does the hon. Gentleman share my amazement about this? Presumably, as the journalists who write about MPs going on holiday are political journalists, they are also going on holiday—or are they, like us, doing other things as well? Looking at the packed Press Gallery, it seems as though they have already gone on their summer holidays.
Jason McCartney
My hon. Friend is absolutely right. I was about to say that, like most other Members in this Chamber, I will be working hard in the constituency throughout the summer.
For the third summer in a row, I will be doing a full week of volunteering in my community. I want to highlight and praise all the wonderful volunteering that goes on day in, day out, not just in my constituency but across the country. We are lucky to have a great organisation called Voluntary Action Kirklees that supports local charities, voluntary organisations and community groups. The centre works in partnership with many Kirklees organisations to support and promote good practice in volunteer involvement. In the past year, Volunteering Kirklees has helped over 4,000 local people who are looking to volunteer across Kirklees. That is an increase from just over 2,000 people two years ago, so well done to them.
This week, 4th Golcar Scouts signed up 65 adult support volunteers as a result of an exciting YouTube video to which they e-mailed me a link, so well done to them too. Thanks to all those adult volunteers, over 200 young people are now enjoying stimulating and exciting activities every week. On a larger scale, this time next year we have the Tour de France coming through Yorkshire, including my constituency and my village of Honley. Thousands of people are signing up to be “Le Tour Makers”—volunteers who will help to put on the Tour de France.
I mentioned my volunteering week last year. I am pleased to say that I helped to plant cotton grass on Marsden moor with the National Trust; helped out in the Age UK shop in Holmfirth; visited children and their families with the at-home care team from the Forget Me Not children’s hospice; helped out in the Kirkwood hospice shop in Lindley; put together food packs with the Welcome centre in Huddersfield; helped to do some painting at the Standedge visitor centre near Marsden, where my hon. Friend the Member for Hexham (Guy Opperman) came to join us; and organised big community litter picks with Councillor Donna Bellamy in Marsden.
I am just finalising my volunteering week for this summer. I will be returning to the National Trust and hope to get up on the moors while the sun is shining. I will be delivering meals to people’s homes with the meals on wheels team from Golcar. I will be helping out again at the Kirkwood hospice shop. I will be meeting and greeting, helping the porters and doing hospital radio at Huddersfield royal infirmary. I will again be organising litter picks throughout Lindley, Birchencliffe and Salendine Nook with Councillor Mark Hemingway and a candidate for local councillor, Gemma Wilson. Later in August, I hope to volunteer at the Oakes community café, which is part of Oakes Baptist church. I know from speaking to other colleagues who are heading off for the summer that they will also be working hard and volunteering in their constituencies.
I have also volunteered over recent months. I was pleased to join other volunteers at the Laura Crane Youth Cancer Trust to put on a fashion show. I swapped my suit for some vintage clothes at the Carding Shed in Hepworth. Wakefield Trinity Wildcats rugby league star Andy Raleigh joined us on the catwalk. We raised thousands of pounds for the charity, so well done to all the volunteers. I have also helped the volunteers at the Drop By community resource centre in Golcar, who run various lunchtime activities including arts, crafts and knitting.
There is so much wonderful volunteering going on in my constituency. Indeed, that has been recognised. The Examiner community awards, which celebrate everything that is wonderful in Huddersfield and the local area, has an award for local volunteering. I was pleased that a young man from my constituency picked up that award this year. Usmaan Saleem won the student community award for voluntary work for everything that he has done for the old and young people in his community. He is an 18-year-old student from Huddersfield new college. He helps out at Springwood central youth club and spent last summer working with autistic children.
As we break up for the summer recess, I look forward to working hard in my constituency. Yes, I will be having a week’s holiday, but I also look forward to doing a week’s quality volunteering. I wish you, Mr Deputy Speaker, and all other Members a fantastic summer. They should not work too hard and should try to have a bit of a break, but I know that they will all be working hard in their communities to help local charities and organisations. I wish them well and look forward to seeing them again in September.
Neil Parish (Tiverton and Honiton) (Con)
It is a great pleasure to be the last speaker in this debate.
I congratulate my hon. Friend the Member for Colne Valley (Jason McCartney) on taking on the mantle of my hon. Friend the Member for Southend West (Mr Amess) in trying to refer to the most constituents in the shortest time. I echo his concerns about dangerous dogs. We are doing a lot of work on that. Microchipping and other compulsory measures will help. People who have a legitimate right to go into a home, be they a postman, a midwife or a social worker, should not be bitten by a dog, especially a dog that is known to be dangerous. I want to pursue that matter. I have great sympathy for the postman who was bitten in the constituency of my hon. Friend the Member for Colne Valley, as I do for the thousands who are bitten every year.
I will raise one or two serious matters from my constituency. The first relates to the A35, which runs through my constituency, including through Axminster, and on to the Dorset border. Recently, there have been a couple of fatal accidents on the A35 at the Hunters Lodge junction at Raymond’s Hill. In the first collision, a 60-year-old man from Plymouth died and two other people were injured. The second crash claimed the life of 82-year-old Pamela Manning from Harrow and her two elderly companions in the car were taken to hospital.
I have met the Highways Agency, Axminster town council and Uplyme parish council to discuss how we can improve the Hunters Lodge junction. Something must be done. Although there have been many accidents at the junction, the Highways Agency said at the meeting that there had been no fatalities. Unfortunately, they have now occurred, so it is essential that something is done, and I shall be working with my right hon. Friend the Member for West Dorset (Mr Letwin) on this issue.
The A303/A30 was mentioned in the financial statement. It should be dualled all the way from Honiton, right the way through those interesting stones in Wiltshire called Stonehenge, to London, so that we have a second arterial route into the west country, and to Devon and Cornwall in particular. Tourism is one of our great industries. Those who run businesses in the west country find that when the M5 is blocked, the A303/A30 is almost impassable. I look forward to its being dualled.
I would like to talk about health funding for primary care. The current age profile in Honiton and Axminster—to take two towns I represent—is estimated to be reflected nationally by 2035. The population is getting older. The doctors in Axminster say that the number of people calling them for advice has gone up from 6,000 to 18,000 in a year, and there are similar figures for Honiton. Health funding will have to recognise this trend. People breathe in the good clean air in Devon and live for a long time. I am pleased with that, but people will need to be treated more as they get older and that has to be recognised.
As we bask in the sunshine, we must remember that a year ago we were all under water. There were floods in Axminster, Uplyme, Seaton, Cullompton and Tiverton—all over my constituency—and many were caused by the blocking of rivers and tributaries. At the time, the Environment Agency said that it had so much to do just to help people who were already flooded that they could not do a great deal to manage the waterways, by dredging them and clearing blockages. Now is the time to do it: there is never a better time than when it is dry. What we do not want to do is just bask in this great sunshine. I welcome this great sunshine and I am glad that the right hon. Member for Leicester East (Keith Vaz) congratulated the Government on providing it, even though I know he was only teasing.
Neil Parish
I thank the right hon. Gentleman for his intervention, even if I am not sure that I entirely agree with him. I think will keep it fairly light-hearted at this stage of the proceedings.
We need to remember that flooding took place. We need proper dredging of our rivers. The Secretary of State for Environment, Food and Rural Affairs is keen on it. Now is the time to do it.
I have mentioned Mrs Ethelston’s school in Uplyme previously. We need a new school in the village and we are trying to put together a funding package locally. Government support is needed to make that happen. It is a very successful school with very high grades and it will be a great asset to the whole area, not just Uplyme.
My constituency runs from Exmoor down through the Blackdown hills, so I have a number of farmers in my constituency. They are concerned about yet another reform to the common agricultural policy. It seems that yet more bureaucracy will be heaped on them, rather than less. There is no level playing field: payments between them and those on the continent, or even between them and farmers from Wales, Scotland and Northern Ireland, are all different. If we are to make a single market in food and agricultural products work, we need to pay farmers at a similar level. My argument over the years has been that we should either pay at a similar level or not pay at all, because otherwise we will distort everything.
We have had to negotiate a tough package in Europe. As a Conservative and part of the governing party, I cannot expect to go cap in hand to the Treasury for huge handouts over and above what the CAP provides. Therefore, I would ask my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs to look sympathetically at how we deliver environmental schemes and payments to farmers in a way that maintains the countryside—the beautiful grassland and hills in my constituency, which people come to visit from all over the place, including down from London and even the north of England.
People visit Devon, Cornwall and much of the west country because of their landscapes and the way they are managed. Who manages them? It is very much the farmers who manage them, and if we lose them, we will lose those landscapes. I look forward to a sympathetic reform and to trying to break the bureaucracy of the system. I rather fear that some of what comes from Europe will be somewhat bureaucratic, but let us hope we can make the best of it, because I am a great believer in good, traditional food that is well produced under high welfare standards, which is what our farmers deliver in this country.
Finally, may I wish you a very good recess, Mr Deputy Speaker? I am sure that, like my hon. Friend the Member for Colne Valley, you will be busy in your constituency, as will I and most Members of this House.
The Deputy Leader of the House of Commons (Tom Brake)
Let me start by congratulating all Members who have taken part in this afternoon’s debate. Those who are here in the Chamber are very much the hard-core membership of the House—the aficionados who have not taken advantage of a sunny Thursday, on the final day in Parliament, to depart early to their constituencies.
Normally I have to deliver my response to such debates in the style of the hon. Member for Southend West (Mr Amess)—who is currently not in his place—because of the time available to me, which is usually a short 10 minutes. However, I have a little more time today—although I will not seek to detain the House until 5 o’clock. The hon. Gentleman raised various issues—
Tom Brake
My hon. Friend says that the hon. Member for Southend West raised 17 issues. I think I counted 15, but it was certainly about that number, and he did it in his own inimitable fashion.
The hon. Gentleman’s first batch of issues concerned foreign affairs—in particular, Syria, Iran and the Maldives. Let me respond briefly to those. Members will be familiar with the tragic situation in Syria, with 93,000 people dead so far, some 7 million Syrians now in need of humanitarian assistance and 1.7 million having fled to neighbouring countries. The UK is playing a significant role in providing humanitarian aid, with many agencies supporting activities there, providing food and water, and making other contributions. The hon. Gentleman was concerned about the risk of military intervention from the UK or the UK making a military contribution. Clearly no such decision has been taken and, as has been stated many times in the Chamber, Parliament would be engaged before any such decision was put into action, with a vote in the House of Commons.
We have consistently urged, including at ministerial level, all parties to work together to find a solution that would allow for genuinely free, fair and inclusive elections in the Maldives. We are supporting the Commonwealth with its observation of the Maldives presidential elections, so we certainly hope to see substantial improvements in that country, including in human rights.
The hon. Gentleman also referred to Iran. We are all hoping that the recent change in leadership there will lead to a more positive relationship with the UK, and I hope that we as a Government can contribute to that.
The hon. Gentleman referred to obesity, a matter that was also raised by the right hon. Member for Leicester East (Keith Vaz). The Government are aware that this is a critical health issue, and our call to action on obesity sets out our approach and the role of key partners. The national ambition is a downward trend in the number of people with excess weight, and many partners will contribute to that. The change for life programme, the national child measurement programme and NHS health checks should all make a contribution.
Keith Vaz
I thank the right hon. Gentleman for agreeing to look into this matter, and I am pleased that the Government take it so seriously. I know that, as Deputy Leader of the House, he spends a lot of his time in the House. During the recess, will he undertake to look into the fridges and look at the offerings that are made in our restaurants, to ensure that they do not contain the sugary fizzy drinks that lead to obesity? We in this House have a responsibility in that regard, and the right hon. Gentleman has a responsibility as the Deputy Leader of the House to ensure that those offerings are all good and proper, and appropriate for our diets.
Tom Brake
I thank the right hon. Gentleman for that. I am certainly willing to take up the challenge that he has thrown down to me. We should certainly be able to do as he asks. A few months ago, I visited a school in my constituency, Wandle Valley school. It has emptied its vending machines and replenished them with products that are much healthier. If that school can do it, I am sure that we can do it in this place as well.
The hon. Member for Southend West expressed his concern about the progress of the Chilcot and Leveson inquiries. Clearly they are both dealing with complex issues. He will be aware of the action taken in relation to Leveson. A submission from the press is before the Privy Council, and the Government will be submitting our own submission once that has been considered. We want this matter to make progress. Sir John Chilcot made it clear as recently as this week that his inquiry is determined to complete its task and publish its report as soon as possible. That matter certainly has not been forgotten.
The hon. Member for Southend West referred to space exploration. Had he been in his place, I might have asked him to intervene at this point to list the people he would like to send into space, never to return—[Interruption.] Yes, perhaps he has already departed in that direction himself. He also referred to bungee jumping; I have nothing to say about that. I have never done it myself, and I have no intention of doing it. He mentioned the important work of a company called Coloplast, and talked about bowel independence day, which I hope was successful in giving a higher profile to an issue that people are sometimes reluctant to talk about. He also talked about Monitor, and asked whether it had had played as effective a role as it possibly could. I am sure that when those in the Department of Health read Hansard, they will note his concerns about that.
The hon. Gentleman wanted a monorail. Well, good luck with that! He also wanted representatives of the Treasury to meet the Essex bowling club to help it with its tax affairs. He has put that request on record, and I have now repeated it, so I am sure that the Treasury will consider it carefully. He finished on a point about Southend regrettably having failed in its bid to become the city of culture. He suggested that Unite might have rigged the ballot. I cannot comment on that, but perhaps someone on the Opposition Benches might like to do so.
Keith Vaz
Just before the shortlisting, the hon. Member for Southend West, who is a good friend of mine, made some very disparaging comments about Leicester. The fact is that Southend did not make it on to the shortlist, but Leicester did. I challenged him to go on to Southend pier and do a Gangnam-style dance in competition with Leicester, but he chickened out and refused to do so. Unless he is there now, of course.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Deputy Leader of the House—answer that!
Tom Brake
I wish I had not allowed that intervention, as I am short of a suitable riposte.
The hon. Member for Southend West said that Southend would provide an alternative city of culture in 2017. We will have to see what that culture amounts to, and we look forward to hearing some reports about that.
The hon. Member for Coventry South (Mr Jim Cunningham), who is no longer in his place, and the hon. Member for Harrow West (Mr Gareth Thomas) referred to Coventry City football club. They will be aware that Department for Culture, Media and Sport questions are scheduled for the Thursday when the House returns, so that will be the earliest opportunity for them to raise the matter. Football governance has come up repeatedly in this place, and I have heard requests for the Backbench Business Committee to consider it. The hon. Member for Coventry South wanted everyone to get round a table to discuss it, and I and others would certainly be in favour of such discussions. I will draw this exchange to the attention of the Minister for Sport as requested, and I agree that football clubs are more than just a business, as they support local communities. The clubs will receive greater support from local communities if those communities are heavily engaged in what the clubs do. The hon. Member for Harrow West wanted supporters to have a greater voice through supporters’ trusts and he made a request—the Minister for Sport will see it in Hansard—for 5% of the Football Association’s funds to go to grass-roots sport.
My hon. Friend the Member for Hornchurch and Upminster (Dame Angela Watkinson) talked sensibly about the London borough of Havering and its public library service. She praised Councillor Andrew Curtin for the role he is playing, and I think we would all echo what she said about the essential role that libraries play in developing children’s interest in reading and their culture. She referred to a read and rhyme scheme for improving, among other things, listening skills. Perhaps she could bring that to the House at some point, because listening skills could be developed further in the Chamber. We would all support my hon. Friend in what she said about the importance of reading. The second issue she raised was about the activities of Stubbers outdoor leisure centre and its important role in building young people’s skills and experiences, which they might not otherwise have, helping them to overcome their difficulties. She highlighted the importance of the National Citizen Service, and I hope that all Members will have played their part in promoting this valuable scheme.
My parliamentary neighbour, the hon. Member for Mitcham and Morden (Siobhain McDonagh), referred to an unfortunate series of failures in communication and a real lack of competence in the police’s handling of the case of George Shaw and Paula Davidson. She made some understandable requests for the police to talk to her constituents about their experience and to explain to them why they did not get the support they needed to bring about closure in what was clearly a very serious case. Currently, they have not had closure because of the failure to produce the pertinent evidence.
The hon. Member for Rugby (Mark Pawsey) referred, as he has previously in these debates, to electronic or e-cigarettes and the difficulties they have created for a company in his constituency. He expressed his concern that the regulatory aspect might discourage people from taking up something that could make a contribution to health. I am sure that the Department of Health will have listened carefully to what he said. However, I hope he would also acknowledge that there are issues such as the ability of such products to deliver a consistent dose. There is clearly a need for regulation, but I think that what concerns him is how that should be done.
The hon. Member for Lewisham East (Heidi Alexander) said that 20 people had written to her about the European Union referendum and 50,000 had been in touch with her about Lewisham hospital.
Heidi Alexander
One of the right hon. Gentleman’s Back-Bench colleagues has just suggested that the fact that 50,000 people signed my petition about Lewisham hospital was all to do with 38 Degrees. I can assure him that that was not the case. In fact, hundreds of people were in Lewisham town centre collecting signatures.
Tom Brake
The hon. Lady has put her clarification on record.
I heard Members behind me expressing surprise that Europe was not a big issue. I can only say that consistently, year after year, when I ask people what issue is most important to them, they reply that it is health, education or law and order. It is not Europe. I think we had better leave it at that.
As the hon. Lady will know, the European Union (Referendum) Bill is currently being debated, and will return to the House in September. I do not know whether she is a member of the Bill Committee, or indeed whether she would wish to be a member of it, given that its sittings seem to be finishing quite late and may continue to do so. She said that there was scope for reform of the European Union, and I accept that. I think there is agreement among Members on both sides of the House that the EU can and should be reformed. The justice and home affairs opt-outs, for instance, are part of the process. That reform may well deliver some changes which I think would be supported by Members in all parts of the House.
Mr William Cash (Stone) (Con)
Let me point out to the Deputy Leader of the House—who represents a constituency where my family lived for the best part of 100 years—that his assertion that Europe is not much of a priority in the minds of the electorate is completely at odds with the findings of all the opinion polls over a number of years. He might like to look at the report of a Westminster Hall debate entitled “National Parliaments and the EU”, which was initiated by the hon. Member for Birmingham, Edgbaston (Ms Stuart) the day before yesterday, and in which I took part. I think that all the questions to which he ought to be referring now are contained in the speeches that she and I gave.
Tom Brake
I do not know whether my hon. Friend’s family were resident in my constituency 100 years ago, but things may have changed in the last 100 years. All that I can reflect today is the feedback that I receive regularly from my constituents—and I should add that I am the only one who has that information. No one else here has it.
On the European Union, let me finally say that one of the risks of being outside it—I think that this is Norway’s experience—is that a country will end up paying much more than it would pay if it were inside.
My hon. Friend the Member for Colchester (Sir Bob Russell) made one of a number of suggestions that have been made today about holiday reading for Members. He recommended “You Can’t Hide the Sun”, by John McCarthy, and he spoke of what is happening to the Bedouins. He has tabled an early-day motion on the subject, and he is not alone: I believe that 21 Members signed it. There is clearly an acknowledgement in this place, at least, that it is a significant issue. I certainly agree with him that both the Israeli and US Governments have a significant responsibility for sorting out the situation there. I am pleased, therefore, that John Kerry has won Arab League support for his initiative to try to restart the Israeli-Palestinian peace talks, and if they do restart I hope the Bedouin issue will come up. We need to see urgent steps to ensure that a two-state solution is introduced there. I am sure the Foreign and Commonwealth Office will look very carefully at my hon. Friend’s strong words on this subject when Hansard is published.
The right hon. Member for Rother Valley (Mr Barron) put on record his concerns about a failure to respond to his correspondence. I will ensure that is communicated to the Prime Minister’s office, and I hope a response to his letter is forthcoming. He talked about the NHS and alcohol, too. I hope he will acknowledge that the NHS budget is one of the budgets that has been safeguarded when many others have not. On alcohol, I think it is fair to say that a lot has been achieved through the public health responsibility deal, and it is worth pointing out that binge drinking is reducing, rather than increasing, which is also a positive trend.
My hon. Friend the Member for Congleton (Fiona Bruce) described a terrible experience a North Korean student working with her at present had in North Korea. He is subsequently leaving that country. Her contribution highlighted the fact that often the issues of asylum and immigration get mixed up and we lose sight of the fact that the UK has a very important role to play in providing asylum for genuine cases of the type she described.
My hon. Friend referred to Lord Alton’s book. I happen to have a book called “Escape from Camp 14” by my bedside at the moment. I understand it is also about Korea, and although it is not exactly light holiday reading I intend to read it over the summer break.
My hon. Friend also gave some useful concrete examples of how UK citizens can help directly in North Korea. She gave the soft examples of making a financial or business contribution as a way of trying to open up a society that is still very closed. Finally, what she said about the desire of North Koreans to have access to information reminded me of the meetings I had about 30 years ago when I was in Czechoslovakia—as it then was—and met up with Hungarians. The Czechs were too scared to talk to westerners, but the Hungarians were a bit braver, and one of the things they said was how important it was that they could get news that was real news. They did not want to get their news through a filter that filtered out what was genuinely happening. That is clearly what is happening in North Korea, and the UK remains extremely concerned about reports of widespread and continued systematic human rights violations there. My hon. Friend will be aware that the UN has commissioned an inquiry to investigate human rights abuses, and we encourage the North Korean Government to co-operate fully with it and to engage with that process. My hon. Friend referred to the launch of a campaign on 27 July that will be about raising the profile of the situation in North Korea and trying to achieve there what was achieved through the Burmese campaign.
My right hon. Friend the Member for Tonbridge and Malling (Sir John Stanley) went into some detail about a constituent of his, Ms Chung, and he has put down a very detailed request that I am sure the Home Office will want to respond to. I welcome the fact that the Chair of the Select Committee on Home Affairs, the right hon. Member for Leicester East, has also indicated that he will follow that matter up immediately, and I therefore hope my right hon. Friend will get a swift response on the issue of the passport, the fact that his correspondence has not been responded to and the request that the Home Office look at having a fast-track procedure. He will be aware that one of the reasons the changes were made to the UKBA was to ensure a separation between its role in processing the customer-focused part of the work it does from the enforcement part, to try to achieve what he was trying to achieve for business people.
The Chairman of the Home Affairs Committee, the right hon. Member for Leicester East, focused on obesity and diabetes, as I mentioned earlier. He is a recognised campaigner on the issue in this House and referred to some of the statistics that highlight why we should take the matter seriously. As 10% of the NHS budget is spent on addressing the issue and 80% of cases are preventable, there is a clear win for the health service if we can focus on that. He referred to the responsibility deal and clearly felt that it was a mixed blessing—or at least that it was not delivering in the way he would like and that the substance behind it had not materialised. We all, as a Government, as Members of Parliament and as members of the wider public, need to do our bit to ensure that the 536 organisations that he referred to as having signed up to it are doing what they volunteered to do and to draw attention to them if they have not.
The right hon. Gentleman might like to know that I visited Greenshaw secondary school, in the constituency of my right hon. Friend the Member for Sutton and Cheam (Paul Burstow), which has recently changed the catering contract and appointed a new chef. The new chef is cooking everything fresh in the school and there has been a huge uptake in school meals as a result. I visited and the queues were phenomenal, as a lot of the children chose to stay in school to have their meals as opposed to taking packed lunches or leaving school. Things can be done in schools, even within the same budget, if they are willing to be imaginative. The right hon. Gentleman has mentioned the matter in relation to diabetes in the House before, in the debate on 24 April 2013.
The hon. Member for Colne Valley (Jason McCartney) mentioned the distressing case in Meltham involving a postman, Jason Lee, and we will all want to join the hon. Gentleman in wishing him a full recovery. The hon. Gentleman and all Members will know that the CWU has done a lot of work on the issue. It is not only postal workers—I suspect that we have all been out delivering leaflets fairly recently and have faced the same sort of risks trying to push our respective party literature through doors in our constituencies. It clearly is a real issue and we have probably all experienced individual cases similar to the one he described.
The hon. Member for Tiverton and Honiton (Neil Parish) intervened to suggest that the hon. Member for Colne Valley was trying to compete with the hon. Member for Southend West in listing constituents who had achieved notable things, but the hon. Member for Colne Valley praised volunteers, which is something we cannot do enough in this place. I want to take the opportunity to praise OGRES—the Onslow Gardens residents association—which I visited yesterday. It is a volunteer organisation like any other, and is campaigning against a large McDonald’s that it does not want to see built on Stafford road. The hon. Gentleman mentioned 4th Golcar Scouts and the effective work they have done in signing up lots of adult volunteers to help them expand the work they can do.
The hon. Gentleman talked about the Tour de France—which, it seems, might be slightly lost if it is going through his village, or to have gone slightly off-piste—and it will clearly be a fantastic event for Yorkshire and the UK. We will all cherish the occasion, particularly if we manage to win it again.
Of course, we had a debate yesterday about MPs and second jobs. It is clear that the hon. Gentleman has not just a second, but a third, fourth, fifth and sixth job, but they are all volunteer jobs, so if the motion had been agreed to, he would not have been banned from undertaking them.
The hon. Member for Tiverton and Honiton, the last speaker in the debate, mentioned the fatalities on the A35 and the discussions he has had with the Department for Transport and the Highways Agency about Hunter’s Lodge junction. He has used this opportunity, rightly, to raise the issue’s profile. He talked about health funding for primary care. It is an interesting fact that the age profile of residents of Axminster and Honiton is what we are expecting the national age profile to be by 2035, so we probably have quite a lot to learn from those towns’ experiences, in terms of types and costs of services. He made a request for a new school; I am sure that the Department for Education will have listened carefully to that request, and will respond to it. He also asked the Department for Environment, Food and Rural Affairs to consider carefully issues to do with environmental schemes and payments to farmers. I am sure that it has listened carefully to his contribution.
We have come to the end of this debate. I have had slightly more time to wrap up than I am used to, so I will take a few minutes to thank you, Mr Speaker, for keeping us on a fairly tight leash this Session; the staff of the House for helping us to ensure that this place runs smoothly; and the staff in the Office of the Leader of the House of Commons for supporting me and the Leader of the House in our roles. I hope that all Members enjoy the recess and come back full of energy in September for the full programme of activities that we will undertake then.
Question put and agreed to.
Resolved,
That this House has considered matters to be raised before the forthcoming adjournment.
Business without Debate
Cannock Hospital
Mr Aidan Burley (Cannock Chase) (Con)
I have great pleasure in presenting this petition in support of a fully used and fully utilised Cannock Chase hospital. Along with other petitions and pledges in similar terms, it has been signed by thousands of my constituents, and constituents of neighbouring colleagues.
I also want to pay tribute to Deborah Hubbard, a former nurse at Cannock hospital, who has amassed more than 12,000 signatures through the “Supporters of Cannock Chase Hospital” Facebook page, for her tireless campaigning to keep services in our local hospital.
The petition expresses the desire of my local community in Cannock Chase, who raised much of the money for the hospital to be built in the first place, to ensure that Cannock hospital is not overlooked in the review that is being carried out by Monitor and the trust special administrators. As colleagues will know, they are looking into the future provision of health services in Staffordshire, following the abolition of the failed Mid Staffordshire NHS Foundation Trust.
The petition reads:
The Petition of residents of Cannock Chase,
Declares that the Petitioners support Cannock Hospital and wish to ensure that it becomes a centre of excellence for elective surgery, fully used, and with a secure and professionally managed future, within the NHS.
The Petitioners therefore request that the House of Commons urges the Department of Health to ensure Cannock Hospital becomes a centre of excellence for elective surgery and has a secure future.
And the Petitioners remain, etc.
[P001216]
Henry Thorley and HMRC
(10 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr William Cash (Stone) (Con)
I am holding this Adjournment debate in consequence of a very grave injustice that has been done to my constituent, Mr Henry Thorley, who is now aged 88, and in line with the fundamental principles of our constitution, namely redress of grievance and accountability, which go back to the earliest times of our Parliament.
I am appalled by the manner in which this matter has been handled because it strikes me that a case of this kind, relating to a man aged 88, whose correspondence has already been sent to the Chancellor of the Exchequer and to the Exchequer Secretary and has been handled by the person responsible in Her Majesty’s Revenue and Customs, the director of criminal investigation, Mr Donald Toon, does not provide the justice that I believe is owed to my constituent.
The case goes back to the 1970s—indeed, it goes back to a period when my predecessor, Sir Hugh Fraser, was the Member of Parliament for Stafford. I became the Member of Parliament for Stafford in 1984 and I am now the Member of Parliament for Stone, where Mr Henry Thorley resides. I sent to the Minister on 21 May a letter that I received, which summarised various points relating to the case in question. The case is simply explained. At Stoke-on-Trent Crown court in December 1979 Mr Thorley was convicted of theft arising from VAT returns. In 1980 the Court of Appeal quashed the conviction and Mr Thorley left the court utterly blameless.
It appears clear that from the outset the prosecution case was fatally flawed, and the prosecution knew it. A Customs and Excise official had conducted a satisfactory inspection for the period subsequently complained of, and said so in a written report. So, in the words of leading counsel,
“How any prosecution could thereafter be considered let alone persisted in beggars belief.”
He goes on to say that the prosecution of Mr Thorley was, he believed, motivated by malice and conducted in chaos. That is why I have raised the matter and why I am looking for a suitable response from my hon. Friend the Minister.
I have here the report, which has already been sent to my hon. Friend. It is a note of the visit of the person in question from the then Customs and Excise, which shows four items and states quite clearly against them the word “satisfied”. On 2 July 2013 I received a letter through my office from Mr Toon which thanked me for my letter to the Exchequer Secretary and stated that on behalf of the chief executive he would reply, as he had operational responsibility for criminal investigation. He went on to say:
“I have reviewed the papers provided by Mr Thorley’s advisers”—
which, by the way, are well known in the Department—
“but I am afraid that there is nothing more I can add to David Gauke’s letter to you of 23 May 2013. Whilst I sympathise with Mr Thorley, HM Revenue and Customs has no papers in relation to this case and therefore nothing on which to base an apology. The papers enclosed with your letter seem to show that the Appeal Court overturned Mr Thorley’s conviction because of misdirection by the judge in the original trial but this does not mean that the decision to prosecute was flawed.
I know that Mr Thorley will find this reply disappointing but I hope you will understand that without the original case papers I cannot comment further.”
I also had a letter dated 23 May from my hon. Friend the Exchequer Secretary, in which he said:
“I am afraid that following my inquiries, I can only repeat what he has been told in previous letters. HMRC does not hold any papers in relation to his court case. There is no official record, either paper or electronic, of any information in relation to this case and so HMRC cannot confirm on what basis a prosecution was undertaken. Neither can it ascertain from records whether or not there was an appeal. It follows therefore that I cannot comment on the outcome of that appeal. HMRC does not hold any records in relation to Mr Thorley’s original VAT registration, which would have presumably been active when the prosecution took place. Whilst there are some records in relation to a later 1992 registration, these papers make no reference to any previous prosecution.”
In the light of the information I have supplied, I find it unbelievable that there would be no basis for an apology. My constituent—who, at 88, does not have by any reasonable standards much longer to live—has throughout this period been seeking by various means to obtain an apology. He does not want compensation and has made that absolutely clear in correspondence. There is no need for HMRC to be concerned about that if it made an apology. There is no need for electronic files; he was convicted and sent to prison for three years, serving 11 months. As a result of the diligent conduct of his defence by his lawyers, he was released from jail on the orders of no less a judge than Lord Justice Eveleigh. He asks only for an apology.
The judgment of the court was read on 27 and 28 October 1980 by Lord Justice Eveleigh. I will not go through every detail of it—the Minister has a copy—but I will read out some salient points. In June 1975, an investigating officer named Mr Evans from Customs and Excise went to Thorley’s office to investigate the claim for the repayment of £43,000. He expressed the view that he was satisfied, in the document I mentioned earlier. He was given a large number of documents and made inquiries—chiefly from a Mrs Mannering. He was left in the office to investigate these at his leisure and sent in his report. He wrote “satisfied” against all four periods that he investigated. Mr Evans also states that he investigated the position in depth. At the trial four and a half years later he could not say what had happened but felt that the word “satisfied” meant that he had compared the claim with the totals in the books and that the returns had been reconciled. That is why he put “satisfied” against it. I have the paper in front of me signed by this gentleman and so has the Minister.
No one is doubting that the trial took place, that my constituent was sent to jail and released, or that Lord Justice Eveleigh importantly quashed the conviction. Against that background, to my mind it is utterly astonishing that my constituent cannot even get an apology, simply because the records are not available. It is not for me to lay down rules about what records have been or should have been held by the Departments in question, or any other Department, but nobody with any sense of justice—or, indeed, with any common sense—would seriously dispute the facts as I have described them. Nobody has attempted to dispute those facts; they say only that they cannot find the records.
My constituent is now aged 88. He is an old man whom I have met on many occasions, and he is clearly deeply concerned and affected by the manner in which he is being treated. He simply wants an apology—that is all he is asking. The note that I have states:
“This Court concludes that the crux of the Appeal was the misdirection relating to Mr Evans…There had been a misdirection on the material point and the Court concludes that conviction must be quashed.”
Part of that includes a sworn statement by Mr Ian Wright, who stated:
“Between October 1957 and July 1994 I was a Customs and Excise Senior Officer.”
He described what happened, which I have already explained to the House. The statement continues:
“At the time of my own initial visit to Mr Thorley’s company and before the decision to prosecute Mr Thorley was taken I was aware of a report by a colleague, one Graham Harry Evans, of his control visit to the Thorley companies in 1975. This did not indicate anything untoward…Throughout my work alongside Mr Riley whilst in support of his investigation into the affairs of Mr Thorley’s company, I was made aware that Mr Evans’s report would not feature in any way in the Department’s conduct of the case.”
That is from a senior Customs and Excise officer who was looking at the manner in which a prosecution had been levied against my constituent, who has been convicted and released because the conviction was unsound. The statement goes on:
“I progressively became more anxious about this deliberate omission and discussed this in detail with Mr Riley and with numerous of my own senior colleagues over some months before the Court case. At the commencement of Mr Thorley’s trial, the omission of what I considered a very important document (Evans’s report) became apparent to me. Before my own evidence was due, I remonstrated directly with a Crown Solicitor that there were very great dangers in not producing the Evans report. It was then produced in Court immediately thereafter.”
I understand that it was only five minutes before the jury gave its verdict.
I also have a letter dated 13 May 2013 from Mr Thorley’s accountant, which was supplied to me and has been passed on to the Minister. It expresses, on behalf of its client, many of the concerns one would expect. Among other things, it says that, in 1980-81, Mr Thorley lost his home, his business and his family pride. His family were made homeless and his wife had to recommence work to provide food for the family. The letter says that since then he
“has had to try and rebuild what he has lost. Mr Thorley has also tried in vain to get an apology from HMCE (Now H M Revenue & Customs) for their failure of withholding back such crucial evidence.”
Mr Thorley says he is not seeking any financial compensation—
Mr Cash
I find it impossible to understand why so far the Minister has not been prepared to issue an apology. It simply does not stack up. There is no serious dispute about the facts. Is he going to say that Lord Justice Eveleigh had no case? Will he explain why HMRC does not hold the records or why my constituent was put in jail for three years and released because the Court of Appeal, on considering the facts, regarded it as completely unfair, unjust, unacceptable and unreasonable? I cannot explain it any better. It is incredible. I have never before come to the House on an Adjournment debate with such a case. I doubt whether many people have had to come to the House to ask a Minister to apologise. I do not know what he will say, although I have no reasonable doubt about what he should say. I will supply any necessary documents in my possession to anybody at any time to get the justice due to my constituent. He is not asking for compensation; he just wants an apology, which I think the House will agree he is due.
The Exchequer Secretary to the Treasury (Mr David Gauke)
I thank my hon. Friend the Member for Stone (Mr Cash) for his remarks, for securing this debate and for putting forward his constituent’s case with his characteristic eloquence. The case relates to the investigation and subsequent prosecution of one of his constituents by what was then Her Majesty’s Customs and Excise. His constituent and his advisers have approached my hon. Friend requesting a public apology for what they have described as a malicious prosecution by HMCE. I have great sympathy with his constituent for the worry and distress that the case has clearly caused both him and his family, and I hope this afternoon to offer reassurance that the case can be further investigated by Her Majesty’s Revenue and Customs. I shall return to that in a moment.
For reasons I shall explain shortly, however, HMRC does not old information about the case, other than that supplied by my hon. Friend in his correspondence and by his constituent.
Mr Gauke
I am not disputing any of the facts provided by my hon. Friend, but I hope he will allow me to explain the reasons why HMRC does not hold information about this case, other than what has been provided to it by him, and why that constrains what HMRC can say. I will also explain how we might be able to take this matter a little further forward.
Let me deal with the first point about why HMRC does not hold information. In line with the requirements of the Data Protection Act, HMRC must not hold personal data indefinitely, so the organisation regularly reviews and destroys or deletes information. For cases involving criminal investigation, the retention period varies depending on the outcome of the investigation. The default period is six years from the conclusion of the investigation, but when the investigation leads to a conviction, the retention period is the length of sentence imposed plus one year, or six years, whichever is the longer. When an investigation ends in conviction but that conviction is later overturned on appeal, as clearly occurred in this case, the retention period is six years from the Court of Appeal ruling. In the case of my hon. Friend’s constituent, the data relating to the investigation and prosecution would have been destroyed as early as 1986.
However, the Data Protection Act also requires that when someone makes a request for the release of information, the recipient of that request must make a thorough search to see whether it is held, even if the normal destruction date has passed. To that end, HMRC has carried out a department-wide check of all electronic systems and a targeted search of manual records. It also asked the Crown Prosecution Service to check its records to see whether it held anything relating to this constituent’s case. That check has revealed that no such records exist.
Further correspondence from my hon. Friend, enclosing correspondence from his constituent and addressed to the Chancellor of the Exchequer, was passed to HMRC to reply under normal Treasury procedure. That correspondence was dealt with under HMRC’s complaints procedure for ministerial correspondence. I should make it clear that HMRC of course welcomes complaints as an opportunity to apologise and put things right where it has made a mistake, and as a source of learning to make its services better for taxpayers in future.
Mr Cash
On the question of procedure, is my hon. Friend aware of the Cabinet Office’s 2005 guidelines on dealing with letters from Members of Parliament to Ministers, which set out very precisely what has to happen in relation to such letters and the manner in which such letters have to be handled under the Cabinet Office guidelines prescribed by the Prime Minister?
Mr Gauke
The Treasury is aware of the guidelines that apply to ministerial correspondence, and we seek to comply with them. Where operational matters are involved and it is more appropriate for HMRC to deal with them in order to provide as much information as possible and to deal with them as appropriately as possible, HMRC will respond to those letters. My hon. Friend has received a letter from me and from HMRC—indeed, he has received several items of correspondence—on this front.
Let me return to the procedure. Usually, HMRC has a two-stage complaints process, which seeks to deal with as many complaints as possible at the first review. At the end of that stage, the reply tells the customer that if they are still unhappy, they can ask HMRC to look at the complaint again. At that stage, a different official takes a fresh look at the complaint and gives HMRC’s final response. If the customer remains unhappy, they may approach the Adjudicator’s Office. The Adjudicator’s Office will investigate the complaint, drawing together a full and impartial summary of details from the customer and HMRC.
Mr Cash
I have read out the salient reference in the statement of Mr Ian Godfrey Wright, the senior Customs and Excise officer involved. He is a member of HMRC, or he certainly has been—I dare say he is retired now. This statement is dated 1996, so it is possible that it could be followed up, and it contains serious allegations by a senior Customs officer about the conduct of Customs and Excise—as I believe it still was—at the time. It is not as though we are talking just about communication between me and the Minister; we are also talking about sworn statements made by a senior Customs officer, which can be followed up. They must have this record—if they have not got that, I do not know what is going on.
Mr Gauke
Again, I will not repeat the data protection guidelines and the length of time for which HMRC is entitled to hold on to personal data. I note my hon. Friend’s comments about a statement being made in 1996. I do not know what communications there were with HM Customs and Excise, the body in place until the merger in 2005, or how they were made. As I have made clear in my remarks, a search was made across HMRC to locate records on the case, and no records were found.
As I was saying, the Adjudicator provides an independent review of details and makes her decision and recommendation. Customers who continue to be dissatisfied can ask an MP to refer their complaint to the Parliamentary Ombudsman, who will then decide whether to investigate the complaint. If she decided to do so, her investigation might also look at the way in which the Adjudicator’s Office reviewed the complaint.
It is worth noting that this specific case did not follow the normal procedure. My hon. Friend is perfectly entitled to contact Ministers about the matter. He has received replies from senior officials at HMRC and one from me dated 23 May 2013. All those replies carried the same message: given the age of the case and the lack of any of the original papers, HMRC is not in a position to comment with any certainty on the case.
Letters from the Adjudicator to my hon. Friend on 13 March and 25 April 2012 contained a similar message and provided contact details for the Parliamentary Ombudsman. However, if the constituent or his advisers provide HMRC with full copies of all the documents they hold in connection with the matter, I can assure my hon. Friend that it will carry out a thorough review and revert to them with its findings.
Mr Gauke
I will give way, but first I will make this point: my hon. Friend has provided HMRC with information regarding the case that indicates that a conviction was quashed following the finding that there had been a misdirection. As he will also be aware, his constituent’s concern is that there was a malicious prosecution against him. If HMRC has evidence that there was a malicious prosecution against someone, of course it should apologise. If that evidence is presented to it and it is satisfied that that is what has happened, I would hope and expect it to do exactly that.
Mr Cash
Whether or not it was malicious, the question is whether an apology is due, given the fact that—of this there is no doubt—there was a prosecution, my constituent spent time in jail, the conviction was quashed and then he was released. I am simply asking for an apology. There is an element of farce about the situation. I do not want to be told that I should go off to the Ombudsman; I am talking to the Minister, who is accountable to the House. He has responsibility for HMRC and for the conduct of Customs and Excise before it, in one form or another. All I am asking for—it sounds as though I am not going to get it, even this afternoon—is an apology on the Floor of the House from the Minister in relation to this. It is no good just reading out all the bits of paper that have been supplied—
Mr Speaker
Order. The hon. Gentleman’s intervention is a little on the long side. He has expressed some frustration that he does not think that he will get what he wants this afternoon but, on the strength of his 29 years of service in the House and the indefatigability with which he has pursued a variety of causes over those years, he will be well aware that it is open to him to pursue the matter again, and again, and again.
Mr Gauke
Thank you, Mr Speaker, for setting out that prospect.
What I am seeking to say to my hon. Friend is that his constituent clearly feels wronged. He was, as my hon. Friend says, convicted on a case brought by HM Customs and Excise, and that conviction was subsequently quashed. I understand my hon. Friend’s position, which is, in essence, that in any circumstances when someone has been wrongly convicted, the prosecuting authority should apologise to that person. I fully respect that position. However, it must also be said that the fact that an individual is found not guilty after a criminal trial or their conviction being quashed by a higher court on appeal does not necessarily mean that it was inappropriate for the case to have been investigated, or even prosecuted, in the first place. I am sure that my hon. Friend, as a distinguished lawyer, can appreciate that point.
It may well be that in this investigation over 30 years ago HM Customs and Excise behaved wrongly and inappropriately. If that is the case, then his constituent would deserve an apology in those circumstances—let me clear about that—and I would be very happy to give that apology on behalf of HMRC. However, before HMRC is in a position to give a full apology, it needs to see the facts more fully. As I say, the mere evidence that a conviction has been quashed does not necessarily mean that HM Customs and Excise behaved in an unacceptable way. That is why I believe that it is essential that my hon. Friend’s constituent provide all the available paperwork that he and his advisers hold to enable HMRC fully to assess the reasons for the quashing of the conviction.
Mr Gauke
I will allow my hon. Friend to intervene again; he need not worry that I am galloping towards the end.
I am keen to ensure that HMRC looks at the evidence again thoroughly, and if it is in a position to make the apology—I can understand the reasons why my hon. Friend wants that apology sooner rather than later—I am keen to do all I can to facilitate that. My hon. Friend rightly has a reputation for being someone who weighs the evidence thoroughly, and HRMC also needs to weigh the evidence thoroughly before it reaches a conclusion. It might be the easiest thing in the world just to announce an apology, but it should do so on the basis of the facts, and at the moment it does not have those facts.
Mr Cash
Let me refer again to the statement by Mr Wright—a senior Customs officer who I presume, or hope, is still available to be spoken to because his statement was so clear. There is also the opinion of the leading counsel, and there are all the other papers that have been supplied. If the records are not in the Department and no papers are available other than the ones we have already supplied, then I do not know what else we would be able to produce. I think that a careful judgmental assessment of the justice of this case is required, and that the apology is due, although my hon. Friend is now making some very helpful remarks.
Mr Gauke
I am glad that I have had the opportunity to make some helpful remarks. I say to my hon. Friend that the more evidence there is that can be presented, the better. I assure him that HMRC will consider the matter thoroughly and follow the evidence. If an apology is due on the basis of that evidence, it will of course make an apology. I accept that no apology was made when the conviction was quashed more than 30 years ago and that there has been no apology in the intervening 30 years.
I hope that this wider airing of the case and the offer for HMRC to review all his constituent’s paperwork go some way towards providing the assurance that my hon. Friend is seeking. If I have not provided that reassurance or if HMRC’s investigation of the evidence proves to be less than fruitful as far as he is concerned, I suspect, as you have said, Mr Speaker, that we will return to the subject.
Question put and agreed to.
Ministerial Corrections
(10 years, 9 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text
Carers: Young People
(10 years, 9 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Mike Hancock
To ask the Secretary of State for Health (1) what support his Department has made available for young carers in each year since 2010;
Mr Timpson
I have been asked to reply on behalf of the Department for Education.
From 2011 to 2013, the Department allocated over £1.5 million in grant funding to The Children's Society and Carers Trust to improve the support available for young carers. This followed the conclusion of a three-year funding grant to help 18 local authorities develop and test intensive family focused models of support for families with young carers as part of the young carers pathfinder programme.
The funding has enabled The Children's Society and Carers Trust to deliver regional events for practitioners in local statutory and voluntary services on designing and delivering 'whole family' approaches to support for young carers. The events include training on engaging young carers in "hard-to-reach" groups, such as those belonging to Black, Asian and Minority Ethnic (BAME) groups who have English as a second language. The training is based on learning and resources developed in partnership with the Black Carers Network and young carers from BAME communities. In February I announced the award of a new contract worth up to £1 2 million to those two organisations to continue this work for a further two years.
Additionally, the Department has worked closely with the two organisations to share evidence-based tools and good practice guidance, including an online training package for school staff which raises awareness about the issues facing young people with caring responsibilities and how it can impact on their school attendance and attainment.
The correct answer should have been:
Mr Timpson
I have been asked to reply on behalf of the Department for Education.
From 2011 to 2013, the Department allocated over £1.5 million in grant funding to The Children's Society and Carers Trust to improve the support available for young carers. This followed the conclusion of a three-year funding grant to help 18 local authorities develop and test intensive family focused models of support for families with young carers as part of the young carers pathfinder programme. In February I announced the award of a new contract worth up to £1.2 million to the two organisations to continue this work for a further two years.
The funding is enabling The Children's Society and Carers Trust to deliver regional events for practitioners in local statutory and voluntary services on designing and delivering 'whole family' approaches to support for young carers. The events include training on engaging young carers in "hard-to-reach" groups, such as those belonging to Black, Asian and Minority Ethnic (BAME) groups who have English as a second language. The training is based on learning and resources developed in partnership with the Black Carers Network and young carers from BAME communities.
Additionally, the Department has worked closely with the two organisations to share evidence-based tools and good practice guidance, including an online training package for school staff which raises awareness about the issues facing young people with caring responsibilities and how it can impact on their school attendance and attainment.
Empty Buildings
(10 years, 9 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text
Sheila Gilmore (Edinburgh East) (Lab)
Further to the question from my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), is not the problem that no real research was done before the introduction of the bedroom tax? The position is very different up and down the country, and in some areas it is clear that an inadvertent consequence might be more empty homes. If that proves to be the case, will the Government change their mind?
Mr Foster
I must say to the hon. Lady that clearly very detailed research was done and we had a number of pilots across the country. It would be very helpful if she would assist the House by indicating whether the Labour party, which has been so opposed to the measure, now intends to reverse it.
[Official Report, 8 July 2013, Vol. 566, c. 4.]
Letter of correction from Don Foster:
An error has been identified in the oral answer given on 8 July 2013 to the hon. Member for Edinburgh East (Sheila Gilmore).
The correct answer should have been:
Mr Foster
I must say to the hon. Lady that clearly very detailed research was done and an estimate was made of the likely impact in each region. It would be very helpful if she would assist the House by indicating whether the Labour party, which has been so opposed to the measure, now intends to reverse it.
Petition
Proposed Closure of Suffolk Court Care Home
Westminster Hall
(10 years, 9 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Backbench business
(10 years, 9 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
UK Shale Gas
(10 years, 9 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Caroline Lucas (Brighton, Pavilion) (Green)
It is a pleasure to serve under your chairmanship, Mr Bone. I thank the Backbench Business Committee for allowing this debate and colleagues from across the House for supporting it. It gives us an opportunity to examine some of the measures that the Government are putting in place to promote shale gas, and to explore the implications of fracking for our constituents, our countryside and our climate. I read with interest the Hansard report of Tuesday’s debate, which focused in particular on the details of community benefit packages but also touched on some issues that I am sure we will return to and explore further in this debate.
Before I discuss those questions, in light of recent lobbying scandals and concerns about inappropriate corporate influence on politics and policy making, I will declare my relevant interests. I am a proud, albeit small, shareholder in Brighton Energy Co-operative, which invests in community-owned solar power in Brighton and Hove and whose vision for community-owned renewables at the heart of our energy system I openly support. I have a similar very small interest in the Westmill Wind Farm co-operative in south Oxfordshire. I hope that other Members speaking today will agree that in the interests of transparency and rebuilding trust in the political process, it would be beneficial if all of us declared fully all interests relating to the energy sector or energy companies.
As part of the spending review, the Government set out their commitment to put in place the conditions to allow the shale industry to “reach its full potential”: new planning guidance, community benefits and tax breaks. The planning document was to be published by 18 July, in the depressingly common pattern of waiting until just before the summer recess to publish unpopular policies, but I was told this morning by the Department for Communities and Local Government that it would, after all, be published not today but “very soon”. That is even worse for the House’s ability to examine the details and hold Ministers to account on behalf of our constituents. I am sure that we would all like to hear from the Minister the reasons for the delay. It is hard to avoid concluding that his colleagues in the DCLG are scared of scrutiny.
It is also pretty appalling that the new planning guidelines are set to come into force without public consultation, denying communities that stand to be affected by fracking any say in the new process. It is clear that Ministers and the fracking firms, which are, sadly, increasingly indistinguishable, are keen to press on rapidly, but it is wrong to refuse to consult on new planning guidance aimed at making it easier for developers to cast aside community concerns.
Even from a perspective of due procedure, I cannot see how the decision to deny communities a say in their new planning rules is remotely in line with the Government’s own definition of circumstances in which consultation is unnecessary. The relevant Cabinet Office principle makes it clear that that is appropriate only in the case of
“minor or technical amendments to regulation or existing policy frameworks, where the measure is necessary to deal with a court judgment or where adequate consultation has taken place at an earlier stage”.
Many of my constituents have e-mailed me over the past few weeks to call for a full public consultation, as well as for new planning rules that are strong on tackling climate change and follow the precautionary principle when it comes to issues such as groundwater contamination.
Another spending review measure is the consultation on tax incentives to encourage companies to press on with shale gas exploration. The Treasury is proposing reducing the tax payable on income from 62% to 30%. One of my concerns is that tax breaks for fracking amount to an additional fossil fuel subsidy, which is exactly what the UK and other G20 nations pledged to phase out three years ago. It looks like a backward step. Fossil fuel subsidies, which amounted to $500 billion worldwide in 2011, are effectively an incentive to pollute. Earlier this year, the chief economist of the International Energy Agency, Fatih Birol, called them
“public enemy No. 1 for sustainable energy development”.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
Will the hon. Lady make it clear that what she calls a fossil fuel subsidy in the case of the UK is, overwhelmingly, simply a lower rate of VAT on all energy use? Is she calling for a higher rate of VAT on all energy use, or just a higher rate on fossil fuels? To describe it as a subsidy is surely nonsense.
Caroline Lucas
I do not think that it is nonsense. The Environmental Audit Committee, of which I am a member, is in the middle of an inquiry into fossil fuel subsidies, and it is clear from some of the evidence that we have received that many people think that the Government’s definition of subsidy, which is narrow and does not include tax breaks, is wrong. I am happy to say that I do not think that fossil fuels should have tax breaks. Whether or not we want to call that a subsidy, I am clear that I think it is, and I am against it.
Charles Perry said in evidence to the Committee:
“The media in this country…would like us all to believe that we are paying a lot more for renewable energy as consumers, but if you compare what we are paying for renewable energy versus fossil fuels, it is six times more for fossil fuels as a taxpayer than it is for renewables.”
That sums up what I am saying.
David Mowat (Warrington South) (Con)
I heard that number with interest: six times as much for fossil fuels as for renewables. Can the hon. Lady take us through the calculation that gave that number? Was it, for example, by comparing solar with gas?
Caroline Lucas
I refer the hon. Gentleman to the Environmental Audit Committee evidence, which goes through that complicated calculation in a lot of detail.
Caroline Lucas
I have answered that point.
Ministers have given us an industry-led community benefit scheme. It was discussed at length on Tuesday and will be consulted on in the autumn. It is expected to yield £100,000 in community benefits per drilling pad, each with several wells, plus 1% of revenues. The hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) made a crucial point about the importance of additionality when it comes to such payouts, over and above what localities would normally expect under local government or other funding systems.
I share those concerns, not least in light of recent comments from the chief executive of shale gas explorer IGas, who said that local communities should be won over to shale gas fracking by being rewarded with more teachers in primary schools or more officers on the beat. Given the coalition Government’s cuts to crucial public sector services and local authority budgets, it would be outrageous if communities were faced with a situation in which the only way to secure adequate numbers of teachers or policemen and women was by accepting a giant fracking rig in their back yard.
The other recent development discussed on Tuesday is the creation of a new Office of Unconventional Gas and Oil. The Minister explained its co-ordination role, which aims
“to accelerate the development of shale responsibly.”—[Official Report, 16 July 2013; Vol. 566, c. 215WH.]
The new office has been given the role of cheerleader-in-chief for the shale gas industry, as well as being tasked with ensuring that shale development remains safe and the environment protected. We heard that it would also play a third role, providing information to the public on apparent myths to help people separate fact from fiction. However, the office and the Minister’s whole Department are so rampantly pro-shale gas that I cannot see how the public will have confidence or trust in them either to maintain the highest safety and environmental standards or to provide independent, credible, non-biased information about the risks of shale gas development. How does the Minister intend to manage that perceived conflict of interest?
During the rest of my remarks, I will concentrate on some crucial questions about shale gas development in the UK. First, do we understand fully the local environmental and health risks of shale gas and what our constituents and the general public think about fracking, and can regulation and the OUGO adequately address such risks and concerns? Secondly, does shale gas really have the potential to deliver lower-cost gas power and reduce energy bills, as the Chancellor and other fracking enthusiasts claim? Thirdly, is drilling for shale gas a sensible approach to addressing concerns about future energy security? Finally, is shale gas development compatible with the UK’s climate change commitments? I will set out why, sadly, I believe that the answer to all those questions is no, and why shale gas ultimately cannot and should not have a role in a secure and affordable energy system that is consistent with the UK’s climate change commitments.
On the environmental impacts, I am sure that I am not alone in having been contacted by many constituents concerned about a wide range of environmental and health risks from shale gas. I worry that Ministers and those with financial links to shale gas companies are quick to dismiss people’s concerns, especially about water resources. The International Energy Agency, not known for an overtly environmental perspective or for hyperbole, states:
“The scale of development can have major implications for local communities, land use and water resources.”
It goes on to list serious hazards
“including the potential for air pollution and for contamination of surface and groundwater”.
The number of wells would, of course, depend on how much extractible gas there is and the geological conditions. Huge uncertainties remain, so all estimates are assumptions, but a study by Bloomberg based on average well extraction data from the US, rather than just sweet spots, found that meeting North sea production levels of 1,460 billion cubic feet and sustaining those levels for 10 years would require between 10,000 and 20,000 shale gas wells. Does the Minister think that the visual impact of so many drilling rigs and the associated traffic would be considered preferable to the aesthetics of wind turbines, for example?
On Tuesday, Balcombe residents delivered a petition to the Environment Agency in respect of Cuadrilla’s application for a mining waste permit for its operations in that area. It states:
“We the undersigned residents of Balcombe and its surrounds strongly object to the activities of Cuadrilla and demand that you take all possible measures to ensure the cessation of its activities with immediate effect, on the grounds that it poses an unacceptable threat to our water supply, air purity and overall environment.”
It is wrong for Ministers to dismiss such concerns and to suggest that local opposition stems from a misunderstanding of the impact of shale gas extraction. Local campaigners I have met are not stupid or scaremongering. They are extremely well read and well informed. Last year, a survey by Balcombe parish council found that 82% of residents wanted their local elected representatives to oppose fracking. That gives a good overview of people’s concerns, which include issues such as the increase in road traffic through the village, the pollution of water supplies, the impact on an area of outstanding natural beauty and the effect on property values.
Opposition to fracking goes way beyond organisations such as Greenpeace and Friends of the Earth. One example this week is the Quakers, who issued a statement on the EU’s climate and energy package and said of shale gas:
“This is not an option for replacing coal power. The greenhouse gas emissions during the life cycle of a well (including after decommissioning) are too high to enable us to reach our long-term climate targets and stay within the vital 2°C limit, especially given the high risk of methane leakage.”
It continued:
“The fracking process contaminates water and soils causing major concerns for the environment and public health.”
Even the National Farmers Union has raised concern that fracking represents an additional water user, which could increase water stress in times of shortages, and what about the views of farmers in places where fracking is already established? In Alberta, Canada, the Canadian NFU has led calls for a moratorium, with the co-ordinator, who is a dairy farmer, warning last year:
“Many farmers in my area who either have direct experience with the destructive nature of hydro-fracking technology on their water wells or who have neighbours who have been affected have come to me with their concerns…our ability to produce good, wholesome food is at risk of being compromised by the widespread, virtually unregulated use of this dangerous process.”
The Minister has given assurances about robust regulation in the UK, but the implications of fracking for British farmers remains to be seen, not least in the light of increasing water scarcity and food price hikes. The Co-operative Group, which also farms, perhaps not coincidentally, is also calling for an end to the use of unconventional fossil fuels and for a massive upsurge in community renewables instead.
Another local concern is that leaks from well casings that have been inadequately completed or have subsequently failed are one route by which water and air pollution can occur. The first report from the Select Committee on Energy and Climate Change said that the risks are
“no different to issues encountered when exploring the hydrocarbons and conventional geological formations”
and recommends that the Health and Safety Executive tests the integrity of wells before allowing drilling activity to be licensed. The Minister has indicated that such a regime will be put in place. I wonder whether those same assurances were given in the US and elsewhere.
New data from the Marcellus shale show that 6.6% of Pennsylvanian wells are leaking. Examination of studies of well leaks by various bodies in the US, Canada and Norway shows that it is likely that world leakage rates come in at between 5% and 20%. Will the Minister confirm whether there is any difference between well design in the US and the UK that makes that less likely here? Will he also say whether there is a register of the performance of existing UK wells? I have not been able to find one. Such a register would allow us to have an overall picture of leakage in the UK and would tell us a lot about the world-class regulation argument that is so easily bandied about.
The need for robust regulation was discussed in our debate on Tuesday, providing a brief respite from the regulation-bashing rhetoric that seems to be fashionable at the moment. The hon. Member for North Warwickshire (Dan Byles) was present at that debate, and I am delighted that he spoke in favour of high environmental standards, in keeping with the gold standard that already applies to oil and gas regulation in the UK. However, last month alone, Britain’s offshore rigs and platforms leaked oil or other chemicals into the North sea on 55 occasions. I am not convinced that communities facing the prospect of shale gas drilling, albeit onshore for the time being, will find that reassuring.
The Minister says that robust regulation is now in place and that there is nothing to prevent licensees from bringing forward new drilling plans and seeking the necessary permissions. I worry that his Department is becoming increasingly indistinguishable from the fracking companies that are rubbing their hands at the prospect of tax breaks and drilling permits, particularly in his treatment of legitimate public concerns as myths.
It was heartening to hear the hon. Member for Fylde (Mark Menzies) speak of the need to put in place the highest environmental safeguards, as opposed to what is simply convenient for the industry. He also made the point that in addition to strong regulation, there must be sufficient resources to ensure that they are applied. The shadow Energy Secretary emphasised the importance of comprehensive monitoring. I would add that the remits and duties of the regulator also matter.
The proposed growth duty to be imposed on non-economic regulators such as the Environment Agency through the draft Deregulation Bill is of great concern in that respect. The Government claim that it will support growth without weakening environmental protection, but lawyers from the UK Environmental Law Association warn in their consultation response that
“A growth duty, as currently proposed, would make it harder for non-economic regulators to refuse environmentally damaging development, including those that threaten nationally important wildlife sites—even if the overall societal benefits of such a refusal are greater than the development.”
They continue:
“This arises because the proposed duty does not adequately reflect evidence about the economic value of the natural environment and the need to value it accordingly in decision making.”
Ministers have a lot of explaining to do before anyone will be persuaded that this growth duty is not simply the latest attempt to weaken crucial environmental and public health safeguards, capitulating to corporate lobbyists who want short-term profit-making to trump public interest.
An additional concern, which is almost entirely ignored in the UK but is at the centre of debates in the US, is the radon risk from fracked gas pumped directly into householders’ kitchen stoves and hobs. Two month ago, the hon. Member for Newport West (Paul Flynn) was told in a written answer from the Under-Secretary of State for Health, the hon. Member for Broxtowe (Anna Soubry), that
“Public Health England…is preparing a report identifying potential public health issues and concerns, including radon…that might be associated with aspects of hydraulic fracturing…The report is due out for public consultation in the summer. Once released for public consultation, the report will be freely available from the PHE website.”—[Official Report, 20 May 2013; Vol. 563, c. 570W.]
Subsequent follow-up by telephone with Public Health England this week established that the “summer” has become “later this year”. That seems to be a trend. Will the Minister explain the delay in publishing this research report when the public debate over fracking is moving ahead apace?
In brief, the concern raised in the US has been led by Dr Marvin Resnikoff, now of Radioactive Waste Management Associates, who has more than 50 years’ research experience in radiation hazards. My purpose in raising this matter is not to scaremonger, but simply to ensure that the risks are not ignored. I look forward to hearing from the Minister on that aspect as well.
As chair of the all-party group on fuel poverty and energy efficiency, I believe that the cost of energy policy decisions to householders, particularly those on low incomes, is an absolute priority. Current estimates suggest that fuel poverty now affects more than 6.5 million households throughout the UK. The Government’s figures show that rising wholesale gas prices are the overwhelming cause of higher energy prices, which raises questions about the economic merits of the gas strategy in which gas plays a big role long into the future, never mind that a gas-powered future would bust carbon budgets.
The Chancellor and the Prime Minister both seem to think that shale gas could have a positive impact on gas prices and household fuel bills. Yesterday, the Department of Energy and Climate Change published a new report in what looks like a desperate attempt to create some evidence to back up those dubious claims. The Daily Telegraph thunders:
“Gas prices could fall by a quarter with shale drilling”.
But on closer examination, the document is all about ifs and buts.
Dan Byles (North Warwickshire) (Con)
We all want evidence-based decision making, and it seems odd to say first that there is no evidence that shale gas will reduce prices, and when the Government investigate and commission a report, to say that they have done so in a desperate attempt to find something that looks like evidence. Surely we should welcome the Government’s commissioning of independent research so that we can have an evidence-based debate.
Caroline Lucas
I would certain welcome that if it were reflected in the sort of statements that we hear from the Government about shale gas, but it is not. Time and again I have had debates with Ministers when they have easily and quickly leapt to the defence of shale gas by saying that it will incontrovertibly lead to lower gas prices. That is the problem. There is a gap between the rhetoric and the reality. If we all agree that the jury is out on that issue, I am pleased about that. The DECC report states that there is
“a high degree of uncertainty surrounding any price forecast.”
Let us look at what some of the energy market experts are saying about the cost question. Jamie Spiers, researcher at Imperial college, said that
“figures suggest that the cost of extracting UK shale gas reserves will exceed the price. This is a big issue that not been addressed very much.”
David Mowat
The hon. Lady makes the point that the cost of extracting the gas will be higher than the cost of selling it. If so, why would the private sector go ahead with such projects? Surely the problem will be solved. Why does she think the price of shale gas in the US has reduced the price of wholesale gas by 75%?
Caroline Lucas
I think it will be made commercially viable through the sort of tax breaks that the Government are already beginning to give. I will return to the situation in the US later, but it is vastly different. The regulatory regime is different, as are the geology and the issue of exports. Time and again, people from the International Energy Agency downwards have been saying that it is irresponsible to think that we can simply read across the impacts in the US and assume that we will see those here in the UK.
I was giving examples of reputable organisations that are warning that UK shale gas will not bring prices down. Those warnings come from Deutsche Bank, Chatham House, Ofgem, and the International Energy Agency. Even the CBI has warned that there is only one direction for gas prices, and that is upwards. The highly respected former Energy Minister, the hon. Member for Wealden (Charles Hendry), has warned that the reverse is true, saying that
“betting the farm on shale brings serious risks of future price rises”.
The Government’s independent advisers, the Committee on Climate Change, have confirmed that relying on gas would be expensive, adding up to £600 extra on household electricity bills compared with low carbon power, which would add only £100 and would be a good insurance policy against high prices in the future.
Exploitation of the UK’s significant shale resources is unlikely to result in low natural gas prices as well, according to Bloomberg:
“The cost of shale gas extraction in the UK is likely to be significantly higher than in the US, and the rate of exploitation insufficient to offset the decline in conventional gas production, meaning market prices will continue to be set by imported gas.”
Professor Paul Stevens, Chatham House analyst and a recent winner of the prestigious OPEC award for outstanding oil and energy research, has said that the Chancellor’s view that gas will be cheap in the future, based on the views that that will be driven by a shale gas revolution as happened in the US, is “misleading and dangerous.” Here he comes to exactly the point that the hon. Member for Warrington South just mentioned, saying:
“It is misleading because it ignores the very real barriers to shale gas development in the UK and Europe more generally. The US revolution was triggered by favourable factors such as geology, tax breaks and a vibrant service industry amongst many others. However, in Western Europe the geology is less favourable notably with the shale containing a higher clay content making it more difficult to use hydraulic fracturing.”
At a meeting for concerned residents at a potential fracking site in West Sussex, a Cuadrilla representative was asked to comment on whether shale gas could drive down customers’ energy bills. Mark Linder, who is responsible for Cuadrilla’s corporate development, said:
“We’ve done an analysis and it’s a very small…at the most it’s a very small percentage…basically insignificant”.
In the article to which I am referring, a company spokesperson is reported to have said:
“Cuadrilla’s never said it…will bring down prices…We don’t think it will bring down prices, although it does have the potential to.”
The spokesman went on to stress that shale gas exploitation was about security of supply, rather than price, so now I will turn to that.
There is a broad consensus among gas analysts that little, if any shale gas will be produced commercially in the UK before 2020, so we should not expect domestic shale gas to have any impact on gas prices in the short to medium term. That time scale is very important, because so much of the energy debate focuses on the rest of this decade, for which shale gas is basically irrelevant. If we are talking about energy security perhaps in the 2020s, what that looks like obviously depends on how much gas is extractable. The British Geological Survey recently reported that the Bowland shale in Lancashire and Yorkshire may contain 1,300 trillion cubic feet of gas. It stresses that it is a highly uncertain estimate and that it is not an indicator of the volume of gas likely to be extracted, which will depend on economic, technological and environmental considerations. However, if 10% of that gas were extracted, it would equate to approximately 41 years of UK gas consumption, but defining energy security as security of supply, DECC believes that it is still too early to come to a firm conclusion on whether shale gas in the UK or elsewhere in Europe is likely to have a significant effect on security of supply.
The House of Commons Energy and Climate Change Committee recommended that the
“Government should not rely on shale gas contributing to the UK's energy system when making strategic plans for energy security”,
which seems extremely sensible given all the uncertainties. Indeed, given those uncertainties, a much less risky way to reduce the energy security risks associated with the UK’s growing gas import dependence is massively to increase investments in renewable energy generation—we know what the costs of fuel for solar and wind generation are, for example—and dramatically improve energy efficiency and reduce overall demand.
Much of the discussion on the climate change impact of shale gas centres on its relative emissions intensity compared with coal. That matter is of interest, but it must not distract from the most climatically relevant issue of the absolute quantities of emissions from the global energy system. When people get very excited that shale gas in the US is cutting emissions by displacing coal, they need to remember that that coal is simply being exported and the emissions created elsewhere, so that does not help very much with the overall reduction of emissions required in order to tackle climate change. Regardless of the precise life cycle in terms of the greenhouse gas impact of shale compared with other gas, the direct carbon content of shale gas means that its widespread use is incompatible with the UK’s international climate change commitments.
We hear a lot that the Committee on Climate Change says that we need to cut emissions from power generations to 50 grams of CO2 per kilowatt-hour by 2030, but we hear less often that that needs to be a step on the way to a zero carbon grid very soon afterwards. Yes, shale gas is lower carbon than coal, although the methane leakage question is still to be resolved, but it is still a high-carbon fuel. Arguing otherwise is not dissimilar to an alcoholic justifying a barrel of 7% cider on the grounds that it is less harmful than a crate of 13% wine.
What about carbon capture and storage, which is usually raised at this point as the get-out-of-jail-free card? At commercial scale, CCS will be significantly less than 100% effective at capturing carbon dioxide, but more importantly, CCS is unlikely to be commercially viable for at least another 10 years and probably more. The Opposition Front-Bench team have been very outspoken about the need for a 2030 decarbonisation target in the Energy Bill. I welcome their strong stance, and indeed, that of Members on both sides of the House on that crucial issue. The Opposition Front-Bench team are clearly trying to create an impression that they understand, more than the coalition, the pace and scale of carbon emission reductions needed. I hope that they would agree that rebuilding cross-party consensus in favour of urgent action on climate change is crucial, too.
However, from all the evidence that I have seen, if we take a scientific, evidence-based approach to tackling climate change, it simply does not make any sense to exploit the UK’s shale gas reserves, however much may be economically or technically recoverable. That is not only a green or environmental argument. As John Ashton, who was the UK’s former head climate diplomat for 10 years, including under Labour, told the Energy and Climate Change Committee,
“the issue here is not emissions, it is the security and prosperity of 60 million British citizens.”
I want to take issue with the view of the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) that those who oppose shale gas are taking an absolutist position. He said on Tuesday that people who are against shale exploration have a principled position, but their views are “ideological objections” that must be separated “from legitimate environmental concerns”, and that regulation is the way to do that. However, is he really suggesting that opposing shale gas extraction on climate grounds is not a legitimate environmental concern? Will he still be saying that when the next set of Intergovernmental Panel on Climate Change reports come out and we are all reminded of what is at stake and the consequences of a rise of more than 2°?
I say to the hon. Gentleman that such a position is neither ideological nor absolutist; rather it is a position that is honest about the science of climate change and the massive risks of our current emissions trajectory. The lack of realism and integrity is to be found not among shale gas opponents, but on the Opposition Benches for as long as they remain in thrall to the fossil fuel lobby and in favour of adding a new source of carbon-emitting fossil fuel to our energy mix.
In Tuesday’s debates, not once did the words “carbon” or “climate” pass the lips of an Opposition Member. It is clear that the shadow DECC team have seen the analysis by Carbon Tracker, which found that between 60% and 80% of existing fossil fuels cannot be burned if we are to have any hope of staying below 2°. The hon. Member for Liverpool, Wavertree (Luciana Berger) has asked questions about those unburnable high-carbon assets, and the International Energy Agency conclusions on burnable carbon are broadly the same. Perhaps today we will hear from the Opposition, as well as the Minister, exactly how they think that the exploitation of new sources of fossil fuels, including shale gas, is remotely compatible with the action needed to avoid catastrophic climate change and with the UK’s international commitment to keeping global warming below 2°, which was reiterated just last month at the G8.
In conclusion, I want to return briefly to the issue of the inappropriate corporate influence in Government. I believe that that is doing huge harm to our democracy and is at the core of the coalition’s irrational enthusiasm for shale gas and fossil fuels more widely. This fossil fuel obsession, or addiction, is preventing us from making the most of the UK’s indigenous renewable resources. Worse still, it means that we are seeing policies designed to maintain the status quo, where power is literally and metaphorically concentrated in the board rooms of big energy companies such as the owner of British Gas, Centrica, which recently bought shares in Cuadrilla.
Before the cold snap last winter, Centrica raised prices by 6%. Its full-year profits before tax were reported in May to be £602 million, with the group’s full-year earnings after tax expected to be 2% higher than last year at £1.4 billion. Therefore, I think it is reasonable to ask why it is remotely acceptable, for example, that Lord Browne, a former BP boss, is now holding a key cross-departmental role as the head non-executive director at the very same time as he holds significant shares in Cuadrilla. Lord Browne reports to the Minister for the Cabinet Office and Paymaster General, the right hon. Member for Horsham (Mr Maude), in whose constituency Cuadrilla wants to drill. The right hon. Gentleman explains that Browne
“has a cross Government role convening Non-Executives from the best of business and the third sector...The code of practice on good governance in government departments requires the board to record and manage conflicts and potential conflicts of interest appropriately. There is no conflict of interest in this case.”
However, a recent freedom-of-information response from DECC seems to undermine such assurances. It states:
“After a trawl of our Ministers’ private offices and very senior civil servants at DECC we can confirm that there have been four meetings with Lord Browne during the period specified”—
in other words, the past three years. Those all took place in DECC’s offices, and I am told that although DECC does not have minutes for the first two meetings, Cuadrilla’s activity plans and shale gas were discussed. The minutes that do exist are heavily redacted on the grounds that attendees were in a private discussion with the Minister. The response states:
“It would be likely to prejudice the commercial interests of Cuadrilla and inhibit communications with this organisation on an ongoing basis if we were to release details”.
Another non-executive director is old Etonian Sam Laidlaw, who has also had a long career in the oil and energy industry, including top roles at Enterprise Oil and Chevron. He is currently in charge of—guess what?—Centrica. I am therefore genuinely concerned that policy making on shale is skewed in favour of the companies, such as Centrica and Cuadrilla, and that the interests of our constituents are not being put first, as they should be, when it comes to the risks of fracking, keeping energy costs down or tackling climate change. I would like to know whether the Minister shares my concerns about the access and influence that these companies have in relation to policy making across the Government.
I want to highlight some questions that my constituents and other members of the public have asked me to put to the Minister during this debate. Will the Government confirm that they will mandate that fracking companies must name the chemicals that they use and their toxicity? Can he explain how fracking is compatible with the sustainability and emission reduction aims of what is meant to be the greenest Government ever? Where is the assessment of the risks of fracking, and how will those risks be properly managed? I would be grateful for answers to those questions as well.
I want to end my speech by saying a few words about the positive energy future that we could decide to pursue, instead of this headlong rush to exploit every last drop of oil and gas. It is a future in which we are free from our fossil fuel reliance and on a path towards climate security, not catastrophe. It is an energy system in which the big six energy companies are replaced by independent generators and a blossoming of community and co-operatively owned renewable schemes—local, sustainable and democratically controlled.
The Centre for Alternative Technology launched just this week “Zero Carbon Britain”, showing how Britain could eliminate emissions by 2030, and not just from our energy system. It is the latest of many reports that show, from a technological perspective, that fossil fuels are fast becoming redundant. I recommend it to anyone who thinks that the only way to keep the lights on is to fry our planet and condemn young people and future generations to unmanageable climate impacts, not least on water and food security. As many have said, what we are lacking is not technological solutions to end our fossil fuel addiction and tackle climate change; it is political will. I hope that this debate will be one step further in generating that will.
Mr Peter Bone (in the Chair)
I should like to tell right hon. and hon. Members that I will call the first Front Bencher no later than 10 minutes past 4. The Chairman of Ways and Means has given the Chairman of this debate permission to impose a time limit. I will not do that at the moment. Nine Back Benchers want to speak, so Members can do the arithmetic.
Mr Peter Bone (in the Chair)
No, you are quite capable of doing that, Mr Lilley.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
It is a pleasure to serve under your chairmanship, Mr Bone, and to have your understanding that I may have to nip out and see a Minister about a school. I hope that I will also have the understanding of other hon. Members.
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on ensuring that we could have this debate. I think that this is the fifth time in 18 months that we have had such a debate, and my right hon. Friend the Minister has had the pleasure of my company and that of other hon. Members only in the last few days on pretty much the same topic. I will try to take a different tack from the hon. Member for Brighton, Pavilion, given that I represent a constituency that sits on the majority of the Bowland shale, which apparently is becoming the nirvana of plugging our energy gap. That is how it seems to many of my constituents, who are worried on a number of grounds.
Personally, I have always tried to take the middle ground. I am not, and never have been, completely set against the use of shale gas in the UK’s energy mix. However, following conversations with constituents and having done my own research, I do have concerns about the safety and the environmental aspects of the fracking process. That includes, in particular, the integrity of water supplies for those who draw water from their own boreholes and not from the mains supply. That is an issue that I keep raising, and I have raised it in meetings with companies and civil servants, who still do not seem to understand that there are people in Lancashire who do not have a mains water supply. They are clearly concerned about the possible contamination that may occur with a process that goes on below the water table; but more importantly, they are also concerned about the quantities of water taken from the water table to use in this process. They are still waiting to have those questions answered.
My constituency is right next to where the small earth tremors happened. Test drilling at Preesall in the Fylde constituency was stopped to check what was going on. As hon. Members can imagine, in a county that was already seeing the speed at which people were trying to get to the shale gas but hearing few answers, the fact that a small tremor happened—whatever one wants to argue about the tremor itself—led to extremely serious worries among my constituents.
I accept that, since then, the Secretary of State for Energy and Climate Change has put in place a number of additional safeguards. Certainly, the regulatory system has been beefed up. He has also confirmed that all data from the exploratory process will be monitored to assess further the environmental impacts. The additional safeguards; the monitoring of seismic activity; a strengthening of the regulations in relation to wellhead integrity; and—this is the important one for me and I am grateful to the Energy Secretary for it—the presence of an independent expert on-site, while fracking takes place, are all moves in the right direction. They are important measures, but I believe that more can be done to strengthen things further, particularly the water safety element.
I understood the hon. Member for Brighton, Pavilion to refer to the DCLG in terms of the planning regulations, and we in Lancashire are waiting to see the nature of them. I hope to see very strong roles for the Environment Agency and the Health and Safety Executive throughout this process. There needs to be some understanding that the area of the Bowland shale is rural Lancashire, so there are extreme concerns about the impact not just on the ground, but on some of the most outstanding countryside that we have in this country. We need to be assured that each site will be assessed on its own merits in terms of how it affects the local landscape. I have always made the same point in relation to applications for wind turbines, and it would be wrong of me to approach planning consents for shale gas well pad sites differently. Local people must be allowed to have a full say in the planning process.
I will now return to a familiar theme. Hon. Members have heard this long and hard from me, but the issue still concerns me. If we are to have large-scale extraction of shale gas, how will that represent a bonanza for the local community? The mineral rights belong to the Crown, to the duchy or to the county, and local residents will not see the sums that communities and landowners in the US or Europe could get. Moreover, the statements on the number of jobs that will be available are not convincing enough for me. Promises are being made, but I do not believe that this activity will create large-scale employment opportunities across Lancashire.
I accept that a move to industrial-scale production of shale gas has not been advocated by the Energy Secretary at this stage, but it does look as though there is more and more evidence that economically viable extraction is possible. I have seen a reference to £366 billion-worth of extractable gas from the Bowland shale. Therefore, the community’s share of the profits needs to be sorted. I am determined that if Lancashire is to produce shale gas that benefits Lancashire and the rest of the country, Lancashire residents will get financial recompense.
We have now heard that a community compensation scheme will be established, which is good news. However, we are told that it will be a voluntary scheme, run by the United Kingdom Onshore Operators Group. The plan is to provide £100,000 per well at the exploration stage, and once production starts, 1% of all revenues generated during the well’s lifetime will be allocated to the local area, with one third going to the county and two thirds to the local community. That is a good start, but I and others in this Chamber would like to see a lot more. We want to see more clarity, more certainty, a guarantee of additionality and, ideally, more money.
David Mowat
My hon. Friend is making a number of strong points on behalf of his community in Lancashire, and I agree with them all. I will just draw his attention, though, to the unemployment figures that came out yesterday. The three constituencies with the lowest unemployment in the country are all around Aberdeen, and that has been achieved without community transfers. Does my hon. Friend not think that there will be a bonus in terms of economic activity, potentially centred on his constituency?
Eric Ollerenshaw
On balance, my hon. Friend makes a fair point. It has been put to me that, if the area were the first where fracking went ahead, the potential for university research, engineering and skills would be an advantage, but as I have tried to explain, against that is the fact that we have had one test drill, which caused an earth tremor. We have seen nothing else, and we need to see what one of these well pads does to the environment. No one has seen that yet.
Dan Byles
I know that my hon. Friend is looking at the issue carefully, as well he should. Does he agree that we will be able to answer these questions only if planning permission is granted for the next series of exploratory wells? Only when we have wells being drilled and operated can people look, sniff and prod, and we will then know what the wells look like and what the impact will be.
Eric Ollerenshaw
My hon. Friend makes an extremely valid point, but he must understand that we then get the argument that, because we have had exploratory wells, we obviously need to go ahead since we have spent all that money on exploration. My constituents need assurances that the wells are exploratory, that they are part of a pilot and that there is the possibility that we can close down the whole thing if something else goes wrong. Those are the kinds of assurance that they want.
The community fund that the Onshore Operators Group will apparently be in charge of will provide more money locally, but there are still questions about what the local community is. Will funds go to community groups, parish councils or even district councils in my area, such as Wyre borough council or Lancaster city council? They are all below county council level and there is a huge spread of locality between them. What will the money be spent on? Could it come in the form of cash payments, reduced energy bills, building community facilities, reduced council tax bills or affordable housing contributions? If that kind of money is spent in those ways, there are possible tax implications, which is how the problems with the Shetland Charitable Trust developed.
Tessa Munt (Wells) (LD)
The hon. Gentleman is probably already aware of the Sullom Voe agreement, under which community benefit is brought into the community at parish level. I believe that for every barrel of oil taken from Shetland Island waters, a number of pence—totalling something like £23 million or £24 million—goes to the Shetland Islands council for it to distribute. That is probably a good model for us all.
Eric Ollerenshaw
It is an interesting model, but there are serious problems with the definition of what the council can spend money on. If the council spends money on certain things and gives financial recompense to the residents, they will face tax anyway, and that is the issue.
I turn to the subject of certainty. We are talking about a voluntary community compensation scheme. I had hoped that we would be dealing with something more substantial, preferably underpinned by statute. We need to ensure that there is no wriggle room. Local residents and councils need to know that there will be no about-turn, that promises will be lived up to and that changes in company control will not lead to changes to the commitments made by companies now.
Additionality is important. Basically, I want a guarantee from Ministers that if local councils receive extra funds through the community compensation scheme, that will not be used against them when calculating normal standard local government grants. Put simply, I do not want to see a case of robbing Peter to pay Paul. There must be extra money to compensate local communities for the problems that they will have to deal with in hosting shale gas extraction, and that compensation must not be seen by the Government, of whatever hue, as an alternative to normal grant funding. That might be achieved by using a separate fund, as the hon. Member for Wells (Tessa Munt) has already suggested, rather than by paying money into the usual revenue streams—almost a Lancashire sovereign wealth fund. Such a fund would be managed by professionals according to a strict charter, for the benefit of the most closely situated residents on the one hand and the whole of the county on the other. Obviously, it would have to work closely with local authorities of all tiers, to deliver genuine and tangible benefits for local residents and the county.
I hope there might be room for negotiation on the amounts involved. One per cent of revenues of £366 billion is interesting and a good figure, but we hope that it is just a starting negotiating point. If we are to have a profusion of wells, which I remind hon. Members are not like oil wells and need to be located every few miles across the patch or move round the patch—that is my understanding, but those more expert than I am may correct me—we want a fund able to invest for the time when the gas goes, as surely it must, given its nature.
Dr Alan Whitehead (Southampton, Test) (Lab)
The hon. Gentleman may find it helpful to consider—certainly looking at US experience—that a fracking pad in production is about twice the size of a football field and has six different wells, each of which last seven to eight years before a new well needs to be drilled. He is right that a number of wells and pads would be required in any area to sustain substantial shale gas production over a period.
Eric Ollerenshaw
I thank the hon. Gentleman for his technical expertise; that is also my understanding. I remind hon. Members that I am talking about rural Lancashire, the vast majority of which is defined as an area of outstanding natural beauty. I have fought wind turbines owing to the impact of their look on the area, and in the same way, shale gas development raises serious questions about protecting such areas, of which we have few left.
My obsession with compensation should not be taken as support for a move to full-scale fracking. Ministers have to understand how fracking is perceived at the moment. All they read in their national papers are new figures building on new figures and the huge possible bonanza, while my constituents sit on those possibilities. Too often, Lancashire has seen itself used to generate profits that did not return to the county. As the hon. Member for Brighton, Pavilion said, constituents in the affected areas have done a hell of a lot voluntary work to look at fracking at all levels. A farmer in the Bleasdale area of my constituency pointed out at the end of an involved meeting—I hope you accept the reference, Mr Bone—“Eric, this gas has been down there millions of years; there can’t be harm in waiting a little bit longer. It will still be there when we want it.”
Barbara Keeley (Worsley and Eccles South) (Lab)
It is a pleasure to speak in this Backbench Business Committee debate with you in the Chair, Mr Bone. I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing the debate and on the way in which she opened it. I have a potential site for fracking for shale gas at Barton Moss in my constituency, and I want to talk about constituency concerns, as the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) has just done. My constituents have a number of concerns, and they are building by the week and month. I want to talk about those concerns over the potential impact of fracking for shale gas on their quality of life, because that is the key issue for me.
First, even the suggestion of fracking for shale gas moving into the area is bringing house prices down. I had a quick look before I came to the debate, and found various articles talking about a house price downturn of up to 30% in various parts of Manchester and the north-west. When major projects such as large rail schemes are introduced into an area, they bring house prices down. Such a loss would mean a cost running into millions of pounds for all the local people affected by a house price downturn.
Graham Stringer (Blackley and Broughton) (Lab)
Will my hon. Friend give way?
Barbara Keeley
Will my hon. Friend wait until I complete this point? I will come to him in a moment. His constituency is at the other end of Salford from mine, and I know that he will disagree with what I say.
As we heard extensively from the hon. Member for Lancaster and Fleetwood, there is talk of a community bonus of £100,000 per well. The difficulty is that it is out of scale with the potential loss in house values that people will see. The 1% of any revenue will also come along far too late. If someone’s house has lost value and they have become fed up and moved away, they will not be helped by 1% of revenue.
Graham Stringer
Outside London and the south-east, the highest house prices in the country are in Aberdeen, due to the benefit of the oil industry in the North sea. Eventually, the improvements in the economy if shale gas is exploited are likely to lead to a rebalancing of the UK economy and higher house prices.
Barbara Keeley
My hon. Friend is entitled to that view, but I do not agree with him.
There are serious concerns about the impact of fracking on communities. I want to quote from the International Energy Agency’s “Golden Rules for a Golden Age of Gas: World Energy Outlook Special Report on Unconventional Gas”:
“Producing unconventional gas is an intensive industrial process, generally imposing a larger environmental footprint than conventional gas development. More wells are often needed…The scale of development can have major implications for local communities, land use and water resources. Serious hazards, including the potential for air pollution and for contamination of surface and groundwater, must be successfully addressed.”
Those are the issues and concerns that are starting to bear down on my constituents, and the notion that anyone living in an area where such things were being contemplated would see house price increases is just not realistic.
I want also to quote from a report by the Tyndall Centre for Climate Change Research produced by local academics at the university of Manchester:
“The depth of shale gas extraction gives rise to major challenges in identifying categorically pathways of contamination of groundwater by chemicals used in the extraction process. An analysis of these substances suggests that many have toxic, carcinogenic or other hazardous properties. There is considerable anecdotal evidence from the US that contamination of both ground and surface water has occurred in a range of cases.”
The report also states that
“there are a number of documented examples of pollution events owing to poor construction and operator error. There are reports of incidents involving contamination of ground and surface waters with contaminants such as brine, unidentified chemicals, natural gas, sulphates, and hydrocarbons”.
Government Members appear to be saying “Nonsense.” I think I heard the Minister say it too, so I hope he can give me information that I can pass on to my constituents that will help to settle their minds.
Barbara Keeley
That is interesting, and if the right hon. Gentleman has references that he wants to pass on for me to use in my constituency, he is welcome to do so.
We have read the various reports, and it is clear that there are things that need to be borne in mind, not least the potential effect of the shale gas industry’s environmental impact on my constituents. There are many points in the process at which groundwater contamination could occur, due to fracturing fluids or contaminants being mobilised from migration under the surface. There is also the contamination of land and surface water, and potentially groundwater via the surface route, arising from any kind of spillage. Right hon. and hon. Members who have lived in the vicinity of chemical processing industry plants—we have a number in the north-west—know that such things happen. I used to work alongside someone who had worked for ICI, who constantly told me about the evil soup they would get rid of on one particular day. Such things have happened, and people remember them.
The key point is that there will clearly be impacts on the land and the landscape from the drill rig, the well pads, storage ponds or tanks and access roads. People will experience noise and light pollution during the well drilling, and local traffic will be affected. All those impacts are not uncertain; they are certain.
We also know that seismic impacts are possible, and the hon. Member for Lancaster and Fleetwood has touched on that issue. The western part of Salford was previously mined for coal and has many quarries—unlike the eastern part, which my hon. Friend the Member for Blackley and Broughton (Graham Stringer) represents. I have already had experience in my constituency of part of a street of newly built houses falling backwards—subsidence is a hazard for home owners throughout the area. We have come across a study by geologists at Columbia university, who feel that large earthquakes can trigger, even from a great distance, smaller seismic reactions near waste water injection well pads. People read the studies and take away that fear.
It would be helpful if the Minister could tell me, so that I can pass the information on to my constituents, what research has been conducted into that domino effect. If, as we get into shale gas development in various places—not, I hope, in my constituency—there are further seismic impacts, will areas such as mine be affected?
Dan Byles
The hon. Lady is absolutely right about the report, but it was, as she said, about geological waste water disposal, not about hydraulic fracturing. I believe that geological waste water disposal is already prohibited in this country, under a number of EU regulations. Last year’s Royal Society report considered closely the issue of induced seismicity and declared the risk of it to be very low.
Barbara Keeley
Those are interesting points, but I can assure the hon. Gentleman that if he was at meetings with constituents of mine who have these fears, he would realise that it is very hard to persuade people who are personally affected by living next to a site.
I want to mention the Lancashire Wildlife Trust, because it is a key stakeholder in any proposals for gas exploration and exploitation at the site. The trust has a role in protecting and restoring the precious mosslands resource in Salford, which is adjacent to the site in question. The area of raised peat bog has suffered for decades from peat extraction, but we have just won council approval to refuse a licence for peat extraction—in which the trust played a key role—and people were feeling that things might get back to normal and calm down. The trust gave me the following statement:
“The Wildlife Trust for Lancashire considers that the most significant local issues for biodiversity are the impact of the footprint of the physical development (e.g. buildings, parking areas, waste water storage tanks and well-heads)”
on adjacent wildlife sites on the mosslands,
“and the safe disposal of the waste water. Any proposal for shale gas extraction should go through the full planning process including public consultation, compliance with EU Directives and a full Environmental Impact Assessment.”
I have concerns about planning, which I will come to. The statement continues:
“The Environmental Impact Assessment should disclose all chemicals involved in the process and identify the least damaging disposal route for the waste water.”
I am already getting questions from constituents that I cannot answer about what chemicals are involved in the process, so that is clearly very important to people.
The trust goes on the state that it
“will treat each planning application for energy generation on its own merits and we would expect there to be a net gain in biodiversity in line with current legislation, local planning policies and the National Planning Policy Framework”.
The final point the trust makes, as we have already heard from the hon. Member for Brighton, Pavilion, is that
“the precautionary principle should be adopted until adequate scientific evidence exists as to the environmental impacts.”
Dan Byles
The hon. Lady is being very generous in giving way. I might have misheard her, but I think she said that she could not answer the questions about what chemicals are put into fracking fluid. If she looks on the Environment Agency website, she will see that they are listed in full, as required by the agency’s rules. That is entirely transparent.
Barbara Keeley
I do not know about the particular developer we will have or the particular process that it will undertake. To be perfectly frank, in the current environment I do not know whether I have the resources to get into that anyway, so it would be helpful if the information could be provided.
Barbara Keeley
No, I want to make some progress.
I want to touch further on the potential environmental impacts of shale gas developments. Constituents of mine have brought reports to meetings and have raised their concerns. I have already mentioned the issues they see as being more likely to cause problems for the local environment and for human health, including water contamination and air pollution, and I want to go a little further into the latter.
In certain places in the States—Wyoming and Texas have been mentioned—there have been cases of photochemical smog, which increases susceptibility to asthma. A hospital system in Texas, which serves six counties, has reported asthma rates of three times the national average. In my constituency, we already have significant problems with air pollution, due to the volumes of traffic and traffic congestion on the three motorways. My constituency is surrounded by the M60, the M62, the M602 and the local road network. Recent roadworks near a junction of the M60 caused tailbacks of up to two hours, with traffic nearly at a standstill, and that was in the same area as the drilling site.
The current mortality figure for Salford attributable to air pollution is as high as 6%, which is higher than the average for England of 5.6% and much higher than the figures for other parts of the country, such as Devon and Cornwall. We have evidence from the United States of some hazardous pollutants being prevalent around shale gas wells. In my constituency, the Barton Moss site is close to two local housing estates—the real difference is that the hon. Member for Lancaster and Fleetwood was talking about a rural area, while I am talking about a heavily populated urban one—so any drilling for shale gas would only add to the harmful air pollutants already breathed in by my constituents. Has the Department done any work to examine the outcomes and the potential risk of exploiting shale gas in such urban areas? I do not know whether there is information about that, because there is concern about air quality now that the monitoring duty has been taken away from local authorities.
There is a concern that many of the data currently used to promote shale gas extraction are limited or at best incomplete. Hon. Members have given examples and pointed out certain websites. The Tyndall Centre for Climate Change Research has argued that, although there are increasing volumes of data on the subject—such as lists on websites—many of the data are built on provisional sources and there is a paucity of reliable data. Will the Minister tell us what measures he is taking to develop the information used to underpin Government policy, so that people have certainty? It is important to have certainty about the data on fracking that are being relied on and the potential effect on the environment.
Another concern is that any gains from shale gas will not be as substantial as claimed. A fear that I have heard from my constituents is that gains will go straight to the Treasury and bypass the local community, as we have heard today. It is right to question to what extent shale gas may cut energy bills. Although there has been a boom in the United States, experts say that costs in Europe will be up to 50% higher than in the US because of such factors as the less promising geology and the higher population density. Bloomberg New Energy Finance has said that hopes that shale gas will cut energy prices are “wishful thinking”, and the former Energy and Climate Change Minister, the hon. Member for Wealden (Charles Hendry) has written that
“betting the farm on shale brings serious risks of future price rises.”
Like the hon. Member for Lancaster and Fleetwood, I am concerned about the real bonus, if there is one, to the local community in Barton and Irlam, because they will experience all the disbenefits. It is said that exploiting shale gas will lead to cheaper fuel bills, but we have heard from other sources that it may not.
I return to the planning issue and whether local communities can have a proper say on any decisions about shale gas that affect them. I have to say to the Minister that the changes to the planning and permit process advertised over recent months have served only to make my constituents more anxious. We know that the Growth and Infrastructure Act 2013 will allow developers to bypass local authorities in some cases, which is a real concern in my constituency. The Act creates an opportunity for developers to fast-track major projects instead of going to the local authority, and I have many times been asked, “Is that going to happen to us?” The Act allows developments for large onshore gas extraction over a certain size to be fast-tracked to the Secretary of State, so it would be helpful if the Minister said whether he thinks shale gas extraction will be fast-tracked.
The hon. Member for Brighton, Pavilion has already referred to the fact that on 27 June the Government published their document on infrastructure investment, which stated that they intended this month to publish measures
“to kick start the shale gas industry in the UK.”
The measures were to include guidelines that, as she said, are not currently available. I am concerned about that, so can the Minister shed any light on why they have not been published? Most alarmingly, the 27 June document stated that the Environment Agency would
“significantly reduce the time it takes to obtain environmental permits for exploration.”
A process seems to have been built in for fast-tracking or streamlining permits in a standard period of 13 weeks from August, but in as little as six weeks in some cases. Alarmingly, by February 2014 permits will be issued within one to two weeks, based on standard rules. Will the Minister tell us what we can expect with the new planning and permit regime, so that I can pass that on?
I want to quote some policy lines that relate to the debate. The shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls), has said that
“the green economy and low carbon energy will be central to Labour’s plans in government”,
and that work for Labour
“on industrial strategy will also have energy and environmental policy at its heart. So will…Armitt’s review into the way in which we make our infrastructure decisions. Without a low carbon infrastructure plan and economic strategy, in the modern economy you simply don’t have an economic plan. Our vision is for a race to the top—to secure a world-leading position for British businesses in helping the world meet the low carbon challenge—and in doing so create prosperity and jobs for people in this country.”
The point about jobs has already been raised.
My hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) has set out the questions that need to be answered to ensure that exploration and extraction are properly regulated and monitored, and he may say more about that later. He has quoted President Obama as saying that plentiful shale gas does not make climate change and its associated emissions go away; it makes the need for carbon capture and storage all the more essential and the need to drive renewable technologies more urgent. Legitimate environmental concerns should be addressed and, I would add, consultation with communities should be meaningful. Energy policy needs responsible leadership, and I hope that this debate helps point the way to that and, more importantly, helps to get answers that I can pass on to my constituents.
Mr Peter Bone (in the Chair)
Order. Because of the number of Members who have indicated that they wish to speak, with the authority of the Chairman of Ways and Means, I am imposing with immediate effect a time limit on Back Benchers’ speeches of eight minutes, with added time for two interventions.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
It is a pleasure to be at this debate under your chairmanship, Mr Bone, and I am delighted that you are a chairman of so many things. I congratulate the hon.—and old Malvernian—Member for Brighton, Pavilion (Caroline Lucas) on obtaining the debate. I mention her school since she seems to be obsessed with other people’s schools. It is important to have the opportunity to debate the issues.
The hon. Lady asked Members to draw attention to their interests. I invite everyone to look at my interests, as declared in the Register of Members’ Financial Interests. They will find that I have no interest in fracking or in any oil and gas companies in this country. Over my lifetime, I have been—indeed, I still am—involved in an oil company in central Asia and I was involved in analysing oil companies and predicting energy prices for 20 years, when I had a proper job before coming to this place, so she may try to insinuate that that somehow makes me too well disposed to the oil and gas industry. She may therefore be surprised that, as the hon. Member for Southampton, Test (Dr Whitehead) will confirm, I was the only member of the Energy and Climate Change Committee who criticised, as she does, the suggested special tax breaks for fracking. On the basis of my knowledge of the oil and gas industry, I think that they are probably unnecessary, and we should not give away unnecessary tax breaks; although if they are necessary, that would be fair enough.
I want to draw Members, attention to one interest that is not declared in the Register of Members’ Financial Interests. I probably share this interest with all other Members, although too many ignore it. It is my interest in my 70,000 constituents who want their heating bills kept as low as possible, my interest in the people in this country getting jobs and my interest in reviving the manufacturing industry in this country and providing it with fuel that is as plentiful and cheap as possible.
I have great respect for the hon. Lady and those who, like her, simply want to keep fossil fuels in the ground, although if that was my objective, I would start by keeping coal in the ground rather than gas, which produces only half or less of the carbon dioxide emissions of coal. I do not support such a policy because, probably like her, I take as given the Intergovernmental Panel on Climate Change summary of the science, I also, unlike her, accept its summary of the economics of taking action to prevent global warming. It has concluded that, in relation to the level of CO2 in the atmosphere, it could not identify
“an emissions pathway or stabilisation level where benefits exceed costs.”
Unless and until we can find a pathway or a stabilisation level for CO2 that will produce greater benefits than its costs, we should not set about impoverishing this generation in the vague hope that we may make some generation in the future richer.
Caroline Lucas
I think I said that the driver for increasing fuel bills for most people today is rising prices of gas rather than renewables or anything else. Those interests that the right hon. Gentleman declared at the beginning of his contribution around jobs and keeping fuel bills low are better met through green energy sources than through gas, the prices of which are pushing up bills right now.
Mr Lilley
The current cost of electricity produced from gas or coal is £50 per megawatt-hour. The current cost of producing it from windmills is £100 per megawatt-hour. For offshore windmills, it is £150 per megawatt-hour and for solar it is off the scale. If we think that we will get cheaper, lower energy bills by going to energy sources that are two, three or four times as expensive, we are living in la-la land.
Caroline Lucas
Far from my being in la-la land, the right hon. Gentleman has very effectively not answered my question. I said that if we were to look at a fuel bill to try to ascertain which elements made it high, we would find that it was gas rather than renewables. Yes, renewables have a greater degree of subsidy now, but that is because they are new. They have a rate that will enable them to come to grid parity very soon. Gas, by contrast, is an old technology and hardly needs those kinds of subsidies.
Mr Lilley
Even that is not true. The most recent generation of gas turbines are so much more efficient than the previous ones that the savings from replacing all our gas turbines with the most recent generation would probably be greater than the savings in CO2, emissions from using wind. I will, if I may, make some progress.
Until we find a way of controlling CO2 levels in the atmosphere that will not cost more than the benefits of doing so, we should not impoverish this generation. My respect for the hon. Lady and her colleague, the hon. Member for Worsley and Eccles South (Barbara Keeley), begins to evaporate when they abandon their real belief, which is that we should not burn any fossil fuels, and start to concoct fabricated fears and spurious arguments against fracking. Their first argument is that there will not be much there—that was what they originally said. Now the British Geological Survey says that there is probably an awful lot there, but that we will not know until we have drilled it.
The hon. Lady went on to say that the process will be so costly that it will cost more than the price, in which case no one will extract it, so her fears can evaporate. She clearly does not believe her own argument otherwise she would not even bother to attend this debate because it would not be important. She alleges that it will be more difficult geologically to extract shale in this country than in the United States, and that the geology here is less attractive than there, but that is simply not the case.
When the Select Committee interviewed Cuadrilla and BHP Billiton in the States, we asked them how thick the shale beds were in the States that they typically extracted from. They said 300, 400 or 500 feet thick. How thick is the Bowland shale? It is a mile thick; up to 20 times as thick as in America, which means that from one surface pod, we can get up to 20 times as much fracking as they can in the States—perhaps it is only a dozen times.
Dr Whitehead
The right hon. Gentleman will lose time from me intervening, so I am sorry about that.
Dr Whitehead
Well, it relates to geological faulting, clay, extractability, tightness—
Mr Lilley
Thank you very much. I am grateful to the hon. Gentleman. That was not very helpful to the debate in general.
The second and more plausible argument is that, even if there are large quantities of gas here and we will not know that until we have drilled, it will not succeed in bringing down prices in the UK, because our prices are fundamentally set by marginal suppliers from Europe. That is both plausible and possibly true, but either we will have so much here, and there will be so much elsewhere, that gas prices will come down, or they will not in which case the tax revenues from producing gas in this country will be substantially greater—three times as much per cubic metre extracted as in the States. With those extra tax revenues, we will be able to reduce our other costs on the economy or other tax bills that people face.
Shale is ubiquitous; it is incredibly widespread across the world. For the hon. Lady to suggest that it will be extractable only in the States is really to express the belief that God is an American, that he has created a particularly unique situation in America with shale that is so different from shale elsewhere in the world and with a technology that will only apply there, and that he has maliciously arranged things so that the technology will not apply to the shale in the UK, France, Poland, China or elsewhere in the world. I simply do not believe that that is true. In all probability, we will see a shale gas revolution worldwide that will probably keep gas prices low. It is certainly likely to prevent them going up, and it may even bring them down as it has done in the States.
When pessimism about reserves and prices fails, some people resort to fabricated scares, which are as irresponsible and as unjustified as the MMR scares, which stopped people taking advantage of vaccination. I hope that we will not allow similar scares to stop us taking advantage in this country of the potential resources that exist beneath our soil.
The letter from the people in Balcombe from which the hon. Lady quoted says that fracking is considered to be an uncertain and risky technology. It is far from being uncertain and risky. The first gas well was fracked on 17 March 1949. Since then 2 million wells have been fracked in the United States, and 200,000 in the last year, without anyone being poisoned by contaminated water, or any buildings or people suffering damage from minuscule seismic tremors.
The Royal Society and the Royal Academy of Engineering dismissed fears about water contamination. They concluded that any health, safety and environmental risks associated with hydraulic fracturing can be managed effectively in the UK as long as operational best practices are implemented and enforced.
Dr Alan Whitehead (Southampton, Test) (Lab)
The debate here falls into two categories: a wider category and a narrower category. It is undoubtedly true in terms of the wider category that we will have to leave a lot of the carbon that we otherwise could get out of the ground in the ground over the next few years. Indeed the understanding of the Department of Energy and Climate Change of this process in terms of what will need to be done with regard to gas as a component of wider energy sources in the 2030s reflects that in the way in which gas will need to be used at a much lower level and fairly sparingly in the running of gas-fired power stations. But that is also an issue in terms of what we do with oil, coal and a variety of other mineral sources of energy under our soils.
We are talking specifically about shale gas in the UK, and I want to address the narrow issue of what the consequence would be of our deciding that we really were going to go for a shale gas “bonanza” in this country and try to extract as much shale gas as possible in order to underpin our energy economy. First, there is indeed a large amount of shale gas reserve under the ground in the UK. How much of it is recoverable is another matter. If we recovered what looks to be a possible level of recoverability from the present fairly uncertain estimates of how much shale gas there is, shale gas could perhaps underpin 10% of our overall necessary gas supplies in this country.
[Mr David Amess in the Chair]
For shale gas to do that, we would have to have just over 100,000 shale gas wells. There is a popular misconception that drilling for shale gas is like drilling for offshore North sea gas, but that is not the case, as we have already heard. A large number of small wells would be the order of the day; in themselves, they would not produce a large amount of gas but collectively they would produce quite a large amount of gas. Perhaps there would be about 100,000 to 107,000 wells. Admittedly, they would not be separate wells. Usually, there would be about six or seven wells on one pad, going outwards from the pad, which would create a need for about 18,000 pads. So, if we did a straightforward division between the constituencies of this country, each constituency would have to support 164 wells. Obviously, the wells would not be distributed constituency by constituency, because there would be concentrations in different parts of the country, but I can well understand the concerns expressed by the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) and my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley).
Barbara Keeley
Whatever number of wells my hon. Friend thinks each constituency would have to bear, does he think that there are particular issues in urban areas that already have very high levels of pollution, such as the ones I outlined?
Dr Whitehead
My hon. Friend is absolutely right. Indeed, in the US shale gas drilling takes place right in the centre of a number of towns, such as Fort Worth. There are very considerable concerns about that, precisely on the grounds she refers to, not because shale gas will kill us all but because of particular concerns about how the shale gas is extracted: what happens with the waste water; what happens with the operation of the shale gas facility itself; and indeed the arrangements in the US relating to mineral rights that cause that drilling to take place. That would not be the case in this country, so I would not for a moment suggest that we will get a rash of shale gas wells in the middle of town, because there is an entirely different mineral regime in the UK. Nevertheless, she makes an important point.
How would those 100,000-plus wells be built? Well, as I have mentioned, it would be on the basis of pairs of football ground-sized pads across the country, concentrated in particular areas, perhaps including my own area. Hampshire and Sussex would be one area where there would be a fairly large number of those wells, if that is the sort of ambition we wanted to achieve.
Dan Byles
I am not sure if the hon. Gentleman has seen the report by the Institute of Directors that was published two months ago, which did some modelling of what a UK shale gas industry could look like. The IOD concluded that potentially we could meet up to a third of UK peak gas demand by 2030 from 100 two-hectare sites across the country.
Dr Whitehead
Well, those are entirely different points. At a particular point we could meet a larger supply, but what I am talking about is the overall question of supply over a period of time that would be possible to underwrite as a result of that sort of level of shale gas production—two different points.
The additional point that needs to be borne in mind about shale gas wells is that they do not last very long. Research from the US demonstrates that the average life of a shale gas well is about seven years or so. That is because shale gas wells produce a lot of gas to start with, but they deplete very rapidly. So, after about seven years they are producing negligible amounts, even—as has happened in a number of instances—on the basis of refracking. Refracking of a well produces a little increase, but the well still dries over a fairly short period. Therefore, to maintain that sort of level of production over a longer period, one would need to redrill a number of those wells. That is the sort of scenario that we would set for ourselves if we were to introduce a level of shale gas production that would support the sort of intervention in the gas market that I have mentioned.
My second concern is this: would shale gas production actually reduce prices for everybody, if we went for it to that extent? The clear answer is no. The intervention of the shale gas itself would not reduce prices because of the way that gas is traded on the international markets, particularly in this country. There are three international markets for gas trading. Gas is not particularly transportable, except through vessels such as liquefied natural gas carriers, which make a marginal difference in terms of supply; gas is largely transported by pipelines. Gas is traded on the European market, the far east market and the north American market. The north American market has seen substantial price decreases because of the concentration of shale gas within that one particular market. We would need to have a similar amount of shale gas produced throughout Europe in order for the European traded gas market to come down significantly in price compared with what it is currently, notwithstanding LNG imports coming into the European market overall. So shale gas might make a marginal difference over a period of time, but probably not—for the reasons I have given—unless there were fundamental changes in gas trading.
David Mowat
I am trying to understand the point that the hon. Gentleman has just made. Is it that because there is not enough shale gas in Europe potentially, it will not have enough of an impact on the European gas price vis-à-vis what has happened in the US? Is that the point?
Dr Whitehead
If every country in Europe produced the same amount of shale gas that is being produced in the US, yes, that is possible, in terms of the trading in the European market, but that probably is not going to be the case. Therefore we have to look at the relevant prices of gas within the markets. It is a question of trading in a market, not a question of the gas being plugged into someone’s home and therefore creating a reduction in price there.
Dr Whitehead
I am sorry, but I cannot give way any more; I would lose the rest of my time.
What happens with those large numbers of wells in terms of the fracking process? That process involves the use of between 2 million and 7 million gallons of water, and 5,000 gallons of chemicals, per frack; whether we know what is in the chemicals or not, that is the sort of volume of chemicals needed. As has been said, that water cannot be injected into seams deeper than the fracking itself, as is the case in America, but would have to be disposed of by other means. Also, unless the fracking companies brought the water with them, water would have to be taken from the water table within the area where the fracking was taking place, which has implications for the integrity of the water tables in those particular parts of the country. That is an important but largely forgotten point.
The final thing that I want to say, given the short amount of time I have, is about the policy implications of going for a large amount of fracking. If we went for a large amount of fracking, as I have said we could perhaps supply—over a period—10% of overall UK gas supplies. If we went for a large programme of anaerobic digestion, we could provide 10% of the domestic gas supply. A farm-sized anaerobic digestion plant costs about £2 million to build—
Dr Whitehead
The right hon. Member may well have asked a very valid question. As I was saying, such a plant produces about a third of the gas over a 20-year period that a fracking well would produce over 7.5 years, but anaerobic digestion plants will produce gas continuously because the cows that provide the stuff that produces the gas continue to produce the feedstock, as do we from our own waste and our food. Therefore, anaerobic digestion plants do not deplete. A long-term strategy for gas supply security might concern itself with anaerobic digestion and biogas, rather than going for a gas bonanza. We ought to look at all these factors when looking at the future of gas supply in this country.
Dan Byles (North Warwickshire) (Con)
I can confirm that I have no financial interests outside of this place whatsoever. I sit on the Energy and Climate Change Committee, I chair the all-party group on the environment and I also chair the all-party group on unconventional oil and gas. “Unconventional gas”—that is what we call shale gas, which is a bit of a misnomer, because it really is just gas. It is the same gas that we use to heat 83% of our homes and to generate 30% to 40% of our electricity.
Accessing gas from shale rock is not new. My right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) said that gas has been hydraulically fracked in the US since 1949, but he may not be aware that the first exploratory shale gas well drilled in the UK was in 1875, in Netherfield in the south of England. It was an academic activity at that time, but the first commercial shale gas wells in Europe were drilled in northern Spain in the 1950s. Hydraulic fracturing itself is not a new or an unknown process, as my right hon. Friend has already said.
I want there to be a calm debate about this subject, informed by the evidence. Sadly, there is too much rhetoric around the entire shale gas debate, often—it has to be said—on both sides of the debate. Whenever anybody uses the phrase “shale gas bonanza”, I cringe as well. My view is that the evidence to date shows that shale gas can be accessed safely, if operations are done to a high standard and with effective regulation. That is backed up by a growing library of research from reputable expert organisations, such as the Royal Society, the International Energy Agency, the Royal Academy of Engineering, and others. The weight of evidence so far shows that unconventional gas can be developed safely, with effective regulation.
Ultimately, this is not a debate about whether to use gas. It is important to state that, because sometimes this debate strays into a discussion about the gas strategy. This is a debate about where we get the gas we use from. Under the Department of Energy and Climate Change’s central forecast scenario, we will be using broadly the same amount of gas in 2030 that we do today. The trouble is that both the Institute of Mechanical Engineers and the Institute of Directors estimate that by 2030 we will be importing up to 80% of our gas, at a cost of some £15 billion a year. That gas will come from Norway and Qatar and in future, probably, from Russia. It will include liquefied natural gas that has to be liquefied, transported and re-gasified. I have no confidence that Russian gas is produced and transported to higher, or even the same, environmental standards as gas in the UK.
Graham Stringer
Will the hon. Gentleman accept that not only would that gas be expensive because it is being imported, but the price would be artificially forced up, because under the Government’s scenario it is being kept for back-up supplies and is therefore used inefficiently? Although the hon. Gentleman is right to say that that is the Government’s position, it would be better if gas were used as a main supply for energy.
Dr Whitehead
Does the hon. Gentleman concur—I think that he already is concurring—that the notion of that supply might make a difference to our balance of payments, but because one would purchase those supplies through the European market, and could not do otherwise, the cost would be based on the prevailing price in that market at that time, not on an artificial price for the UK?
Dan Byles
I agree. I do not think that the hon. Gentleman could accuse me of saying that lower prices is the reason why we should do this. In fact, later on I will mention other reasons why this is useful for the UK economy. Actually, lower prices are not the be-all and end-all of why we should develop shale gas, because, of course, we are part of a European gas market.
In terms of importing LNG, the Committee on Climate Change said:
“Our recent assessment of lifecycle emissions showed that well regulated shale gas production within the UK could potentially have lower lifecycle emissions than imported liquefied natural gas.”
The IOD, in a comprehensive report published two months ago, estimated that a domestic UK shale gas industry could, by 2030, halve our import requirement and meet up to a third of peak UK gas demand. The key thing here is that, unlike imported gas, every pound’s worth of domestic gas that we produce generates tax revenue for the Government—for the nation, not the Government; I am not socialist—and jobs. The IOD estimates up to 74,000 direct, indirect and induced jobs across the country.
With lower imports and lower life-cycle emissions than LNG, tax revenues, jobs and inward investment, an argument does not have to be made about the price of gas to argue that developing a UK shale gas industry could bring tangible economic benefits to the country. A few days ago in this Chamber, we debated the need for those tangible economic benefits to be shared directly with the local community, where shale gas is likely to be developed, in the forms of jobs and infrastructure and the community benefit fund, as we discussed. That is right. Communities that host shale gas developments should benefit from what are, in effect, their own natural resources.
It is right—I agree with hon. Members who have said it today—that industry and Government need to do more work to explain to people many of the basic facts and processes of shale gas and hydraulic fracturing. It is true that people get concerned, particularly about uncertainty. I agree, again, with my right hon. Friend the Member for Hitchin and Harpenden, who said that we have heard some scary and inaccurate comments today, from Members of Parliament.
Barbara Keeley
The hon. Gentleman makes a valid point. This issue is developing in my constituency, and the companies are not helping themselves at all, because they constantly minimise everything, saying that there will be no disturbance, no traffic movement and that people will hardly even notice that this is there. I say that this is a large footprint industrial process, but they never use such terms themselves. It is about time we started to level with our communities.
Dan Byles
I agree. If companies are implying that there will be almost no impact whatever, they should look at that. I often make the point that this is an industrial process, although I am making a slightly different point when I say it. I am saying that this is not a scary process; it is simply an industrial process that should be managed like any others. In my experience of looking at new nuclear at Hinkley and at this, most people are often more concerned about the generic construction type blight—about truck movements, and so on—than about the intrinsic nature of a nuclear power station or shale gas.
I want briefly to mention a few points that have already been made. The Royal Society and the Royal Academy of Engineering were commissioned by the Government last year to investigate induced seismicity—earthquakes, for want of a better word—and they were clear in their findings: the intensity of the earthquakes caused or induced by hydraulic fracturing was lower than natural UK background seismic activity.
We heard that the public do not want it. I think the hon. Member for Brighton, Pavilion (Caroline Lucas) said that people do not want shale gas or fracking. Actually, only one organisation that I am aware of—Nottingham university—has been conducting regular background public opinion monitoring. Since 2010, it has monitored background public opinion on shale gas, approximately every quarter, using YouGov, with proper balanced samples. It has found that acceptance of shale gas is slowly rising and fears about it are slowly falling. Its most recent survey, with 2,200 respondents, done in the past month or so, found that levels of recognition are rising—more than 60% of people know what shale gas is when asked—and of those who can identify what it is, nearly 60%, although not quite, say that fracking should be allowed. The evidence is not clear that people are, on the whole, in aggregate, afraid of or concerned about fracking. I think people recognise it for what it is: that it is not particularly scary; that it needs to be managed properly; but that it could benefit the country.
Impact on water resources has been mentioned as well. I am not talking so much about fears about pollution of water, but about access to and quantities of water. Again, the Royal Society and the Royal Academy of Engineering assessed the impact of water use. They concluded:
“estimates indicate that the amount needed to operate a hydraulically fractured shale gas well for a decade may be equivalent to the amount needed to water a golf course for a month; the amount needed to run a 1,000 MW coal-fired power plant for 12 hours; and the amount lost to leaks in United Utilities’ region in north west England every hour”.
The idea that access to quantities of water is an issue is probably another myth that needs to be busted.
Dr Whitehead
Does the hon. Gentleman accept that the use of water would not be on a regular basis over 10 years, but would be intensive during the period of fracking, re-fracking and clearing up?
Dan Byles
The hon. Gentleman is right. It peaks and then trails off, but in that entire 10-year period, including the peak, it is one hour’s worth of lost water from United Utilities. I agree with him.
On the impact on climate change, I find that often people who oppose shale gas increasingly no longer refer to earthquakes and some other issues, because I think a lot of people understand now that that is not an issue. The most common issue being raised with me now is the one that the hon. Member for Brighton, Pavilion mentioned, in respect of bigger picture climate change issues, with people saying that fossil fuels should stay in the ground. There is a discussion to be had in that regard, but I still believe that the elephant in the room for climate change is coal. Some 600 GW of new, unabated coal-fired plants are estimated to be coming online globally by 2030. I am amazed at the effort being put into opposing gas by some people when they should be opposing coal.
I shall end by quoting the Committee on Climate Change, from its report published in May this year. It said:
“The overall picture, therefore, is one in which well regulated production of shale gas could have economic benefits to the UK, in a manner consistent with our emissions targets, while reducing our dependence on imported gas.”
Other hon. Members want to speak, so I will give them an extra 15 seconds.
Mr David Amess (in the Chair)
Members will be pleased that the air conditioning has now been fixed. They will now feel better.
Graham Stringer (Blackley and Broughton) (Lab)
I had not noticed that the air conditioning had changed.
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas), whom I tend to either agree or disagree with 100%. Today I am afraid it is the second of those two positions.
There have been many excellent speeches on both sides, and I will try not to say what I was going to say, because that would mean repeating some of the points that have been made; instead, let me deal with some of the facts and issues that have come up.
One of the last points to be made was about water. While relatively little water is used, it has not been pointed out that there is, in most cases, a mile of rock between where the fracking takes place and the water table, so contamination is very unlikely.
On house prices, I was responsible, as chair of Manchester airport, for building the second runway there. At the bottom of it is a beautiful Cheshire village called Style. When the runway was being built, people claimed that house prices there would go down, but the only time prices were affected was during the campaign against the runway, when there were lots of signs up in the village. As soon as the campaign went away, house prices went up, even though the runway was taking very large planes. The fact is that house prices are related to economic activity, so my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) can reassure her constituents that house prices will not be brought down.
Barbara Keeley
It is important to tell my hon. Friend that I already have evidence that, because of these developments, people are planning to move out of the area, which I would not want to happen, while others have said they will not move into the area. This really is having an impact.
Graham Stringer
That is completely consistent with what I was saying—that the fear of the activity, rather than the activity itself, is the problem.
I want now to move on to the science and to speak as a scientist. I agree with virtually everything the right hon. Member for Hitchin and Harpenden (Mr Lilley) said, apart from when he completely accepted what the Intergovernmental Panel on Climate Change said. We must remember that it involves a political process, which lies on top of a number of scientific papers; its work is not necessarily put together by scientists themselves.
The hon. Member for Brighton, Pavilion could be accused of being unrealistically precise in her comments about what is likely to happen in the climate over the coming years, and I would make two simple points about the science. First, I have talked to most of the leading scientists on climate change in this country and in the United States, and there is no known way of distinguishing natural variations in the climate from impacts caused by carbon dioxide—nobody knows how to do that.
Secondly, the models that have been used to predict the increase in temperatures have all been wrong. In the Met Office, we have the biggest supercomputers in the world, which are great at back-projecting climate, but their projections of climate into the future have all been inaccurate. That is just an indication that there is something unknown about the science, which is not to say that carbon dioxide is not a greenhouse gas, because it clearly is, and it has been known as such for a long time. However, an artificial precision is being introduced into the debate, and it really should not be there. We do not, therefore, often talk about the science.
My next point is about the costs of all the different policies and the price that will result. An interesting report by Liberum Capital indicates the difference between the cost of the Government’s policies on replacing the sources of our energy and the cost of replacing like with like. It finds that there is a difference of more than £200 billion between the two, and that will come out somewhere in the price of gas to our constituents.
The Government’s energy policy is based on taking a long-term position on the price of gas and oil—fossil fuels. Essentially, they are betting the house, the country or hundreds of billions of pounds that the price of fossil fuel will continue to rise. If that happens, and if renewables are put in place, they are likely to win their bet—and it is a bet. They will have to find the capital to fund those renewable energy supplies, but given that prices of publicly quoted shares in the European renewables market have dropped below their level in 2004-05, that looks very unlikely. If the Government lose their bet, our constituents will pay more for their energy than they should.
David Mowat
I agree with the point the hon. Gentleman has just made about renewables and potential increases in the price of fossil fuels. Effectively, the Government’s strategy is to use renewables as a hedge against increased fossil fuel prices. That is not altogether unreasonable, is it?
Graham Stringer
It would not be if it was just a hedge and it was not artificially pushing the cost of gas and other energy supplies up by holding them in reserve. The hon. Gentleman is right: it is a hedge, but it is a very expensive hedge indeed.
There are two reasons for being against fracking, and the debate has been helpful in clarifying some of the facts. One—it is a completely reasonable to make this point on behalf of constituents—is that people worry when they hear that there is to be fracking in their area. It is therefore quite reasonable for them to ask for the good health and safety standards and good environmental standards that apply elsewhere in the country. However, it is not reasonable to push those standards to the point where the fracking does not happen. When the hon. Member for Brighton, Pavilion talks about the precautionary principle, that is really a way of trying to stop everything. She really should read the Science and Technology Committee report from the previous Session on the precautionary principle, which is often quoted, but it is often used to prevent anything from happening.
Let me give an example. One often has to use the best available evidence to do something, and the reason we are not getting protected areas in the sea at the moment is that the Government are looking for more and more scientific evidence when we should be using the scientific evidence available. If the hon. Lady wants to stop fracking by using the precautionary principle, she is likely to do that, but I think we have to look at the scientific evidence we have and apply high environmental standards.
Finally, I want to put the Government’s energy policy, which is not coherent, in the context of what is happening on emissions worldwide. Much of the Government’s policy is based on reducing emissions, in the belief that that will bring down global warming and slow down or stop climate change. However, the policy is failing, and emissions are going up. With emissions, one has to deal with imported goods, which are often created using industrial processes that create more carbon dioxide than processes here do. If we push up the price of energy here, we will export production to China, India and other places and increase the amount of carbon dioxide. That is a deindustrialisation policy, and I hope that, by exploiting shale gas in a safe and environmentally responsible way, we can start reindustrialising this country and creating the 72,000 jobs or more that it has been predicted will come from exploiting shale gas.
David Mowat (Warrington South) (Con)
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on obtaining the debate and on her spirited contribution. Unlike the hon. Member for Blackley and Broughton (Graham Stringer), I can only recall being in debates in which I disagreed more or less 100% with her, but I may have missed some of the other debates.
I want to make a few points about the hon. Lady’s spirited contribution. One of the phrases that I have heard used several times is that we are “betting the farm” by moving ahead with shale gas. I have not heard anyone in the Government or otherwise saying that we should do that. We do not want to bet the farm on it. We want a mixed supply of energy for the future, and gas will rightly be part of that. She mentioned Sam Laidlaw who now runs Centrica and who was previously at Conoco and Amerada Hess. Just to put her mind at rest, he is an ex-Etonian, just as she is from Malvern, but I went to a state school in the midlands, and she can take my speech in that way.
I want to pick up on four points. The hon. Lady talked about fossil fuel subsidy. Apparently tax relief —VAT or other forms of tax relief—would be a subsidy. There is a difference between giving a technology money to make it work—I am not necessarily against doing that for some renewables—and just taxing it a little less, and we need to recognise that. I think that she also said—she must intervene if I am wrong—that fossil fuels were six times more expensive than renewables.
David Mowat
I apologise; it is probably my fault. Just to be clear, the price of solar is something upwards of 45 times the price of electricity produced from gas at the moment.
As for the climate change issues around shale gas, or unconventional gas, I would take hon. Members’ concerns about the impact of climate change more seriously—I am inclined to think that we should address it—if they took a different attitude to nuclear power, the technology that is far and away the most likely, worldwide, to make a difference at scale to carbon emissions.
I want to consider whether shale gas will affect the UK economy. The hon. Member for Southampton, Test (Dr Whitehead) made an interesting speech about the necessary volume of wells. I was not aware of what he said and found his numbers hard to believe, but if they are true, the point is interesting and important. Let us be clear: shale gas is already having a massive influence on the UK economy, because right now one of our major industrial competitors, the US, has energy prices and therefore electricity prices that are a quarter of ours. It has feedstock prices as an input to the global gas industry and the petrochemicals industry that are a quarter of ours. That is already making a difference at the margins. Some industries are already deciding not to invest in the UK and to bring petrochemicals and chemicals back to the US—indeed, out of China, let alone Europe. Shale gas is already having a massive impact on the UK economy, and it is nonsense to pretend that anything we say in this debate, or that the Government do, will make any difference to that.
Graham Stringer
One of the points that has not been made is that there is a slight assumption that shale gas is just methane. It is actually ethane and propane as well, and those can be used as feedstock to our chemical industry, lowering chemical prices and making the industry more competitive.
David Mowat
I thank the hon. Gentleman for that point. He is completely right. Indeed, it would be more accurate for us to talk about unconventional gas than about shale gas, because coal gas is also part of what we are discussing.
Clearly, there is already an impact on the UK economy. I used to do a lot of work on the correlation between energy prices and GDP. They are closely correlated, and particularly so if we are trying to rebalance the economy back towards manufacturing, chemicals, aluminium, steel and chlorine production, and all that goes with that. We cannot do that if we have differentially higher energy prices than our competitors. I refer mainly to the US, although there is increasing concern that the rest of Europe is taking a different path from the UK on carbon taxes, and so on. It is right to let shale gas go ahead and let the market define prices and how things will work.
In the US, the gas price has fallen from $12 per million British thermal units to about $3. The cost of importing liquefied natural gas, if its export is allowed, is about $5. That implies a cap on European gas prices if there were a free market; and the hon. Member for Southampton, Test is right to say that there are three gas markets currently. Such a move would imply a cap of about $8 or $9, which is considerably lower than now, although I accept that for strategic reasons the US Government might not agree to export any gas at all.
My hon. Friend the Member for North Warwickshire (Dan Byles) made an excellent point about climate change. The issue about climate change and gas emissions is how we get coal out of the system. The UK still produces 70% of its energy from coal and oil and something like 3% or 4% from renewables, taking into account transport as well as electricity production. The UK has lower carbon emissions per head and per unit of GDP than nearly every country in Europe, in spite of the fact that we have less in the way of renewables. The reason is that we burn less coal than most countries in Europe. Incredibly, apparently aided and abetted by members of the Green party in Germany, a programme has kicked off there to build 10 or 12 unabated coal-fired power stations.
David Mowat
They will burn, as my hon. Friend says, a dirty coal. It is extraordinary that that is happening right now in the EU, and even more extraordinary that there appear to be members of the Green party in that country’s Government while it is happening—the same Green party that purports to care about carbon emissions and climate change.
Caroline Lucas
Germany is on course to meet its emissions reduction target far more effectively than we are. There is a short-term gap, admittedly, because it got rid of nuclear so fast. No one wants more coal, but it is a short-term thing as Germany gets its renewables even further up to speed. It is massively ahead of us on renewables and will get its emissions down faster than we will.
David Mowat
The hon. Lady makes an important point, if it were true, but the fact is that Germany has 25% higher carbon emissions per unit of GDP than the UK, and the UK is decelerating more quickly than Germany. To pretend anything else is not right.
I have some more time—I thank the hon. Lady for that—so I want to wrap up by talking a little about local considerations. When I first became interested in the subject, I could see that Lancashire—my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) made a good speech on behalf of his constituents today—was heavily affected. However, the maps of shale gas have since come out in more detail, and there is more in Cheshire, around Manchester and Warrington. Of course it is right that the work should not go ahead without adherence to the highest environmental standards and that the Government should not give permits without being satisfied that fracking will not considerably increase the earthquake cost and all that goes with it. There should be no compromise on that.
In an intervention, I mentioned the fact that Aberdeen contains three constituencies with the lowest unemployment in the country. That is not a coincidence; it is because the sort of economic activity that we are talking about brings jobs. I want to say on behalf of the people of Warrington that we welcome IGas and Cuadrilla. If they wonder where they should have their UK headquarters and if they pick up the text of this debate, I say to Mr Egan and Mr Austin from those companies, we are open for business in Warrington. We would like them to have their UK head offices in our town. It is only an hour and 40 minutes from London. They are very welcome, and we should go ahead as fast as possible.
Kerry McCarthy (Bristol East) (Lab)
As always, it is a pleasure to serve under your chairmanship, Mr Amess. I want to focus on the area in Somerset that borders my constituency. I note that the hon. Member for Wells (Tessa Munt) intends to speak next, so I hope that I do not steal too much of her material.
So far, four petroleum exploration and development licences have been granted in an area extending from Keynsham, just south of Bristol, down to Pilton and Evercreech—east of Glastonbury—and covering towns such as Marksbury, just south-west of Bath. The area is significantly covered by green belt and includes the Mendip hills—an area of outstanding natural beauty—and there are water catchments for several areas, including Bristol. Bath’s hot springs, which are of course a world heritage site, could be affected. The unique combination of features in the region is said to result from the
“specific geological circumstances of the Mendip Carboniferous strata.”
I understand that UK Methane, which has been granted three of the licences in partnership with Eden Energy, has confirmed that it has been working on plans in the Ston Easton area and around Compton Martin, both within the Chew valley, for its next test drilling sites. UK Methane intends to apply for permission for full production at a site beside the Hicks Gate roundabout on the Bristol ring road in Keynsham towards the end of 2013. Again, that is very close to the border of my constituency. I should say that the areas have been identified for coal bed methane extraction, rather than for fracking, although coal bed methane extraction commonly comes under the same heading and the process can involve fracking.
I thank Louise from Frack Free Somerset for her time this week in setting out the organisation’s concerns. The umbrella organisation brings together many groups, from families to farmers and from the Mendip Campaign to Protect Rural England to Bristol Rising Tide. Residents are particularly concerned about the impact of possible soil, water and air pollution on tourism and agriculture, and there are also concerns about light and noise pollution, especially as some wells could be flaring off gas 24/7. There will be noise from rigs operating 24 hours a day and roads will become blocked with lorries carrying chemicals and waste.
Another key concern is the potential for water contamination, which could also affect people living outside the licence area. The reservoir water supply in the Chew valley needs to be protected, and the impact on the hot springs that supply Bath’s spa water is still unknown. The British Geological Survey’s report to Bath and North East Somerset council concluded that hydraulic fracturing within the carboniferous rocks would
“pose an undefinable risk to the springs.”
The written ministerial statement issued by the Secretary of State for Energy and Climate Change on 13 December 2012 acknowledged instances of water contamination outlined in reports by US regulators and review bodies, which he said confirmed
“the need for the industry to consistently apply good practice, and the need for proper scrutiny and oversight of the industry to ensure that this is in fact done.”—[Official Report, 13 December 2012; Vol. 555, c. 47WS.]
The Environment Agency is of course responsible for providing that scrutiny, but there is real concern that it does not have the staff to monitor wells effectively.
Residents in the area who are opposed to the plans are particularly concerned by evidence emerging from coal bed extraction in south-west Queensland, from gas leaking into local rivers to perceived heath problems such as nosebleeds and skin rashes. The Health Protection Agency does not appear to have published its review of the public health impact of shale gas. I hope that the Minister agrees that potential health risks should be assessed before exploration is allowed to go ahead.
Bristol Greenpeace has raised with me its concern about UK Methane, which was described by a local resident, Laura Corfield, in a recent article in The Guardian by John Harris as
“a company of two guys in a broom cupboard”.
It is difficult to confirm UK Methane’s financial position, but John Harris tracked down its head office to an industrial estate in Bridgend with no listed telephone number. I understand that DECC has set out criteria that need to be met for a company to become a licensee, including a level of financial capacity to show that it is able to meet the actual costs that may be reasonably expected to arise.
How does awarding three licences to UK Methane square with DECC’s guidance? Is it presumed that UK Methane will ultimately be trading its licences to a larger company in the same way as with Eden Energy, with which it was partnered and that has now sold its stake to Shale Energy, a UK firm, for a large amount? That does not appear to be consistent with DECC’s view that licences are not regarded as
“mere tradable assets, and we expect companies to buy licence interests with a view to exploiting them—not merely to sell them on.”
There are specific issues with the area’s geology, including the prevalence of coal mine shafts in Bristol and Somerset, which makes the land more unstable and potentially more prone to both subsidence and tremors. A recent technical report by independent geologists Integrale Ltd concludes:
“Unlike much of North America and Australia where ‘simpler’ rock strata occur, the Carboniferous Coal Measures of the Bristol-Bath Basin form the most tectonically complex area of the UK, ie the rocks are highly fractured, folded, contorted and faulted... So gasfield exploration and exploitation in this district will be commercially and technically ‘high risk’”.
There is a point about whether companies need public liability insurance, given the risks. I understand that, apart from employers’ liability insurance, there is no statutory requirement for insurance.
The hon. Member for South Thanet (Laura Sandys), who is Parliamentary Private Secretary to the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), said that planning applications for shale gas
“make onshore wind farms look like a walk in the park.”—[Official Report, 6 September 2012; Vol. 549, c. 146WH.]
She was referring to the public opposition that is likely to be encountered.
Mr Lilley
Does the hon. Lady ever feel that she has a duty to her constituents not merely to pander to every anti-development pressure group and to give credence to every scare story, but to give some balanced account of what, for example, the royal societies, the Royal Academy of Engineering and the British Geological Survey have said? Two million such wells have been drilled in the States without untoward effect.
Kerry McCarthy
Perhaps the right hon. Gentleman should speak to his Conservative colleagues who control Bath and North East Somerset council, which recently voted unanimously on a motion objecting to unconventional gas exploration and extraction in Somerset.
There is a concern that the Government’s scheme to provide financial benefits to local communities does not seem to cover coal bed methane extraction unless fracking is used. If he is actually listening to me at the moment, will the Minister confirm that that is the case? Will he ensure that the planning application process provides meaningful opportunities for affected communities to express their concerns? As shown by all the concerns that I have outlined, there is a great deal of uncertainty and unhappiness in the area.
Barbara Keeley
My hon. Friend is making an excellent representation of her constituents’ concerns, and she is the third Member to do something similar in this debate. It is rather remiss of the Minister and Government Members to spend their time chuntering and shouting, as they did to me. It does not bode well for such debates when that goes on when we are doing our job representing our constituents.
Kerry McCarthy
I entirely agree with my hon. Friend. The patronising responses from some Government Members, with their references to living in la-la land, are unseemly.
My final point is on the Government’s link to shale gas companies. Last year, The Observer found that two key executives of the energy trading giant Vitol—its chief executive officer, Ian Taylor, gave more than £500,000 to the Tories and was a guest at one of the Prime Minister’s cosy kitchen suppers—are personal shareholders in a company bringing fracking and CBM to the UK.
Just this weekend, an article by Mark Leftly in The Independent on Sunday detailed a host of senior Government advisers who have financial interests or close ties to fracking companies, from Lord Browne—the chairman of Cuadrilla, who is also lead non-executive across the Government—to Sam Laidlaw, the lead non-executive at the Department for Transport, who is also chief executive of Centrica, which has just bought a one-quarter stake in Cuadrilla’s licence in Lancashire.
Of course there is the conflict of interest between Lynton Crosby’s lobbying firm—which represents the Australian Petroleum Production and Exploration Association, which has been aggressively campaigning for shale gas—and the advice that he gives to the Tory party as its election strategist. When I raised the influence of the shale gas lobby with the Government in January, the Minister failed to respond. I hope that he will do better in answering my concerns today.
Tessa Munt (Wells) (LD)
Thank you for your generosity in allowing me to contribute to this debate, Mr Amess. I apologise for having to be absent for a short while.
I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) first for bringing this debate to the House and secondly for setting out some of the points that I was going to make myself.
As the Member for Wells in Somerset, my constituency includes the Mendip hills, the southern fringes of the Chew valley and the very edge of the Bristol and Bath basin. It adjoins north-east Somerset and Bath. Both Bath and Wells are naturally completely intertwined with water—the clue is in the name, really. I, too, am delighted to hear of Bath and North East Somerset council’s recent unanimous, cross-party resolution formally to register with the Department of Energy and Climate Change its serious concerns about the potential impact of unconventional gas exploration and extraction in that critical area.
The source of the thermal waters feeding the Bath hot springs in the world heritage site is widely believed by experts to be in the Mendip hills. The hills also feed the city of Wells and the well known Somerset levels, with their several sites of special scientific interest and network of rhynes, most of which were dug under the aegis of the abbot of Glastonbury to ensure that there was water throughout the area. That beautiful and large environmentally sensitive area, with regionally important water supplies, is one of the most complex geological districts of the UK, and the state of geological knowledge of the lower coal measures rocks and the carboniferous shales is extremely limited. We simply do not understand the mechanisms by which those vulnerable hot springs are controlled.
The estimated economic value of the hot springs for tourism and employment is close to £100 million annually and, in my opinion, this is not an area in which any dash for gas can be allowed. The global embarrassment of damaging the world heritage site does not bear consideration. More concerning would be the unknown health and environmental effects of a pollution incident. The earthquakes in Lancashire triggered by lubrication of undetected and apparently still untraceable geological faults are an example of why it is crudely short-sighted to encourage a “drill and see what happens” approach for short-term commercial or revenue gain. Whatever the unconventional gas industry worldwide says, with the present level of technical understanding it is unable to rule out long-term disastrous impacts. Widely reported pollution incidents in the US and Australia seem to reinforce that.
I have no interests to declare, other than those of my constituents, their children and their grandchildren, in particular those who live in Compton Martin, Ston Easton, Glastonbury and Wells, but also the many residents of the villages and towns in the area where I have attended meetings and heard their concerns expressed. I am deeply concerned that any hasty legislative or regulatory streamlining that fast-tracks exploration will inevitably set us up for future environmental and geological failures. The precautionary principle must take precedence.
Nick Herbert (Arundel and South Downs) (Con)
I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing the debate.
I first want to dismiss the poor arguments produced this afternoon and previously on the merits of shale gas extraction: we should not have the slightest interest in where executives of oil and gas companies went to school; the possibility of a company making a profit in a market economy is not a serious argument or a reason to dismiss its proposals; and nor is it of any interest or significance that a businessman might at some point have met a Minister to discuss shale gas—heaven forfend! In the end, the Government have to make a judgment on the basis of the national interest, and that judgment must be approved by the House of Commons. We therefore have to consider the arguments sensibly and seriously, not merely chucking mud or rocks in the belief that that will somehow strengthen the argument. In actual fact, it will not; it will undermine it.
Secondly, I want to talk about my interests, as my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) did. I have a constituency interest, because the Sussex Weald basin, which covers a large part of my constituency, has been identified as an area that might contain significant reserves of exploitable shale gas. At the moment, we do not know the extent of any possible drilling or how exploitable any reserves might be. Test drilling is about to begin, subject to planning permissions being obtained.
I want to engage in the argument about what the national interest is. It cannot solely consist of the contention that shale gas might lead to cheaper energy and economic benefit, powerful though that argument might be—in any case, we have heard that it is debatable. There are of course other arguments about whether the form of energy generated is sustainable or the kind of clean energy that we should be investing in for the long term. For now, I set aside that important economic argument.
There are other national interests, one of which is our landscape. To pick up on a point made by my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw), some of the areas in which the drilling would have to take place in Sussex are in the national park. National parks are areas with the highest landscape designation, and they are designated as such precisely because the landscape is treated like no other, so there should be a strong presumption against any kind of economic activity that may damage them. That does not mean that no activity can ever take place in a national park, or even that that should be the case, but it does mean that we have to make judgments carefully, recognising the national interest in protecting such areas, not only the local interest or vested local interest. That has to be considered. We must be able to balance the national interest properly.
What has struck me about the debate this afternoon is that we do not yet really know what the effect in each of our constituencies will be. The hon. Member for Southampton, Test (Dr Whitehead) suggested that there might be about 164 wells per constituency. I do not know whether that figure is right or wrong, but I do know that my constituents are completely bemused by the possible impact on their areas and the landscape in an entirely rural setting, which is tranquil and quiet and where the countryside is especially valued. Further concerns involve the supply of water in a stressed area and the impact on groundwater. It must be right that should any activity take place, it is conducted according to the highest environmental standards.
The kernel of my argument, however, is the importance of a system that properly balances the arguments both nationally, so that we take a careful view of the national interest and where we should do anything, and locally, so that we preserve the integrity of the local planning system. We must be able to judge locally where activity might be particularly damaging to the local area because of a high landscape designation or the impact on the local environment. The process should be gone through transparently, so that communities have a sense that their concerns are being properly weighed and balanced.
Caroline Lucas
I very much agree about the planning system. Does the right hon. Gentleman therefore share my disappointment that the guidelines we were promised from the Department for Communities and Local Government before the recess have not been forthcoming? Does he also share my disappointment that, when they finally arrive in the weeks or months to come, they will not be open to consultation, but simply there as a given?
Nick Herbert
My interest is in what the guidelines say; I will not criticise the Government for not bringing the guidelines forward. I am making a plea for the guidelines to ensure that we maintain the integrity of the local planning process.
I strongly agree with my hon. Friend the Member for North Warwickshire (Dan Byles) about the need for an evidence-led debate and a good supply of information. That is exactly what my constituents want. They are unclear about the impact of any proposals. We do not know whether the shale gas is exploitable, or what the impact of drilling would be—the footprint of the drills might be minimised, or there might not be as many as suggested, because the gas is not exploitable—and that unknown is fomenting a great deal of fear. The provision of sensible information and having a sensible debate are therefore incredibly important.
Barbara Keeley
The right hon. Gentleman is making some good points about uncertainty, which I can echo from my constituency. Is he slightly disturbed or alarmed, as I am, to hear that the Environment Agency aims to cut its process down to six weeks by September and to between one and two weeks by early next year, and to base that process on rules? I am concerned that each site should be considered on its own merits. We should not have a rulebook approach or deal with things using a method based on “Let’s get this out in one to two weeks.”
Nick Herbert
I am not sure that I accept the hon. Lady’s point. Timely provision of a view by the Environment Agency should be welcomed by constituents. Of course, we do not want to allow a situation in which decisions are in effect being bulldozed through—I accept that—and the independence of the Environment Agency and its ability to weigh such issues properly are important. However, timely provision of information without any obfuscation or delay by the Environment Agency, as can happen in a lot of areas where development proposals are concerned, would be welcome.
I am not here to say that shale gas development must be a bad thing and that we should not pursue the drive to exploit shale. I seek a careful debate in which we ensure a balance of interests and a recognition that the national interest does not consist only in economic advantage, however powerful that argument might be. It also consists in ensuring that we can protect national assets, including the countryside and our landscape. We must ensure that we balance that interest in our national consideration as we design the guidelines and so on, and that locally elected councillors can do so and take specific local concerns into account. We should not drive towards this potential new energy source regardless; we should attempt to engage with people and ensure democratic support for what is proposed.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
It is a pleasure to serve under your chairmanship again, Mr Amess. I congratulate the Backbench Business Committee on allowing this debate to take place. This is the second debate on shale gas that we have had in this Chamber in the last couple of days; some Members here took part in that debate, and some did not.
I am pleased that the hon. Member for Brighton, Pavilion (Caroline Lucas) had the opportunity to read the Hansard report of Tuesday’s debate. I do not intend to repeat much of my contribution that day, partly because I am conscious that during this debate, Members have raised questions to which they seek responses from the Minister, and I want to ensure the maximum possible time for those answers that he has available to be forthcoming to those Members, who have expressed important points.
It is a pleasure to follow the right hon. Member for Arundel and South Downs (Nick Herbert). Towards the end of his contribution, he made a crucial and important point about the balance in this debate between different issues that must be properly addressed. I have no financial or registrable interests in anything to do with any aspect of the energy industry, but I have an interest in ensuring that we have a balanced, rational, evidence-based debate and that conclusions are drawn and decisions made on the best evidence available.
The hon. Member for Brighton, Pavilion chided me for saying in the debate on Tuesday that some people had an absolutist position. It is not an insult; it is a statement of fact. She has an absolutist position against the extraction of unconventional gas. That is an entirely legitimate position for her to hold; it is a position held by some and diametrically opposed to the position held by others. It was not intended as a slight. My point in saying it was that some people will never be in favour. That is perfectly legitimate. I was interested during the debate on Tuesday, and I am interested during this debate, to consider properly all the factors involved and ensure that all the environmental concerns expressed by numerous Members with constituency interests—including my hon. Friends the Members for Worsley and Eccles South (Barbara Keeley) and for Bristol East (Kerry McCarthy), the hon. Member for Wells (Tessa Munt), the right hon. Member for Arundel and South Downs (Nick Herbert) and my hon. Friend the Member for Blackley and Broughton (Graham Stringer)—are properly addressed.
Caroline Lucas
The hon. Gentleman implied that it was ideological or absolutist to say that I cannot see what scientific evidence is out there that would persuade me that the extraction of shale gas is compatible with staying below 2ºC. That is an evidence-based position, and to say that it is ideological or absolutist undermines that. That is the point that I was making in my criticism.
Tom Greatrex
The hon. Lady makes my point for me. That is an absolutist position, and she has defined in her terms why it is absolutist. In relation to the evidence, I point her to the report by the Committee on Climate Change. Sometimes, when we get into debate on the issue of unconventional gas, we consider that it is only about electricity generation. She will be aware, as other hon. Members are, that we use a considerable amount of gas in this country for heating as well, and we will continue to do so well into the future. I have been on a platform with her in the past when she has made the point about the need for gas as peaking capacity as well. I do not think that she is suggesting that we will not need gas.
The consideration, then, is whether it can be done safely, whether the regulation can be right and whether it can be monitored properly. That is why, in March 2012—I will not read it into the record again, as I did so on Tuesday—I set a number of conditions that I believe need to be met in terms of regulation. However, the monitoring must also be in place, and it must be as comprehensive as the regulation is robust. That is where I have continuing concerns, particularly relating to the resources of the Environment Agency and the Scottish Environment Protection Agency and their ability to do that.
It is right that people should be concerned about some aspects of self-certification, particularly in the early stages. I take Government Members’ point that the technology is not new, but it is a new application of the technology in the UK context. For that reason, a higher public acceptability test must be met. If it is not met, planning applications will not be successful and shale gas development will not happen. There is an interest in ensuring that it is done properly, which is why I continue to have concerns about the level of monitoring.
Tom Greatrex
I will give way one more time, but then I hope to conclude my remarks.
Caroline Lucas
The hon. Gentleman is kind to give way. I am only intervening again because he is quoting what he says I did or did not say. On the issue of whether we need gas, yes, we need a small amount of gas as a transition fuel to get us to the renewable future that we need, but the question is what to do over the next 10 years. Do we lock ourselves into or put in place the infrastructure for a whole new gas business here in Britain, or do we use the 10 years that it would take to get shale gas going in Britain to invest properly in renewables? There is an opportunity cost and a decision to be made. I would rather we invested in renewables.
Tom Greatrex
I would like us to invest in renewables, because I think that it is important, but I take a slightly different view of the prognosis for how long we will require gas both for heating and for electricity generation. In relation to our indigenous gas supply from the North sea, the hon. Lady will know as well as I do that the extent to which we rely on imports has changed massively in the past 10 years. The trajectory is going one way. If it is possible to extract shale gas safely, and if it is properly regulated and monitored, we may have the benefit of being able to replace some of what we import with indigenous supply. We should not close our minds to that or seek to block it.
I would like to make a slightly different point to the other extreme. I have been listening to the right hon. Member for Hitchin and Harpenden (Mr Lilley) responding to other speeches from a sedentary position. He has said a number of times to Members with constituency interests in the issue that it is about showing leadership. With all due respect, leadership is not about hysterical hectoring; it is about ensuring that the approach is evidence-based and that all the arguments can be properly, systematically and fundamentally dealt with, so that people can see exactly what the level of risk is.
Tom Greatrex
I see that the right hon. Gentleman agrees with me, so I do not want to chance my arm too much, but it does not help when he shouts across the Chamber to people that they should be showing leadership. They are entirely right to address and represent their constituents’ concerns in this debate, as we are in the early stages of potentially developing a new aspect of our energy supply.
I have a couple of final points to make. It is often considered whether shale is the answer to all our energy problems. This speaks to the point made by the hon. Member for North Warwickshire (Dan Byles) about the tenor of the debate sometimes. I do not think that that is a realistic suggestion. Sometimes, the language around the issue does not help. Suggestions that shale will yield cheap gas, or that an extrapolation of the US experience will apply in precisely the same way in the UK, do not stand up to much scrutiny. My hon. Friend the Member for Southampton, Test (Dr Whitehead) made a point about how gas is traded, which is one aspect, but there are a number of different factors that make it highly unlikely that the impact on costs here would be the same as in the US.
The Prime Minister talks, as he did yesterday, about making it easier for shale to be extracted. That is not particularly helpful or useful either. It should not be about making it easier; it should be about ensuring that it is done sensitively and appropriately. Members have mentioned the precautionary principle. I suppose that I would use the term “proportionate”. It needs to be proportionate. That is important. If it is not proportionate, it will not happen, and then the potential benefits may not be realised. It needs to be done proportionately and properly. We have had a couple of debates this week and I am sure there will be plenty more during the next few months. Some specific points have been raised with the Minister, and I hope that he will respond to them in those terms. If he does not, he may be in danger of stopping something rather than encouraging it.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I, too, thank the hon. Member for Brighton, Pavilion (Caroline Lucas) for starting this debate, and all those who have contributed to it. For those of us who were here on Tuesday, this has been a slightly livelier debate, but none the worse for that. I will try to set some context, say more about the way in which the industry is being regulated, deal with some of the myths, and then turn to some of the specific questions and worries that have been expressed. I hope that colleagues will bear with me.
I start by saying that oil and gas are vital for our economy. About three quarters of our current energy demand is met by oil and gas. Even as we move to lower-carbon sources, which we all want to do, 70% of the primary energy we consume here will come from oil and gas by 2020. They are a vital part of our economy and will remain so for some decades to come, even as we move to a low-carbon economy.
Before I deal with some of the specific questions, let me debunk some of the myths about shale gas: that it is a recent technology, that it is new technology, and that accelerating its exploration involves increasing the risks. Let me take those three myths in turn. The first is that onshore oil and gas production began recently. In fact, we have been exploiting oil and gas onshore for nearly 100 years.
The first production well was drilled onshore in 1919 at Hardstoft in Derbyshire. Since then more than 2,100 conventional wells have been drilled, and onshore production continues to take place throughout our country from the south of England up to Scotland. Just last week, I visited IGas operations in the South Downs national park in Sussex, which is a very good example of how oil and gas operations can work even in the most sensitive environments. We have nearly a century of experience of oil and gas production with no history of chemical spills or gas leaks comparable with the experience in the United States. During that century, we have put in place robust regulation to ensure that oil and gas operations are safe for people and the environment. Given that century of onshore exploration and the expertise and robust supply chains that exist as a result of extraction in the North sea, we are very well placed as a country to make the right decisions about shale.
The second myth is that fracking is new. It is not. As my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) said, some 2.5 million hydraulic fracturing operations have been performed at oil and gas wells worldwide. It is thought that as of 2010 around 60% of all new oil and gas wells are hydraulically fractured. Some 27,000 wells were drilled in the United States in 2011 and most of them were fracked. Even here, that has been happening in some form for the past 60 years. We have already had some 200 wells fracked in this country. With all that activity, there is still no confirmed evidence of contamination of aquifers caused by fracking.
Michael Fallon
If the hon. Lady will excuse me, I will not give way.
The United States has felt the great difference that shale gas can make. It has reinvigorated the economy, gas prices have halved, reducing costs for industry and consumers, and billions of dollars of new investment and thousands of jobs have been created. Nations across the globe, including India and China, are looking in on that boom and joining in. We must start to think seriously about shale. We must get on and explore the resources that are there and understand the potential, to see whether shale gas can be extracted here as economically and as technically efficiently as it has been in the United States.
The third myth I must deal with is that we are somehow accelerating shale gas and that that means increasing the risk. Conditions vary from country to country, of course, and it is already clear that the shape and development of the industry here will be significantly different from that in the United States. We have the advantage of learning from experience in the United States, but we are, as the hon. Member for Worsley and Eccles South (Barbara Keeley) said, a much more densely populated country, which has implications for where and how we can drill. The geology of our shale, as has been said, is much thicker in some areas, but we are committed to ensuring that the industry can prosper here if the conditions are right.
Michael Fallon
I will come to some of the hon. Lady’s concerns a little later.
First, we announced last December that fracking could resume with robust regulation, and I emphasise that nothing now prevents a licensee from bringing forward new drilling plans. Secondly, we provided the industry with much fuller geological data on the gas resource in the Bowland-Hodder basin, thanks to the work of the British Geological Survey, and our knowledge of shale resources will be further enhanced when we publish estimates for the Weald basin in the south of England by March next year. Thirdly, we have been very active in creating the right framework to accelerate shale gas exploration in a responsible way. Let me be clear. Accelerating shale gas exploration does not mean that communities will be put at risk.
We have a long history of successful onshore oil and gas production. Getting it right will benefit the industry where it matters in the long term, and across Government we are creating a coherent and concerted approach to shale. We have created the Office of Unconventional Gas and Oil to co-ordinate the activities of the regulatory bodies and Departments. We have a world-class safety and environmental regime with a joint approach to inspecting new exploratory operations, and for new and first-time operators, their key operations will be inspected, including the cementing and the main hydraulic fracture.
We are providing tax incentives to create a fertile ground for shale to prosper. We will consult shortly on a new pad allowance to help to unlock investment and to provide significant support to the industry, particularly during the critical exploration phase. I have already announced that next year we will launch a new round of onshore licensing, in which we expect a great deal of interest.
I turn to the planning and regulatory system, which will have a high degree of local scrutiny and prior consultation, which we are setting out in guidance that we will publish very soon. That guidance will not cover every issue when considering proposals for shale gas. It must be read alongside other planning guidance and the national planning policy framework, but it will carry weight in the system. The Government have heard loud and clear what the industry and others in the community have said about the importance of clarifying that the main focus of planning should be on the surface issues—traffic, noise, visual impact and so on.
Responsibility for regulating activities beneath the surface rests largely with the other key regulators. For example, seismic activity is regulated by my Department under our licensing arrangements; potential pollution of ground water falls to the Environment Agency; and design and integrity of the wells rests with the Health and Safety Executive. It will, of course, be critical for planning authorities to be content at the planning decision-making stage that the issues that fall to the other regulators will be adequately regulated.
The Environment Agency and the Health and Safety Executive have already agreed to work closely together and have developed a joint approach to inspecting new exploratory shale gas operations under a memorandum of understanding. That means they have agreed a joint programme of inspection for the next series of hydraulic fracturing operations in England and Wales. For new and first-time shale operators, they will meet and advise them of their legal duties, and conduct a joint inspection of key operations, including the cementing and verification of cementing, and the main hydraulic fracture. In addition, my Department will check that the Environment Agency or its Scottish equivalent, the Scottish Environment Protection Agency, and the HSE have no objections before consenting to drilling operations.
If hydraulic fracturing for shale gas is intended, we will also require measures to address the risk of induced seismicity—namely, prior analysis of geological risks—and the submission of a detailed fracturing plan, including a traffic light control protocol, before my Department gives any consent for fracking operations.
It remains our strong view that there should be early and constant engagement by the operators with local communities and the key regulators before any planning application is submitted. I therefore welcome the industry’s commitment, in the community engagement charter, to engage earlier with local communities and to be transparent in their activities. However, close engagement with the regulators by such firms is also beneficial, helping to identify issues to be addressed as part of the planning application and other approvals at an early stage. That is the right approach to create a sound basis for a shale industry that can provide more energy security, jobs and investment.
The industry has said that we can expect about 20 to 40 exploration wells to be drilled here in the next couple of years, but I am clear—this point was also made by the shadow Minister, the hon. Member for Rutherglen and Hamilton West (Tom Greatrex)—that success will come only if development is done in true partnership with communities. That means a responsibility to the communities that host shale operations, and there are two vital areas in achieving that: first, it is about engaging communities right at the start of every shale application, and secondly, it is about ensuring that where shale operations are hosted, local people feel that they are getting their fair share of benefit from the development of shale. The community charter that has just been adopted will now be consulted on in the autumn, and its proposals, I hope, will be developed further.
I now want to try to answer some of the questions that were put to me. The hon. Member for Worsley and Eccles South asked me about the impacts on adjacent wildlife sites, which are important issues to be addressed in the planning system. Where an environmental impact assessment is required, such issues will have to be addressed in the report. They will have to be consulted on and considered again by the planning authority on the basis of that report, before any decisions are made. If any SSSI or other European protected site might be affected, a habitats assessment must be made, and that, too, must be similarly considered by the planning authority before any decision is made on planning permission.
The hon. Lady also asked whether the Growth and Infrastructure Act could allow shale and gas projects somehow to bypass local authorities’ planning permission. The Act allows for certain business and commercial projects, defined by regulation, to go directly to the national regime for obtaining planning permission. The Department for Communities and Local Government has consulted on the possible inclusion of oil and gas projects in that process, but in light of the responses to that consultation, I can tell her that that option is not being pursued for the moment. We want those planning decisions to remain with the minerals planning authority in the normal way.
The hon. Lady also asked about the Columbia university study on the domino effect, where distant quakes in one place can trigger quakes at other water disposal sites. It is important to point out, as my hon. Friend the Member for North Warwickshire (Dan Byles) did, that the research relates to waste water disposal wells involving volumes of water much greater than those used in fracking. The injection of very large volumes of water can trigger quakes in the ground. That is not news; it has been understood for some time. However, as he also pointed out, that particular technique of disposing of waste water is not used at the moment in the United Kingdom, and it is very unlikely that it would be approved if it were proposed.
Barbara Keeley
Will the Minister give way? There is a point that he has not moved on to, and I think there is time.
Barbara Keeley
The potential site I mentioned is in a heavily populated urban area, and I spoke about pollution. There is a concern that the air quality is already poor enough and that pollution is exceeding what it should be, but there will no longer be a duty on local councils to monitor that. How can we go forward given that we already have very poor air quality and nobody will be monitoring it?
Michael Fallon
I must apologise to the hon. Lady. A large number of points have been made during this three-hour debate and I was not, I am afraid, going to attempt to answer each of them today. I will pick them up and, if I may, write to colleagues whose points I have not had time to consider.
The hon. Lady asked about pollution. During construction and drilling of the well, the operator will monitor emissions at the site, and that will have to be a permanent feature of operations should the activity proceed to commercial development. The Environment Agency has also recently published research to understand how emissions from a well can affect air quality, how they can be monitored and what controls are available. If I can give her any further information on that, I certainly will.
My hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) had concerns about borehole users and whether there would be a reduction in their supplies. It is likely that most operations will use public water supplies so far as practicable, because that is the most likely way to reduce truck movements to and from sites. However, where operators want to extract water directly from aquifers, again, they will need a permit from the Environment Agency that will not be given if the quantities that they require are not sustainable.
The hon. Member for Brighton, Pavilion made a very large number of points, and I am afraid that I may have to reply to her in writing about some of them. She specifically asked me about the disclosure of the use of chemicals. The answer to her question is yes, the Environment Agency will require disclosure of all substances proposed for injection into groundwater that might affect the water, and it will only approve the use of those chemicals if they are assessed as harmless in that context.
Tom Greatrex
The Minister will be aware that the Environment Agency requirement is for self-certification of what those chemicals are. Will he say any more about ensuring, particularly in any early exploration, that the Environment Agency, or the Scottish Environment Protection Agency is on site when the chemicals are injected, so that it can be absolutely sure about what is going into the process?
Michael Fallon
It is certainly the responsibility of the operator to disclose that; but obviously, it is for the Environment Agency or SEPA to ensure that what is disclosed is accurate. If the hon. Gentleman will allow me to write to him on that point to ensure that there is a procedure whereby that information is verified, I would be happy to do so.
Tessa Munt
I hope that the Minister will forgive me a brief intervention. In my experience, the Environment Agency always gives at least a week’s notice, sometimes more, of a visit to inspect when it is looking at procedures. I wonder whether the Minister, while he is writing about the subject, might consider ensuring that spot checks and investigations take place without a period of notice given to the body that is doing the drilling.
Michael Fallon
I will certainly consider that suggestion, and if I may, I will write to my hon. Friend about it.
The hon. Member for Brighton, Pavilion also asked me about the differences in well designs between operations here and in the United States and about the possibility that we might have methane leaks on the scale that we have seen in Pennsylvania. I visited the United States to talk to experts, and I am aware that the standard of environmental regulation has varied widely across the different states of America. They do not have the overall, national regulatory system that we have. Practices appear to have been tolerated in some states that would not be acceptable in others.
I understand that the repertoire of well design technology is essentially the same as in the United States, but the regulatory framework in the United Kingdom is quite different. Here, we have a national regulator—the Health and Safety Executive—which will require a full review of well design and construction by an independent competent person. I should point out to the hon. Lady that the Royal Academy of Engineering commented that that was a highly valuable feature of the United Kingdom’s system. We can certainly learn from the experience in the United States, but I want to emphasise to her that we start from a position of having what the United States did not have—a system of national regulation.
Caroline Lucas
The Minister has referenced, now and at the beginning of his winding-up speech, the fact that our regulations are essentially much stronger. In that respect, I wonder why he would think that it is all right, perhaps, that Britain’s offshore rigs and platforms have leaked oils or other chemicals into the North sea on 55 occasions in the last month alone, according to the figures from DECC. The idea that our drilling regulations generally are somehow much better than those elsewhere is more questionable than he suggests.
The Minister also spoke earlier about the number of countries that are falling over themselves now to go down the fracking route. He did not talk about countries such as France, Bulgaria, the Czech Republic, Austria, the Republic of Ireland, Spain, Denmark and Germany, all of which have full or partial bans or moratoriums on fracking. That gives a slightly different picture.
Finally—this was one of the key questions that I asked the Minister—why have the planning guidelines been delayed; what does “very soon” mean; and if he is seriously genuinely concerned about consultation with local people, why are those planning guidelines not open to some discussion with the communities?
Michael Fallon
I am coming to the point about planning guidance—I was due to do that—if the hon. Lady can contain herself, but first let me deal with the point about the North sea.
Michael Fallon
I was coming to the point about planning guidance. The hon. Lady has somehow suggested that I was not or that I had missed it. Let us just deal with her slur on the North sea. The North sea has one of the most extensive safety regimes in the world. Of course, we have learned from the accident on Piper Alpha, which sadly took place 25 years ago this month. Of course we have learned from that, but if she compares operations in the North sea with operations in other seas right around the world, she will see that we have one of the best and safest regimes there is. The proof of that is precisely the fact that the incidents that she referred to have to be reported to the Heath and Safety Executive, which is at present in Aberdeen. They have to be monitored; explanations are required from those involved. I think that it is rather remiss of the hon. Lady to try to suggest somehow that there is laxity in our regime in the North sea.
Michael Fallon
The hon. Lady raised two other questions in her last intervention, but I will give way if she wants to intervene again.
Caroline Lucas
I should like to intervene again, first to say to you, Mr Amess, that I think that this is yet another example of the kind of patronising tone that we hear again and again from Government Members, particularly towards women in this Chamber, and I absolutely deplore it. Secondly, and more to the point of the debate, the Minister says that I am casting a slur on the North sea somehow. The facts are that there have been 55 leaks in the last month. Is he or is he not comfortable with that fact?
Mr David Amess (in the Chair)
Order. This is a very warm afternoon. I just appeal to hon. Members on both sides of the Chamber to bear that in mind. We are the mother of all Parliaments. Let us continue to have a civilised debate, but obviously I have heard what has been said.
Michael Fallon
Yes, I am content that the safety regime in the North sea is fit for purpose. It is kept constantly under review. I was struck during the events to commemorate the Piper Alpha disaster that I attended by the commitment of those involved—the Health and Safety Executive and others—continuously to improve the safety regulation regime in the North sea, and that is what they are doing.
The hon. Member for Brighton, Pavilion asked me about the fact that some countries now do not want to go down the fracking route. That is perfectly true. Some have decided not to do so, but there is fracking in other countries right across Europe. In Poland, fracking is taking place. It is taking place right across the globe and as far away as Australia. As I said, there is worldwide interest in the success of shale gas in the United States and other unconventional oil and gas in Canada. I think that it would be a little unfortunate if we were to close our minds to that.
The hon. Lady asked why we have not consulted on planning guidance. The Government do not normally consult on planning guidance. We consult on planning policy. We have prepared the guidance in line with the principles set out by Lord Taylor of Goss Moor. This is a living, web-based resource that is easier to read alongside other parts of planning guidance. It will be on the website shortly, and it will be easier to adapt if we need to do so on the basis of experience.
Barbara Keeley
We were expecting something to be published today; the word “publish” was used. The Minister seems to be saying that it will be published only on a website. Some of my constituents live in a deprived area and will not necessarily have the internet. Is he saying that no printed version of the guidance will be available?
Michael Fallon
I will certainly check that, but the point of putting the guidance on the website is that it is a living document that can be and is adapted the whole time in the light of experience. That is what it is up there for and that is obviously more difficult with hard copies, but I will of course look into whether hard copies can be made available for colleagues in the House. We were hoping to get the guidance out before the House rose for the recess. It is possible now that we will miss that deadline by a few hours or a day or two. We have been trying very hard not to do that, but it will not be long now before that guidance is available to everyone involved.
As we move to a low-carbon future, oil and gas will continue to be a key part of our energy mix for decades to come. We believe that shale gas has the potential to provide the United Kingdom with greater energy security, more investment and more jobs. We have a strong regulatory system, which provides a comprehensive and fit-for-purpose regime for exploratory activities, but we do want continuously to improve it. We have taken important steps to streamline the regulatory framework, but that is not at the cost of robustness. It is about ensuring that the regulation does not duplicate things and is clear, simple and understandable not just for the developers, but for the public and the local communities that will be asked whether they are prepared to host shale exploration and production. It is very clear—it is even clearer after this debate—that to get those basics right, we must also work tirelessly to engage people with clear, evidence-based information, so that they have hard facts on which to make an informed decision about fracking.
I think that I concluded Tuesday’s debate in Westminster Hall on this subject by saying that we should approach shale gas neither as zealots nor as victims, but looking at the evidence and going step by step to ensure that the potential of shale is thoroughly understood, analysed and explored, so that if it really can benefit our economy and our people in the way that it has benefited those in the United States, it will be able to do so.
Mr David Amess (in the Chair)
I was not anticipating that any time would be left, but would the hon. Member for Brighton, Pavilion like to speak again?
Caroline Lucas
That is very kind, Mr Amess. I sense that the mood in the room is one of warmth. We have probably done our best with this debate, so I thank the Minister for his words. It will not come as a surprise to him that I do not agree with him, and I am sure that the debate will continue.
Question put and agreed to.
Written Statements
(10 years, 9 months ago)
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Business Premises Renovation Allowances
(10 years, 9 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
The business premises renovation allowances (BPRA) scheme provides 100% capital allowances for the capital costs of converting or renovating empty business property in certain disadvantaged areas of the UK, where the property has lain empty for at least a year, in order to bring the premises back into business use.
The Government remain committed to the objectives of BPRA, which is to foster the regeneration of deprived areas, by helping to increase private investment, enterprise and employment in deprived communities.
HM Revenue and Customs (HMRC) has, however, brought to the Government’s attention a recent increase in DOTAS (disclosure of tax avoidance schemes) disclosures, involving BPRA, which appear to contain features aimed at exploiting the relief in ways that Parliament had not intended.
The Government are fully committed to tackling tax avoidance to ensure the Exchequer is protected and fairness is maintained for the taxpayer.
The Government have, therefore, authorised HMRC to conduct a technical review of the BPRA legislation, with a view to making its policy purpose even clearer, so that the scheme may be made simpler and more certain in its application, at the same time reducing the risks of exploitation.
HMRC will shortly be publishing this technical review, along with an associated “Spotlight” article to alert people to the fact that almost all of the disclosed BPRA schemes appear to be seriously flawed and that HMRC will investigate anyone using them.
The technical review will invite comments on new legislative proposals, with a view to introducing new legislation in 2014.
Targeted Capital Funding for New School Places
(10 years, 9 months ago)
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The Minister for Schools (Mr David Laws)
Today I am announcing the outcome of the applications to the targeted basic need programme. The programme was launched in March this year to provide additional funding for school places in areas where they are most needed. Local authorities were invited to bid for funding for new schools, or to expand existing outstanding and good schools.
The targeted basic need funding brings the total amount of funding allocated to local authorities for new school places over the current spending review period to over £5 billion—more than double the £1.9 billion spent by the previous Government over an equivalent period. That funding is sufficient to provide the 417,000 places we need by 2015. By September this year, we expect 190,000 extra places will have been created during this Parliament, with more still in the pipeline.
Our main basic need allocations—which go directly to local authorities, and are based on projections of their need—were issued in March, and gave authorities funding for the next two years, enabling them to plan provision. Those allocations totalled some £1.6 billion and will support local authorities to keep pace with projections of demand.
On top of this, we invited applications from local authorities for additional new places, particularly focused on places in outstanding or good schools, and on creating new academies sponsored by organisations with a good track record in educational success. We are determined that every pupil should not just have a place, but that the growth in the system is, as far as possible, concentrated in schools that parents and pupils really want to go to. So I am delighted to announce that the targeted basic need programme will provide £820 million to fund an additional 74,000 high-quality school places on top of those already created and funded—all in areas that face the greatest pressure on places. These new places will be in 45 new schools and in 333 expanding schools that are rated as outstanding or good.
The number of pupils in England will continue to rise and ensuring that every child is able to attend an outstanding or good school in their local area is at the heart of the Government’s comprehensive programme of reform of the school system.
We will continue to set up free schools where there is both demand from parents and where they can make the biggest difference to local provision through addressing basic need and improving the quality of local schools.
Over the longer term, we will also fund a further 500,000 places up to 2020-21, as announced in the recent spending round—again, we judge that this will be sufficient to meet the projected demand for school places.
I will write today to all those MPs with successful projects in their constituencies, and I will place a list of successful projects in the Libraries of both Houses.
Electricity Market Reform
(10 years, 9 months ago)
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The Secretary of State for Energy and Climate Change (Mr Edward Davey)
The Government yesterday published for consultation the draft electricity market reform (EMR) delivery plan.
As laid out in my 27 June statement, Official Report, column 12WS, EMR is a central component of the Energy Bill currently being considered by Parliament, and will address the need to attract unprecedented levels of investment in the UK electricity sector over the coming decades as we replace our ageing energy infrastructure with a diverse mix of low-carbon generation, and meet the expected increases in electricity demand as sectors such as transport and heat are electrified. The Energy Bill includes clauses to introduce contracts for difference (CfD) to support investment in low-carbon generation, and a capacity market, to ensure security of supply.
On 27 June, Government made a range of key announcements in relation to reform of the electricity market, and I laid before Parliament two policy documents: “Electricity Market Reform—Delivering UK Investment” and “Electricity Market Reform: Capacity Market—Detailed Design Proposals”. The document published yesterday for consultation provides further detail on the key components of EMR and seeks views from consultees.
Contracts for Difference (CfDs)
CfDs form a core component of the Government’s strategy to bring forward investment in affordable low-carbon electricity generation—including renewables, carbon capture and storage and new nuclear. CfDs provide efficient and long-term support for low-carbon generation, reducing risks faced by generators by increasing revenue certainty and through the backing of a long-term contract. Generators are paid the difference between the market price and a “strike price”, but when the market price is high the generator must pay back the difference, which reduces costs to consumers when electricity prices are high.
Our June publication included draft CfD strike prices for renewables technologies, decisions on key CfD terms, and the levy control framework (LCF) profile to 2020-21.
The draft EMR delivery plan published yesterday provides details of the assumptions which underpin the draft CfD strike prices and seeks views and additional evidence from consultees. The Government will use the evidence gathered through this consultation to inform final CfD strike prices, which we intend to publish in the final EMR delivery plan later this year, subject to Royal Assent of the Energy Bill.
Capacity Market
A key part of the challenge our market faces is in ensuring secure electricity supplies. The capacity market will give investors the certainty they need to put adequate reliable capacity in place, protecting consumers against the risk of supply shortages. It does this by providing a predictable revenue stream to providers of reliable capacity, including both generation and non-generation measures such as demand-side response and storage. In return, they must commit to provide capacity when needed or face financial penalties.
I confirmed on 27 June that Government intend to run the first capacity market auction in late 2014, for delivery in 2018-19—subject to state aid clearance and laid out more detail on design proposals.
I have now published Government’s intended reliability standard for the capacity market—which captures the trade-off between the cost of providing additional back-up capacity, and the level of reliability achieved. The proposed standard is expressed as a loss of load expectation (LOLE), i.e. the number of hours per annum in which, over the long term, it is statistically expected that supply will not meet demand, and which reflects the economically efficient level of capacity. This does not mean that we would have this level of blackouts in a particular year; in the vast majority of cases, loss of load would be managed without significant impacts on consumers. But no electricity system can be 100% reliable. Based on our assessment of the value consumers place on security of supply, and the costs of providing capacity, we are proposing that a reliability standard of three hours LOLE per year most efficiently makes this trade-off between cost and reliability. We are seeking consultees’ views on this proposal and will finalise the reliability standard in the final delivery plan in December.
Analysis and scrutiny
Alongside the draft EMR delivery plan, I have published a report from the system operator—National Grid—which lays out analysis conducted to support the decisions contained in the delivery plan.
I have also published the report of the independent panel of technical experts, which was appointed to oversee the analysis. Information on the members of the panel and their terms of reference can be found at:
https://www.gov.uk/government/policy-advisory-groups/electricity-market-reform-panel-of-technical-experts.
The consultation document is be available at:
https://www.gov.uk/government/consultations/consultation-on-the-draft-electricity-market-reform-delivery.
I will deposit copies of the delivery plan and associated documents in the Libraries of both Houses.
Safeguarding British Businesses Overseas
(10 years, 9 months ago)
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The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)
Since the launch of the FCO’s Charter for Business in May 2010, the FCO has made supporting British business abroad one of its core activities to help build Britain’s prosperity. This priority sits alongside the FCO’s work to safeguard Britain’s national security and support British nationals around the world.
One of the commitments we made was to use the FCO’s knowledge to help businesses manage risks. The FCO created a new Commercial and Economic Diplomacy Department to help deliver this, to work more closely with UK business and liaise with the rest of the FCO to ensure we balance HMG’s commercial and security objectives. We do this by FCO staff sharing their political, economic and security analysis in written and oral briefings for UK business, and through the joint FCO UK Trade and Investment website Overseas Business website.
The attack in January this year on a gas production facility in the Algerian desert by a terrorist group linked to al-Qaeda underlined the threat British businesses and nationals can face overseas. Five out of the 38 people killed were British nationals and one was a British resident. Al-Qaeda, and groups inspired by al-Qaeda, continue to present a threat to British nationals and businesses around the world. We are determined to help British business thrive and operate safely overseas.
Since the attack we have consulted many British extractive industries that operate in high-risk environments and spoken to families of those affected by this tragedy. Many have said they would like to gain a better understanding from Government of the terrorism fuelling the threats we describe in the FCO’s travel advice. Companies have said the additional information could allow them to make better decisions on securing their employees, and also to make longer-term decisions on what can be significant investments. And we have stressed to industry how important it is to ensure the availability of information to all those employed at any site, including subcontractors.
I have therefore instructed officials to take the following steps:
To include more contextual information about terrorism threats in the FCO’s travel advice pages for countries where there is a high threat from terrorism. This is available to all members of the public on GOV.UK at: https://www.gov.uk/foreign-travel-advice.
For the FCO, through its network of posts in high-risk locations, and through the Counter Terrorism Department in London, to engage British businesses and organisations who employ British nationals in high-risk locations.
To offer British businesses and organisations the opportunity to apply to take part in crisis table top exercises in the FCO, and for officials to attend their crisis exercises.
To make available information on overseas terrorism threats to owners and operators of national infrastructure, through the Centre for the Protection of National Infrastructure.
The advice for companies operating in high-risk environments on the overseas business risk website has been updated. I have placed a copy of this new advice in the Libraries of both Houses. The advice can be found at:
http://www.ukti.gov.uk/pt_pt/edport/howwehelp/overseasbusinessrisk.html?null, with links to FCO travel advice.
NHS Modernisation (Costs and Benefits)
(10 years, 9 months ago)
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The Secretary of State for Health (Mr Jeremy Hunt)
The Government’s estimates of the costs and benefits of implementing policies in the Health and Social Care Act were contained in the “Coordinating document for the Impact Assessments and Equality Analysis” published in September 2011. These estimates reflected the changes that the Government made to their proposals following the listening exercise and the report of the NHS Future Forum.
Officials have continued to track closely the actual costs and benefits of the changes. Last September I reported to the House that the current estimate of costs was in the range £1.5 billion to £1.6 billion, which is equivalent to £1.6 billion to £1.7 billion in today’s prices. I can confirm today that I expect the costs—including spending on redundancy—to be no higher than announced last year. Indeed, the costs are likely to be nearer the estimate in the business case for the programme (£1.5 billion in today’s prices).
I can also announce that, up to 31 March 2013, costs of £1,096 million had been incurred across the health and care system on developing and establishing the new arrangements, comprising:
£435 million on staff redundancies;
£54 million on IT for the new organisations;
£42 million on estates costs of closing bodies and setting up new organisations;
£22 million on internal departmental costs (e.g. programme management);
£299 million on setting up clinical commissioning groups (excluding items above); and
£244 million on other costs of closing bodies (e.g. primary care trusts (PCTs)) and setting up new organisations.
In the impact assessment, long-term annual savings arising from the changes were estimated at £1.5 billion per year from 2014-15 onwards. Gross savings over the transition period (2010-11 to 2014-15) were estimated at £4.5 billion.
Annual savings are still expected to be £1.5 billion from 2014-15. Over the period 2010-11 to 2014-15, on a comparable basis with the impact assessment, the cumulative savings in administration costs arising from the reforms are still expected to be at least £5.5 billion. This sets aside administration costs of around £1.5 billion that are expected to be incurred on implementing the changes across this period.
I am today publishing “Business Case for the Health and Care Modernisation Transition Programme” which was prepared for the major programme established to take forward implementation of the reforms. A copy has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office. This publication meets a commitment made in “Health and Social Care Reforms: Transition Programme Scheme for Publication” (published in May 2012). The business case reflects the landscape that existed in December 2011, after the Government had responded to the listening exercise. Although the financial estimates in the business case are largely consistent with the impact assessment they took account of some costs (estimated at £127 million in total) that were excluded from the impact assessment either because they were out of scope (for example, because they related to measures not requiring legislation) or because they were redacted (for example, because they were commercially sensitive). The business case estimated the costs of implementing the changes at £1.5 billion at today’s prices
Francis Inquiry (Costs)
(10 years, 9 months ago)
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The Secretary of State for Health (Mr Jeremy Hunt)
Robert Francis QC published his “Report of the Mid Staffordshire NHS Foundation Trust Public Inquiry” on 6 February 2013. The public inquiry report looked at the roles and responsibilities of the wider health system in the events at Mid Staffordshire NHS Foundation Trust between 2005 and 2009. The inquiry itself sat for a total of 139 days; its oral hearings began on 8 November 2010 in Stafford and concluded on 1 December 2011. The inquiry took 352 separate witness statements in total, with 164 witness statements heard in person.
On the day of publication, the Prime Minister made a statement to Parliament. The Department of Health published the initial Government and system-wide response. “Patients First and Foremost”, on 26 March 2013. A further response to Robert Francis’s report will be published in autumn 2013.
Officials have compiled the costs of providing evidence to the inquiry incurred by the Department and the relevant NHS organisations, including foundation trusts.
I can now report to the House that the expenditure incurred by the Department and NHS organisations in their role as witnesses amounted to £6 million. A breakdown by type of cost is shown below.
£000 | |
|---|---|
Cost of dedicated staff | 712 |
Legal costs incurred | 5,227 |
Other staff related expenses (travel and subsistence) | 79 |
Other directly related costs | 23 |
Total | 6,041 |
The public inquiry was independent. The Department of Health acted as sponsor for the public inquiry. The costs incurred in the direct running of the public inquiry are published separately on the inquiry’s website.
Public Service and Demographic Change
(10 years, 9 months ago)
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The Minister of State, Department of Health (Norman Lamb)
We have today laid before Parliament “Government Response to the House Of Lords Committee on Public Service and Demographic Change report “Ready for Ageing?” (Cm 8677).
This country faces major demographic and economic challenges as a result of an increasingly ageing population. We welcome the Committee’s report, which shares the Government’s ambition of making this country a great place to grow old in.
We know the challenge is significant. The quality of our later life is an issue which affects us all. Cross-Government co-ordination and focus is crucial to achieving success. We all have responsibility for ensuring we make the most of the extraordinary opportunity of increasing life expectancy. These challenges are for individuals and communities, for local and national Government, for the private sector and the third sector.
This response describes the wide reaching programme of reforms this Government have put in place, as well as the plans we have for further work, which we believe will begin to address the challenges set out in “Ready for Ageing?” The reforms range from changes to pensions, transformation of the health and care system as well as improvements to wider public provision such as housing and transport.
Public provision must continue to adapt and respond as the needs and expectations of the population change. Individuals must take personal responsibility for planning for their later life, making choices and exercising control. This report is not a one off piece of work but an important dialogue between Government and the public, which must and will continue into the next Parliament.
As part of this dialogue, Government have committed to writing to the House of Lords Liaison Committee in a year’s time. This will update on progress of the Government’s reforms as well as provide any new evidence and challenges that might have arisen since the original report was published.
Public Health (Local Authorities)
(10 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Health (Anna Soubry)
We have today laid before Parliament “Government Response to the House of Commons Communities and Local Government Committee Eighth Report of Session 2012-13: The Role of Local Authorities in Health Issues” (Cm 8638).
The Government are grateful to the Committee for its constructive and positive report, and for the opportunity it provides to set out our position and expectations on some key issues in greater depth.
I am grateful to the Department for Communities and Local Government and the Department for Work and Pensions for their contribution to this report, and commend to the House the increasingly broad base for thinking and action on public health across Government.
Copies of the Government response are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.
Caring and Support Consultation
(10 years, 9 months ago)
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The Minister of State, Department of Health (Norman Lamb)
Today we are publishing a significant consultation that looks at the practical detail of implementing our reforms to what and how people pay for their care and support.
We have published plans for a new fairer funding system that will help people to more easily prepare for the cost of their future care needs, and will provide financial protection for people’s homes and savings.
The proposals are based on sweeping reforms to how care is paid for to give more certainty and peace of mind over the cost of old age or living with a disability. They will end the unfairness of unlimited care costs and ensure everyone gets the care they need with most support going to those in greatest need.
From 2016 the reforms will deliver a new cap of £72,000 on the costs of meeting eligible needs, additional financial help for people of modest wealth with less than £118,000 in assets including their home and, from 2015, a scheme to prevent anyone having to sell their home in their lifetime. The consultation confirms details of the plans including:
for people entering a care home, their property will not be included in the assessment of assets if a partner or dependant still lives in the home. In this case if a person has assets of less than £27,000 (excluding their home) they will qualify for financial assistance; and
the cap is based on the total cost of meeting someone’s eligible needs, not just their own contribution, an individual’s payments are added to those made by the local authority when measuring progress towards the cap. This means around two-thirds of people who reach the cap will have contributed less than £72,000 towards their care costs.
The consultation looks in detail at the various elements of the reforms seeking people’s views to help us deliver a fairer and more sustainable care and support system in local areas.
Reforming how and what people pay for their care intends to bring a number of benefits. Currently, a fear of high costs and lack of good information and advice can cause people to delay getting the care they need, and therefore see their needs escalate more quickly. This leads to more people (and their families) seeking and organising care in a crisis situation and risking higher care costs, due to their condition having deteriorated more rapidly.
The reforms will set some limits around how much people can expect to pay for their care, making it easier for them to plan and therefore putting them more in control. It will also protect more of what people have worked and saved up for during their lives.
The consultation launched today is about working out the practical detail of what needs to happen to make the changes to payment of care costs a reality. Reforming what and how people pay for their care will involve significant changes to how local authorities operate currently. We are therefore keen to hear people’s views on how these changes to the funding system should happen and be organised locally, to help us deliver a care and support system that is sustainable and fairer for everyone.
Consultation proposals include:
how best to provide people with information and advice, including on how to pay for
care and support, to help everyone plan for the future;
annual “care account” statements to project when someone will reach the cap or qualify for additional financial support;
the option of joining a not-for-profit “deferred payment” scheme where the local council pays people’s residential care fees and the person is able to repay from their estate, allowing them to keep their home during their lifetime;
possible new products from the financial services sector who are responding to these reforms by looking at how pensions and expanded life or health insurance could help some people plan;
principles behind the level of the cap for people aged under state pension age who have eligible needs; and
the process for providing redress and resolving complaints.
The Government have provided £335 million to local authorities in 2015-16 to cover the costs of implementation of the cap and the requirement to offer deferred payments for residential care. This includes funds that will enable local authorities to begin assessing people’s needs for care and support around six months before introduction of the cap, if they choose to do so.
The Department of Health, Local Government Association and the Association of Directors of Social Services (ADASS) have committed to work in partnership on a joint programme to ensure successful and sustainable delivery of these reforms.
The consultation will run from 18 July until 25 October.
“Caring for our future: Consultation on reforming what and how people pay for their care and support” has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.
Europol Regulation
(10 years, 9 months ago)
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The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
The Government have decided at this time not to opt in to the European Commission’s proposal for a Europol regulation which would establish the European Union Agency for Law Enforcement Co-operation and Training. The Government will however seek to opt in to the regulation post adoption provided that Europol is not given the power to direct national law enforcement agencies to initiate investigations or share data that conflicts with national security.
The Commission has a number of objectives in this proposal: to update the law on the European Police Office (Europol) and the European Police College (CEPOL) following the Lisbon treaty and to create cost savings by merging both the agencies; as well as to strengthen Europol’s role in the exchange and analysis of information on cross-border crime through increased obligations.
The Government value UK membership of Europol as currently established. The ability to access law enforcement intelligence directly from all other EU member states means UK law enforcement can significantly increase its intelligence yield and is effectively supported in the fight against organised crime and terrorism.
However, having analysed the draft proposal from the Commission the Government have identified two very serious concerns with the proposal which would fundamentally change the relationship between Europol and member states.
First, there is an increased obligation to provide data. In the proposal member states are not exempt from providing data, even where it would conflict with national security, endanger ongoing investigations or an individual’s safety. This conflicts with the national interest.
Secondly, while Europol can already request a member state to initiate an investigation, this proposal goes much further and includes an obligation to provide a reason if no such operation is conducted. Any reasons provided would be subject to challenge before the European Court of Justice. This creates a risk that the European courts could dictate what national law enforcement agencies should prioritise. This interferes with operational independence which is at the heart of UK policing.
We will remain a full and active participant in negotiations on the regulation and are committed to seeking to opt in post adoption provided that the above two concerns are met in the final text.
Action Fraud
(10 years, 9 months ago)
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The Minister of State, Home Department (Mr Jeremy Browne)
Action Fraud, run by the National Fraud Authority (an executive agency of the Home Office), now receives all reports of fraud on behalf of all police forces in England and Wales. Between November 2012 and July 2013, 2,490 reports (of which 1,738 were reports of crime) were not processed correctly due to a fault in the IT system. This represents 1.3% of all fraud reports taken by Action Fraud in this period. No data was lost or compromised at any point and the IT fault has been rectified. Action Fraud has taken immediate action to process the affected reports and will be writing to apologise to everyone who submitted a report and to make clear that their report is now being dealt with.
This issue came to light too late to notify the Office for National Statistics for inclusion in “Crime in England And Wales” for the year ending March 2013, published today. Crime continues to fall. Although the levels of total police recorded crime and fraud would be affected by this issue, the annual percentage change for total police recorded crime and for fraud would be unaffected. As part of routine revisions to the data, any corrections will be included by the Office for National Statistics in next quarter’s crime publications.
These figures supersede any given in previous answers to parliamentary questions and I apologise to the House for this.
Commissioners (Annual Reports)
(10 years, 9 months ago)
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The Prime Minister (Mr David Cameron)
I have today laid before both Houses copies of the latest annual reports from the Commissioners appointed by me to keep under review public authority use of covert investigatory techniques. The reports are from: the former Interception of Communications Commissioner, the right hon. Sir Paul Kennedy (HC571); the current Intelligence Services Commissioner, the right hon. Sir Mark Waller (HC578); and, the current Chief Surveillance Commissioner, the right hon. Sir Christopher Rose (HC577).
The Commissioners and their staff provide statutory oversight to check that public authorities, and where necessary the Secretaries of State where they sign-off covert activity, use correctly and lawfully the relevant provisions of the Regulation of Investigatory Powers Act 2000, the Regulation of Investigatory Powers (Scotland) Act 2000, the Police Act 1997, and, the Intelligence Services Act 1994.
The Commissioners’ functions are different but complementary and cover a broad and complex legal and technical area. Their annual reports provide information, as far as is consistent with public security, on current patterns of use, emerging developments and broad statistics.
In general they show a high degree of understanding, diligence and compliance with what the law requires from the agencies and the personnel required to observe it. They also show that regrettably there have been a small number of errors and instances where the law has not been applied correctly. The Commissioners have worked to correct the situation and assure themselves that safeguards have been adopted to minimise the risk of future error.
I want to thank Sir Paul, Sir Mark and Sir Christopher for maintaining the rigour of their scrutiny. I believe that it has never been more important that their roles are discharged effectively and efficiently. I regard the publishing of their annual reports as an important part of demonstrating that there are independent, external checks on public authority covert investigations and that public authorities may obtain private information covertly only when this is necessary and proportionate to do so.
“Foreign Involvement in the Critical National Infrastructure”
(10 years, 9 months ago)
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The Prime Minister (Mr David Cameron)
On 6 June I laid before Parliament a report of the Intelligence and Security Committee entitled “Foreign Involvement in the Critical National Infrastructure” (Cm 8629). Today the Government publish their response. Copies have been placed in the Libraries of both Houses.
The Government are grateful to the Intelligence and Security Committee for its report, and for its ongoing valuable work.
Intercity Express Programme
(10 years, 9 months ago)
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The Secretary of State for Transport (Mr Patrick McLoughlin)
I have decided to exercise an option that was contained in the Intercity Express Programme (IEP) contract, signed in July 2012 with Agility Trains, a consortium made up of Hitachi and John Laing.
The option is to purchase a further 270 vehicles to replace the electric Intercity 225 fleet which currently runs on the east coast main line with a fleet of new, high quality, modern, higher capacity class 800 series nine-car electric trains. This is in addition to the core order to build nearly 600 vehicles to replace Britain’s fleet of Intercity 125 high speed trains along the Great Western and east coast main lines that were originally deployed by British Rail in the 1970s and 1980s.
The first class 800 series trains will enter revenue-earning service on the Great Western main line in 2017 and on the east coast main line in 2018. We expect the second batch of new class 800 series vehicles to be in service on the east coast from 2019. Passengers will see improvements to their travelling experience, including even more reliable services, improved telecommunications connectivity, increased leg space without compromising on luggage provision, and a greater chance of getting a seat. Train capacity will be 627 seats per train, 18% higher than the stock they are replacing which will mean that the class 800 series deployment in total will increase the number of seats in to King’s Cross in the morning peak by 28%. Journey times between London, Leeds and Edinburgh will also be reduced by several minutes. The new trains will be capable of running at 140 mph, which would lead to further journey time reductions, although operation at this speed will require signalling and infrastructure upgrades.
Furthermore, Hitachi, the manufacturers of the trains, has announced that it will assemble them at its dedicated manufacturing plant at Newton Aycliffe in County Durham. The order is a boost for the facility and its 730 planned jobs and many more in the local and national supply chains.
Exercising this option represents around a further £1.2 billion investment in Britain’s rolling stock, bringing the total contract value up to £5.8 billion covering the design, build, finance and maintenance of the fleet over a 27.5-year period. This highlights the Government’s commitment to infrastructure, to rail, to British manufacturing and to the strategy of growing and protecting the key Intercity rail markets in readiness for HS2.
HGV Road User Levy Bill
(10 years, 9 months ago)
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The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
I am today correcting a figure that I quoted during the Ways and Means resolution debate on the HGV Road User Levy Bill, on Tuesday 23 October 2012, and during the Second Reading debate on Tuesday 20 November 2012. There will be significantly fewer vehicles paying more than £300 a year extra when the levy is introduced than I previously stated.
The reason for the additional costs once the levy is introduced is because some vehicles currently pay close to or below EU minimum rates of vehicle excise duty (VED), and so VED cannot be reduced by the same amount as the levy, or indeed in some cases VED needs to be increased.
During the Ways and Means resolution debate I stated that
“our analysis of 7,000 rigid vehicles that tow a trailer has found that 40 vehicles would probably suffer a penalty of some £300, but that is only 40 out of 7,000, which is a significantly small part of the overall haulage fleet of the United Kingdom”—[Official Report, 23 October 2012, Vol. 551, c. 884.]
I also stated on Second Reading:
“there are a small number—about 7,000 of them on the road—of rigid vehicles with a trailer. Of those we estimate—the Department has done some analysis—that fewer than 50 will face potentially more than £300 extra in costs”—[Official Report, 20 November 2012, Vol. 553, col. 497.]
However, as a result of the Government continuing to consider and refine the analysis for these vehicles, an error in the source data was corrected, and improvements were made to the methodology used to set the VED rates that will apply from 1 April 2014. By making this improvement, it is possible for Her Majesty’s Treasury to amend the VED rates to reduce the number of vehicles paying over £300 more to just one vehicle. Even this additional cost represents less than 0.4% of the annual cost of running an HGV, which is normally in the range of £80,000 to £100,000.
There is no change to figures quoted in Parliament of 94% of vehicles paying no more than now, and 98% paying no more than an additional £50 per year, as a result of these changes. The Department for Transport will be republishing the full updated analysis on the consultation pages for “Charging Heavy Goods Vehicles” hosted on the gov.uk website:
https://www.gov.uk/government/consultations/charging-heavy-goods-vehicles-consultation.
The updated analysis will enable vehicle operators to see the revised details of how much will be paid for each type of vehicle.
These figures will remain provisional, until Her Majesty’s Treasury confirm the new table of rates in the “Overview of Outstanding Legislation And Rates” document accompanying Budget 2014.
This once again reinforces the Government’s commitment to introduce the HGV road user levy in April 2014 at as minimal a cost to the UK haulage industry as we can realistically deliver.
Grand Committee
The Deputy Chairman of Committees (Lord Brougham and Vaux)
Good afternoon, my Lords. Welcome to day six of the Energy Bill. There will not be any Divisions so we can have a clear run—apart from perhaps a comfort break.
Energy Bill
Lord Teverson
“(f) to give priority to demand side management and demand reduction measures in preference to increased generating capacity whenever and wherever this is economically appropriate;(g) to progressively increase the energy efficiency of the United Kingdom as measured in terms of quantity of energy used per unit of GDP”
Lord Teverson
My Lords, I shall have to be brief, as we are supposed to finish the Bill today, I think it says, so we will need to set quite a pace. The target for the day: to complete. The easiest way to do that is for the Minister to say yes—perhaps not; I suspect that will not happen.
I tabled Amendment 51N specifically under Part 2, Electricity Market Reform, under Chapter 1 entitled “General Considerations”. This is not just about the capacity payment or all the other bits that make up energy market reform; it is about energy market reform as a whole. Clause 5(2) contains a number of general considerations and it goes through those very carefully. Clause 5(2)(c) refers to,
“ensuring the security of supply to consumers of electricity”.
Clearly that is very important. It also mentions a number of things around cost.
One thing that everybody has agreed, particularly the Secretary of State and Ministers at the Department of Energy and Climate Change, is that as this Bill has been considered in its draft stage and by the informal group of this House, it emerged that it had a bias towards supply. That may have come from old thinking from many years ago and had not caught up with a new way of looking at the overall issue of energy provision within the United Kingdom. I very much welcome the fact that the Secretary of State and the Government have started to take this on board and there are a number of mentions within the Bill of the demand side of the equation, in terms of both demand reduction and demand-side response. Of course, the previous Energy Bill was all about energy reduction in terms of the Green Deal so this is an agenda that is live.
I still think it is really important within this Bill to put down as part of these general considerations the fact that the demand side must be taken into consideration in terms of the exercise of the various functions to do with electricity market reform. That is why I seek to add these two additional paragraphs; first,
“to give priority to demand side management and demand reduction measures”.
I have put very strongly,
“in preference to increased generating capacity”,
but I have made the constraint, which ties in with the whole cost area,
“whenever and wherever this is economically appropriate”.
We need to move our mindset on from being dominated by the supply side to ensuring a much more level playing field in terms of how the Secretary of State and future Secretaries of State have to look at the way in which electricity market reform is implemented. So it is a reminder. It is exactly the thing that needs to be in the Bill to make that clear so that in the future civil servants know that when they are advising Ministers about how this Act is applied, these issues have to be taken into consideration.
We had a long debate on the first day of Committee on decarbonisation targets but we never mentioned energy-efficiency targets. In many ways, this is equally if not more important in terms of the way that we plan our electricity usage and our energy usage within the economy more generally as we move forward.
Clearly, I understand that some of this comes within a European Union context, in that we have the energy efficiency directive, the non-statutory target of 20% energy efficiency for the EU as a whole by 2020—one of the three major targets to be met by that time. It is also important to bring that requirement into this Bill.
The Minister might say that I am absolutely right, and that the United Kingdom is one of the most energy-efficient economies in Europe and indeed the world. Part of the reason is that we have a relatively small but, I hope, rebalancing manufacturing sector. We do not have many energy-intensive industries, but we rely on our service sectors—commercial and retail—which are not energy efficient.
On the other hand, we have a housing stock and a building stock which are still very inefficient: in fact DECC estimated in its energy-efficiency strategy, which came out towards the end of last year, and which I welcomed at the time, that 14 million homes were not insulated to an acceptable standard, from a stock of 27 million. For those of you who can do maths—even if they could not do the equation we dealt with earlier this week—that is just over 50% of total housing stock. In fact around 40% of total housing stock was built before the end of World War II, and a significant proportion of that before the end of World War I. That shows the issues we have around energy efficiency in this country, some of it being dealt with, we hope, as the Green Deal becomes more effective as time goes on.
What I intend to do here is to rebalance this Bill in a key area of electricity market reform, where we set out what we are trying to achieve. We are not removing the supply side; we are adding demand as an equal factor. We are saying that there should be a preference for not spending rather than spending, but only where that makes economic sense. In the cost abatement curves shown in the many multicoloured DECC documents, energy efficiency always comes out on the left-hand side of the graph, which means it is the most cost-effective way to attack our energy needs and to shape how the energy market works in the future. I beg to move.
Lord Davies of Stamford
My Lords, I agree with the second part of the amendment proposed by the noble Lord, Lord Teverson, and the noble Baroness, Lady Parminter. It would be rather strange if nothing at all were said on the face of the Bill about the importance of energy efficiency, as it is quite clearly one of the criteria the Secretary of State must always have regard to in conducting a sensible energy policy.
However, I have a problem with the first half of this amendment, which reads:
“to give priority to demand side management and demand reduction measures in preference to increased generating capacity whenever and wherever this is economically appropriate”.
In improving this Bill we are drafting the law. The law has to be unambiguous. The law places obligations on the citizen; the citizen needs to know precisely what those obligations are if the law is going to be effective, dignified and respected. This provision could not possibly from part of a law in that sense. The phrase “economically appropriate” is so vague that it is almost impossible to know what it might mean and where one would need to decide, using this principle, between an energy-saving investment and an energy-generating investment. I notice that the noble Lord, in introducing this amendment, did not actually refer to “economically appropriate”: he used the term “economically sensible”, which he perhaps feels is a synonym. However, the use of a different word only adds to the vagueness and uncertainty, which should not come to rest in the corpus of the law of the land.
I suppose that what the noble Lord might have had in mind with the phrase “economically appropriate”, or even “economically sensible”, is the solution that has the highest economic return, but even that would be a very vague phrase to place in a Bill in the corpus of law. After all, in choosing between one particular project with a relatively high capital cost and a relatively high return and another with a lower capital cost and a lower return, or between a project with a high capital cost and a long payout period and another with the same capital cost and a different payout period, which one to be chosen would depend on the cost of capital, on which one was discounting the projected cash flows. If you wanted to make this a precise obligation, you would have to specify what the cost of capital would be. It would be and should be, of course, different according to the different risks for different types of energy projects, because they would have different risks. Therefore, I do not see any prospect here of reducing the unambiguous guidance that is necessary in law so that the citizen or, indeed, the Secretary of State would know precisely whether he was observing the law or not.
Lord Roper
My Lords, Amendment 55ZA in this group is in my name and that of the right reverend Prelate the Bishop of London. As has already been mentioned, when the draft Bill was published in May last year, there was a great deal of criticism that there was nothing in it on electricity demand reduction. Indeed, those of us who sat on the informal group with the noble Lord, Lord Oxburgh, drew attention to this in the document that we produced and suggested that it ought to be included. When this Bill was published last November, there was still no reference. Fortunately, at the same time, the department started a consultation into demand reduction, and on 21 May it published its response to that consultation. At the same time, it tabled an amendment, which was then proposed new Clause 12 and is now Clause 37 in this Bill, the clause that I wish to amend.
The interesting point in the response to the consultation is that the department suggested that its preferred route to delivering reductions in electricity demand is via a capacity market—I am talking here not of a demand-supply response but of permanent reductions in electricity demand. I have always had some difficulty in seeing how that could fit in to a capacity market. I therefore grabbed the delivery plan last night to read the section on the capacity market in order to discover how it should occur. I am extremely sorry to have to tell your Lordships that, having read that whole section overnight, I found no reference at all to electricity demand reduction, not even to demand-side response. I sometimes wonder whether there are two DECCs, one writing one thing and one writing another. I hope that I am not misleading the Committee in that view. The important thing is that Clause 37, which was introduced in the other place, suggests that a pilot scheme should be developed to look at it.
In our amendment, the right reverend Prelate and I suggest that we should aim it rather more widely. There ought to be a number of different pilot schemes and, if it is possible to envisage how it could be done, they ought to be included within the capacity market. Alternatively, we could look along other lines, including those discussed in Committee in another place, of finding some sort of premium for this. There are quite a number of problems with the use of the capacity market in dealing with the permanent reduction of electricity demand. There is of course uncertainty as to how big a capacity auction will be. Therefore, people who invest in permanent reductions are unclear from time to time as to what sort of return they will get for that reduction.
Lord Cameron of Dillington
My Lords, I support the theme of these two amendments, particularly the latter one. It is widely recognised that energy demand reduction is one of the cheapest ways to achieve decarbonisation of our economy. I have seen figures—I am not sure whether they came from DECC—which state that energy saving could reduce demand by 26% by 2030. I imagine that that 26% is not from where we are now but from where we would be if we did not have any form of energy demand reduction schemes in place.
It worries me, as the noble Lord, Lord Roper, was saying, that DECC originally said that it would be implementing energy demand reduction via the capacity market. Perhaps I am quite glad that the noble Lord did not find any reference to it in his reading last night because maybe we have got that wrong. To be honest, it makes absolutely no sense. Why wait for the capacity auction next year and implementation in four years’ time before introducing demand reduction schemes? Why wait for a capacity crunch before introducing them? We need these schemes to start now or as soon as possible. As the noble Lord, Lord Teverson, said, we are not talking about energy security or even capacity margins; we are talking about emission reductions across the economy.
I think that I am happy to accept that the Government might want to run pilots here, although the noble Lord, Lord Roper, was absolutely right that we need to put details in those pilots; for example, when the results will be, what will happen afterwards and so on. We have seriously to get on with this.
Lots of opportunities are available. Smart meters are the first that come to mind. A supply company can run machines within a business or a household that are very expensive on electricity—tumble dryers and even dishwashers can wait until the smart meter tells it to turn itself on. Obviously, it should be allowed to be overridden by the householder but the householder must know exactly what cost there will be if he or she overrides the meter. There will be certain times—obviously, when people come home from work and turn on the kettle, or when they get up from watching a film or “Coronation Street”—when the electricity companies know intimately when the peak demand will be. The prices should be allocated accordingly.
I should also say that in future, smart meters could—nay, should—be sensitive to the amount of supply available. If a large proportion of our supply such as photovoltaics or wind turbines is dependent on the weather, a smart meter should know what the weather is to be tonight at 6 pm when the peak demand is coming and therefore what the capacity margin will be. For instance, in Germany last week—and probably this week as well—at certain times, 33% of the national electricity supply came from photovoltaics. Clearly, at those times there was no shortage of power in the country and no need to restrict demand at all by cost.
The noble Lord, Lord Teverson, also said that demand reduction could be encouraged by better energy rating in housing. I could not agree more. Again in Germany, 360,000 homes have been brought down to near zero emissions by lending money to householders at 1%. Perhaps a pilot could be encouraged on those lines; as we all know, the Green Deal has not been very effective as yet.
However, the most important move, because it throws down the gauntlet to the entrepreneurial flair of industrialists, business people and householders themselves, is to pilot and introduce as soon as possible energy efficiency premium payments. Those schemes have worked very well in the USA and, I believe, could work in the UK if bundled together with grants for capital investment. That could, incidentally, include hundreds of household or office-based batteries linked to the smart meter—so electricity is going in and out of those batteries. Obviously, some help would be needed with the capital expenditure in those circumstances.
The main point is that the Government have to drive that agenda, not just sit back and let it happen via the rather clunky capacity mechanism, which was never really designed for electricity demand reduction in the first place.
Viscount Hanworth
My Lords, I, too, express my appreciation of the intentions of the noble Lord, Lord Teverson, and the noble Baroness, Lady Parminter, but I should like to pick holes in the amendment in much the same way as has my colleague, my noble friend Lord Davies. Whereas he considered proposed paragraph (f), I shall concentrate on proposed paragraph (g). It may well be that the amendment is more sophisticated than it seems, because it is possible that the noble Lord, Lord Teverson, is trying to strike a judicious balance between saying something felicitous and saying something that will get past the Minister.
Let me try to deconstruct what is being said in paragraph (g). It is an injunction,
“to progressively increase the energy efficiency of the United Kingdom as measured in terms of quantity of energy used per unit of GDP”.
That is most unlikely to impose a binding constraint. The fact is that the ratio has been decreasing monotonically since 1950, at least, so that in 2010, we used about half the quantity of energy per unit of real GDP as we did in 1950.
I want to make a bigger point than that. I think that we should approach most of what we read in the Bill in a spirit of cynicism and scepticism. I am sorry if that sounds strong, but if we analyse a great many clauses in detail and think of the circumstances in which they would be applied, we realise that they impose non-binding constraints and impose no particular behaviour by the Government that might staunch emissions, improve efficiency, or whatever. I do not fully understand the motives of the noble Lord, Lord Teverson, and they may, as I said, be more sophisticated than they seem but, if I may be forgiven for saying so, his amendment would perpetrate exactly such an ineffective provision. I hope that he will forgive me.
Lord O'Neill of Clackmannan
I follow on from my noble friend’s remark and say that Amendment 51N is pretty vacuous. It is giving us the excuse to have a debate, but it will not come to anything. It is certainly the case that the Government have been reasonably successful in demand reduction because of their economic incompetence over the past three years. We have been in recession, we have seen emissions fall and we have seen the demand for electricity change. That is the first point which has to be made.
Sooner or later, we will come out of this recession—and when we do, we are going to need far more than Amendment 51N would do regarding capacity changes. We are, I hope, going to have an economy growing in a manner which, in its early stages, will probably not be the most attractive for energy efficiency. In some respects, we want to get out of the recession as quickly as possible. Having to chase around for the most energy-efficient way of doing that when we are trying to find economic prosperity for our people would be questionable in the eyes of the public and their sense of priorities. Frankly, the quicker we move on from this amendment the better, because it is a waste of time, although the other amendment has a degree of merit. I am also always dubious about split infinitives in law at the best of times.
Lord Dixon-Smith
My Lords, I do not know whether my noble friend Lord Deben is getting up to speak or walking out. I did not realise that the noble Lord who just spoke would have such a potent effect that he would drive my noble friend nearly out of the Room.
I am bound to say that it is very dangerous to blame the state of the economy in the past three years for what has gone wrong. That is a bit like trying to compare last week’s weather with the global climate. When you look at matters affecting the global climate or, indeed, the national economy in the wider scale, the blame lies rather more out of the three years that we are completing. It has a great deal to do with what went on before, but that is not what I really rose to speak about.
I should perhaps explain that there was a time, quite a number of years ago, when I had the ultimate responsibility for the complete built estate owned by Essex County Council, which is a major operation. Among the things that we had to do, there was the little matter of energy efficiency. There was also the question of the quality of buildings, because there were some truly appalling buildings around in those days. It was a constant balancing act as to what we did. Two factors were vital. In those days interest rates, which fortunately we do not have to consider today, went up and down rather like a yo-yo so that schemes went into and out of our plans depending on those rates. The other factor was of course the price of energy itself. If your Lordships want people to take an interest in economising on energy, the quickest way to do it is to put the price up. That is a brutal reality and we should not forget it. Price will always be an important factor.
When we get into the question of demand management, I have my own view on smart meters. First, they are not very good at demand management; what they do is to move the demand around so that you can reduce the peaks and troughs on the supply side, to a certain degree. However, they do not actually reduce demand in total. We may as well bear that factor in mind. Secondly, we have to bear in mind that the idea that we might somehow reduce demand for electricity is unreal in the present context. We are looking at a period when we have to decarbonise the whole economy, in effect. That means that everything has to go down to zero emissions at the end of this period. In order to do that, we will be obliged to have an electricity generating market which is probably twice as big as it is today, if not even bigger. The idea that we are going to reduce demand for electricity, bearing in mind this evolution, is completely unreal.
My last point is that the same person has to pay, whether it is for energy or for the economy measures. There is only one customer. We do not want to fool ourselves that the Government have a fund of money to do this with. The Government have our money, and one way or another the customer is going to pay. It is a question of balance. I am all for getting all the efficiency that we can into the generating system and into the demand system. However, we should not fool ourselves—whichever way the equation goes, it is still the case that one person is paying. I am slightly pleased about the initial criticism of these amendments, because introducing a phrase such as “where economically possible” into the equation puts a bit of sense into it. If it were not there, you could start taking some very rash decisions which in fact were not economically sensible.
Lord Grantchester
I am grateful to the noble Lord, Lord Teverson, for his introduction to the debate on the demand side of energy. He is quite right to draw attention to this. Although other noble Lords may have been teasing in their remarks, the Second Reading debate highlighted that the Government are coming rather late in their thinking to these subjects, and our later amendments will explore all the different technicalities on the demand-side responses. Therefore, we are happy to support the wider recognition of the importance of demand-side response.
I turn to the proposed new paragraph in his amendment on making the efficiency measures EU-compliant. Again, we note the position that we are in at the moment and that the directive requires member states to set an indicative national energy efficiency target based either on energy consumption or on energy savings, or indeed on energy intensity, as the noble Lord, Lord Teverson, suggests in the amendment. We wonder how that might take account of the decarbonisation challenges that we will be facing. Also, we will be monitoring more than one change at a time to take into account GDP changes. Therefore, we would be very interested in knowing how the Government view this measurement of energy efficiency.
Turning to Amendment 55ZA, which concerns pilots, once again we note that the Government are coming rather late in their thinking to the demand side and that they therefore want to make provision to help their thinking to progress by running a pilot scheme. Clause 37 gives the Government powers to run a pilot scheme for electricity demand reduction. While the clause does not specify that this pilot scheme should take the form of a pilot capacity auction, it is clear from the consultation response that that is what DECC is considering.
However, the capacity market is primarily designed to ensure capacity throughout troughs in supply, and it will therefore reward only demand reduction projects that reduce the amount of generating capacity that is needed at such times and not those that reduce demand at other times. A capacity market therefore rewards energy efficiency only for its security benefits and not its other, much larger benefits in terms of emissions reductions and affordability. Therefore, we are aware that an additional policy is needed to enable small businesses and households, and not just large infrastructure projects, to be rewarded for saving energy.
Such “premium payments” were favoured by the majority of respondents to DECC’s consultation but were then dismissed by the department. A further explanation in this regard would be welcome. Therefore we support the call on Her Majesty’s Government to clarify whether DECC should bring forward multiple pilot schemes to include premium payments, a capacity market and perhaps other forms of incentives. This would demonstrate which scheme or schemes were most effective in delivering permanent demand reduction in practice.
Amendment 55ZA also mentions how these pilots might be financed. Clause 37 states that it will be paid out of government funds rather than through consumer prices. However, following the spending review, a figure of £75 million for investment in innovative energy projects was mentioned. I understand that DECC suggests that only about £25 million of this will be available for the pilot. In any event, those sums are dwarfed by DECC’s own assessment of the cost for full capacity auction. Amendment 55ZA would allow pilot reduction schemes to be funded at least in part from capacity payments either in advance or during a capacity auction period. Will the Minister clarify to the Committee where the Government have got to in their thinking?
Baroness Maddock
My Lords, I support my noble friends in trying to highlight the importance of demand reduction and the fact that this Bill came rather late to it, as has been said by others. I was somewhat confused by some of the earlier comments from those who said that they were in favour of energy efficiency but were not sure about demand reduction. If you increase energy efficiency, you reduce demand. That is fairly logical. I find some of the comments a little curious.
I emphasise the fact that if the Government are having only one pilot that will be only around the capacity market, that will not be good enough, which is why we have tabled these amendments. As regards the amendment in the name of my noble friend Lord Roper, if the Government were to take something like that forward, we could have a demonstration about which scheme or schemes are the most effective in delivering permanent demand reduction. In a sense, that ties in with the amendment of my noble friend Lord Teverson. There was a lot of criticism of my noble friend and talk about the difference between demand management and demand reduction. They are two different things. We have had some strange logic in today’s debate.
Unless we have several pilots, there will be no meaningful comparison and we will not be able to decide which are the most cost-effective and the most effective in reducing demand. I support my noble friends in their efforts to make demand reduction more of a priority in this Bill.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, I thank my noble friends for enabling me to lay out further a response to the amendment of my noble friend Lord Teverson, which aims to make energy efficiency a general consideration when carrying out key functions of electricity market reform. I also welcome the cross-party support expressed in this House for electricity demand reduction measures and energy efficiency generally.
While I support the sentiment behind the amendment, we consider energy efficiency to be more than just about the efficient use of electricity, on which the amendment appears to focus. Therefore, the danger of this amendment is that, in focusing on efficiency of electricity use, it risks diverting attention from the wider importance of energy efficiency, on which we are already committed to progressing. When exercising capacity market functions, proposed new paragraph (f) would require the Secretary of State to give priority to demand side management and demand reduction measures over increased electricity generating capacity wherever this was economically appropriate.
The capacity market is being designed to allow demand-side response and permanent electricity demand reduction measures to participate in the capacity market. This is a proven way of delivering electricity demand reduction and is already working successfully in the United States. The auction process is a fundamental pillar of the capacity market and all resources that can contribute to security of supply. Demand-side response, permanent demand reduction and generation are able to compete against each other for support in the long term. This will ensure that demand-side measures that deliver the same level of security of supply benefits as generation at a lower cost will always be rewarded at the expense of generation. Accordingly, I hope that my noble friend will see that proposed new paragraph (f) will not add to the practical effort of what is already envisaged for the capacity market.
Proposed new paragraph (g) of Amendment 51N would require the Government to measure the energy intensity of the UK economy per unit of GDP and to improve this progressively. Again, while I recognise the intention behind this amendment, it would duplicate the existing domestic and European policies, to which my noble friend referred, in the recently adopted EU energy efficiency directive, which is aimed at driving improvements in energy efficiency across the EU and contains, among other measures, two key targets for member states, to which my noble friend also referred. The first is a non-binding national energy efficiency target for 2020, which is equivalent to reducing primary energy consumption by 20% by 2020. The second is a binding target to save 1.5% of additional energy per year, to be achieved between 2014 and 2020, through the deployment of an energy supplier obligation and/or equivalent policy measures.
The UK recently submitted its target to the European Commission under Article 3 of the directive. Under the target, the UK is projected to reduce final energy intensity by 26% between 2007 and 2020, maintaining our position as one of the least energy-intensive economies in Europe. In terms of domestic action, this Government have shown their commitment to supporting every opportunity for energy-efficiency measures. The policies that we have put in place, such as the Green Deal, will help households and businesses reduce demand by installing energy-efficiency improvements, with some or all of the cost paid for from the savings on their energy bills. In addition, the energy efficiency strategy sets out our plans for realising the significant untapped potential that remains in this key sector. Between the measures that we have put in place domestically and the new targets established through the directive, there is already considerable momentum that is contributing to making the UK economy more energy efficient.
Amendment 55ZA in the name of my noble friend Lord Roper, which aims to make an electricity demand reduction pilot compulsory, raises an issue that has come up a number of times at Second Reading: namely, that multiple pilots are necessary in order to test a variety of approaches. While I support my noble friend’s aim of ensuring that we test variations of the key elements associated with demand reduction projects, the Secretary of State already has the ability to design and run a pilot, or pilots, to test different approaches.
Clause 37 is simply a spending power to authorise the spending of money for such a purpose. I appreciate the concern that this amendment demonstrates about ensuring that sufficient funds are available for a demand reduction pilot. However, since it depends on the arrangements for the capacity agreements made in Clauses 22 and 24, funding the pilot in this way would have to wait until the affirmative regulations implementing the capacity market are in place. We considered this option but discounted it because the process would delay considerably the start of a pilot, and, as I have said, the Government are committed to taking forward a pilot with funds that are already available to it.
Before I ask my noble friend to withdraw his amendment, I will refer back to a few points raised during the debate. First, the noble Lord, Lord Cameron, referred to smart meters. I agree with him that increasing developments in new technologies—and the smart meter is one example—will ensure that consumers will have more control over how energy is being used. It is one of a number of measures that we are taking. He also asked why we are not getting on with a pilot. At the moment, there are a number of uncertainties. We are working out how a pilot would lead to a better understanding of the potential benefits of a financial incentive and of the market appetite for such an approach. We are considering detailed elements of how the design of that pilot, its monitoring and its location would work. The noble Lord also mentioned that Germany has 33% of its grid powered by solar. I respond to that by saying that Germany also has much higher energy costs than the UK, of both gas and electricity. We are delivering a low-carbon energy mix, at least cost to the consumer: this is at the heart of what we are trying to achieve through the Bill.
My noble friend Lord Roper asked why DSR and EDR were not in the draft delivery plan. Proposals on demand-side response were detailed in the capacity market framework publication of 27 June. On electricity demand, we are committed to a piloting approach, as I have said already. This commitment—to the pilot—was included on page 15 of the draft delivery plan.
Lord Roper
My Lords, I am most grateful to my noble friend for what she has said, and in particular for drawing attention to page 15 of the plan which was published yesterday. However, it is interesting that the reference there to electricity demand reduction is,
“to enable permanent reductions in demand to form part of the Capacity Market”.
Part of the purpose of my amendment was to suggest that that was not the only way in which one could look at permanent demand reduction.
My noble friend also referred to the situation in the United States. It is interesting that in the United States, as I think I am right in saying, only 3% of capacity payments have gone to energy efficiency. For example, in the state of Massachusetts, which has had one of the most developed of the schemes, only 7% has gone to electricity demand reduction. A good deal more needs to be examined in this area, and I hope—although my amendment will not be considered today—that we may be able to come back to this on Report.
Lord Teverson
My Lords, I thank noble Lords who have contributed to this debate. I am totally unapologetic about putting this amendment forward, because it is fundamental to what we are talking about. The electricity supply industry, over recent years, has operated at an average of 50% efficiency. It only operates 50% of the time. This is before intermittent renewables are significant within the energy mix. That is why there is a problem and why we cannot, or should not, build our way out of this issue entirely.
I entirely agree that we should not table vacuous amendments. However, this is not vacuous, because it concerns one of the general considerations that the Minister has to look at. It concerns a guiding principle.
I would like to follow that up with a lot more specific amendments on energy efficiency. I have not, however, because as my noble friend has said, there are a number of provisions within the European framework although in paragraph (e) there is a reference to the renewables directive, so perhaps we should also have one to the energy efficiency directive and treat the two equally. That is why I tabled the amendment.
I say to my noble friend Lord Dixon-Smith that electricity demand is clearly due to rise very greatly, because the only way that we can decarbonise much of our economy is by moving to electricity. That makes it even more important that we should make sure that the electricity we generate is decarbonised and is produced and dealt with in a balanced way to try to make that demand reduction. That is why those two new paragraphs are there: because there is that need for balance under “General Considerations”.
I have some sympathy with the comments of the noble Lord, Lord Davies of Stamford. I do not think that the phrasing, “economically appropriate”, is exactly how one would like it in the Bill, although as for its fuzziness, paragraph (d) states:
“the likely cost to consumers of electricity”.
That is a similarly fuzzy phrase that is already in the Bill, so the amendment is in sympathy with the way that the rest of the clause is written.
The Minister mentioned my amendment in relation to the capacity payment. I stress again that it is not just about the capacity payment but about electricity market reform generally under “General Considerations”, before we move to the provisions covering capacity. However, I thank my noble friend for going through that and reassuring me in a number of areas about economic efficiency.
Clearly, the economy has got more and more efficient in terms of GDP. I would like us to do what Japan did in the 1980s, which was more or less completely to decouple the high growth rates that it then had from energy consumption. On that basis, I beg leave to withdraw the amendment.
Lord Jenkin of Roding
“(f) the desirability of promoting effective competition between persons engaged in, or in commercial activities connected with, the generation, transmission, distribution or supply of electricity or the provision or use of electricity interconnectors, wherever appropriate.”
Lord Jenkin of Roding
Colleagues may remember that I gave notice on Second Reading, during a passage when I spoke about the need for greater competition in the energy markets, that I would move an amendment to try to reinforce what is in the Bill. I will come to the amendment in a moment, but before I do, I ought just to say that it is perfectly clear that greater competition is at the heart of what the Government are aiming at. I have a letter here written by the former Minister for Energy, my right honourable friend John Hayes, to a company that has been seeking to break into the energy market. It states that,
“a competitive market is key to the Energy Market Reform programme”.
I agree with that, but his were not the only words. On 12 June, when there was the announcement from Ofgem of the opening up of the electricity market to effective competition, the right honourable Edward Davey, Secretary of State, said:
“I want our energy market to be as competitive as possible. An increased role and level playing field for independent suppliers and generators is precisely what will help drive the competition that delivers better value for consumers and businesses”.
That is what we are aiming at here. This is the first of what I suspect will be a number of amendments which have been tabled to open up greater competition in the energy industries.
If one looks back to the Electricity Act 1989—I see that an amendment in the name of those on the Labour Front Bench which has been grouped with mine refers to it—Ofgem is obliged to protect the interests of consumers and promote effective competition. However, there is nothing there or in the Bill which makes it clear that that, too, has to be a duty of the Secretary of State. Ministers have said that they want to promote more competition but there is nothing in the Bill that lays any kind of duty on the Secretary of State to do that.
We are moving to discuss the capacity market now, which, interestingly, used to be called the capacity mechanism. Happily, “market” begins with the same letter, M, so it has been transmuted into the capacity market. Even its name suggests the market has to be a competitive institution. Of course, we now know that there will be auctions rather earlier than had originally been envisaged. The auctions will happen next year but they are seen by many in the industry as a way not only to ensure greater security of supply—and there is no doubt that right at its heart, the capacity mechanism is all about making sure that we have the generating capacity to meet the demand from time to time—but to provide a way in for independent producers to join the market and to compete for contracts under the capacity mechanism.
This is the first amendment that we are dealing with under the general heading “Electricity Market Reform”. If one looks at Clause 5(2), listed there are the matters to which the Secretary of State must have regard when exercising his functions. My noble friend Lord Deben will no doubt be delighted to see that the first is,
“the duties of the Secretary of State under sections 1 and 4(1)(b) of the Climate Change Act”.
Secondly, there is a reference to the “decarbonisation target range”. Thirdly, there is,
“ensuring the security of supply to consumers of electricity”,
which is right at the heart of one of the three main aims of the process. The fourth matter is,
“the likely cost to consumers”,
and the fifth is,
“the target set out in … the renewables directive”,
for the,
“use of energy from renewable sources”.
There it stops, but the amendment in my name and that of my noble friend makes it clear that we need something more. We want an additional paragraph at the end to say,
“the desirability of promoting effective competition between persons engaged in, or in commercial activities connected with, the generation, transmission, distribution or supply of electricity or the provision or use of electricity interconnectors, wherever appropriate”.
The amendment perhaps goes a little wider than I indicated when I gave notice that there would be such an amendment in Committee. It has been the product of much consultation with firms which are anxious to play their part in the new electricity market but so far have found it extremely difficult to break into it. I will not repeat what I said at Second Reading about the wholly predominant role of the big six, all of which operate in one way or another with a vertically integrated operation that goes all the way from generation to supplying the final consumers. Other amendments on the Marshalled List seek to break into that and I shall be interested to hear what the noble Lord, Lord Berkeley, is proposing. He is not in his seat at the moment but he will be back, I am sure. There are other amendments as well, which we will come to later on.
As I have said, Clause 5(2) makes no reference to this matter. It would add a great deal more weight to the obligation on DECC to take into account the needs of independent generators and new entrants if we added a new provision that makes explicit the objective of promoting competition. The capacity mechanism is one of the ways in which the authorities intend to intervene in the market. Indeed, having seen to what extent this is under the control of the Secretary of State—certainly in the initial years—one might say that it is more than intervening; it is, in fact, running it. However, this is one of the ways in which the authorities are intervening, and the amendment has been deliberately phrased in general terms to mirror the requirement under the Electricity Act 1989 that I read out at the beginning.
Lord Roper
My Lords, my name is attached to this amendment but I shall be very brief because my noble friend Lord Jenkin has made the case for this amendment very strongly.
We are considering here electricity market reform, and we are very anxious to ensure that, in spite of fairly substantial interventions both through the contracts for difference and through the capacity mechanism and in other ways, competition will be maintained and increased.
We have had an opportunity over the past few months to talk to the independent generators and independent suppliers. In both cases, they see that there are aspects of the changes in the structure which could in some circumstances be disadvantageous to them and significantly advantageous to the larger players in this field. In that circumstance, it seemed to me—and as my noble friend Lord Jenkin said—imperative that we should make it explicit that it is a duty of the Secretary of State to take these actions to promote effective competition between all those involved in these areas.
Baroness Worthington
My Lords, I thank the noble Lords, Lord Jenkin of Roding and Lord Roper, for tabling their amendment. We have tabled a very similar amendment—great minds must think alike.
Our Amendment 52A seeks to do almost exactly the same as Amendment 52, which is to make it a requirement for the Secretary of State to have the same duties as under the Electricity Act 1989, in which the protection of “existing and future consumers” is enshrined through the advancement of competition. We will discuss this in more detail when we come to the amendment in the name of the noble Lord, Lord Berkeley, who has come up with a much more precise way of tackling this problem.
These amendments seek to ensure that the Secretary of State has a duty to advance competition. Much has been said, very eloquently, about the need for that and how, if we are going to rely on a truly competitive market, that needs to be enshrined in this Bill. So much of this Bill relies on competition to deliver efficiency. There are many complexities in many aspects of this Bill, particularly in Part 2, where you have contracts for difference and capacity mechanisms, the interplay between them and the effect that that has on investment decisions, all of which is very complicated. The more transparent the market is, the less opportunity there is for gaming and the more successful this Bill will be in meeting its objectives. I fully support the amendment tabled by the noble Lords on the other side, and our own amendment seeks to do something similar.
Lord O'Neill of Clackmannan
I remember the birth of the 1989 legislation. At that time, due to what were deemed to be the fundamentals of competition, generation was split from distribution in England and Wales. In Scotland, the companies were vertically integrated. Throughout the 1990s it became a kind of adventure playground for takeovers. We are where we are now in large measure because a number of interested foreign companies, usually American, took over the distribution companies; they subsequently sold them and they were picked up by various people at different times. So we have six players, which by and large are vertically integrated, as well as Centrica.
A lot of wise words are being spoken about competition but I am not sure if these amendments go far enough. As soon as a company becomes big enough to be a threat or to be of interest to the large players, the oligopolists of the present structure, they are gobbled up. We have seen this fairly recently with the takeover of Ecotricity, a very interesting, predominantly Irish company that engages in renewable generation. I am not sure that these amendments are going to make an awful lot of difference.
When we go further and look at the break-up of the vertically integrated companies, there is the likelihood of the two remaining companies being taken over by other foreign players that have money that they wish to expend in the United Kingdom. Therefore, I am very sceptical about how we are going to achieve anything meaningful in the way of competition.
We have at the moment six players—seven if you include First Utility, but that is rather special because it is exclusively in the retail market—and by and large they do the same as each other. They confuse the tariffs, introduce difficult pricing schemes that we do not always understand—
Lord Roper
Does the noble Lord agree that because First Utility is only a supplier, it considers itself at a serious disadvantage against those that are vertically integrated and therefore have some compensation from their activities in the supply and generating fields?
Lord O'Neill of Clackmannan
I could not agree more with the noble Lord. The point that I am trying to make is that, while First Utility has had very dramatic growth—I have spoken to some of its senior executives, who paint a very interesting picture—I am not quite sure what the life expectancy of the organisation would be if the main shareholders were given an offer that they could not refuse by one of the big six. I do not think that there is really anything in the competition legislation of the United Kingdom or within the powers of the Secretary of State to do anything about that. That is why I am a wee bit sceptical about us jumping up and down and waving our arms on this issue because somehow there is something intrinsically attractive in a new form of competition. I am not sure whether it will be any different from what we had post-1989 and defy the laws of economic or financial gravity that have been applying in the intervening period.
While I wish my colleagues well in promoting the amendment, I am not very optimistic. In five years’ time, we might well be debating the same issue and trying to secure a greater degree of competition because of the inexorability of the forces that have been at work. I am not overdramatising it or going into neo-Marxist stuff. I am merely making the point that the six main players, who are big and who are not always as nice as they appear, certainly like competition as it is and do not seem to want anything else, and I am not sure whether many of the ambitions of this Bill will actually change the status quo that much.
There are other options, which are not on the table, and I will not waste the Committee’s time discussing them this afternoon. However, we have to be perhaps a wee bit more realistic than we are. In the light of past experience, even if British companies did not want to take over some of these smaller successful players, I am sure that there would be international players, who would have a bit of financial elbow room. They might even come in to see how a competitive market works, as the Americans did in the 1990s—they thought they were going to have liberalised markets in the United States, as the Germans thought they might have liberalised markets. In fact, what they have is a market with a number of players, but each of them is a regional monopoly. Therefore, when we talk about competition, we have to be quite clear that Britain is the exception as a competitive and liberalised market, not the rule, as far as energy utilities world wide are concerned.
Lord Deben
My Lords, I am driven to get to my feet by the wise words of the noble Lord, Lord O’Neill—he may be embarrassed by this. They lead me to believe that this is a very interesting and important amendment simply because it reminds the Government, at a crucial point, of their responsibility to the marketplace, where we are of necessity intervening in order to give it a sense of time. After all, what we are really saying is that these decisions are made not just for today and tomorrow; they have to be made, given the problems, over a very much longer period. That is why we are intervening in the market-driven mechanism. However, we have to think about some of the fundamentals of the market as well.
I agree with the noble Lord, Lord O’Neill, when he points to the oligopoly in which Britain is. He is right to say that other countries are in a worse position, but that does not mean that we should not try to improve our own position. One of the odd things about oligopolies and, indeed, large businesses in general is their lack of enterprise. The bigger a company becomes, the less likely it is to produce intelligent and quick-footed answers. What worries me is that we also take for granted that bigness is better. I have seen no evidence whatever that that is true; indeed, I see a good deal of evidence that it is the opposite. Bigness is convenient, and that is a wholly different concept. I think that the noble Lord, Lord O’Neill, pointed to that when he showed how, over the years, people have taken on companies which would otherwise, in competition, be embarrassing, inconvenient and difficult, and have forced them to think differently—all the things that one needs to ensure happens in a market.
Lord Berkeley
My Lords, I shall intervene briefly because I do not want to pre-empt what I am going to say in moving Amendment 53.
The noble Lord, Lord Deben, and my noble friend Lord O’Neill both hit the nail on the head when they emphasised the problems that we are facing in the market. However, whatever else we do with other amendments, it is important that we have an amendment such as Amendment 52, which puts a duty on government and regulators to promote competition and look after the interests of consumers. There is similar wording in legislation relating to water and the railways but it is the principle on which all other negotiations and discussions are based. It may be meaningless but it is there. There have been many occasions when I have used the railway principle against a particular Government who seemed to do something stupid or something that I did not like, but it is a very important principle. Whatever we do later as we go into more detail, it is very important that we have this kind of policy right at the top to show where the Government and the regulator should be going.
Viscount Ridley
My Lords, I had not intended to intervene on this amendment and I shall do so extremely briefly, mainly because I have been moved by the words of my noble friend Lord Deben and the noble Lord, Lord O’Neill, to say that I heartily agree with them. As I do not always agree with them on everything, I suspect that that is terrible news to them, but I think that this little outbreak of what one might call “free-market anti-capitalism” is a very good point. The point of competition is to drive co-operation between producers and consumers—to cause producers to do things that help consumers both by innovation and by the lowering of prices. I shall not go on any further; I just wanted to record that fact.
Lord Crickhowell
My Lords, I had not intended to intervene but, while listening to this debate and agreeing with what has been said, particularly during the recent speeches, I was also glancing at the Explanatory Notes to the Bill. It is rather interesting that under Chapter 6 the Government have an essay on access to markets. The notes refer to wholesale market liquidity as,
“an important feature of a competitive market. It provides market participants with a route to market, risk management opportunities and investment and operational signals”.
It goes on to talk about the importance of liquidity and, further down, it says:
“Independent developers have played an important role in delivering new capacity in the renewable and gas generation sectors and could play a key role in meeting the Government’s goals and deliver essential investment in the future, provided market conditions are right”.
Having said all that, surely it is entirely appropriate that, when we get on to electricity market reform and the duties placed on the Secretary of State, the points made by my noble friend in this amendment should indeed be there. If these are the matters that the Government consider important in their introduction to Chapter 6, it must surely be right that this should be one of the factors that the Secretary of State has to take account of. It should therefore be listed in the Bill.
Baroness Verma
My Lords, I thank my noble friend Lord Jenkin and the noble Baroness, Lady Worthington, for their amendments and for the opportunity to debate some of the important issues that they have raised. In relation to Amendment 52, Clause 5 sets out the matters to which the Secretary of State will have regard when carrying out specific EMR functions to meet the objectives of EMR. Effective competition is fundamental to delivering the Government’s energy policy objectives of having energy security, keeping consumers’ bills affordable and decarbonising our energy sector. EMR will deliver the greener energy and reliable supplies that the country needs at the lowest possible cost, which is good news for the consumer, by reducing exposure to volatile and rising fossil fuel prices and securing electricity supply.
Increasing competition in the electricity market drives down prices and promotes innovation—hence competition will be considered in the context of the requirement at Clause 5(2)(d) to consider the likely cost to the consumer. For example, we are designing the capacity market in a way that promotes competition —in particular, between incumbents and the new entrants that my noble friend Lord Jenkin is anxious to see. By providing a steady revenue stream in place of dependence on volatile scarcity prices, the capacity market will help to ensure that we can enable broad participation. Furthermore, we are incentivising new investment in plants by offering longer-term contracts to new plants, which will enable the costs of capital to be spread over longer periods. This will be important in ensuring that new independent entrants can compete with incumbents, as they would be likely to find it difficult to access finance with a short-term contract.
However, it is important to note that independent generators are a broad mix. They are not just medium or small-scale firms. Some are large European or international utilities, such as GDF Suez, which do not currently have a major presence in the UK wholesale or retail market. To ensure that we capture the interests of this broad group, we have been working, and will continue to work, with the independent generators’ group on the design of the capacity market.
The Government are also addressing problems affecting competition within the market. This includes poor liquidity in the wholesale electricity market and tariff complexity in the retail energy market. We are working with Ofgem to tackle these now, and have taken back-stop powers in relation to both areas in this Bill to ensure that reforms can still be driven forward if Ofgem’s proposals are either frustrated or delayed.
We recognise that it is important to help independent generators to secure access to the market. We are aware of their concerns that it is becoming more difficult to secure a power purchase agreement and that terms have declined. We have been working to gain a better understanding of the complex PPA market and the investment issues for independents. Since last year’s call for evidence on access to markets, we have undertaken analysis of the issues and the potential options for addressing them. I hope to provide further information to the Committee on this very shortly.
The ultimate aim of electricity market reform is to allow all forms of electricity generation to compete fairly, and therefore to enable the least-cost mix of generation and demand-side measures necessary to meet our decarbonisation targets, ensure security of electricity supply and keep costs to consumers as low as possible. I hope that noble Lords will be reassured that competition is therefore at the heart of the design of all EMR functions. Consequently, it is the Government’s view that my noble friend’s amendment to Clause 5 is unnecessary.
Turning to Amendment 52A, throughout the development of EMR we have been clear on the objectives of these reforms. They have been set out in our published documents, from the EMR White Paper of July 2011 onwards, and the objectives set out in Clause 5 reflect these. The amendment would add the duties set out in Sections 3A to 3D of the Electricity Act 1989 to these objectives in Clause 5. However, the Electricity Act 1989 relates to the operation and regulation of the market, which is a different purpose from the new mechanisms that we are introducing through EMR. Contracts for difference and the capacity market are designed to complement the existing market structure and have been developed with the specific objective of moving to a secure, low-carbon energy mix at least cost to the consumer.
Furthermore, the amendment would risk causing duplication. For example, Section 3A(2)(a) of the Electricity Act 1989 relates to ensuring that electricity demands are met, and this would duplicate Clause 5(2)(c) of the Bill. We have made clear the importance of considering the cost to consumers at Clause 5(2)(d).
I turn now to Amendments 54 and 55, linking the principal objectives and duties in Clause 33 to the Secretary of State in relation to the capacity market. The purpose of this clause is to align the principal objective and general duties of the authority, in carrying out functions in the capacity market, with its principal objective and duties in the current electricity market. The reason this clause does not apply to the Secretary of State is that Clause 5(2) in Chapter 1 sets out what the Secretary of State must have regard to in relation to making capacity market regulations, as well as other EMR functions.
As I have already indicated, encouraging competition will be central to the way that the Secretary of State makes capacity market regulations. Promoting competition will be an effective way of achieving the aims of having regard to ensuring security of supply to electricity consumers and having regard to the likely cost to electricity consumers. We feel that it is impractical to require the Secretary of State to have regard to two separate lists of matters: those in Clause 5 as well as the principal objective and general duties in the Electricity Act 1989.
I hope that I have been able to reassure my noble friend and the noble Baroness, Lady Worthington, with my explanations and that my noble friend will feel content to withdraw his amendment.
Baroness Worthington
My Lords, perhaps I may ask for clarification before the noble Baroness sits down. I accept her comments about the potential duplication involved in having two lists. However, subsection (2)(d), on the likely cost to consumers of electricity, does not include future consumers of electricity. People involved in the discussion about Ofgem’s duties will know that that innocuous-sounding difference is actually a big difference. Perhaps she will reassure us that she might consider changes to subsection (2)(d) to better reflect the duties in the Electricity Act.
Baroness Verma
I have been informed that it does take into consideration the points that the noble Baroness has just raised.
Lord Jenkin of Roding
My Lords, I am extremely grateful to those who have contributed to this very important debate. As I listened to the noble Lord, Lord O’Neill, voicing his warnings about this, my mind went back to when I instituted the privatisation of British Telecom in 1982. The chairman of BT was Sir George Jefferson, who sadly died earlier this year. He was constantly in and out of my office, very much supporting the privatisation. However, when I had to say very firmly that BT was not going to be allowed to take a majority position in any of the new mobile telephone networks that were coming up, Sir George was extremely angry. He felt that it was a very unfair restriction on BT. I said to him that he had a virtual monopoly of land telephony and perhaps he ought to concentrate on that, and that in the mean time the new mobile telephone industry should develop without BT having a monopoly position in it.
Years later, when I attended a farewell reception for Sir Christopher Gent, the retiring chairman of Vodafone, which by then was worth some £82 billion, somebody asked him, “To what do you attribute the huge success not only of the mobile telephone network but of your company in particular?”. He said, “That is very easy. It was one thing: the decision of the Secretary of State at the time that BT would not be allowed to compete”. I went up to him afterwards and said, “I don’t know if you are aware that it was me who took that decision”. He said, “Oh, that’s very interesting”. I said, “Where’s my dividend?”. Of course, no such dividend was forthcoming.
I do not think I need lectures from the noble Lord, Lord O’Neill, or anybody else about the importance of—
Lord Jenkin of Roding
Perhaps I might finish my sentence before I give way. I wish more people on the “Today” programme would say that to the interviewers. I find it absolutely intolerable that they start asking a second question in the middle of the interviewee’s answer to the first question.
Lord O'Neill of Clackmannan
The point that the noble Lord makes is a good one, but he has chosen the easy one, where there was a technological change that worked in favour of Vodafone and others. If he were to look at the behaviour of BT in relation to the spread of broadband, he would find a very different story. BT’s monopolistic bullying of the broadband industry by one means or another has meant that we have some of the slowest speeds in the industrialised world, and it is all down to the inadequacy of the regulatory system that the noble Lord allowed to be created.
Lord Jenkin of Roding
If I may say so, my regulatory system was RPI minus X. I had an interview with a very senior American economist who was one of the world’s experts on regulation. He said that RPI minus X was the best and simplest regulatory instrument that anybody had ever seen. I took some comfort from that. I have not been responsible for competition in the telecommunications industry since then, so I am not in a position to comment on what the noble Lord has said.
Coming back to this amendment, my noble friend Lord Deben is absolutely right: every capitalist wants to have a monopoly. It is the job of the competition authorities to ensure that competition exists, and in this country we have very well established competition laws through the Office of Fair Trading and so on. I will read my noble friend’s reply to the debate very carefully and consult those who have been advising me on this. What I want to see is a very clear duty on the Secretary of State to promote competition.
My noble friend said, “It is in the Bill already and we do not want to duplicate it”. I can tell her that those who have studied this Bill perhaps even more carefully than I have say that actually it is not. We are going to need to look again. I will look very carefully at what the noble Baroness has said and see whether we can come to some understanding on this between now and Report.
I am quite convinced that Ministers—I will not repeat the quotations; indeed, I have given most of them to Hansard already—want to see a more competitive industry. Ofgem wants to see a more competitive industry. At Second Reading, I quoted from its June press release entitled, Opening Up Electricity Market To Effective Competition. Those with whom I, Ministers and officials have been talking feel that there needs to be a duty on the Secretary of State very clearly to promote competition. That is what we are attempting to achieve. I will study my noble friend’s speech and see whether we need to come back to this on Report. In the mean time, I beg leave to withdraw the amendment.
Lord Whitty
“( ) The Secretary of State and the Authority must ensure that any arrangements made under this section are fully reflected in the future plans of the Electricity Distribution Network Operators.”
Lord Whitty
My Lords, in speaking to Amendment 52B, I shall speak also to the other amendments in this group. They deal with the distribution network operators, which very little of the rest of the Bill explicitly does. In a formal sense, the distribution network operators look very similar to the structure both pre- and post-privatisation but, in a real sense, they have been through exactly the process referred to by the noble Lord, Lord Jenkin, and my noble friend Lord O’Neill. Formally speaking, there are about 13 companies which actually are limited to six, most of which are part of vertically integrated monoliths. I am not sure whether in this context competition is operating effectively. It is also true that DNOs are the part of the structure which has the most direct link with business consumers and household consumers. They are a key part of Ofgem’s universe in terms of its price regulation and have a vital role in delivering what most consumers would regard as security of supply—that their own lights do not go out. They are also an important part of making the whole electricity market system more efficient.
However, DNOs largely are a passive part of the system. They are a conduit for electricity rather than a lever for policy and innovation, and simply pass electricity from, say, the national grid to the ultimate user. Therefore, to a large extent they are a regional monopoly in each case but not entirely. They have hardly been mentioned in this debate and are hardly explicitly referred to in the Bill or in our discussions in Committee. The role of DNOs in the policy objectives, which the reform is intended to deliver, and the other outputs we have sought to achieve in this debate, is vital. They will be vital in terms of moving to smart grids, and in what we have just discussed in relation to electricity demand reduction and in demand response mechanisms. They also are vital in relating the whole of the system to an increased use of decentralised energy, decentralised generation, district heating and other forms of embedded energy. They therefore need to be seen as a key aspect of the capacity system and of the delivery of energy to consumers. Reducing demand and increasing the efficiency of the total distribution system plays its part in the inefficiency referred to by the noble Lord, Lord Teverson. Yet that dimension hardly features here.
In a different part of the jungle, things are going on. Ofgem is conducting a price-related review of the DNO structure. It requires strategic business plans in the context of RIIO, which a year or so ago Ofgem was always using as the term for the brave new world. It uses a slightly different system now but it is part of that approach from Ofgem. In March this year it issued a strategy document for the DNOs—which, incidentally, I think I am right in saying implied a serious move away from the kind of RPI minus X approach, which the noble Lord, Lord Jenkin, was extolling just now—and that process has been going on. Only at the beginning of this month, on 1 July, did it issue a consultation paper about the strategic business plans that were required under that previous strategy. Incidentally, that strategy extends the period of the review from five to eight years and is therefore dealing with the period from 2015 to 2023. In terms of what the Government and the industry are intending to deliver and the changes that we are intending to require, that period is absolutely vital. The consultation was six pages long but it cross-referred to the individual strategic business plans of each of the companies, some of which amounted to 400 or 500 pages, if not more. However, the deadline for the response to that was 2 August—that is, the paper was issued a fortnight ago and a reply is required by tomorrow fortnight.
Meanwhile, we are dealing with the broader aspects of capacity mechanisms and the whole of electricity market reform. Presumably Ofgem, after the close of that consultation, will finalise its view of the DNO structure for a period of eight years. Although all the DNO companies seem to have produced strategic plans, it is somewhat difficult to see how they could have done so for that eight-year period without knowing what was coming out of the process that we are discussing here today and have discussed over the past few sessions, and indeed what is going to come in the statutory instruments and the follow-through after the Bill has passed into legislation.
It is also a bit odd that we should move to an eight-year period when other aspects of electricity market reform may well have different time periods attached to them. The only conclusion from that would be that the department and Ofgem do not expect everything in the Bill, as well as all the intentions and strategies laid out under the Bill, to have much impact on the way that the DNO sector operates. That cannot be right and it cannot be the Government’s intention. In fact, whole new capacity mechanisms, including those that we have debated in connection with energy demand reduction, must have an impact on the DNOs’ operation. This document on the market reform delivery plan ought to have a dimension which is specifically related to the DNOs, but I cannot see it in there—it is 70-odd pages of big print and I did try to flick through it last night. However, it must have serious implications for the DNOs.
I tried to look at one of these business plans. My own company, Western Power Distribution, supplies consumers in the south-west and has a good level of consumer performance, although it has since merged with some other companies. It has produced a plan totalling 704 pages which sets out everything about its investment, its expenditure, its price approach, its customer services—some of it is quite good, although some of it is a bit unambitious; its carbon saving, for example, is only 5% over those eight years, which is slightly less than we are expecting of the system as a whole—its approach to leakages and other environmental considerations, and its social obligations, including a worthy reference to fuel poverty. However, what it does not do is to say anything about its place in the restructuring of the electricity market as a whole. That I find very odd. There is nothing, for example, on the demand reduction side; there is nothing about the effect of smart users at the user end; and there is nothing about the move to smarter grids at the other end.
On present progress, quite apart from the process started by this consultation on the electricity market reform delivery plan, after 2 August Ofgem will presumably be endorsing those business plans or otherwise within the context in which they were set and without fully taking into account what is happening in the rest of the Bill and the rest of the Government’s intentions. So the times are out of joint and these amendments are a modest attempt to try to put them back into a degree of conjunction.
Baroness Maddock
My Lords, I support the noble Lord, Lord Whitty. As I have declared before, I am vice-president of National Energy Action, which has been working with Ofgem on this because there is the potential to reduce prices for vulnerable customers in fuel poverty. As the noble Lord said, it is rather surprising that the distribution network operators have not been specifically mentioned with regard to electricity demand reduction because they have the ability to reduce the cost of network reinforcements, which would reduce prices.
We are always talking about what is going to add to the cost of fuel but this amendment would reduce prices. If we are moving to more people having domestic electric heating, it is particularly important to find ways of reducing the cost. There is quite a lot of work going on here. Indeed, NEA has been working with Ofgem on some of these proposals. I give my strong support to this and I hope that the Minister can indicate that the Government recognise that this is an important part of what we are all trying to achieve.
Baroness Verma
My Lords, I thank the noble Lord, Lord Whitty, and the noble Baroness, Lady Worthington, for tabling these amendments, which highlight the important role that the distribution network operators play in our electricity system, including in supporting electricity demand reduction. Amendment 52B seeks to ensure that distribution network operators take account of government policy as set out in Clause 5. Amendment 55ZZC would insert a requirement in Clause 37 for the Secretary of State to take account of the role of distribution network operators in a pilot scheme to permanently reduce electricity use.
Ofgem regulates through a licensing system and electricity distribution network operators need to obtain licences from Ofgem to participate in the energy market. An important aspect of this system is Ofgem’s power to set regulatory price controls, and its price control framework. This, as the noble Lord pointed out, is known as RIIO, and is well aligned with the Government’s energy policy, including the requirement for network companies to invest efficiently to ensure continued safe and reliable services, to innovate to reduce network costs for current and future consumers, and to play a full role in delivering a low-carbon economy and wider environmental objectives.
As we have previously debated, the Government are providing even greater clarity, as Clauses 119 to 126 will enable the Secretary of State to introduce a new strategy and policy statement for Ofgem to help improve alignment with government policies. In addition, my department works closely with DNOs and the wider industry, through groups such as the Smart Grid Forum, to satisfy ourselves that strategic investment decisions are being made.
On the specific issue of efficiency and reducing demand, DNOs have a licence condition on them to reduce losses, and they have been required to set out in their business plans how they will reduce losses, and to publish annual reports on what loss reductions they planned and what they actually achieved. A discretionary reward of up to £32 million will be made available by Ofgem, over the price control period, for efficient and innovative loss reduction initiatives.
In future price control reviews, when more reliable data may be available through smart meters and smart grid technology on the networks, Ofgem expects to introduce further incentives. Furthermore, Ofgem has recently extended the scope of its Low Carbon Network Fund to enable DNOs to carry out electricity demand reduction projects, which will complement the Government’s larger-scale pilot.
To reiterate the points made in our earlier debate on the electricity demand reduction pilot, while I support the noble Lord’s aim of ensuring that we test variations of the key elements associated with demand reduction projects, the Secretary of State already has the ability to design and run a pilot—or pilots—to test different approaches.
Clause 37, as I said earlier, is simply a spending power; it authorises the spending of money for EDR pilots. Our intention is design the pilot in a way that encourages projects to be delivered by a variety of organisations, including DNOs, provided the projects meet the criteria that we develop.
The noble Lord, Lord Whitty, asked why we cannot deliver eight year-old DNO plans without details under EMR. We have set out clear policy intentions—for instance in the renewables road map published last year, and in our various announcements on EMR—to move to a low-carbon energy mix. This informs the development of the DNO plans.
The noble Lord also asked why we had moved to an eight-year period. This was to encourage DNOs to work more strategically and to invest over a longer term, instead of making short-term investment decisions.
I hope the noble Lord is reassured that I recognise the important role that DNOs are already able to play in helping to realise reductions in electricity use. I hope that on that basis he feels able to withdraw his amendment.
Lord Whitty
My Lords, I am grateful to the Minister and also to the noble Baroness, Lady Maddock, for her support.
It is certainly true that there have been general indications of the Government’s direction. No doubt they are taking into account the DNOs in drawing up their plans. It still strikes me as very odd that we have here a piece of legislation, the capacity mechanism bit of which we are discussing now but the detail of which is not yet known, and it will require considerably more explanation before we finish this Bill and some serious delegated legislation thereafter. If it applies to DNOs—as the Minister rightly says in a sense it will—it must have implications for how DNOs operate. The outcome of the demand reduction must have implications. The way in which the capacity mechanism brings other people into play in the grid, and ultimately down the distribution system, must have implications. Therefore, I still find it very odd, even if they have read all the signals right—and my brief reading of the 700 pages of the Western Power document suggests that they may have missed one or two.
I am not necessarily objecting to the eight-year period, but that period has to relate to something that is operating under the wider electricity market reform. Instead, we are going to have the approval of the DNO strategic plans within the next two or three months before we know how the capacity mechanism is working, before we know how the demand reduction mechanisms are working and before we know a lot of other detail that will emerge from this Bill, which will eventually be encapsulated in the new strategy and policy statement from the Secretary of State. That will be the context in which Ofgem and the industry will have to work.
I am not trying to be awkward with the Government. I just do not think that they have the pieces in the right order or in the right place. Before we complete the consideration of this Bill, we need to be a bit clearer on how the distribution structure will operate in the new system. We should not have Ofgem definitively endorsing the plans, which it will have before it in a couple of weeks. In the mean time, I beg leave to withdraw the amendment.
Lord Berkeley
“Divestment of retail business
(1) Any electricity generator which also supplies electricity to either domestic, commercial or industrial users shall, within two years of this Act coming into force, divest itself of its supplier business so that—
(a) an electricity generator shall have no financial interest in, or exercise any right over, a supplier of electricity or gas;(b) a supplier of electricity or gas shall have no financial interest in, or exercise any right over, an electricity generator;(c) no person may hold a directorship of an electricity generator and a supplier of electricity or gas concurrently,and any contracts entered into between any of the divesting parties shall cease to have effect when this section comes into effect.(2) Generators which have a direct contract to supply the majority of their output to a defined site through a private transmission scheme are exempt from this section.”
Lord Berkeley
My Lords, to some extent, we started discussing the issue of fair competition in the debate on Amendment 52. I certainly welcomed the comments from the Minister in her response, but I think that this issue, which is designed to require the big six generators—those who own both generating and retailing—to separate, is probably separate from all the other discussions about pricing, who gets what, guarantees and everything else. However, unless we achieve the separation, I do not believe that we will get fair competition.
My reason for saying that is that I believe we will have higher costs, a lack of transparency, which one can widen out to cover a lot of things, and added risk for the independents in selling to the retail market. I am sure we have heard it before but when the big six, according to Ofgem, are producing something like 72% of the generating capacity and a percentage in the high-90s of the domestic retail, it is quite a challenge, as my noble friend Lord O’Neill mentioned earlier. He also mentioned that there is a similar experience in Germany, with the three major suppliers inhibiting competition, and the comments that I get from Germany indicate that there are similar high prices and a lack of choice.
I find it very interesting that on the railways—I declare an interest as chairman of the Rail Freight Group and I am on the board of the European Rail Freight Association, which is an association of small, independent operators—we are finding exactly the same problem. At the moment, the European Commission is trying to drive what it calls the “fourth railway package” through Parliament and the Council, and Germany is again opposing any attempt to remove vertical integration, which Germany has at the moment. It has got to the stage where the Commission has accused the German Government of allowing the infrastructure manager to make a profit on its access charges and transfer the profit up to the holding company and down to its own train operating company. In effect, independents who want to run trains on a line are paying an access charge, an element of which—the profits—may well be going to subsidise their competitor. The two parties to it in electricity are different, but I suggest that it is the same problem. It is resulting in a loss of competition because the smaller operators get swallowed up by the bigger ones, which happens in France as well, and it is difficult to know what can be done without insisting upon this total separation.
Lord O’Neill of Clackmannan
I have some questions for my noble friend. What he is suggesting has been tried before. We used to have the separation—I shall not say of powers—but we did not have vertical integration at the time of privatisation. That position prevailed for about 10 years. My noble friend has to show us whether things were better then. Were prices, independent of exterior energy costs, cheaper than now? Certainly the degree of obfuscation of tariffs was not as sophisticated as it is now, but whether that is down to the character of ownership, the nature of the industrial organisation or just the badness of some of the people involved in setting the prices is for others to decide.
The point I am getting at is that this is not new; we have had it already. I am not sure that consumers were any better protected then than they are now, or that prices were that much lower, when we take out the externalities that determine the price. I am not sure that when we take out the impact of the price of oil and gas on the energy market there is that much of a difference.
Let us not forget that one of the first things that the Labour Government did in 1997, which attracted no opposition at all, was to introduce the windfall profits tax because of the way in which a number of the utilities had been screwing the country as a whole. The Select Committee that I chaired thought that we made a sizeable contribution to a better understanding of the abuse of utility power at the time. Indeed, I always worried that such was the universal acclaim for the Labour Government’s windfall profits tax that they had probably got it too low. They probably could have got far more out, because people knew the degree of pain and had prepared themselves for it.
That is not the point that I am trying to get at here. If there are abuses of the kind that my noble friend suggests, would it be better to go through what might be a lengthy and costly process—I can imagine the lawyers salivating at the moment over the prospect of what they would get out of it—or would it not be more appropriate to try to deal with that market abuse by a radical reform of the regulatory process? The selective choice of international examples made by my noble friend is not really relevant, because in the case of France and Germany, we are dealing in the main with regional monopolies. Their markets are not like ours. We have an oligopolistic system where there is fantastic loyalty to the old electricity boards, and people still talk about them in that way. The reluctance of people to switch has been one of the great frustrations of the regulator and the advocates of the market, because people, by and large, like to stay with the devil they know and choose not to move, for whatever reason.
My real point is that I am not sure that the international comparison is that relevant because although the companies are vertically integrated, they are operating in different market structures. While this is an interesting debate to engage in, I am not certain that it will come up with the answers that my noble friend is looking for. In the 1990s, when we had something like this, it did not really work that well and there were an awful lot of other forms of market abuse. Indeed, that is why we had market reforms—the previous Labour Government had two bites at the cherry during their 13 years. I understand where he is coming from but I am not sure whether he would get where he wants to be by the mechanism he suggests, short of having a radical, tough regulator prepared to have a go, unlike the overly cautious regulators that we have been blessed with in the energy markets over the past 20-odd years. The Opposition have said that they would like to change drastically the character of regulation in this area, and that might be a more productive way of going about it.
As I said, I am grateful to my noble friend for raising the issue because it is important that we consider it, although I am not quite convinced that past experience or the evidence that he has adduced are necessarily unduly relevant to the objectives that he is trying to find.
Viscount Hanworth
My Lords, I support the amendment of my noble friend Lord Berkeley. If his amendment were adopted, and indeed if the policies that it prescribes were implemented, I believe that many of the problems that afflict our electricity industry would be overcome—notwithstanding what my noble friend Lord O’Neill has just said, which I shall consider at some length.
The amendment would radically alter the oligopolistic environment in which the big six vertically integrated companies dominate the generation of electricity and its supply to industrial, commercial and domestic consumers. There would then be some chance that a genuine economic competition could ensue. The vision of the free-market fundamentalists, who inspired the radical restructuring of the industry through a privatisation that occurred a quarter of a century ago, would come closer to being realised than ever it has been.
Having said that, I confess that I greatly regret the demise of the state-owned electricity industry. Mine is not a doctrinaire position, as some might imagine, albeit that much could be said to justify a doctrine of state ownership. An attitude in favour of state ownership of the electricity industry needs no further justification than a reference to the example provided by the French electricity industry. Although the dominant French company Électricité de France, or EDF, sometimes adopts a cunning commercial concealment, it is state-owned, excepting a very small proportion that is attributable to shareholdings which are predominantly in the hands of other companies closely allied with the French state.
I am an admirer but not a friend of Électricité de France. A testimony to its success is the fact that, apart from being one of the aforementioned big six companies dominating the English market, this company owns virtually all of Britain’s nuclear generating plant. Over many years, Électricité de France has worked in close collaboration with the French Government to realise the latter’s strategic objectives regarding the provision of the nation’s electrical power. Only recently, with the advent of François Hollande, has there been any significant difference of opinion between the politicians and the management of EDF regarding the investment strategy.
An investment strategy is precisely what the Bill is about. The danger we face is that the industry’s dominant firms will have no interest in providing the investment in the UK that would serve to avert the risk of a serious electricity shortfall. Although the free-market economists might deny this reality, the fact is that these are multinational companies, often with head offices in other countries. This implies that their primary interests and loyalties are not with the UK. When they are seeking profitable investment opportunities, they are liable to look much further afield.
There are some minor players in the UK electricity market that are based predominantly in this country and have few interests abroad. These are the independent electricity generators which are concentrated in the renewables sector. It is perhaps inevitable that the Government should look to these companies to provide a substantial proportion of the new investment in renewable generating capacity. Notwithstanding the fact that they currently account for only a small proportion of the generating capacity, it is hoped that they will provide something between 35% and 50% of the new investment in renewable plant.
The truth of the matter is that these companies are in trouble. They are being squeezed out by the big six, which have an increasing proportion of renewable capacity in their own portfolios and a declining reliance on the independent generators to fulfil their renewables obligation. The eventual suspension of the renewables obligation in 2017 will spell the doom of these companies, unless measures are adopted to safeguard their position. This is what the present amendment and subsequent amendments being spoken to today propose. It may well transpire that the measures proposed in subsequent amendments represent the only viable ways to protect the interests of the small generators and ensure that they continue to have a market into which to sell their produce.
Lord Deben
My Lords, I am very clear in my desire to have maximum competition. I have been fascinated to hear the various versions of history of privatisation, the like that we have now been given. It is rather like listening to the history of the Battle of the Boyne in the north of Ireland. You would not expect to find that people were talking about the same event. Happily, we have not come to blows about it but perhaps I may suggest that there were few industries as incompetent, useless and pathetic as the British electricity industry before it was privatised. This industry hid the cost of nuclear power in a way which was possible only because it was totally and utterly opaque.
I remember having discussions with the head of the Central Electricity Generating Board and it was quite impossible ever to get any information of any kind that anyone would need if they were to make any assessment. I sat in a Cabinet meeting when the noble Lord, Lord Wakeham, had to come in and explain that we could not privatise the nuclear power industry because the finances had been so incompetently run that there was no way whatever that it could be presented in a manner which anyone properly could buy. Do not tell us this story about the electricity industry. On top of that, we have had a pretty miserable time since privatisation. It would be better to do what one should do in the north of Ireland; that is, to say that there are very considerable histories on both sides and that we had better just face that, and not try to fight old battles again.
The issue is that we do not have as good a degree of competition as we would like. We do not forward that by lauding either the failed system of state ownership or the not-very-efficient system which we happen to have now, so would it help to take the amendment of the noble Lord, Lord Berkeley? When reading this amendment last night, I started by thinking it sounded rather good—or perhaps it was this morning; it is out of my memory now. Then I thought, “This is exactly the kind of prescription that does not work”. We need to make sure that every time we make a decision, we do so in a way that ensures the maximum likelihood of competition.
One of the helpful comments made reminded the Government of the end of the ROC scheme in 2017. That is an area where we could look very carefully at ensuring that the move into the new structures encourages competition, and enables the companies that have made real advances in the present structure to transfer to a new structure. Maybe we will have to alter the new structure to make that more likely. If I may say so to my noble friend the Minister, my problem is that I am not sure whether the Government are entirely with it, or moving fast enough and with enough sensitivity, to do their best here.
The noble Lord who has been promoting a concept of bringing expert advice into DECC has graphically illustrated the concerns we all have about constantly changing Ministers and, above all, constantly changing civil servants. One of my worries is that unless we get some better stability in the structure, we will not recognise early enough—or long enough ahead—the changes we have to make to protect what competition we have and to encourage more. Having said that, I must say to the noble Lord, Lord Berkeley, that I am not at all sure that the kind of shake-up he proposes here would be a satisfactory means of delivering it. Indeed, it certainly would be a satisfactory means of delivering total incomprehension and utter difficulty at a point when it is most necessary that we keep the lights on.
Therefore I hope that the Minister will not accept this, and in a robust way—meaning that she will tell us that she will act in a way that is a bit more than merely taking on board the need for competition. I hope, rather, that she will find a whole range of areas where the Government can promote that competition.
Lord Oxburgh
My Lords, I will make two quick points. First, I point out that many Governments would salivate at the thought of having six roughly equipotent competitors or participants in a regulated industry in competition with each other. For my information, I am not clear how you decide when you have enough competition, because six participants is quite a lot. It is popular to bash the big six, probably because they do not handle their consumers very well and they have all been associated with unpopular price rises. However, I would like to hear this aspect explored a little more.
My second point is quite separate, which is to draw attention to the second subsection of the amendment of the noble Lord, Lord Berkeley. Regardless of whether the amendment is accepted by the Government, it is very important that the Government take note of that second subsection. It covers a lot of small businesses—I declare an interest as a director of 2OC, which does this—that use renewable energy on a particular site and deliver it to a particular business or a very small range of customers locally. They generally combine generation and transmission to one or a limited number of customers. The Government should make sure that that is protected in the Bill, whatever the final outcome.
Viscount Hanworth
Perhaps I may make a few more comments, some of them addressed to things that have just been said. A great deal of negative propaganda accompanied the privatisation of the electricity industry in the UK, but many studies indicate that the industry was far more efficient than another national industry with which we should compare it, the American industry. There is no question about that. Yet many people tendentiously denied these realities.
If we are to have a nuclear industry, it will be in the hands of a state-owned foreign monopoly. That is a reality that sits very ill beside the fantasy of perfect competition. If we are to have a competitive environment or, indeed, any competition in this environment, perhaps the competition should come from a British state-owned nuclear industry. We have to think somewhat outside the box and not revert to the paradigms of perfect competition versus state industry, which seems still to dominate people’s thinking in this respect. The only countervailing force that I can imagine that could really survive in the British electricity industry to induce competition is if a fraction of it lay in the hands of the state.
Baroness Worthington
My Lords, like the noble Lord, Lord Deben, when I read this I thought that it was a very elegantly phrased and simple set of provisions that are very easy to understand and could go a long way to sorting things out. Having thought about it a bit more, I am still quite attracted to it, but that is not to say that it is necessarily the only way in which the problem could be solved—or, indeed, the right way. What we really want is an acknowledgement from the Government that, rather than thinking about the past— sadly I do not have the benefit of those many years of pre-privatisation—we should really be thinking about the future and acknowledging that the Bill signifies a massive change of direction. As a result of that, it is appropriate that we think again about our competitiveness regime. It will come as no surprise that, from our side, we believe that we need a new regulator to do that—one with real teeth and independence, and one which is not scared to hear from the incumbent, saying, “You don’t like that? We’ll change it for you”. That is the modus operandi of Ofgem, I am sad to say. There are many ways in which we can address the issue.
In answer to the question from the noble Lord, Lord Oxburgh, about how much competition is competition, six companies might be appropriate if it were not for the fact that the vertical integration of generation and supply gives them an enormous advantage in this market. That is what needs to be looked at—and that is why the noble Lord, Lord Berkeley, can be congratulated on his precise and laser-like vision in getting to the nub of it. It is possible to force the integrated companies to operate in a less integrated way, but it is what they do with the DNOs, as my noble friend pointed out. Many of the big six are owners of DNOs. But there are regulations and laws that mean that they have to have a very firm Chinese wall between those parts of their industry, which is precisely because they are natural monopolies and will gain enormous advantage by knowing what is going on in the other parts of the business. So there is a precedent for keeping the corporate structure the same but having clear delineations between the different parts of the business.
Why is this more important in future? One reason that has been oft-cited for allowing vertical integration to continue is that it keeps the cost of capital low. If you are a vertically integrated company and you have a supply base of millions of customers, you can borrow against it very easily and get nice low-cost capital. That was true until this Bill, which completely removes the risk of new generation and potentially gives companies a many decades-long contract against which they can borrow. So the old arguments for vertical integration are falling away, and we should now be reconsidering the logic of allowing it to continue. There are many examples where vertical integration can act against the interests of consumers and of more plurality, competition and lower costs in the market. I shall choose just two.
Baroness Verma
My Lords, I am grateful to the noble Lord, Lord Berkeley, for his amendment. Amendment 53 is aimed at the abolition of the vertically integrated business model in the energy industry. I have listened carefully to noble Lords and I have some comments to make after I have gone through my speaking notes, which I hope will address some of the issues the noble Lord has raised. I reassure him that the coalition is committed to driving competition and choice in the energy market.
In considering the merits of this amendment, we must be guided by what will most benefit consumers, deliver competition, affordable energy and better customer service, and secure the investment we need for the future. We must acknowledge that the vertically integrated business model delivers a range of benefits for consumers through lower capital costs, efficient risk management and economies of scale. Simple prohibition of certain business models could lead to higher prices for consumers and trigger lower investment in the market.
The Government believe that consumers will get the best deals when suppliers face much tougher competition. Wider competition and more diversity are key to a competitive market and securing investment. We must ensure that the market is open to all business models to provide them with the ability to compete on a fair basis. That is what the Government and the regulator are working to achieve. It is why we have made concessions on the threshold for the small-scale feed-in tariffs and the route to market for independent renewables generators. These will help to open the market to community energy projects and smaller independent renewables developers.
Liquidity in the wholesale market remains a key barrier to entry for independent players and Ofgem has recently announced a package of reforms to address the low levels of liquidity in the wholesale electricity markets. This is a positive step forward and the Government welcome Ofgem’s announcement. We want to see swift and effective implementation of its reform package. However, we are seeking back-stop powers in Clause 43 to address low liquidity should Ofgem’s reforms be delayed or frustrated.
The Government are also looking at other barriers, including independent generators’ ability to secure bankable long-term contracts that will allow them to finance their projects. The Government are taking back-stop powers in Clause 44 to enable them to act quickly to address this issue if necessary. I know that this will be of particular interest to the noble Lord, Lord Berkeley.
Finally, Clauses 127 to 131 will give statutory backing to Ofgem’s retail market review proposals. This will ensure that energy companies place consumers on the cheapest tariff that meets their preferences, thus simplifying the market and enabling consumers to shop around for the best deals. Bringing greater transparency to the retail market will also make it easier for innovative small suppliers to compete with larger established players in the market.
We share the desire of the noble Lord, Lord Berkeley, to ensure that consumers get the best deal in a fair, affordable and competitive energy market. However, requiring the energy companies to divest and reorganise is not the most effective way of delivering the outcomes that I know we both desire. It is likely to create unnecessary disruption at a time when we need significant investment in our energy infrastructure, and we are making real progress in introducing greater competition in the energy markets.
I query also whether this would improve liquidity in wholesale markets, at least to the degree suggested. Poor liquidity relates to a lack of availability of products or buyers for products, and poor transparency of prices. Removing vertical integration will not necessarily address these issues fully, whereas Ofgem’s reforms to the wholesale electricity market are focused on making more power available to buyers while ensuring that generators can sell their electricity, and on increasing price transparency. We therefore believe that reforms by government and Ofgem offer the quickest, most effective and most reliable way to increase competition and boost consumer confidence in the energy markets.
We have a real opportunity through the reforms we are making in the Bill to see the way opened for greater competition, greater transparency and harsher penalties if generators and suppliers do not provide the choice and value for money we all want to see for customers. Decades of missed opportunities cannot be allowed to continue.
Perhaps I may pick up on a couple of the points that the noble Lord, Lord O’Neill, made about the flaws in the amendment of the noble Lord, Lord Berkeley. I refer back to what the noble Lord and the noble Baroness, Lady Worthington, said about Ofgem. When he was Energy Secretary, Ed Miliband said that Ofgem was a regulator fit for purpose. Through supporting Ofgem and strengthening its powers, we are trying to deal with the fears that the noble Lord, Lord Berkeley, and the noble Baroness, Lady Worthington, have. It is not about creating another new body but about ensuring that the body we have has the powers to be able to deliver what a regulator is supposed to be delivering; that is, to be quite tough on energy suppliers. We have seen examples of that. Between April 2011 and March 2012, Ofgem set fines of more than £19 million for licence breaches and anti-competitive behaviour. It imposed fines of more than £500,000 and £4.5 million in redress.
It is not about change but about ensuring that we empower a body. It would be really interesting to know what sort of body the noble Baroness, Lady Worthington, would put into place and what it would do that Ofgem is not doing. It is not clear to me that banning vertical integration would in fact improve liquidity in the wholesale markets, at least not to the degree suggested. A lack of available products and poor transparency is what needs to be addressed and on that basis, I hope that the noble Lord will see that what the Government are doing in the Bill is right, and withdraw his amendment.
Baroness Worthington
In response to the Minister’s direct question, we would have a regulator which, when it is asked, “Why can’t you split vertical integration?” answers, “That is a good idea and we will look at it in more detail”, instead of “Because the industry doesn’t like it”. Quite frankly, as I said earlier, when it did a review into liquidity and competition in the market, eight recommendations were made but I think six of them were dropped and the two that were moved forward were watered down. As soon as Ofgem goes and consults its friends in the industry, it gets told, “That’s too difficult—we couldn’t do that”, so things get watered down. That is what we have to break.
For example, the noble Baroness quoted the suggestions that Ofgem has come up with for solving this problem. The market-maker proposals are frankly ludicrous. They are so complex and so against a normal, natural market that I really cannot believe that that is our solution to this issue—actually, I can believe it since it is Ofgem—when the real solution is staring us in the face: no more vertical integration. However, I will sit down.
Lord Berkeley
I am very grateful to all noble Lords who have spoken in this debate. We have had a very wide-ranging debate with a wide range of opinion. It is really good that we have been able to air it. We have not all agreed but at least we have discussed it. I will not respond to every noble Lord who has spoken—to whom, many thanks—but the noble Lord, Lord Oxburgh, asked particularly how one decides whether six generators are sufficient for competition. There is no number bigger than three where it matters very much, in my experience. The key is that they are all able to act fairly, simply and transparently.
We have six at the moment, and whether they are in a cartel is not for discussion tonight. That is something for the regulators and the Competition Commission, if there is a complaint. However, what motivated me to put down this amendment is the problem of having a complaint from some of the other generators, which do not have retail outlets, that the system is not fair. They have to be convinced that it is fair because otherwise they will not invest. The proof of the pudding will be in the eating, but will the lights have gone out before we see the answer? On competition generally, my belief is that it is much better to have a simple structure than devising all kinds of rules and regulations to make sure that a mixed structure will work.
My noble friend Lady Worthington suggested Chinese walls as an alternative to complete separation. Chinese walls work if they are properly policed, so that may be another answer which we should discuss later on. To me, the key is to have a strong and effective regulator that is not captured by the industry. I am not saying that the present one is captured, but the key will be whether we end up with a system where all the independent and other new generators that do not have retail outlets feel so comfortable that they will continue to invest. I hope that they will also multiply rather than what happens on the other side, when they all get bought up by one or two big ones and there is no actual competition. I shall read the Minister’s response with great interest.
Lord Teverson
I hope that the noble Lord will not mind me intervening. I thought that the noble Lord, Lord O’Neill, asked a very interesting question about the decade when there was effectively this separation. Does the noble Lord, Lord Berkeley, have any thoughts about whether it was better then, or does he have any other answer to that? It is quite an interesting issue that came out of the debate.
Lord Berkeley
I do not think that it was particularly perfect then. We thought that it would get better, but what is probably different between then and now is that the technology has moved on. We are able to trade and the physical network has got a lot better, so I am not sure that the situation is quite the same. However, I am sure that my noble friend will have more to say on that.
Lord O'Neill of Clackmannan
I just want to make the point to my noble friend that, of the six companies that currently exist as vertically integrated companies, two of them started off as vertically integrated companies because of the difference between the jurisdictions in Scotland and England and the desire of the Secretary of State for Scotland to have vertical integration. Therefore, we have always had that vertical integration for two of the companies. The interesting thing is that one of the two is still British-owned, whereas all the other companies are now in the hands of foreign owners. Scottish and Southern Energy is located in Perth; it may have major shareholders across the world but it is still a Scottish company, or a UK company based in Scotland, which is something that we tend to lose sight of.
Lord Berkeley
I am grateful to my noble friend. He is absolutely right. It is good to have Scottish companies. It is also good to have companies that all pay their tax, wherever they are based, although that is probably a slightly separate subject. My concern is whether the companies, whether they are Scottish, English, British or whatever, are behaving fairly with the generators that do not have access to the retail market. As I said, it would be perfectly possible to have a Chinese wall rather than total separation if that could be worked. I am not sure what the disadvantage of that is but it is only one small cog in the whole jigsaw puzzle—I am mixing the metaphors nicely—of making fair competition that works and which is for the good of the consumer. I beg leave to withdraw the amendment.
Lord Davies of Stamford
Lord Davies of Stamford
My Lords, I will deal briefly with the first of my amendments, which would replace “may” with “must”. I think that there is far too much use of the word “may” in this Bill. If Parliament thinks that something is important, it should, in my view, be decisive about it. If we decide that we ought to give an instruction to Ministers, we should give them a clear instruction and not just a vague exhortation, such as is encapsulated in a subjunctive word such as “may”. In fact, as I said earlier in a different context, it is very important that the law generally should be precise and unambiguously comprehensible. If you give someone an instruction which is not an instruction, you are not producing good law. That is the simple reason why I want to change “may” to “must”, and it is a theme that applies to many other instances in the Bill.
I now come to my more substantive second amendment. By way of introduction, when I read the Bill I was quite surprised to see in Clause 21 the capacity market dealt with jointly with the issue of demand reduction. Of course, the whole Bill is really about demand reduction—how you can get the price mechanism generated by concepts such as the decarbonisation principle and contracts for difference and so forth to force people to be more efficient in their use of energy and to bring down our carbon emissions. That is the whole purpose of the Bill.
The capacity market is rather specialised; it concerns how we provide ourselves with a margin of safety over periods of peak demand so that there is not a serious danger of the lights going out. I thought that that would require and deserve separate treatment in a specialised section of this Bill. There is an aspect, of course, of demand reduction that is intimately related to the capacity market. It is intimately related in an inverse sense, in the sense that when you have more of one, you have less of another. That is the issue of demand reduction in the sense of modulation of demand—or what I prefer to call intelligent management of demand so as to reduce the aggregate volatility of demand for energy, particularly for electricity, in the economy—to reduce the peaks, and reduce the peaks that perhaps raise the troughs; to reduce volatility. There are many ways in which modern technology enables one to do that, which was extremely well described by the noble Lord, Lord Cameron, as regards dealing with smart meters and so forth. I do not need to go back over that.
The Minister has already referred to this approach several times and the Government in principle are entirely signed up, which is why it is in the Bill. There is a certain logic in dealing with the capacity market and demand reduction as reciprocals in the same part of the Bill. However, it would be a great mistake if we held up progress on intelligent demand management and demand reduction until we have a capacity market up and running. I should have thought that we should do things the other way around. It will be very difficult to know how much additional capacity we will need—that is, what we need by way of a capacity market and a definition of what the task of a capacity market is—unless we know the potential for demand reduction and specifically for the reduction in the volatility of electricity demand in the economy. Until we have experimented with some of these new systems, and have seen whether people and the market respond to these intelligent meters and so forth, we will not really know how much we need in terms of additional capacity as a safety margin in the electricity market.
It is clear that the general principle is universally acknowledged. My amendment would make sure that we do not neglect smaller businesses and households in all this. From what I can gather, all the discussion up to now has been with big generators or big consumers of electricity. It is extraordinarily important that we do not ignore, on grounds of fairness and economic rationality, smaller businesses or private individuals and families. If the Minister says that the Government are not ignoring them at all and that they are absolutely in the front line of their concerns, the substance of my amendment very largely would be achieved. That is why I am very explicitly putting forward this matter today.
I deliberately mentioned that there are two principles behind my amendment. One is fairness and the other is economic efficiency. The fairness point is that unless small businesses are encouraged to have equal access to these new smart meters and other means of monitoring price in the market so as to make sure that they can modulate their consumption of electricity to maximum advantage from their point of view, there will be a terrible distortion between the smaller people and the larger people. It will be much more difficult for small businesses, which have to cover many issues and risks with limited management, to be up to speed with new technologies of this kind. I suspect that regulations may be required in order to make sure that they get an equal crack of the whip. That is the way in which I want the Government to think about this. Certainly, small businesses should be equally sensitive, or perhaps more sensitive, to the price of energy than big businesses. They need this as much as possible.
There is a clear fairness point in terms of households. I thought that most of us in this country were concerned—although I am not quite sure about this increasingly Thatcherite Government, with the invention of the bedroom tax and so on—about the potential impact of the very necessary decarbonisation targets and increase in energy prices on poorer households in this country. In so far as that is the case, we should want to make absolutely certain that these new technologies of the smart meters and so forth are available to all families and households, but particularly to poorer families. Poorer families will have what I think would be known technically as a very high price elasticity of demand for energy. That is to say, their demand will vary quite a lot depending on the price.
To put it in terms of a graphic, the demand curve will be sloping—everybody requires some electricity for cooking, heating or what have you—but not too steeply. At the other end of the spectrum, I do not suppose that bankers, lawyers, Premier League footballers, movie stars, Russian oligarchs or Arab sheikhs are at all sensitive to price in their consumption of electricity. Their demand curve is almost certainly vertical or as close to vertical as makes no difference. Between those two extremes, there is a vast number of people with different demand curves. Overall, there will be very substantial opportunities for people to save on energy if they are given the opportunity to do so and if it is clear to them where the price advantage of doing so is.
On the grounds of both fairness and efficiency, in maximising this process of intelligent demand and consumption of electricity in the future, we need to ensure that households and small businesses are kept to the fore of the attentions of the Government, the regulator, the big beasts—the big six generators—and all the other players in this market. Without some very specific regulations, I suspect that things will not work out that way. That is the purpose of my amendment and I hope that the Government will be able to assure me that my amendment is unnecessary because they have already embarked on that very necessary course. I beg to move.
Baroness Maddock
My Lords, I do not think it is absolutely true that we have not talked about small businesses and households at Second Reading and in Committee.
Lord Davies of Stamford
I was not suggesting that we had not talked about small businesses. Of course people have talked about small businesses. What I am concerned about is the extent to which the Bill enforces on the Government an obligation to have particular regard to small businesses and households, which are inevitably less sophisticated and need more help in adopting some of these new technologies. That is my point.
Baroness Maddock
I totally agree with the noble Lord, but he gave the impression, I think, that we had not concerned ourselves with this subject. I apologise if that was not what he meant but it was the impression I got. We have done that and the Government have shown that they recognise some of the problems by bringing forward a clause specifically about fuel poverty and a fuel poverty strategy. I agree with the noble Lord that these are important issues but he has slightly distorted how the passage of the Bill has gone, and the Government’s interest. But I support him in trying to ensure that this is at the heart of what we are doing and share his hope that the Minister can reassure him that we do not need the amendment.
I talked about small businesses and domestic customers particularly in the context of demand reduction pilots. I cannot remember whether it was in Committee or at Second Reading but several of us went into that in quite a bit of detail.
The Earl of Caithness
My Lords, I congratulate the noble Lord, Lord Davies of Stamford, on producing an amendment that is probably the most regular identical amendment to come before your Lordships’ House. It is not an amendment that he would have found in the other place but “may” to “must” was something that I defended hugely for 10 years against attacks from the Opposition. As soon as the Opposition got into government and I put down a “may” to “must” amendment, they defended it with exactly the same arguments that I had used. I expect my noble friend the Minister to repeat those arguments of 30 years ago, and we will listen, as we have always listened, and come to the conclusion that “may” is still the right answer.
I hope that my noble friend will dismiss the second amendment. The principle is absolutely right but it is completely otiose. It is already well covered in the Bill. In fact, Clause 21(3) covers the point fairly adequately. It was pointed out to us in Sub-Committee D when we prepared our report on energy that the best way to reduce energy demand is energy efficiency. It is not just for households and small businesses, it is for all businesses. To identify small businesses in the Bill would be quite wrong and give a totally wrong impression.
Lord Whitty
My Lords, I briefly signal the support of our Front Bench for the amendments. Although I am familiar with—and may even have been one of the Ministers who rebutted the noble Earl, Lord Caithness, in—long arguments about “may” and “must”, it is slightly different here because it is not so much about parliamentary counsel’s sensibilities on these matters. “Must” is here a statement of fact. The clauses on the capacity mechanism are wide and vague—understandably, at this stage. The Minister and everyone else have accepted that we will have to translate them into secondary legislation. If we do not do so, we will not have a capacity mechanism. In that sense, there is a stronger argument than there is sometimes for substituting “may” with “must”, because otherwise the whole point of this section of the Bill disappears.
On the second point, although the noble Earl is correct to say that there have been repeated references to the interests of households and small businesses, that is in the context of the demand reduction provisions within the capacity mechanism. It is not obvious from first principles that mechanisms will be involved which benefit the small users of energy, whether they are households or small businesses. I therefore think that it helps to insert that at this point. It will help to guide the drafting of statutory instruments, when we come to that. I hope that the Government will show some sympathy to the amendments.
Baroness Verma
My Lords, I start by thanking the noble Lord, Lord Davies of Stamford, for his amendments. Like my noble friend Lady Maddock, I say from the start that we are putting consumers and fairness to new entrants at the heart of the Bill. It is important to note that the Government confirmed on 27 June our intention to initiate the capacity market, with the first auction taking place in 2014 for delivery from 2018, which would provide an insurance policy against any future blackouts. I reassure the noble Lord that it is the Government’s clear intention to implement the capacity market through regulations as laid out in this chapter. That can be delivered without a statutory requirement in the Bill, so the may/must argument does not need to be fought at the moment.
On Amendment 53ZZB, although the noble Lord’s intention behind the amendment is laudable, we believe that the Bill already makes sufficient provision for driving energy efficiency. The Bill lays out how the capacity market is intended to involve permanent electricity demand reduction in Clauses 29 and 37. The inclusion of electricity demand reduction in the capacity market is of course complex and, as such, its impact needs further examination and assessment. Because of that, we intend that an electricity demand reduction pilot will be carried out to assess the viability of incentivising demand reduction in the capacity market.
Secondly, the Government are already doing a large amount of work to encourage increased electricity efficiency of homes and small businesses—for example, through the Green Deal energy company obligation and smart meters. I urge the noble Lord to consider those measures available to low-income and vulnerable families. I also remind him of how the number of tariffs rose under his Government. When they were in power, it rose to 4,000 tariffs. Fuel poverty nearly doubled during the last five years when they were in power. We are addressing a long-term, deeply embedded problem. Passing the amendment without the result of the pilot being known would risk duplicating existing policies for the promotion of energy efficiency and could lead to contradictory or inefficient regulations.
Although I have been rather brief, I think my explanation should reassure the noble Lord that the Government are doing everything possible through the Bill to answer his concerns, and I hope that he will withdraw his amendment.
Lord Roper
My Lords, with reference to the regulations being referred to here and elsewhere, will my noble friend give the Grand Committee some indication as to how likely we are to have details of them before we come to Report?
Baroness Verma
My Lords, I will not be able to give my noble friend an answer now but, if he will allow it, I will write to him and to the Committee.
Lord Davies of Stamford
My Lords, I am grateful for the contributions to this short debate. On the issue of “may” versus “must”, nothing has been said to persuade me that I was wrong. On the contrary, everybody who has spoken has persuaded me that I am right to make a point about this. If a nonsense is systemic, that is no reason for not combating it and trying to get it right. I shall now feel even more emboldened when the word “may” comes up. I shall feel very sceptical about it; I shall look at it and may very well—not just in this Bill, but in others—put forward amendments of the kind I have today. I hope colleagues who also think that the present system is pretty nonsensical will be emboldened to do the same.
In a free society permissive legislation is otiose. Anything in a free society which is not specifically prohibited is allowed. Therefore, there is no purpose in passing a Bill with a clause saying somebody “may” do something. The issue is whether they must or must not do it. Those are the only things worth including in a legal obligation.
Turning to the more substantive issue, I reiterate that I was in no way suggesting that people had not been talking about the requirements of small businesses or of families and households. I am well aware that the Government have addressed, as the previous Government did, the issue of fuel poverty. We are all conscious of the importance of that, given that energy prices are bound to rise in real terms as a result of our very necessary policies. However, it is extremely important to draw the attention of everyone in this debate to the need to make sure that these new smart methods of monitoring the price of energy through the day, from minute to minute, are available not just to big sophisticated companies and energy users, but to households and small businesses. Only in that way will we get the full benefit of these new technologies, reduce energy demand in the way we need to do, and address the fairness problem and the lack of a distinction between smaller and larger businesses which are substantial consumers of energy.
On the relationship between the capacity market and demand reduction, all I say to the Government is that they had better get on with it. They have got the timing the wrong way around: I repeat, they cannot know what additional capacity they need to meet peak demand, plus a safety margin, until they know how successful the demand reduction efforts are likely to be. The two things are related all the way along: they are reciprocals, as I have said from the beginning. They need to get started with these energy demand methods and pilots very rapidly; they have taken far too long to do it. That is my main message to the Government.
Lord Teverson
I completely agree with the noble Lord over this. However, one thing which happened quite recently was that the National Grid set out to really get moving in this area of demand management in relation to major companies. Smaller ones have, if you like, to be aggregated. That process has started to some degree. The sad thing about it was that the press reported it as being a necessary response to what they saw as a symptom of the crisis in energy supply, rather than as a positive move to get the mental side of supply in line with demand reduction at certain times. That was combined with a number of other government moves at that time. It is not quite as black as that, but the noble Lord is absolutely right to press for even more.
Lord Davies of Stamford
I think that we are all very much agreed. I am grateful to everybody who has contributed. I am grateful to the noble Lord and I am delighted I gave him the opportunity to make that intervention. A very similar message going out from both sides of this Committee about the urgency and importance of these matters is exactly what I wanted.
Baroness Verma
Before the noble Lord withdraws, which I am hoping he will do, I have just been given a note referring to his question about demand and capacity, and when we would publish details of the proposed reliability standard he asked about. It is in the draft delivery plan which was issued yesterday, if the noble Lord would like to refer to it.
I have also been given a note relating to my noble friend Lord Roper’s question about the publishing of the secondary legislation. Detailed proposals will be published from October, along with draft secondary legislation to illustrate our policy intentions. I hope that information is helpful to the Committee.
Lord Davies of Stamford
I am grateful to the noble Baroness. I had not noticed that announcement yesterday, I am afraid, but I am delighted that it has been made. I am sure that the noble Lord, Lord Roper, will be equally pleased with the answer she has given. It is the job of this Committee to keep the pressure on the Government on these matters and I am glad that some measures are now coming through. I beg leave to withdraw my amendment.
Lord Jenkin of Roding
Lord Jenkin of Roding
My Lords, my intention in tabling this amendment was to draw the Committee’s attention to the need to plan for very timely electricity distribution investment to supply the needs of the City of London, and indeed central London generally.
The amendment is backed by a considerable amount of research commissioned by the City of London Corporation on future power supplies for the capital. Some pretty high-level discussions have also taken place in an electricity regulation working party, which includes Westminster City Council, London First, the Greater London Authority, the Mayor of London’s working group, the City Property Association and Westminster Property Association—it is an impressive array of sources. The message that they have all delivered is that long-term strategic planning needs to be enhanced to ensure new electricity connections to key development sites in central London, and that this must be available as projects are completed.
To give that assertion a little context, some office developments in the City have extremely large electricity requirements, which can take the electricity network operator for London, UK Power Networks, up to three years to plan and build. The problem that my amendment is intended to address is that the City of London Corporation has been advised in discussions with Ofgem that the regulatory framework actually prevents strategic investment ahead of need; in other words, when it comes to electricity supply, it is very much a question of providing for what is currently required as opposed to what is going to be required.
It would be quite wrong for me to give the Committee the impression that I think that the need for forward planning is somehow not accepted by the Government; of course it is. There has been a very productive exchange of correspondence, of which I have seen all the copies, between the City’s policy chairman, Mark Boleat, and my noble friend Lord Deighton, Commercial Secretary to the Treasury. The City has a way of going to the top. I entirely accept that we must avoid a situation in which supply need is assessed by reference to purely speculative projects which do not come to fruition. But to have a situation in which forward planning is so legislatively constrained seems to lean too far in the opposite direction.
My Amendment 53ZA proposes that electricity capacity regulations under Clause 21 should include provision that takes account of projected as well as existing needs. It gives 10 years as the forward planning period, which is based on technical advice. It is a halfway point in the 20-year horizon that is generally adopted by the Mayor of London’s London Plan, which deals with planning and development as well as other high-level strategic matters, but it is certainly a timeframe that should enable the necessary electricity distribution facilities to be planned and built.
Lord Deben
My Lords, this is a very important amendment, not least because there are other aspects of planning that should lead one to take this seriously. My noble friend has talked about the commercial and industrial needs of London, but there are also the housing needs. It is estimated that we could build 2 million homes in London with the aim of dealing with our housing shortage. There is no doubt that the sustainable way of development is to use land that has already been used, that we really should try not to build on greenfield sites and that we should do our best to ensure that our cities are increasingly the centres that they ought to be of people living together and of great enterprise. It is very difficult to say whether cities or civilisation came first, but there is no doubt that the two are intimately connected. I believe that there is a real issue about the supply of electricity.
Lord Jenkin of Roding
Perhaps I may interrupt my noble friend for a moment. Somebody is operating a mobile phone, and it makes the induction loop system very difficult for those of us who rely on it to hear what is going on. I do not begin to know who it is, but I recognise the sound. It is not my noble friend but somebody else. I beg pardon.
Lord Deben
I thank my noble friend for explaining what it was that I said that was so damaging.
I would like the Minister to be concerned not merely with the commercial activities, although they are very important, but with what most of us think ought to be the way in which we develop housing in future, rather than across green fields. That means that we have to make it possible to develop on once-used land. One problem that is always brought to me when this comes up is the availability of utilities in general and, of course, electricity in particular.
Secondly, when we decarbonise our electricity system, the availability of electricity becomes even more important, as someone said earlier, because that is what we are trying to shift to. Unless we can put in place what is needed in advance, we will not be able to carry through the whole purpose of decarbonisation. When one looks at the present circumstances, we really are an 11th hour nation. We really do things at the very last moment. I have every sympathy with those who object to the present circumstances, in which nobody does anything until the situation is so disastrous that something has to be done or the whole thing will collapse. That is not a way to plan anywhere. Although no doubt my noble friend will tell me that it will all be dealt with—and here I declare an interest in that the consultancy I chair gives advice on sustainable development—my experience is that is not always like that. It is not always easy to have ready access to electricity supplies, in particular.
I commend my noble friend’s comments, but I hope that they will be taken in a wider sense—this is not just about London, there are other great cities where similar circumstances exist. We do not want people to build, develop and grow in places which are much less suitable simply because the electricity supply is not immediately available. That is a mistake that we have made in the past; I hope that we will not make it again.
Baroness Worthington
My Lords, I shall speak briefly to the amendment moved by the noble Lord, Lord Jenkin, on the future capacity question, because it is the first to address that. This may be a good opportunity for the Minister to provide us with some detail about the capacity mechanism and how it will operate, and to address the important issue raised by the noble Lord of the need to have a long-term view.
Perhaps this is the time to say that this part of the Bill seems to be lacking an awful lot of detail. We have tabled some amendments later which respond to the Delegated Powers and Regulatory Reform Committee’s comments, which were quite damning on this aspect of the Bill. It is lacking a huge amount of detail; a lot of questions still need to be answered.
I will not ask all of them here, but this discussion may be an opportunity for the noble Baroness to talk about how long the review of the capacity market is. The implementation plan is pretty useless when it comes to providing detail on this part, but if anyone is interested, I have discovered that it is all in the June document, Electricity Market Reform: Capacity Market—Design and Implementation Update. If noble Lords want even more detail, I suggest that they read the memorandum submitted to the Delegated Powers and Regulatory Reform Committee, because that has even more detail. Why that is not in the implementation plan I do not know, but we are where we are, we have to gather all this information and try to make the best of it.
It would be helpful if the Minister described the length of time for which the Government consider that the capacity market needs to operate and precisely how it will enable new investment. One of the key challenges is that the capacity market means everything to everyone. If you are an owner of an existing power station, you see it as your opportunity to keep that station open. If you own a mothballed gas plant, it will be the opportunity to get that back on the system. If you want to build new CCGTs, it is your opportunity to get those built. If you are a demand-side response producer, it is your opportunity to get that done. It is not clear how this broad set of measures will manage that conflict between existing owners, owners of mothballed plant, new owners and demand reducers. We as a Committee, representing the wider two Houses, deserve more information. I look forward to the Minister’s response.
Baroness Verma
My Lords, I thank my noble friend Lord Jenkin for his amendment. Amendment 53ZA proposes that providing capacity should take account of projected growth over a 10-year period. I understand that he has proposed it because of concerns about the long-term capacity of electricity networks and the ability of distributive network operators to make strategic, long-term investment decisions. I should make it clear from the outset that the capacity market is not intended to drive investment in network capacity. Rather, it is designed to ensure that there is sufficient longer-term investment in electricity capacity, including generation and other forms of capacity, such as demand-side response.
In March, Ofgem published its strategy decision for electricity distribution network price control. That explained that price control had been designed to encourage distribution network operators to provide a high level of service for connections while maintaining a reliable network and delivering value for money for existing and future customers. The decision also explained that flexibility has been provided for DNOs to submit a case for strategic investment in their business plans on a project-by-project basis. Similarly, the Electricity Act 1989 already provides some flexibility for early investment—for example, the distribution network operator and its customer can make an agreement that allows an upfront user commitment agreement between the DNO and a customer who wants strategic investment. I understand that, in the case of UK Power Networks and its customers in the City of London, this is already happening.
It is vital that investment in our networks continues at a pace that supports our future energy needs. None the less, we must be mindful that there will be a balance to be struck to ensure that consumers do not pick up the costs of unused or underused assets. For this reason, it is right that Ofgem and the network companies continue to consider carefully where investment ahead of need is proposed.
My noble friend also makes an important point about ensuring that decisions on capacity of electricity supply are made with due regard to the long-term outlook. As such, for the capacity market, the Government have committed to publishing a delivery plan every five years and producing annual updates to that plan. These plans will include long-term forecasts of electricity demand and supply, and will inform the amount of capacity contracted through the capacity market.
I hope that my noble friend finds my explanation reassuring. Before I ask him to withdraw his amendment, I shall respond to the noble Baroness, Lady Worthington, on her questions about how the capacity market works and how it is envisaged. A forecast of future peak demand will be made for four and a half years ahead of the delivery year in which it must be available. The amount of capacity needed to ensure security of electricity supply will be acquired through a competitive central auction four years ahead of the delivery year. Generation and non-generation approaches such as demand-side response will be able to participate in the capacity auction. All generation plant, including existing plant, will be eligible to participate in this auction, with some exceptions such as low-carbon plant receiving CFDs.
Providers of capacity successful in the auction will enter into capacity agreements committing to providing electricity when given notice in the delivery year in return for steady capacity payments or will face financial penalties. The costs of the capacity payments will be shared between electricity suppliers in the delivery year. That is a brief outlook of how it will work but I hope that the noble Baroness is reassured that there is plenty of detail. She also referred to the Delegated Powers Committee. As she is aware, we have submitted extra information to the committee and it is now looking at that. We will then look at its recommendations but until that point it would not be right for me to comment on them. With that, I hope that my noble friend will withdraw his amendment.
Lord Jenkin of Roding
I am very grateful to my noble friend for her careful reply to the amendment. It is clear that she understands the nature of the problem but somehow there has to be a greater understanding between those who represent the interests of developers and other business people in the City and elsewhere, and those who are concerned, as she said very properly, not to add additional costs on consumers unnecessarily. I hope the discussions will continue because it seems to me that my noble friend has spelt out the problem very clearly as the Government see it. As I have said, we have had the consultation with my noble friend Lord Deighton. It is also clear from what my noble friend Lord Deben said that this is a wider problem than just the City and the commercial districts. There is something here which needs to be looked at. Those who have been advising me on this will certainly read very carefully, as I will myself, what the noble Baroness has said.
On the wider question asked by the noble Baroness, Lady Worthington, I have had an invitation, as I suspect have others, to a briefing to discuss the document published yesterday, the Consultation on the Draft Electricity Market Reform Delivery Plan. I think this will be on Monday and I am very much looking forward to it. In the mean time, I mentioned that I had not had the full printed copy and, mirabile dictu—sorry, one is not allowed to use Latin—or, amazing to say, it turned up on my desk. I am extremely grateful to the official who made that possible, so I will have some interesting reading over the weekend. Having said that, I am very pleased to withdraw the amendment.
Lord Grantchester
Lord Grantchester
My Lords, we return to the demand-side provisions in the Bill. We spoke earlier today about how this element of the Bill has been quite a late afterthought from the Government. Indeed, it was all initiated by the Government’s response to the consultation this May regarding some of the demand-side initiatives. Amendments have been introduced only on Report in the other House. From this, it is easy to deduce that DECC is developing its thinking on these matters and has perhaps been too dogmatic in trying to insist that the department’s design of the capacity market should be maintained. As evidence of this, I contend that new documents are arriving with ever increasing ferocity on our desks, as the noble Lord, Lord Jenkin, surmised. We on this Committee are endeavouring to keep up with the DECC officials who are trying to keep up with the thinking, and it is a fair challenge. We have put down these probing amendments just to try to understand whether DECC has more to contemplate during its enjoyment of the parliamentary recess.
In DECC’s own document in reply to the criticisms of your Lordships’ Delegated Powers Committee, it reveals on page 11 at paragraph 57, regarding the meaning of “reducing demand for electricity”, that it understands that,
“it includes both temporary actions by electricity consumers to reduce their demands at times of system stress (known as ‘demand side response’ or ‘DSR’) and projects by which electricity consumers permanently reduce their consumption (known as ‘electricity demand reduction’ or ‘EDR’)”.
While its intention is,
“to enable DSR providers to participate in capacity auctions from their inception”,
there is nevertheless some concern that the department has yet to appreciate the full impact of what could be achieved with judicious re-engineering.
It is very important that the Bill is future-proofed and made to be seen to be relevant to future developments and technologies. Many in the DSR market feel that the Government are yet to appreciate the specific needs of their technologies and the relative immaturity of the market. Many would like to see a separate auction of sufficient volume to grow the market until it can compete with supply-side options. Amendment 53A seeks to define demand-side actions to provide capacity services to the market and gives powers to the Secretary of State to ensure that a certain amount of demand-side resource is procured. What does the Minister’s department want to deliver in Clause 21? Providing a reduction in capacity through DSR must have a value put on it.
Amendment 53B would require the prioritising of demand reduction providers in any future capacity market. The principle is that demand reduction over additional supply is clearly in the interests of consumers. It is far more cost-effective and energy-efficient. There is some need for clarity from the Government that demand reduction is not simply an afterthought to a capacity market designed around the provision of supply by large-scale plant but is prioritised in any capacity auction. There is also the question of determining what capacity is required once demand has been reduced. Is there a risk of overprocurement and distortion, as well as overpayment made through the capacity market? Can the Minister clarify how she sees the current plan working in respect of demand reduction?
We have tabled these amendments because there is clear concern within the sector that the capacity market is being designed with no meaningful consideration of the role that the demand side can play as distinct from the role that demand-side reduction and storage could play. DSR is unlikely to participate in the four-year auction because trying to analyse this forward for four years would be beyond its capabilities.
The Minister’s department will take some capacity off the four-year auction and put up it for a one-year auction in which DSR could participate. How will this operate? How will the department avoid inefficiencies? Does her department recognise that the market must be made to work effectively, not merely allow actions to happen?
Currently, Clause 21 defines “providing capacity” as either,
“providing electricity or reducing demand”.
It makes no mention of the demand-side response, or storage. The Government should be looking at how the demand-side response can be deployed in times of system stress to respond to capacity demand. A hospital or business turning down air conditioning or running standby embedded generation in response to a signal from the system can be a highly effective and cost-efficient way of providing additional capacity, rather than investing in keeping more plants on the system than would be needed.
The Minister is indeed correct to identify the role and experience of the demand-side response in the United States. The US experience is important, as the inclusion of DSR in a capacity market for PJM, a major US utility company, is credited with saving consumers $11.8 billon in a single delivery year; that is, approximately $200 per customer. DSR has been proven to be more reliable than traditional generation, delivering a higher percentage of committed capacity over a given period of time.
The transitional arrangements the Government have brought forward are intended to allow the system operator and market participants to gain experience of how DSR will operate in a capacity market and allow for improvement in the market’s design when it is eventually rolled out. However, the CHPA and other DSR providers have said that the proposals put forward by DECC risk losing the UK’s decentralised generation capacity participation in the transitional arrangements of the capacity market. This is because it appears that enduring arrangements are being designed entirely around large-scale power stations and that DSR still risks being a secondary concern.
There is a substantial risk to the trading of small volumes of electricity capacity within the capacity market. Decentralised participants could be locked out. Large plants that trade hundreds of megawatts of power risk excluding those, such as hospitals or universities, which trade 2 megawatts or 3 megawatts. The whole system appears to be based on plants responding to electricity market price signals. However, demand does not operate in the wholesale market and therefore cannot respond to signals it does not see. No clear mechanism has been proposed for ensuring that the demand side can see the market signals.
One or two issues remain unresolved. One of these is proposing the “baselining” of on-site capacity. Current proposals do not consider on-site generation as providing capacity to the system when in operation. This proposal is different from the treatment of power stations, which will be considered as having provided a capacity service if they operate during a period of system stress, irrespective of whether they were operating beforehand.
The hospital making 2 megawatts out of its total 3 megawatt usage is excluded from reward but can avoid penalties only in its baseline. As well as DSR, electricity storage features nowhere in the capacity market clauses. Amendment 53C requires the Secretary of State to provide for additional licence capacity authorising storage of electricity. As our system includes more variable renewable generation, it will become increasingly important to encourage electricity storage.
The Government are currently directing £50 million into grid scale research and demonstrations in electricity storage. However, without a route to market, that money would be wasted. Electricity storage has the potential to provide savings of more than £10 billion per year by 2050—that is £400 per household—but no savings at all if the capacity market takes no account of this contribution. It would be interesting to hear whether the Government support the Electricity Storage Network’s target for an additional 2 gigawatts of storage installed on the system by 2020.
The present licence categories treat electricity storage as generation, which it is not, and the standard licence conditions do not allow for an overlap between the licence categories for generation, transmission, distribution and supply. This inhibits the deployment of electricity storage on our current system, as licence conditions generally restrict activities in more than one segment. Distribution network operators can own electricity storage. However, presently, some operators may infringe their distribution licence conditions, which restrict generation and supply activities, as the DNO needs to buy and sell electricity in order to operate the electricity storage plant.
I will make a comment later in support of the amendment of my noble friend Lord Hanworth but I conclude with a few questions. First, as the Government have said that they consider DSR and storage to be a part of the future capacity market, can the Minister say what level of DSR and electricity storage within the capacity market the Government would deem a success? I remember asking the Minister, when we were welcoming the final provisions on the Green Deal, whether she could perhaps map out to us what success looks like. What I am trying to get at is: can she be more specific than saying that she wants it to happen or that she thinks it will be a success? Perhaps I can challenge her to try to be more specific in mapping out to the stakeholders, who will take note outside, how she views this part of the Government’s operation. A supplementary question to that is: do the Government recognise the need for a separate set of rules for DSR within the capacity market? In recognising that, it is imperative that they undertake a review of the current rules, as there is widespread industry concern that they do not facilitate DSR.
My second question concerns the design of the capacity market and these trial auctions, which do not provide any long-term income stream for new electricity storage to be planned, installed and operated. The Electricity Storage Network and the Liquid Air Energy Network say that their members will not be able to finance projects on the basis of the proposals. How do the Government intend to address these barriers?
I am very grateful to the Committee for indulging me for a moment longer so that I may come to the amendment of my noble friend Lord Hanworth, which follows on from some of the challenges under the amendments in this group. Providing a reduction capacity through DSR must have a value put on it. Explicit recognition is required that DSR has extra value in adding value at certain times of the day, which my noble friend will no doubt address. I beg to move.
Viscount Hanworth
My Lords, this amendment is the result of a representation to us by the Combined Heat and Power Association. It is designed to allay the impression that a demand-side response is simply a matter of staunching demand. It points to the fact that much wasted capacity can be saved by rescheduling the demand for electricity within the days, within the weeks, and even more widely within the year, so as to diminish its variability.
A proper definition of what constitutes a demand-side response is provided by this amendment, whereas as it stands the Bill lacks such a definition. In the course of being alerted to this lacuna, we have also been advised of some of the hazards that might arise. The association fears that in the process of assimilating demand-side responses to the capacity mechanism, there is a risk of creating a mechanism designed around a traditional large-scale generation plant. Such a design risks limiting or even excluding the demand-side response of small-scale embedded generation.
Traditional large-scale generation comprises baseload generation by large power stations running at or near capacity, accompanied by intermittent generation by peaking power plants—“peakers”, as they are known colloquially—which run only when there is high demand. The power that they supply commands a much higher price per kilowatt hour than the baseload power. The peakers are typically run with much lower thermal efficiencies than baseload plants and they often use obsolescent equipment that is close to its retirement.
Small-scale embedded generation, which the Bill is in danger of neglecting, is carried out by small businesses, hospitals, university campuses, et cetera, and not by sophisticated electricity-generating companies. Small organisations have fundamentally different needs from the large-scale generators. If they are to participate in the capacity market, the system must be designed around their requirements. At present there are no proposals to support the trading of small volumes of electricity capacity within the market. The provisions cater to large plants, which typically trade hundreds of megawatts of power, and these provisions risk excluding those who trade, as we have heard, just 2 megawatts or 3 megawatts. We alert the Minister, therefore, to these facts, in the hope that they will be accommodated within the primary or secondary legislation in this Bill.
I will take this opportunity to describe some of the realities of electricity demand. The statistics of electricity usage are readily available. The leading page of the National Grid’s website displays graphically the electricity demand over the preceding 24 hours. It also shows demand over the previous eight days. At the lowest point last week, Monday night, the demand in Great Britain was 56% of the highest demand, which was recorded in the late afternoon or early evening of Wednesday. This kind of variation is greatest in winter. In September the minimum demand, at around 4.30 am, would be a mere 50% of the peak demand, at around 3.30 pm. These figures point to a huge potential for flattening the profile of demand.
Other interesting facts can be garnered from DECC’s literature. The report from the Building Research Establishment on the impact of changing energy use patterns in buildings on peak electricity demand in the UK is particularly revealing. It points to the surprising fact that 50% of our electricity is consumed within buildings for heating and lighting, and by appliances of one sort or another. Apart from being fascinating in their own right, such pieces of evidence convey an important message: if we are to manage our electricity demand in a meaningful way, we must do more than simply assimilate the large-scale generators to the capacity market by means of differential tariffs and incentives. We need to study in detail the components of electricity demand in order to understand the scope for demand reduction, and more particularly for demand smoothing. That is another point we want to emphasise.
Lord Roper
My Lords, I am very sympathetic to the first three amendments and, to a more restricted extent, the fourth because they cover quite a number of the points that I raised earlier with regard to Amendment 55ZA. In moving his amendment, the noble Lord, Lord Grantchester, pointed out the complexity of the range of topics that come under the slightly blurred title of demand-side reduction and electricity demand reduction. For instance, in Amendment 53B, the idea of having a separate auction for the demand side is very interesting. It is easier to involve classic demand-side reduction into the general auction; on the other hand, it is still rather difficult to see how what one might call permanent demand reduction is included in any normal auction. One may need to look at some other market principle to cover that.
Perhaps I may draw attention to one other aspect of energy demand reduction. At a lunch two or three weeks ago, I learnt about the significant contribution of the work of the voltage management and optimisation industry group. It does a rather specific thing in enabling people to reduce their demand permanently by introducing important technologies. That is done in universities and hospitals, and in quite a number of areas of social housing. I hope that when we are thinking about this general area, we do not overlook that important contribution.
Lord Teverson
My Lords, I welcome any amendment that emphasises the demand side of this issue. I particularly like the fact that we have started to bring in the factor of energy storage. Whenever you talk about energy storage, the technologies are always just about going to be there but they never get down to the commercial level by quite a way. But I hope that that will not be the case in the long term. This is an important point that needs to be taken into consideration.
The really important point is around capacity auctions and the ability of the demand side to compete equally with that. I would be interested to hear from the Minister whether she is confident that the demand side will be able to compete or bring forward sensible bids at the early four-year period. While I understand entirely that there is a fallback to the previous year, a lot of the market has already gone. Clearly, the best solution, the nirvana solution, is that all capacity payment is filled with demand-side reduction. That is the best outcome that there could be. I am sure that that will never be the case but it is how we make sure that we do not restrict it. I am interested in the Minister’s views on how the Government feel that the demand side can effectively come forward four years in advance. It would be very useful to understand the Government’s thinking on that.
Baroness Verma
My Lords, I thank the noble Lord, Lord Grantchester, for his detailed explanation of his amendments. The Government have already made it clear that the demand-side response and electricity storage will be eligible to participate in the capacity market. We have announced that these technologies will be supported by transitional arrangements to help develop their capability and enable them to compete on a level playing field against generation. However, while we agree that these are two important aspects of providing capacity, the subsection already allows Secretary of State to make further provision for the meaning of “providing capacity”.
The definition in this subsection is not intended to be exhaustive, nor would it be if these amendments were accepted. There are other existing technologies, such as interconnectors, which may, at some point, play a part in the capacity market, along with other new technologies in the future. This clause seeks to maintain the flexibility to include this full range of technologies, including demand-side reduction and storage in the capacity market, while leaving it open to incorporate novel technologies, should they emerge in the future.
Amendment 53B is intended to ensure that demand-reduction providers are given priority over other providers in the awarding of capacity agreements through capacity auctions. There are a number of reasons why the Government do not see this approach as desirable. First, the capacity market seeks to encourage genuine competition by placing all forms of capacity provision on a level playing field. This is the best way to ensure value for money for consumers, and the reason why no capacity quantity will be ring-fenced for any particular technology type.
None the less, we recognise that certain technologies, such as demand-side response and storage, have different characteristics from generation. That is why we have announced the transitional arrangements. In addition, we have designed the enduring capacity market to ensure that demand reduction and storage can participate effectively by running capacity auctions both four years ahead and one year ahead of when capacity is expected to be required.
As we have already debated, the Government are also proposing an electricity demand-reduction pilot to inform the future entry of EDR into the capacity market. Holding an auction four years out ensures that there is sufficient time to build and commission new generation plants as necessary. However, demand-reduction providers have told us that opting into capacity agreements so far in advance of the delivery year would not be possible for most of their projects. This is why we are giving demand-side response and storage the option of participating either in the auction held four years out or in a further auction held one year ahead of delivery.
It is currently risky for demand-side response providers to predict the amount of demand reduction they will be able to provide four years ahead of a delivery year. This risk is significantly reduced in a one-year auction and we would expect them to be awarded capacity agreements at this stage. This is because we envisage them being able to provide cheaper capacity than generating plants.
In summary, this amendment would not be compatible with a technology-neutral approach. Furthermore, it risks either forcing demand-side response providers into taking on unacceptably large risks to align with the timescales required for building new generating plants or negating the possibility of new plants participating in the capacity market, risking a significant shortfall in electricity supply and the very real possibility of regular blackouts.
Amendment 53C would require the Secretary of State to modify the Electricity Act 1989, adding an additional licence condition authorising a person to store electricity. Storage of electricity is not presently an activity that requires a separate licence, although some storage providers may be generation licence holders. I therefore reassure the noble Lord that electricity storage would be able to participate in the capacity market without this amendment. The Government have already confirmed its eligibility and this is irrespective of its licence status. This is because Clause 22 does not restrict participation in the capacity market only to licence holders. It also allows the Secretary of State to define further who may be a capacity provider in regulations.
The noble Lord, Lord Grantchester, also mentioned electricity storage. We agree that storage technologies are still developing and further innovation is needed to bring down costs and find ways of scaling up. We are supporting two innovation competitions, the first winners of which were announced in May. In the large-scale storage competition, 12 winning projects were given £17 million of funding for the first feasibility phase. Decisions on which projects will proceed to the demonstration phase are expected in September. The component research and feasibility study competition has four projects so far.
The noble Lord, Lord Grantchester, asked about a separate set of rules for DSR within the capacity market. We do not envisage a separate set of rules. We envisage that the rules and regulations will cover all technologies eligible to participate in the capacity market, although the transitional arrangements for DSR will be incorporated. He also asked about baselining for on-site capacity. This will be covered in the detailed capacity market regulations and will be the responsibility of the national system operator.
The noble Lord asked what I visualised as success, given his previous question on the Green Deal. I view success in the long term as a programme that will last many decades. In reference to the Green Deal, I am already witnessing success. We had more than 44,000 assessments up to the end of June and 115,720 installations under ECO. That is what I would call successful.
Turning to Amendment 53AA, tabled by the noble Viscount, Lord Hanworth, which proposes a definition of demand-side response to be added to Clause 21, the Government have already made it clear that demand-side response and electricity storage will be eligible to participate in the capacity market. As I made clear in response to the questions of the noble Lord, Lord Grantchester, we have announced that those technologies will be supported by transitional arrangements to help them to develop their capability and enable them to compete on a level playing field against generation.
I hope that the noble Lord, Lord Grantchester, and the noble Viscount, Lord Hanworth, have found my explanations reassuring, and I hope that the noble Lord will withdraw his amendment.
Lord Grantchester
My Lords, that is excellently timed as the clock strikes six. I thank the noble Baroness for her responses. Needless to say, we will all be looking forward to the recess and studying her words very carefully. I noticed that she said that her department is trying to make its definitions not exhaustive and maintain flexibility to include the participation of novel technologies in future.
It was not my intention that the amendments should not be compatible with a technology-neutral approach. They were merely focused on the different markets that might arise, rather than a different technology approach. I am slightly anxious that the noble Baroness may have misunderstood some of my remarks, so I will study her words carefully but, in the mean time, I beg leave to withdraw the amendment.
House of Lords
War Memorials
Lord James of Blackheath
To ask Her Majesty’s Government whether they will discuss with the Church of England how to commemorate the 304 British soldiers who were executed by the British Government in World War I and who are currently not commemorated in any existing war memorials.
Lord Gardiner of Kimble
My Lords, the Commonwealth War Graves Commission commemorates by headstone or memorial the more than 1.1 million British and Commonwealth men and women who gave their lives in the First World War. This includes those executed for the more serious of what were called military offences. A memorial initiated by the Shot at Dawn association at the National Memorial Arboretum commemorates 306 British and Commonwealth soldiers who were shot for serious military offences during the war. All their names are part of the memorial.
Lord James of Blackheath
My Lords, I thank the Minister for that response. Does he agree that the total dead recorded for the First World War amount to 705,000? I believe that there are at least 10,000 names missing from the war memorials scattered around our country. It is quite disgraceful that the act of annual commemoration is in effect not complete because nothing has been done to restore those names. We should now look to the Government to lead, in line with the church and hopefully the education system, a national campaign to research and restore the names of every missing person. Can we please have some undertaking from the Minister that he will lead the department, with the co-operation of the church, in a national exercise to restore all the missing names by 11 November 2018?
Lord Gardiner of Kimble
My Lords, my understanding is that the Commonwealth War Graves Commission commemorates all names on headstones or, if they are missing, on the memorials. My noble friend’s main point is that new names are emerging. One of the interesting things from the research is that bodies are being discovered and named, and military ceremonies are being held to acknowledge them. A lot of work continues to be done.
The Lord Bishop of Norwich
My Lords, while I am sure the Minister is aware that the Church of England does not have sole responsibility to add names to war memorials but would be glad to work with others on this important issue, is he aware of the work being undertaken by the Church of England, the Imperial War Museum and the War Memorials Trust together to develop educational materials linked to the centenary of World War I to help school children and the wider public to learn more about all the people commemorated and to cherish these memorials and all that they represent?
Lord Gardiner of Kimble
I entirely agree with the right reverend Prelate and I am aware of the very important work being done by the Imperial War Museum, the Commonwealth War Graves Commission and the Heritage Lottery Fund. The important thing is that English Heritage is restoring, as we all see, the national memorial in Whitehall. I commend it for doing that and I hope very much that others will take that lead so that war memorials across the land, in whosever ownership or custodianship, are in very good order for the commemorations.
Lord Grenfell
My Lords, like the noble Lord, Lord James, I would certainly like to see the 306 more widely memorialised around the country, but that is best left to the churches and local communities rather than to the Government. Would the Minister join me in paying tribute to my noble friend Lord Browne of Ladyton, who five years ago next month, against much opposition, as the newly appointed Secretary of Defence, sought and obtained a pardon for the 306? That has brought great comfort to the families. I know that there is a principle of other times and other customs, but this was long overdue. It took great courage to do, and I salute him for it.
Lord Gardiner of Kimble
The noble Lord has out-trumped me, because I was intending to acknowledge what the noble Lord, Lord Browne of Ladyton, did with the Armed Forces Act 2006. It was very important for the families involved, and very important for the nation as well.
Lord Roberts of Llandudno
My Lords, does the Minister not think that the rest of the United Kingdom, as well as England, should be involved in the very proper inclusion of these names? Should not the whole discussion include the churches in Scotland, Wales and Northern Ireland?
Lord Gardiner of Kimble
My Lords, all the commemorations will involve not only all parts of the United Kingdom but all parts of the Commonwealth. They will also very much involve partnerships with all the countries that were allies and on the other side. The noble Lord mentioned local communities. We have war memorials across our land. They are the responsibility and the pride of their local communities. It is there that we should be directing and encouraging, through the Heritage Lottery Fund and the War Memorials Trust, this important work across the United Kingdom.
Lord Browne of Ladyton
My Lords, I am extremely grateful to my noble friend for his recognition and the response of your Lordships’ House to that. I am embarrassed by it, too, because I was merely the last actor in a long campaign. Many others deserve that gratitude. They campaigned in much more difficult circumstances than I had to work in on this challenging issue. Beyond the pardoning of these 306 who were shot at dawn, there is unfinished business. We can only imagine the horrors of serving in the front line of World War I, thank goodness. The Minister is right that all those who were shot at dawn are memorialised. Unfortunately, they are memorialised in the context that they were shot at dawn. On memorials across Commonwealth cemeteries, there is a legend that says that they were executed for the crime that they committed. They did, however, also serve, and it cannot be beyond the wit of man to amend slightly but significantly that beautiful memorial in the National Memorial Arboretum to record the fact that they served as well as the fact that they were executed.
Lord Gardiner of Kimble
The noble Lord presents an interesting scenario. It is one that those involved with the Shot at Dawn association and others would need to consider when deciding how to deal appropriately and best with changing circumstances and views. One of the problems is that 60% of all records across the military were lost in the Second World War blitz, and there are sometimes difficulties in verifying the records because of that. Indeed, the records of the Indian Army have already been destroyed, I believe.
Profumo Inquiry
(10 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Lexden
To ask Her Majesty’s Government whether they intend to release the records and files of the 1963 inquiry which led to the publication of Lord Denning’s report The Circumstances Leading to the Resignation of the Former Secretary of State for War, Mr J.D. Profumo.
Lord Wallace of Saltaire
My Lords, no decision has yet been taken on the future of the information held by the Cabinet Office on the Denning inquiry.
Lord Lexden
Does my noble friend agree that the records relating to Lord Denning’s inquiry constitute an immensely valuable historical source which, if released, would deepen our knowledge and understanding of one of the most sensational political scandals in British history? Does he also agree that a cloud of suspicion hangs over the Denning report? It has been described as “the raciest and most readable blue book ever published”. It has also been depicted as an endorsement of tainted evidence from journalists and the police used at the trial of one of the principal protagonists in the extraordinary drama, Dr Stephen Ward. That is the view of Mr Richard Davenport-Hines, author of the latest detailed account of the Profumo affair. There was collusion between the police and journalists 50 years ago on a scale that would make Lord Justice Leveson’s hair stand on end. Do we not need to see if we can get to the truth through the release of the Denning records?
Lord Wallace of Saltaire
My Lords, I thank the noble Lord for giving me the opportunity to go into this fascinating case. There has been a series of constructive non-decisions. Had decisions been taken on several occasions, the papers would have been destroyed. Indeed, in a debate in this House in April 1977, Lord Denning announced that the papers had been destroyed. The following day the Lord Chancellor stood up to say that he had not permitted this and that this action had not been taken. Given, however, the assurances Lord Denning gave to all of those he interviewed that these records were entirely confidential and that they would never be published, it seems acceptable that they should not be published while those who were interviewed by Lord Denning are still alive.
Lord Tyler
My Lords, given the suspicions at the time of Soviet espionage and all the excitement of Cabinet members being involved in regular orgies, it is perhaps not surprising that 50 years on we still do not know the truth of the Profumo affair. Will my noble friend tell us by what criteria it is decided how much time has to lapse before such matters are made public? Who takes that decision? When and how are those decisions reviewed and by whom—or are these matters also secret?
Lord Wallace of Saltaire
My Lords, I am conscious that there are several Members of this House who would love to write the next book on the Profumo affair. If I were asked to advise on the decision on this, I would say that we should hold to the principle not that the content should never be published but that it should not be published while those who gave confidential information on the assurance that it would not be published are still alive—and some of those who gave that evidence are still alive. The decision will have to be approved by the Lord Chancellor and the Minister for the Cabinet Office. The Master of the Rolls—as Lord Denning was then—also plays a role in such decisions as chair of the advisory board on public records.
Lord Armstrong of Ilminster
My Lords, I declare an interest as one who formerly had the custodianship of these papers. I can confirm that the evidence was taken by Lord Denning on the specific understanding that it would never be published. I think that one would need to be very bold to go back on that, certainly while people who gave evidence to the Denning inquiry or who were involved in events are still alive, and perhaps during the lifetime of their descendants. Does the Minister agree that it will need something like 100 years before one can consider whether these papers should be published?
Lord Wallace of Saltaire
My Lords, I do not wish to take a decision on that, either.
Lord Stevenson of Balmacara
My Lords, we are in an era where freedom of information and changes to the way in which information circulates mean that many decisions need serious review. Can the Minister confirm that this is a one-off situation? Or is he articulating a new policy whereby inquiries of the type led by Lord Denning will give rise to the curious situation of papers not being held in the Public Record Office in the way that all other papers are held?
Lord Wallace of Saltaire
I can give an assurance that this was a very exceptional circumstance. Officials have looked back at the archive on a number of occasions and have assured others, including myself, that there are still some sensational personal items in here which would be embarrassing if released. Therefore this is very much an exceptional case. The promises given by Lord Denning to those he interviewed were also rather exceptional. Therefore the line which the Government are in effect taking is correct; that is, to not decide at present either to destroy or to release the papers but to review the situation from time to time in the light of how many of those who gave evidence are still with us.
Lord Lloyd-Webber
My Lords, I declare an interest in that my new musical is about Stephen Ward and I am presenting a documentary on him for ITV. Is the Minister aware—this is what concerns me—that the fact that these files will be closed for a staggering 83 years gives rise to an awful lot of unhealthy speculation about who the individuals might be within the files?
Lord Wallace of Saltaire
My Lords, we have not yet decided whether they will remain closed for 83 years. It is fairly clear who all the individuals in the files are: they are those who were interviewed by Lord Denning.
Lord Richard
My Lords, I confess that I am slightly baffled by this. Did Lord Denning have the authority to give those assurances? I thought that the release of public documents was governed by various rules and regulations—there may even be an Act—that there was a 30-year rule and a 50-year rule, and that that was, so to speak, part of the governmental fabric. Is the chairman of an inquiry that has been set up by the Government in those circumstances to inquire into a matter like this entitled to give an assurance which, in effect, eats into or may even destroy the purposes of the various rules and regulations about release?
Lord Wallace of Saltaire
My Lords, this decision has been reviewed several times. As I remarked, the review has considered whether the files should be destroyed, maintained or released. As the noble Lord is well aware, there are a number of cases, particularly those with security and defence issues, where papers are retained for more than 50, 30 or 20 years. That has to have the approval of what is called a Lord Chancellor’s Instrument. It would now be appropriate to consider whether a formal Lord Chancellor’s Instrument needs to be applied to these files. I will add that at the time, Lord Denning refused to allow the head of the security services access to the papers.
House of Lords: Peers’ Entrance
Lord Campbell-Savours
To ask the Chairman of Committees what information has been made available to members regarding the purpose of the visitor QR scanner and all associated equipment installed at Peers’ Entrance to the House of Lords.
The Chairman of Committees (Lord Sewel)
My Lords, the new equipment at Peers’ Entrance is being trialled by the doorkeepers, who are moving from a paper-based system to an electronic one. The Administration and Works Committee has discussed the trial at two of its meetings, and members of the committee have been provided with a briefing note in order to brief other Members in their parties or groups. I also answered a Written Question on this matter on 17 June.
Lord Campbell-Savours
My Lords, I hope that Black Rod will now tell us that the equipment will not require the registration of visitor names and that the use of equipment by Members at this stage is to be voluntary, which will obviously thereby render the system of little benefit in terms of security. If ever it was thought that the use of the equipment should be mandatory, can we have an assurance that the House will be fully consulted and allowed to take the final decision on the introduction of its use?
The Chairman of Committees
The new system is not mandatory; I can give that clarification and assurance completely. I am very conscious that Members often arrange visits at short notice, which prevents them being able to give advance notice to the doorkeepers. Therefore Members will not have to pre-book their guests, who will not be turned away if they are not on the list. If they so wish, Members will still be able to record only the number of guests without the names. Furthermore, I assure the House that the system would not be made mandatory without the House being consulted and the House deciding. However, I encourage Members to book their guests in as it makes the processing of guests coming through that very constricted area much easier; I make that request.
On the issue of security, I partly fall back on the tried and tested formula that it is established policy not to comment publicly on specific matters of security on the parliamentary estate. However, I assure the noble Lord that security was not the primary reason for the introduction of the new system. One of the main reasons was to introduce a slicker, more efficient service for Members and their guests. We are trying to modernise a little and replace the pens and papers with computers. I appreciate that this is one of the challenges that the House faces as it struggles from time to time to come to terms with the technology of the latter half of the 20th century.
Lord Forsyth of Drumlean
My Lords, would my noble friend agree that it might have been better to have consulted Members of the House about the use of this equipment before the expenditure was incurred in getting it?
The Chairman of Committees
I think that all members of the Administration and Works Committee and of the domestic committees realise the importance of having a proper and thorough consultation before making and announcing decisions.
Lord Foulkes of Cumnock
Would the noble Lord the Chairman of Committees care to hazard a guess at what further surprises Black Rod may have up his sleeve for us?
The Chairman of Committees
I am not sure that Black Rod keeps his surprises up his sleeve. In answer to the noble Lord, I have no detailed knowledge—they would not be surprises if I knew them.
Lord Dykes
My Lords, notwithstanding the understandable caveat in the first Answer of my noble friend the Chairman of Committees, has there been any indication from members of staff, including police and custodians, that security issues may arise from the sharp increase in the number of visitors to the House, which is a welcome development but may pose problems like this, partly because many are sent by MPs to visit this House as well?
The Chairman of Committees
The noble Lord makes an important and valid point; it is always a matter of proportionality. We want to encourage people to visit their Parliament—that is absolutely right—but at the same time we have a responsibility regarding security, not only for Members of the House but also for the people who work for and with us.
Lord Cormack
My Lords, should we not record our thanks to those who supervise the Peers’ Entrance for their unfailing courtesy towards and, on occasions, incredible patience with our visitors?
The Chairman of Committees
My Lords, I am always aware of the patience that the staff of the House show towards Members of the House in particular.
Lord Dobbs
My Lords, I am sure that my noble friend the Chairman of Committees would agree that security and safety are of prime importance in this House. Does he agree that it would be of great assistance to those who help us in maintaining that security, including Black Rod, if we played our part by reminding ourselves to wear our identity tags so as to assist them?
The Chairman of Committees
That is a very important point that I am more than happy to endorse. If we all got into the habit of wearing our tags it would make life a lot easier for everybody.
Human Rights: Burma
(10 years, 9 months ago)
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Baroness Kinnock of Holyhead
To ask Her Majesty’s Government which areas of concern relating to human rights were raised with President Thein Sein of Burma by the Prime Minister and the Foreign Secretary on 15 July.
Lord Wallace of Saltaire
My Lords, the full range of human rights issues were raised. Ministers called for the release of all political prisoners and for an end to ethnic conflict. They invited Burma’s support for the preventing sexual violence in conflict initiative. On Rakhine State, Ministers welcomed the abolition of the Nasaka security force, raised concerns about the two-child policy and pressed for citizenship for the Rohingya minority. On anti-Muslim violence, they stressed the need for accountability, welcoming recent arrests.
Baroness Kinnock of Holyhead
Does the Minister agree that history shows that the only language that the Burmese generals understand and respond to is firm, sustained pressure? What steps did the Prime Minister take to set out explicit benchmarks by which progress in Burma will be measured, a specific timeline by which we expect to see progress, and the possible consequences if there is no such progress? The Burmese President is very good at offering the right words and promises when required, but less good at fulfilling them.
Lord Wallace of Saltaire
My Lords, I would agree that history shows that one of the most difficult periods in a country’s history is when it is attempting to move away from a highly authoritarian regime. The question whether it can move from that without a bloody conflict is, of course, always one of the difficult ones. We have taken the choice to encourage the moves currently under way in Burma; things are improving a good deal there but, of course, they have a long way to go. The opposition, including Daw Aung San Suu Kyi, have very much encouraged the move that the British have taken.
Lord Alton of Liverpool
My Lords, is it not crucial that we take our lead from Daw Aung San Suu Kyi, as the noble Lord has just said? I met her just before Easter, when she said that we must engage in dialogue—but also that we must be realistic. During the discussions with Thein Sein, were limits placed on the new military relationship that has been announced by the Prime Minister? In particular, have we raised the Burmese army’s use of child soldiers, forced labour, sexual violence and land mines? Can he confirm that it is not our intention to sell arms to Burma?
Lord Wallace of Saltaire
My Lords, I can confirm that the first thing that Aung San Suu Kyi asked the British Government to do was to appoint a defence attaché to Burma some months ago. We are now offering military training to a number of Burmese officers in this country to help them through the transition. Requests have also been made to assist in retraining the Burmese police. These are all things that we think will help through a transition—not, of course, towards full democracy and a perfect resolution of all these problems, but we see the situation as improving. We are doing our best not only to help it to improve but to monitor how far it goes.
Lord Avebury
When the noble Baroness, Lady Kinnock, raised the Human Rights Watch report on ethnic cleansing and crimes against humanity against Rohingya Muslims in Arakan state, she was told that it clearly needed to be supported by further evidence. What has happened to the independent investigative commission announced by the Burmese Government as long ago as last September? Is it going to be established in the near future? To ensure its credibility, will my noble friend suggest to the Burmese that the UN High Commissioner for Human Rights, Navi Pillay, be asked to nominate the members of that commission?
Lord Wallace of Saltaire
My Lords, I will have to write to the noble Lord with a specific answer to his question, but I can confirm that Alan Duncan, from the Department for International Development, was in Rakhine state in June, that my noble friend Lady Warsi was looking at the refugee camps in Cox’s Bazar shortly before that, and that British officials are very regularly in and out of Rakhine state.
Baroness Nye
Is the Minister aware that the Burmese Government refuse to allow the UN access to military sites so that it can identify and discharge children present in the Burmese army border forces, border guard forces and other armed groups? Following on from the question asked by the noble Lord, Lord Alton, in the issues that the noble Lord said were raised, there was no mention of any representations by the Prime Minister to the Burmese President during his visit about ending the recruitment and use of children, some as young as 11, as soldiers in Burma. Can he give an assurance that the issue was not overlooked during the visit?
Lord Wallace of Saltaire
My Lords, noble Lords will have seen the Written Statement issued yesterday on the visit. It does not specifically mention the issue of child soldiers, but it touches on a very large number of human rights issues. I will check and get back to the noble Baroness on the specific issue of child soldiers. We are monitoring the situation; we recognise, for example, that the Kachin ceasefire has been agreed but not yet fully implemented. The President promised, when he was here, that all remaining political prisoners will be released by the end of this year, and we will of course be watching to make sure that that promise is carried out.
Lord Howell of Guildford
There is a sort of race here. The Chinese are pouring in vast sums of money and investment into Burma, which is potentially a very rich country indeed. While we must obviously maximise our pressure, counselling and support for overcoming human rights abuses, as the noble Lord, Lord Alton, has specified, the right approach must be to embrace as fully as we can that country in its efforts to modernise and move away from military rule, and we should consider supporting it and working with it, perhaps in the context of a future membership of the Commonwealth.
Lord Wallace of Saltaire
My Lords, I congratulate the noble Lord on managing to get the Commonwealth into this discussion. Burma is currently the poorest country in south-east Asia. If it is to pass through this transition successfully, it also needs economic assistance. My noble friend Lord Green has also been in Burma. We are engaged in the question of how far British companies, as well as British technical advice, can assist in the transformation of the Burmese economy.
Lord Wallace of Saltaire
My Lords, I think that I would prefer to stick to “monitoring”. We always have to remember the very complex colonial history. We therefore have to be very careful not to be too authoritative ourselves in dealing with the legacy of authoritarianism. We are however actively working to hold the Government to the promises which they are making, and we are working with all forces in Burmese society.
Baroness Anelay of St Johns
My Lords, I know that my noble friend Lord Alton is a courteous man, and will know that my noble friend Lady Berridge has been trying to get in, and indeed has started her question on four occasions. I am sure that the House might give my noble friend Lady Berridge a chance.
Baroness Berridge
My Lords, the overwhelming improvements are of course welcome, but there is growing concern that Burmese citizens are suffering discrimination on the basis of their religion. Therefore there is a danger that the millions of pounds of UK aid that are now going to Burma will not be distributed equally to all Burmese citizens. What discussions did the Prime Minister have with the President regarding freedom of religion and belief, particularly in regard to the rising intolerance towards Muslims and other non-Buddhists?
Lord Wallace of Saltaire
We welcome the recent arrest for the first time of a number of Buddhists who have taken part in anti-Muslim demonstrations. We have sadly discovered that even Buddhism is a religion that is not entirely under all circumstances used as a religion of peace. This is part of the discussion which is well under way.
Probation Service
Lord Beecham
To ask Her Majesty’s Government why they have halted the triennial review of probation trusts in the face of a House of Lords amendment to the Offender Rehabilitation Bill which would require the approval of both Houses to any changes to the probation service, and which the House of Commons has yet to consider.
Lord Ahmad of Wimbledon
My Lords, the triennial review of probation trusts has been formally closed, because as part of the development of the Transforming Rehabilitation strategy, the Ministry of Justice conducted a detailed options assessment of how we could organise the public sector probation service in the most efficient manner to discharge its new responsibilities as detailed in the strategy. This is in line with the requirement of the triennial review to look at the function and form of a non-departmental public body and to consider the best delivery model.
Lord Beecham
My Lords, yesterday’s Written Ministerial Statement, expressing the Government’s determination to press on with the abolition of probation trusts and make other changes to the probation service, is another example of the Government pre-empting the parliamentary process, recently criticised by your Lordships’ Constitution Committee. Does this not constitute contempt for the expressed opinion of this House and raise the question of why we are here at all?
Lord Ahmad of Wimbledon
I cannot agree with the noble Lord. Your Lordships’ House has discussed a particular Bill, and as he has pointed out, amendments have been made. There will be further parliamentary debate on these issues as the Bill moves through the Commons after the Recess. At the current time, in line with current powers as set out in the Offender Management Act 2007, any ultimate dissolution of probation trusts will be subject to the negative resolution procedure.
Lord Ramsbotham
My Lords, as the Minister knows, during the passage of the Bill many questions were asked about the way in which it was to be processed and how the structures needed to process it would be produced. Many of those questions remain unanswered, particularly as regards the future of the probation service and how individuals joining that service will have a career which is properly structured to enable them to gain the expertise to carry out their tasks. Last week, on the same day that it was announced that G4S and Serco had performed tremendously badly in relation to the tagging contracts, which had been poorly overseen by the Ministry of Justice, I attended a conference at which probation service staff told me how little they knew about the plans being made for them. What this House is deeply concerned about is that a major change to the protection of the public and the community is being proposed at vast speed without us knowing the details. When will we be told exactly what these details are if, indeed, they have been worked out?
Lord Ahmad of Wimbledon
As regards G4S and Serco, I assure your Lordships’ House that that is something which the Government are taking very seriously. An internal audit has been initiated by the Lord Chancellor and Secretary of State, the outcome of which will be with us around the autumn. I can reassure your Lordships that no further contracts will be awarded to either company until we have the findings of that audit and they are satisfactory in terms of awarding future contracts. As regards the probation trusts, the noble Lord comes to this matter with great expertise and is fully aware that the Government are proposing not to abolish the disparate probation trusts up and down the country but to create a new national probation trust and open up the market to the private and voluntary sectors to enable experts to come together to address the issue of probation, which, I am sure all noble Lords agree, costs too much and has been inefficient for far too long.
Baroness Quin
My Lords, does the Minister accept that these changes seem to be very controversial and therefore full discussion of them in Parliament is vital, as my noble friend Lord Beecham pointed out? Does he also accept that there is great fear that, as a result of these changes, the service will become less professional and that therefore public safety will be at risk? It seems that some excellent probation services, such as the one in Northumbria, are going to be reorganised when they are working very successfully.
Lord Ahmad of Wimbledon
On the noble Baroness’s first point, Parliament is sovereign and your Lordships’ House has had a very detailed discussion on this issue. Indeed, various amendments were tabled on the Offender Rehabilitation Bill and were passed to the other place. I cannot agree with the noble Baroness’s second assertion. As I have said in a previous answer, I believe that the proposed reforms are about creating a national probation trust that brings together the best expertise. The expertise of existing staff will be taken up in the new probation service. Indeed, private providers will look to recruit staff from the current probation service. So I do think that there is perhaps an alarmist attitude that is not really necessary.
Baroness Linklater of Butterstone
My Lords, the newly constructed probation service plans to operate at about 20% of current capacity and deal with very specialised groups. Meanwhile, the Government plan to give subsequent support in the community to 50,000 or so short-term prisoners. The only body with the skill and the experience to deal with this kind of thing is the probation service, which dates back 100 years. What is the rationale for destroying a probation service that is greatly admired, loved and respected the length and breadth of the land in favour of completely unknown, inexperienced and unhelpful private sector providers whose reputation is rock bottom?
Lord Ahmad of Wimbledon
While I accept that there are many positives in the existing probation service, I cannot agree with my noble friend that the Government are seeking to destroy it. I reiterate that the initiative will bring together the best of what is available in the public sector, the private sector, the voluntary sector and, indeed, the market as a whole. We need to acknowledge that. Why are we doing it? The MoJ currently spends £3 billion on prisons, of which £800 million is on probation. The reoffending figures show that 57.6% of prisoners sentenced to 12 months or less go on to reoffend on release. That, frankly, is not good enough. We need to address the issues. Of course, we learn from history but we plan for the future.
Lord Laming
Does the Minister agree that we are indebted to members of the probation trusts for all they contribute to the well-being of our society? That being so, what are the Government doing to ensure that, as they embark on a massive change, those who are going to be affected by that change will be engaged in it, will understand it and be helped to come to terms with the change in a way that makes sure that we continue to value their contribution?
Lord Ahmad of Wimbledon
I agree with the noble Lord that the country owes a huge debt to people such as the noble Lord, Lord Ramsbotham, who brings great expertise to the subject. I have fully acknowledged that in debates on the Bill and again today. We need to harness that expertise and ensure that the probation service learns from the lessons of history but is also fit for purpose in the future. We pay tribute to the people who work terrifically hard up and down the country to ensure that the people we are there to help—the prisoners—are helped to become productive citizens when they come out after serving their sentences. I am sure all noble Lords will agree that that should be our ultimate aim.
Lord Judd
My Lords, does the Minister agree that, whatever the Government’s intention, the perception is that there is an ideological commitment to downgrade public service and to refuse to recognise the priceless value of commitment and experience which exists in so many of our public services? The probation service has been exemplary in that respect. As so much of the community is to be involved if the Government’s hare-brained scheme is to succeed, is it not all the more imperative to make sure there is no further impression that, whatever may come, the Government are determined to drive through their ideological objectives?
Lord Ahmad of Wimbledon
It is certainly true that the Government believe in ensuring that in all projects—in this case it is probation—we harness all expertise. If that expertise is in the public sector we will harness it; if it is in the private sector we will also harness that; if it is in the voluntary sector we will harness it. I can assure noble Lords that the proposals will ensure that the number of offenders who go through rehabilitation is increased—as my noble friend Lady Linklater acknowledged, an additional 50,000. They will increase the number of providers that are part of through-the-prison-gate projects which combine the expertise of the public, private and voluntary sectors. Finally, they will create a new, public sector body, the probation service nationally, the ultimate aim of which is to protect the public.
Business of the House
(10 years, 9 months ago)
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Baroness Anelay of St Johns
That the debates on the Motions in the names of Lord Haskel and Baroness Prosser set down for today shall each be limited to two and a half hours.
Economic Prosperity and Employment
(10 years, 9 months ago)
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Lord Haskel
That this House takes note of the role of government in generating economic prosperity and employment.
Baroness Garden of Frognal
My Lords, the timing for the next debate is very tight indeed. Could I encourage all noble Lords to keep within their time limit, in order to enable the noble Lord, Lord Haskel, to have a few minutes to respond at the end of the debate?
Lord Haskel
My Lords, we are all concerned about the future of our economy and we all have a different view as to where the answer lies. However, I think that we all agree on one thing: the relationship between government and business is central to whatever the future may hold. I thank all noble Lords who have come to debate this important issue.
I will start by speaking of my early experience of government and business. Many, many years ago, new, higher standards were introduced for fabric safety, particularly for the flammability of fabrics in aircraft. As a young textile engineer, I had to develop fabrics and processes to meet these standards. I did this with the help of Bolton Tech, now Bolton University. At that time, the big market was the US. I went over there to sell our product but was amazed to find that a similar product was already available. It had been developed by the US military and was offered for sale, not only by large companies, but by smaller ones by virtue of a government assistance scheme.
I am pleased to say that we did rather well because of superior design, which is another lesson. That is how I learnt that, at the same time as preaching tough capitalism, the US Government have been engaged in risky research, on a large scale, in radical new areas from which business has benefited with products like the touch screen, GPS, the internet and nanotechnology: I could go on.
True, there must have been failures that we do not know about. However, over the years, this has illustrated the advantages of business and government consistently working together, not only in research and development but in reducing risk by taking public funding much closer to the market—far closer than EU regulations allow here.
Here in Britain, we have veered between extremes. When I started in business in the 1960s, the state had a role through public ownership and the public interest. It was a sort of command and control. Then we moved into a phase in which markets ruled through liberal capitalism. Private initiative, private enterprise and risk were encouraged. Markets were left largely to self-correct and self-regulate. The year 2008 demonstrated that that system did not really work. Some still see the solution in lower taxes, less red tape and less regulation, but an increasing number of people are calling for an industrial strategy that defines the relationship between the state and business. The problem is that the Government, the CBI, academia, finance and manufacturing all have different ideas as to what that strategy should be, largely because of sectional interests.
I would like to find a way in which government and business can work together, while allowing market forces and private initiative to flourish. Business would be free to experiment with new ways of doing things, with government having an enabling role that supported the public interest, not the factional interest. My noble friend Lord Sainsbury put this together rather well in his recent book, Progressive Capitalism. Unfortunately, he is not able to speak today, but he argues that prosperity is fostered by market-supporting institutions of an enabling state. They should be enabling, not market-directed, and far stronger than the weak institutions of the minimal state. These he calls progressive capitalism. These institutions do not start up and evolve spontaneously but are designed to resolve conflicting interests, and involve a strong measure of social justice. They are institutions with a purpose, not set up as an apology for failure.
Recently I have noticed frequent calls for such institutions. For instance, the Royal Institution of Chartered Surveyors’ Housing Commission recently proposed that such an institution was necessary to address the housing crisis in order to end the,
“short-term and partial policies”,
that created it. During the Second Reading of the Energy Bill, several noble Lords were concerned that its implementation was likely to continue over the lives of two or even three Governments and of many Ministers, and that, if nothing else, we needed an institution to provide continuity. I concede that this may take power away from Ministers, but it would be an enabling and more effective implementation of policy that is seen to be in the public interest and free from unpredictability.
Science and technology is one area in which we are already doing this. When the Labour Government came to power in 1997, one of their first priorities was to increase the funding for science and to prepare a 15-year road map for large research facilities. The then Government supported collaborative and applied research, which was first administered by the DTI but then handed over to the Technology Strategy Board, an executive, non-departmental public body. That gave it the independence necessary for it to be staffed by people with industrial and technological backgrounds and experience. It is to the credit of the coalition Government that they have continued this work. They have made a number of key investments, including a national network of technology and innovation centres, as a means of improving our innovation performance as an essential component for growth.
An evaluation in 2012 of earlier R&D projects showed an average return of £6.71 in additional gross value added per pound spent. So we know that this pays. Perhaps this explains why Germany spends nearly 10 times as much on its equivalent institutions However, there are still doubters. An announcement last week that the Government will match £500 million of industry investment to develop cleaner car engines was greeted by the Institute of Economic Affairs with the comment that if the Government have £500 million to spare, they should cut taxes.
Transferring this work quickly into products and processes is a key to growth. Knowledge transfer is a means of achieving this. I declare an interest as the honorary president of perhaps the largest knowledge transfer network, the Materials Knowledge Transfer Network, funded by the TSB, the Research Councils and some 4,500 business members. I am trying to practise what I preach.
Although we have made progress in science and technology, we have failed in other areas. If we are to raise our game, technology is not enough. We must also raise our game in skills, finance and infrastructure. The latest McKinsey paper on innovation says that research and development is only 25% of what it calls our knowledge capital.
We have rehearsed many times the failures of the financial system. John Kay told us how savers have been let down by the system. The banking commission told us of serious flaws. We have rehearsed hostile takeovers, poor governance, short-termism and the isolation of shareholders many times. To achieve prosperity, we must ask again: what is the purpose of the financial markets and are they performing efficiently? The task is to create enabling institutions with a compelling vision that will change the culture and the narrative, so that the financial sector, rather than serving itself, serves society and the rest of business. I join many in thinking that the proposed banking Bill fails in this by not going far enough.
Some tell us that the economy is improving. Others ask if it is improving in the right direction, and point to the dangerous use of housing and consumption, instead of productivity, to rebuild the economy. A strong enabling institution, rather than a data institution, would recognise and help sort out these priorities.
Another area where we have failed is in the supply of technicians. This failure is there for all to see. There are currently many able young people who are unskilled and unemployed, in a nation that is desperately short of technicians. We are getting it right on technology, which is shaping our markets, economy and society. We are not getting it right on skills. We have millions of people working in jobs that do not earn them a living. Temporary work, zero-hour contracts and low wages characterise a trend that has been made worse by the recession.
Some seek inspiration from Germany. It is the strong trade associations in Germany that set the standards. Taking on apprenticeships is a condition of being in the trade association—and if you are not in the trade association, you are not in business. There are penalties for poaching and for apprentices who leave their courses early. The lesson is not just to copy Germany but to recognise that Germany’s success is associated with strong and long-lasting institutions that ensure that the world of education and training is synchronised with the world of work.
If we are to create strong institutions, Whitehall, too, has to raise its game. Yes, Whitehall does review its capabilities and is well aware of its problems. Its style of employment career planning, which rotates people, ignores building up the very expertise that Whitehall and Ministers need to create our lasting institutions. Even in the time of Harold Wilson, the Fulton Commission drew attention to these matters. So did my noble friend Lord Adonis in his recent review of BIS, as did the Institute for Government in its report today on the way that government outsources public services to the private sector. This was again referred to in the Private Notice Question.
So what about the private sector? There was a time when we had complete faith in private enterprise. Now we are not so sure. G4S, Serco and other companies seem to treat us as a business opportunity—an opportunity where vulnerable people who have no voice can be exploited, and where the private provision of public services is seen to be sometimes incompetent, often unaccountable and sometimes uncaring.
We tried to create institutions to support localism. They did not last long. We abolished the RDAs on an ideological whim, instead of developing them and building on what was there. The LEPs set up to replace them are embryonic and need time. The noble Lord, Lord Heseltine, tried to come to their rescue with a major amount of money. The Government watered this down to £2 billion, and then it transpired that this money was taken from local housebuilding support and the local road-building fund—hitting the political target, maybe, but missing the institutional point.
Many noble Lords will have heard businesspeople say that a major block on investment and business confidence is a lack of continuity, and uncertainty in government policy. A series of initiatives, however clever and generous, dealing with market failure or other problems is seen as short-termist and intermittent. Addressing this has to be shared between government and business. Properly conceived institutions will do this, as has been demonstrated by the TSB. We have to repeat this in other sectors with institutions which are long-term, continuous, in which we can take pride and which will look after the public interest in the battle between the parties. Whatever the future may hold, a crucial part of our competitive advantage must lie in the quality and closeness of the relationship between government and business. We have work to do. I beg to move.
Lord Cope of Berkeley
My Lords, the noble Lord, Lord Haskel, and I served together on the Select Committee on SME exports. We all warmly thank him for instituting this debate and, indeed, for the way in which he has introduced it.
My long-held view is that while economists argue continuously over monetary and fiscal policy, what really matters is whether SMEs flourish in home and overseas markets. That is what will decide whether our children and grandchildren live in prosperous times—I cannot help but mention that a fourth grandchild has just been born to my wife and me, to focus our attention even more on the future—but what the Government do about SMEs is crucial to the future.
Many business men and women when asked what government can do best for them say, “Keep out of the way”. I sympathise, but I do not agree. In 1967, I helped Lord Weatherill to write a pamphlet urging the Wilson Government to get much more involved in SMEs to emulate the small-business administration of America. A couple of years later, that Labour Government, to their credit and particularly to the credit of Harold Lever, took a few minutes off nationalising things and command and control and set up the Bolton committee on small businesses, the first authoritative study.
These days there is general recognition of the importance of SMEs. In support of continuity, to which the noble Lord, Lord Haskel, referred, the Government have taken over from their predecessors, UKTI—UK Trade & Investment—and it has grown in stature and effectiveness under my noble friend Lord Green of Hurstpierpoint. His energy, focus and constant travelling have contributed notably to UKTI’s success, and I am sorry that he is leaving later this year.
Since the debate on our SME report last month, my noble friend Lord Green has told us of two new initiatives: the Future 50 programme, to help 50 selected companies grow to the point of being listed on AIM, and the creation of an alliance of high-tech digital clusters similar to Tech City. These are excellent, but the first reaction of some will be: can the Government or their agencies successfully spot winners? We know that it is difficult to spot winners, not only for the Government but for the investment industry, whose job it is. The oldest mantra in investment, after all, is, “Spread your risk”. The reason is the difficulty of picking winners and avoiding losers. The Government should not be put off by that. If only some of the 50 succeed, it will be worth it.
Part of what SMEs mean when they say, “Keep out of our way”, is “Do not keep changing the rules”. The noble Lord, Lord Haskel, referred to this, too. SMEs understand that it is necessary to collect tax and regulate employment, health and safety, but they hate spending hours mugging up on the latest initiative that has just come to their attention.
The latest example is PAYE. From April 2013, or April 2014 for some small businesses, RTI—real-time information—has been introduced. New PAYE software —not all small businesses use software—triggers automatic direct debit payments for PAYE and national insurance on pay day. This is necessary to the smooth working of universal credit. But for the small business with few employees, some part-time probably, striving to remain legal over the minimum wage expressed in hourly rates and changing every October and/or bumping up against the lower earnings limit for PAYE expressed in weekly rates and changed every April, all this is complex and a complete overhead on top of actually selling things and earning a living for the employer and their staff, which is obviously what they have to do to succeed. It is all desirable, no doubt, and perhaps it will be simpler in the long run. Technology often works that way, but it does not mean that it is easy to grasp in the first instance. Changes for small businesses mean more hours of trying to understand new forms and procedures, simply to stay in line with the latest requirements.
My basic message is always that if SMEs flourish, the economy will flourish. We must nurture our entrepreneurs. Only some of them will succeed, but we need them to do so.
Lord Giddens
My Lords, let me begin by congratulating my noble friend Lord Haskel on having introduced the debate in such an elegant fashion. I also congratulate the noble Lord, Lord Cope, on his expanding family.
It amazes me that some people still seem to think that the economic crisis is cyclical. After all, it is the most profound crisis since the 1920s and 1930s. It is still in play after five years. No country—not the United States, not Germany and not this country—has shown, as yet, a sustained economic recovery. This crisis, to my mind, is clearly structural and demands a fundamental rethinking, much of which has to be done in the academic world. Neoclassical economic theory will have to be replaced by a 21st-century version of political economy. A reappraisal of the role of the state and active government will be central to that process. No one of course, as my noble friend Lord Haskel has said, wants a reversion to the old model of top-down planning, but the economic free-for-all of the past 30 years has collapsed in a most spectacular way, with the state having to pick up the pieces, causing suffering to many of the most vulnerable in our society.
That rethinking is starting, and has begun with what I would describe as a sort of historical retrieval process, a kind of hidden history, of the state’s key involvement in all the major technological transformations of the past 20 or 30 years and in all the surges of economic prosperity associated with them. The idea that the role of the state is to stand aside, reduce red tape and let entrepreneurial instincts flow turns out, through recent research, to be much of a myth. All the major transformations affecting economic development have had heavy public involvement, and it is only now that the research is being done by economic historians to bring that out. My noble friend Lord Haskel referred to several of them. They include the most massive one of our age, the internet. We still do not really understand it, and it has caused an absolute transformation in human history. However, it has its origins, as is very well known, in state involvement, although, it has to be said, that was in part for defence purposes, not for economic prosperity.
These findings are as true of the US as elsewhere. Noble Lords might remember the story that circulated a little while ago—it is probably apocryphal—of a major American leader, who will remain anonymous, who was looking at the difference between the United States and Europe and said, “The trouble with the French is that they do not have a word for entrepreneur”. Well, we do not have a word for entrepreneur either, expect for that one. However, we do have a new book by Mariana Mazzucato, The Entrepreneurial State, which I recommend to noble Lords because it is a detailed study of how the state is essentially a risk taker. In countries that have an active state, the state has taken risks that private capital will not. Whatever private capital breakthroughs have come, they have been the result of the preparation carried out by active government.
Rather than using the examples that Mazzucato offers, I will take the case of shale gas, which has been studied in detail recently by the Breakthrough Institute in the United States. In the US, conventional gas began to decline in the early 1970s, which started a collaboration between the industry and the federal Government under a Republican President, Gerald Ford. Everybody knew that there were large deposits of gas, but the existing techniques of extraction were not up to it. There was an extensive partnership with federal agencies and, incidentally, with universities. National laboratories across the country, such as those in Lawrence Livermore, were crucially involved. A tax credit for unconventional gas was introduced in 1980, which lasted until 2002. The Department of Energy and the federal Government continued the funding of research when no one else at all was interested. The towering figure in the industry, George Mitchell, who I like very much—partly because he is a very good tennis player, and I admire people who can do two things really well—came along and applied the final touch, as it were. He made the final breakthroughs, but this would have been impossible without state involvement.
I am a supporter of shale gas, as long as it is properly regulated and coupled with the closing down of gas-fired power stations, but supporters of shale gas who decry subsidies for renewables should remember the tale that I am telling, because breakthroughs will come there too. The trouble with the UK is that they are likely to come in the United States and China, which are making the most substantial investments. The US might have led in shale gas, but it is also a big leader in renewables.
Baroness Kramer
My Lords, I join in the thanks to the noble Lord, Lord Haskel, for this important debate. Since I have only a few minutes, I am going to follow in the footsteps of the noble Lord, Lord Cope, and focus on small businesses. I think we are all aware that job growth is no longer going to come primarily from large companies opening large factories. Those days are over. Small businesses provide more than half our jobs. Many do not realise that they provide more than half our exports. Some will have heard of the rule of one in three. If one in three small businesses added one additional employee, this would wipe out unemployment. That is pretty much true across the developed world.
All government policy has been very slow to recognise the need to row in behind and provide the necessary support for small businesses. I am incredibly conscious that there is a wide range of programmes, such as EIS and other tax incentives to invest in small businesses, and the removal of stamp duty from AIM so that small businesses can raise public shares. UKTI also has very effective programmes now to provide support for exports, and the Government are reshaping export finance programmes so that they suit small businesses. But most small businesses do not have a clue about what is going on and what is out there and available to them as support.
I want the Government to look at the whole communication channel to this complex world of small businesses. It is certainly worth looking at the German approach, which tells every business that it needs to become a member of its local chamber of commerce—I do not care whether they pay only 50p to do so—so that they are in the system and contact can be made, communication can happen, education can flow through, and exchanges and networks can be built. We have to get serious about communication. If it is done through the structures of LEPs, that is fine with me, but we have to start making sure that there is an effective mechanism to reach out to that wide net of small businesses.
When I ask small businesses what is constraining their growth, the answer is always skills—I suspect that other noble Lords who are better equipped on this subject will talk later—but it still astonishes me that we manage to develop a highly sophisticated educational system at school and university level that delivers people often with extensive qualifications that simply do not match the job demand that is out there. Again, with a mechanism of more locally driven decision-making, local networks can try to counter that, but this surely has to go to the top of any agenda that we deal with.
In the three minutes that remain to me, I would like to focus on funding for small businesses. The major banks have long said that they finance anything—a small business, a large business, whatever else—that is bankable, but to those of us who have talked to so many small business and with various trade bodies it is evident that this is not true. I think that banks are finally facing up to that reality. They give us two reasons. I am interested less in their reasons and more in the actuality. One reason is that to work with really small businesses, highly knowledgeable people with exceptional capabilities are needed, because it is so granular when you work with a small business. The skills that have to be mastered are way too costly, given the structure of our banks. It is just not possible, given the way in which we organise ourselves and where we want our priorities to be.
The second issue is capital requirements. Banks have to be properly capitalised. We cannot give on capital requirements in a general way. Banks tell us that this is highly risky stuff, and that they are required to hold large amounts of capital, which essentially makes it uneconomic for them to offer credit on reasonable terms.
How have other countries that face exactly these problems dealt with them, and what can we learn from them? As I have only a short time, I shall look at the US example only. The US Government made a commitment a long time ago to what they call “the last mile”. How do you get money out to the small people in a community, much as we have the Post Office deliver a letter the last mile? The US Government decided that major US banks were not capable of that activity. You have to set up a different sector to deliver that, and because making sure that that happens is a public good, the US has been willing, through its Community Development Financial Institutions Fund, which sits in Treasury, to put substantial amounts of money into making sure that a sector exists that can deliver that. The US funds it by billions. As partners in that effort, it has drawn in its big banks. It has done it largely through a stick, the Community Reinvestment Act, which most noble Lords will be familiar with, so I shall not go into the details.
The effect of being required to put money into these entities and to provide them with knowledge, support and expertise is that it now seems normal to US banks. I have been talking to those here. They find it astonishing that it is a reflex action of our major banks to say, “This is an area we are not going to serve. It is not right for us”. It is exciting to be able to get in there with relatively small amounts of money and do it. I ask the Government to look at those opportunities.
Lord Monks
My Lords, I, too, thank my noble friend Lord Haskell for initiating this timely debate. The state has many roles. Often it has not sought them, but has had them thrust upon it by the failure of markets in important respects. At the moment, the list of roles tends to grow as the country’s problems are no longer masked by the windfalls of the North Sea and booming financial services; they are not completely over, but they are a lot less significant than they were. The problems are not new—economic historians trace them back to the 1870s—but they seem to be getting worse in some fundamental ways: the shrinkage of manufacturing, a persistent balance of payments deficit and too few companies still thinking for the long term, with a relatively low spend on innovation and training. Investment in new machinery is apparently at a lower level than in Austria, Turkey or Mexico. The low productivity levels that we are experiencing reflect inadequate skills, low capital investment and, sometimes, poor relationships at work.
While we are proud of our open economy, can we really be so relaxed about the continued foreign takeovers of successful British companies? The latest is Penguin Books, which has recently been taken over by a smaller rival, and it seems that Invensys is shortly to go as well. There is no comparable traffic in the opposite direction, nor is there a flowering of new UK companies of the same size and importance. A large part of what could be called the commanding heights of the economy is now held abroad. Too many managements and shareholders are governed by thoughts of value extraction—the price they can get—rather than adding value to what they have. There is not a squeak from Eurosceptics or Europhobes about what this means for national sovereignty. A small proposal from the European Commission sends them into paroxysms of anger but when this fundamental change is going on, nothing is said.
We also have a systemic tendency for rewards to go disproportionately to people at the top and for them to outstrip performance. The inequality statistics are truly frightening. Will the Royal Mail in private hands follow the same depressing path by charging higher prices and contracting out delivery services to lower paid, less securely employed workers? Then will we see the Royal Mail sold off, perhaps overseas, like so many of our privatised utilities? Must we watch helplessly as private equity or other predators move in for quick kills? Why are golden shares so out of fashion in developments of this kind?
The stark truth is that private ownership has not unleashed a fresh burst of investment. Thames Water and BT are seeking government guarantees for major investments in the super sewer and national broadband; there is not much appetite for risk among many of these large privatised companies. Centrica withdrew from the new nuclear power project because its shareholders wanted higher returns over a shorter period. This rather frenzied approach to short-term gains continues to enfeeble UK companies. If you add in the periodic devaluations of sterling, which make UK assets relatively cheap, you can see the vulnerability of our economic model.
Some are using the term “responsible capitalism”. I use it myself sometimes; it is a nice thought. However, there is a risk of many in the citadels of deal-making seeing it as an oxymoron and treating it risibly and not seriously at all. We have good economic models among our neighbours, particularly on the other side of the North Sea. Why do we not learn more from them and build, as others have said in this debate, a stronger training culture, foe example, comparable to their economies? Why do we celebrate so much a deregulated labour market while our northern European neighbours reject easy hire and fire, zero-hour contracts and the trend towards making jobs less secure? They are relaxed, even enthusiastic, about collective bargaining and extensive information and consultation arrangements.
Finally, what about our management cultures in this country? We claim some of the world’s leading business schools. I declare an interest as a visiting professor at Manchester Business School. However, they are often seen as transmission belts to put people into financial services or into the finance function of business—accountants and so on. How can they be transformed to become the staff colleges to make the UK a new, North Sea-style economy? The noble Lord, Lord Heseltine, has sought to address some of these issues and I believe that the Business Secretary recognises the problem, but as yet we are well short of measures to promote an economic model and culture that will be both successful and sustainable.
I end with a remark from a senior Siemens executive. When asked what the key factor in the company’s success was, he replied, “Continuity”. Would many top UK executives say the same? I doubt it. We must change that culture so that in due course they will consider that to be the normal way to describe their business.
Baroness Valentine
I declare that I am chief executive of London First, a business membership organisation, which includes companies involved in infrastructure and development.
I thank the noble Lord, Lord Haskel, for introducing this debate and presenting such a cogent argument. However, I want to gently challenge the title and suggest that the role of government is not to generate economic prosperity and employment but to create the conditions in which that prosperity and employment can flourish. Timely interventions by a Government can do that. However, the most efficient, easiest and least costly interventions are often avoided because they are politically uncomfortable. Where business would act, government prevaricates.
Take our international links. To provide us with much-needed air routes to emerging economies we should have built a new runway in the south-east years ago. While we have been staring at our navels, Frankfurt, Paris and Amsterdam have built four-runway or six-runway hubs. There is an easy solution: the Government could just say yes to any of the privately funded offers to build more runways that are currently on the table.
Back in the real world, while I support the creation of the Davies commission, the business community needs assurance that whoever might be the Government of the day will act on its recommendations. Can the Minister reassure me that the current Government would? Can he also reassure me that, while we wait a decade or more for even one runway to be built, the Government will do everything in their power to enable more flights to emerging economies in the mean time?
On immigration, Paris attracts eight times as many high-spending Chinese tourists as London. Why? Because France is part of the Schengen visa, on which you can visit 26 European countries but, to add the UK to a European tour, visitors need to go through the hassle of applying for a separate visa. I accept that, politically speaking, we are unlikely to join a single visa system, strong as the business case may be. However, if we are to acknowledge that political reality, can we please do whatever we can to take the hassle out of applying for two visas? Let us build on the Government’s recent improvements to our visa process, but recognise that incremental improvements will deliver only incremental increases in visitor numbers. The step change will be achieved by sharing application centres in China with key European partners, once Schengen introduces biometric requirements.
In a similar vein, the practice of treating international students as a balancing number in our net migration target has had the unfortunate consequence of giving countries such as India the impression that their students are unwelcome here. Higher education is our eighth biggest export and we should be cultivating rather than inhibiting that sector.
I turn to an area in which positive government intervention can make a real difference, albeit at a cost: investment in infrastructure. I pay tribute to the Government on their recent spending review. A five-year settlement for Transport for London’s capital investment programme makes much more sense than an annual one. The guarantee for the Northern Line extension has enabled the redevelopment of the iconic Battersea power station, paving the way for up to 26,000 jobs.
We must keep that momentum going, though, and with a sense of urgency, if real progress on vital projects such as the Thames tideway is to be made before the next general election. If creating 9,000 jobs to build this new sewer is not enough of an incentive, then the Government might also consider the benefit of allowing the residents of London’s thousands of new homes to flush their new toilets. I am confident that the Government will do the right thing and give the go-ahead.
Finally, I must mention Europe. The UK is one of the most successful global trading nations. We are the third highest exporter of services and the sixth highest of goods. The global companies that base themselves in London do so as a centre for Europe. They have no interest in or understanding of the UK breaking away. While they certainly struggle with aspects of European regulation, particularly of our financial services post-credit crisis, they understand the need to address failures in regulation and for intensive negotiation to find solutions that balance stability, reputation and growth. I have not met anyone in any of these companies who is looking for an exit. Indeed, for most, talk of a referendum suggests a trigger-happy approach to sensitive diplomatic matters.
There is, though, the need to reassess the relationship between those inside and outside the eurozone, and to do that the Government need to fully engage and negotiate as an equal partner, rather than with one hand on the escape hatch. While there are political realities, therefore, there are also economic realities, and if the Government are serious about prosperity and employment, there are occasions when they need to recognise that government itself is the problem, rather than looking for new, politically easy solutions.
Lord Bates
My Lords, I, too, pay tribute to the noble Lord, Lord Haskel. He has a well deserved reputation for, over many years, seeking to improve the understanding, particularly in the Labour Party, of the role of management of the private sector. Having listened to the speech of the noble Lord, Lord Monks, I suggest that his work is yet undone; he still has much to do in that important area.
The noble Lord, Lord Haskel, sets an important task for us, which is to take,
“note of the role of government in generating economic prosperity and employment”.
That begs the question, “Does it have one?”. Of course, the answer to that is yes. The role of government is to generate economic prosperity through untying the wealth-creation potential of enterprises and allowing them to flourish; to maintain a tight fiscal control on the costs and operations of government, through the avoidance of waste and unnecessary regulation; to construct the tax and benefits system in a way that rewards those who work, cares for those who cannot and incentivises the risk-takers while protecting consumers and upholding fair competition; to provide a stable monetary policy which creates the right balance between borrowers and savers in the economy; to provide the investment in the physical and intellectual infrastructure that we will need for the future; and to maintain and develop strong international trading relationships. In short, the role of government is to prepare the ground and regulate the climate for economic prosperity and employment while recognising that, ultimately, it is enterprises which will actually build and maintain it. That would be my definition of an enabling or entrepreneurial state.
If this is the description, how have the current Government performed? I do not think that many in this House would argue against the proposition that no post-war incoming Government have had a more favourable economic legacy than that which fell into the lap of the Labour Government in 1997; I declare no interest as a Treasury Minister at the time. At the same time, there would not be many who would argue that any incoming Government have had a less favourable economic inheritance from their predecessors than that which befell the current coalition in 2010.
The coalition arrived in office to face a debt that was unsustainable, government spending that was out of control, and a public sector that was too strong, and a private sector too weak, to sustain it. We had grown too dependent on financial services and lost our competitive advantage in manufacturing. We had become obsessed with the old, established markets and trading relationships of Europe, and paid insufficient attention to the rising new markets of Asia and Latin America. We had taken no note of the fact that the tax and benefit system could provide perverse incentives that made not working more attractive than working. Wealth creators and risk takers were insufficiently rewarded. Our education was failing generations of young people through its lack of rigour, and vocational training was not delivering the skills that industry needed.
Three years on, what has been the result? Well, we have seen a reduction in the deficit; it is down by a third. We have seen sustained cuts in corporation tax which will mean that we will have the lowest corporation tax rates in the G20 by 2015. We have seen businesses create 1.3 million new private sector jobs, which is close to three jobs created in the private sector for every one lost in the public sector. This week, we have seen unemployment fall further, by 57,000, and the claimant count fall below the level of May 2010. The reform of the benefits system will ensure that people are always better off in work. Through raising personal tax allowances, people working full time on the minimum wage will have had their income tax bill halved during the time of this Government. We have seen investment in infrastructure. Danny Alexander, the Chief Secretary, announced £100 billion of investment in infrastructure between now and 2020. There were 520,000 apprenticeship starts in the last academic year, up 80% on the last academic year under the previous Government.
We are seeing the evidence for this in increased economic indicators showing, for example, that exports are at records levels according to the British Chamber of Commerce and the purchasing managers’ index. We even see this morning an announcement that retail sales have gone up by 2% in the past year. We see that our exports, particularly to those new, dynamic markets such as Brazil are up 25%, with China up 40% and Russia up 80%. That is extremely welcome.
The culmination of this is that the predictions for a double-dip or triple-dip recession that were so frequently made from the opposition Dispatch Box turn out to have been wrong. There has been a reassessment which shows that we are now into growth, and the IMF has reassessed its forecast to show that it expects this economy to grow strongly. I urge those on the Benches opposite to recognise that it is time for them to reassess the record of this Government and their own policies in the light of that performance.
Lord Bhattacharyya
My Lords, I thank my noble friend Lord Haskel for choosing such an important topic for this debate. He is a passionate believer in manufacturing and technology. I declare an interest as chairman of Warwick Manufacturing Group at the University of Warwick, where we have worked for three decades to deliver growth, both at home and abroad.
It is vital to remember the positive difference the previous Government made to our society and economy. Since 1997 we have seen huge improvements in the infrastructure of the nation in rail, schools, hospitals and science. If we had not made those investments, our public realm would have resembled that of a third-world nation. The Labour Party should be proud of those achievements. There are problems, of course, but real successes too. For example, the importance of the science budget is reflected in the current Government’s decision to protect that funding. Naturally, there is a need to go further. We have already heard about the need for infrastructure spending as a driver for growth and I strongly support projects such as HS2. A single driver such as HS2 will create not only a different mindset among industrialists throughout the world but also employment. I also support innovation policies to create a more broadly balanced economy.
We can learn, too, from fast-growing nations. I often visit China. On a recent trip I saw that when growth faltered, the Chinese Government announced 25 major rail projects. They also announced further investment in innovation, aiming to surpass American R&D spend in the next decade. This approach creates a framework for long-term growth, encouraging business investment and increasing the likelihood that jobs created by these businesses will be sustained over a period of time. Here in Britain similar policies are vital, not least for the many young people who face long-term unemployment if there is little growth. Of course, Britain faces real financial constraints. This means we need a better understanding of the impact of our policies.
The real question is not whether government should contribute to economic growth, but how effectively it makes that contribution. I am reminded that the original title of Lloyd George’s Yellow Book of 1928 was Britain’s Industrial Future. Since then we have had many such mantras, such as national champions, white heat, sunrise industries or industrial activism. All of them have agreed with the fundamental judgment of the Yellow Book on industrial policy, which was:
“There is no question of principle at stake but only one of degree, of expediency, of method”.
A focus on expediency and method should make us sceptical of grand claims for any growth policy. As Karl Polanyi said of the industrial revolution:
“No one had forecast the development of a machine industry; it came as a complete surprise”.
Similarly, no one could have forecast what is happening today with the digital revolution.
Governments can never guarantee, or even predict, disruptive innovation. Instead, they should focus on incremental change, supporting infrastructure and innovation, thus creating a framework in which innovators prosper. This means better understanding of what government does well and where it must do better. In this spirit I propose a practical change to encourage the effectiveness of growth policy. It is simply that we commit to a higher standard of evaluation of public policies to support growth.
The noble Lord, Lord Haskel, rightly proposes enabling institutions to support growth. We also need an evaluating institution. All too often—whether in RDAs, LEPs, research councils or government departments —a policy is announced, a programme is delivered, the impact is evaluated by a consultancy firm, a number is put in a press release and then it is ignored. Frequently, bodies responsible for spending money, whether research councils or the Technology Strategy Board, define their own impact and decide if their objectives have been met. As Professor Henry Overman of the LSE said of RDAs, many of which have created important growth in their regions, you can read thousands of pages but evaluating them is very difficult, unless the current Government come in and get rid of them. The issue is not that projects have performed well or badly but that too often we do not know how they performed at all.
It is time that we had a national impact office with a duty to monitor the effectiveness of all government policies to support growth in the real economy. That happens in other countries. Such a body is crucial, especially if we are to embrace devolution in growth policy, for example with LEPs. As the noble Lord, Lord Heseltine, pointed out, the ability to share best practice and identify where things are going wrong is crucial. How can we do this without a neutral body examining what is best practice?
I have always been a passionate believer in the positive role that the state plays in industrial policy, but all good engineers know that it is only by critically evaluating the strengths and weaknesses of any past design that you gain the knowledge to help you do better in the future. We should be absolutely fearless in assessing which policies deliver growth. That is what we should be evaluating in future.
Lord Bradshaw
I, too, add my thanks to the noble Lord, Lord Haskel. I am going to take a rather different line from some noble Lords. I have worked in industries which employ engineers. Engineers were my colleagues. They were highly respected. Over my career I have seen that respect for engineers go down and down so that now the engineer is lucky if he sits at the top table because it is crowded out with people qualified in finance, human resources and other things, when it is the engineers who actually drive our businesses forward.
Several noble Lords have referred to the list of apprentices and how the number is increasing. I ask you to look very carefully at who these apprentices are. They are not technically trained. There are people with apprenticeships in things like catering, business services and law, but those are not the skills which drive the economy forward in the way that I think we all want. I also want to comment on our professional institutions. The professional engineering institutions went through a period where they insisted on graduate entry, yet many of my colleagues started their careers as premium apprentices, took their higher national certificate, got practical experience and then qualified as professional engineers. Fortunately, that approach appears to be coming back—at the Institution of Mechanical Engineers, for example—because people need to know what they are doing. I want to draw to your Lordships’ attention the paucity of maths and physics teaching in schools. It is awful in many schools and there are so few students actually studying these subjects. Without an understanding of these subjects, we are not going to be able to provide the engine for the growth which all of us desire.
I was struck by the question that the noble Lord, Lord Bhattacharyya, raised about evaluation. Many large infrastructure projects of the sort which are being discussed here are judged on the values of time. This is an old system that was invented to evaluate rival road schemes in the 1970s. It was overseen by an organisation called the Standing Committee on Trunk Road Assessment, and it forms the basis of a lot of Treasury thinking. If you can prove that you can save 10 minutes going to Birmingham or a few minutes by putting an extra lane on the motorway, that will often be the deciding factor. However, if you build an extra lane, say on the M25, and at the end of three years you still have congestion as bad as when you started, I cannot see that that value of time is delivering a measurable quantity. On a visit to city hall this week I was heartened to hear that the Mayor of London is saying to people, “Are we creating jobs and building houses? Are we doing good?”, not focusing on how much time people are saving in whatever they happen to be doing.
We need to have a target for funding registered technicians. We should look very carefully at where the money spent on apprenticeships is going and make sure that enough of it is going towards engineering technicians. We are not going to re-equip our railways, modernise our water system, build new power stations or engage in fracking unless we have the skills here or we import them. The Government have more or less set their face against immigrant labour, so we have an urgent task in encouraging some indigenous labour to do the job. Finally, we really have to recognise the status of the engineer and his value to the community.
Baroness Donaghy
My Lords, I thank my noble friend Lord Haskel for initiating this important debate. I will concentrate on a couple of things that the Government should not be doing and then move on to some large but neglected sectors to which the Government should turn their attentions.
First, the Government should stop messing about on Europe. Of course there is a need to reform its institutions, but the opt-out approach to Europe is counterproductive and isolating. As John Cridland recently wrote,
“we must focus on a positive vision of reform”.
A recent CBI study looked at the relationship between Norway and Switzerland and the EU. Both countries are outside the EU but Norway is part of the single market through the European Economic Area agreement. It pays €600 million a year for the privilege, making it the 10th-highest contributor to the EU, just to be allowed to follow the EU rules as a non-member. A Norwegian conservative, Mr Nikolai Astrup, said:
“If you want to run Europe, you must be in Europe. If you want to be run by Europe, feel free to join Norway in the EEA”.
The Government should also stop trying to kid themselves that they can opt out of the social wage when rights for part-time workers, maternity leave and all the other workers’ rights enshrined in various directives have become part of the fabric of society and the expectation of a new generation of workers. Not just the trade unions will resist the undermining of those rights.
My second “not” is that the Government should not mistake Whitehall reorganisation for progress. Abolishing departments and even non-departmental public bodies is wasteful if the functions have to continue elsewhere. It halts momentum and it is costly. That is not to say that things should never change, but so often the problem is poor interdepartmental co-operation or a Government who want to prove that they are different from the previous one.
The proposal to increase the number of party-political appointees in government departments is another area that will help things grind to a halt. If the proposal is implemented, I doubt that the appointees will be from diverse backgrounds with plenty of management experience—or even engineers, as the noble Lord, Lord Bradshaw, urged us. They are more likely to consolidate the very narrow background of Oxbridge-educated political advisers who have already caused such alienation between the political classes and the population as a whole.
I turn to the areas on which the Government should spend more effort. Two weeks ago the noble Baroness, Lady Shephard of Northwold, initiated a debate on preparing young people for the world of work, and she made a powerful speech about the importance of careers advice in which she said that the Government’s own National Careers Service had estimated that,
“the cost to the economy of young people making wrong choices amounts to some £28 billion”.—[Official Report, 4/7/13; col. 1330.]
In his summary of the debate the Minister acknowledged the importance of careers guidance. However, he preferred to lay emphasis on the role of good schools. Although that is an admirable sentiment for an individual, it does not constitute a national strategy. Without a more systematic reform, it is difficult to see how the reform of vocational qualifications will have the impact that we all desire. The noble Lord, Lord Cormack, and the noble Baroness, Lady Fookes, also took part in that debate and spoke about the “unfortunate attitude” towards those who work with their hands in craft and horticulture. A good vocational system needs to take account of these areas, which have the potential to employ hundreds of thousands of people.
The situation is even worse with engineering, science and technology. The Royal Academy of Engineering has predicted that in the next eight years there will be an average shortfall of 40,000 new graduates in science, engineering and technology every year. In Germany last year, engineering was the most popular choice in higher education, after law. I pay tribute to the university technical colleges, but we need many more of them; we need an initiative on the scale of the Robbins report for HE. As well as meeting the needs of employers, it is clear that an increase in vocational learning leads to lower youth unemployment. Surely there is a clear role for government here.
To conclude, the Government should focus on functions rather than wasteful institutional reform. They should focus on skills, advice and guidance on careers for our young people and do more to promote Cinderella industries, such as tourism, which could lead to quick results on economic growth and youth unemployment.
Lord Skidelsky
My Lords, I am grateful to the noble Lord, Lord Haskel, for introducing this important discussion. He has been rightly impressed by the argument put forward by the noble Lord, Lord Sainsbury, that the state must play a key part in fostering innovation, and I agree with that. However, of course, that does not exhaust the role of the state in creating prosperity. In the last chapter of his General Theory, the economist Keynes pinpointed as,
“The outstanding faults of the … society in which we live … its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes”.
I believe that these are still the outstanding faults of the society in which we live and that the state has a vital role to play in remedying them. Moreover, that is clearly connected to the topic of the noble Lord, Lord Haskel. The worst environment for innovation is rampant economic insecurity and excessive inequality. The private sector will not invest in jobs and skills unless it sees a market. The state has a role to play in sustaining that market in general, as well as in providing support to particular sectors. Once again I apologise for being the only macroeconomist taking part in this debate—I feel very lonely.
Let us consider two arguments. After the Thatcher-Reagan revolution, politicians and economists no longer believed that government policy should aim directly to influence the level of employment. Noble Lords will remember the new doctrine announced by the noble Lord, Lord Lawson: government should concentrate on controlling inflation and leave employment to the market. Let us see how well the market has done. Between 1950 and 1973—the period when economic policy was influenced by the Keynes doctrine—UK unemployment averaged below 3%. Since 1979, when the Lawson doctrine held sway, the average has been almost 8%. Today, Britain’s unemployment rate of 7.8% tells only half the story. The widest indicator of joblessness, which includes unemployment, part-timers seeking full-time work and those who are economically inactive but who nevertheless want a job, is estimated at about 12%, or 6.4 million people. On top of that you have to add the much higher level of youth unemployment. The Prime Minister and the Chancellor constantly tell us that the nation must live within its means and that the Government cannot spend more money than they have. Has it occurred to these great thinkers that our means include those unused resources and that if they were being properly utilised, the Government would have more money to spend?
The second revolution that has been associated with Lady Thatcher was the abandonment of any commitment to equality. The ideology of the 1980s was that undue compression of incomes brought about stagnation: get taxes and welfare benefits down in order to increase the incentives to work and innovate and the result would be a more dynamic economy and one in which wealth would steadily trickle down without any need for obvious redistributionary policies. The trade-off has not happened—growth was slower than it was in the Keynesian period and we are waiting for the trickle-down to happen. In the past 30 years, the share of income captured by the top 1% has more than doubled to 14%, leading to the joke that the new class struggle is between the have-nots and the have-yachts.
The economist Tony Atkinson, the great expert on distribution, writes:
“Moves towards reduced income inequality were dramatically reversed in the 1980s with a sharp rise in inequality”,
a rise which was historically unprecedented. Margaret Thatcher and her successors—we should note this historical fact—dismantled two of the main drivers of equalisation: the system of progressive taxation, and strong trade unions. The old tax system set, in effect, a cap on post-tax incomes and profits. The call for caps on bankers’ remuneration today simply reflects the failure of the current tax system to limit its stratospheric rise. The main achievement of the trade unions was to push up pre-tax earnings in line with productivity. This function has now collapsed.
The triumph of greed over professionalism and restraint has been most obvious in the financial services sector, which, ironically, new Labour decided was to become the powerhouse of the British economy. I understand well the frustration of the noble Lord, Lord Sainsbury of Turville—as a Minister for Science and Innovation under new Labour, he was told that the financial services were a great source of innovation. When he asked for examples he was told that,
“tax avoidance is an art where we are very innovative”.
I have no doubt that we will recover from the present semi-slump; we may even recover sufficiently by 2015 to give the coalition—or the Conservatives at least—another term of office. My great fear is that, having got to something like normal, we will come to believe that we can continue much as before, except for a few watered-down reforms to the banks. I believe, on the contrary, that the system of political economy that has evolved since the 1980s has, for all its benefits, grave flaws that, if allowed to continue uncorrected, will land us in a succession of crashes and crises of differing degrees of severity, which will cumulatively destroy support for the free-market economy. The chief of these flaws in our system are, to repeat Keynes,
“its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes”.
The Government have a big role to play in addressing both. I am grateful to the noble Lord, Lord Haskel, for giving me the chance to set out my ideas on these matters.
Lord Hunt of Chesterton
My Lords, I welcome this debate, which was introduced by my noble friend Lord Haskel, and the remarks made by the noble Lord, Lord Cope, following him, which very much set the tone for the importance of SMEs, which I will touch on. I declare an interest as a director of a small scientific consulting company in Cambridge and former director of the Met Office. I did a quick calculation while listening to the noble Lord, Lord Skidelsky, of what the ratio was of the highest and lowest paid people in those companies and it was somewhere between three and four, which is perhaps a bit less than in the City.
As my noble friends Lord Haskel and Lord Giddens explained, modern economies are partnerships of the public and private sectors. The present Government did not understand this when they came to power. I quote Mr Willetts, who made a speech at the Foundation for Science and Technology, under the watchful eye of the noble Earl, Lord Selborne, the chairman:
“There has been a real shift in thinking”—
that means “our” thinking, Tory thinking—
“over the past few years. Many of us”—
Tories—
“used to think that the only thing Government had to do was to get out of the way. Large numbers of businesses still want that; they simply want lower taxes, easier planning rules, less red tape. Yet an increasing number of businesses and industrial sectors look to Government to play a far more creative role”.
Mr Willetts thinks quickly, of course, and in two years he has learnt what we now all understand. Perhaps the noble Lord, Lord Bates, might have a talk with the new Mr Willetts.
Lessons have, however, been learnt by this fast thinking Government and we now have the Technology Strategy Board, which has survived with some great successes—and I declare an interest as an adviser to the company, Tokamak Solutions, which has benefitted from important input. Nevertheless, many smaller companies, as the noble Lord, Lord Cope, said, find dealing with the TSB and BIS quite difficult, and the general view is that it is often easier for these companies to work through European Commission projects, which are much easier to enter and have been very effective, as I know myself. I also did a recent survey of some companies at the Cambridge Science Park, which also found that working with EC projects was at least as easy, if not easier.
Another important role for the TSB in future might be to assist smaller companies—SMEs—in providing technology to larger companies. In the United States, there is a very strong push by government to ensure that big companies sponsor smaller companies and use their products. The same thing does not happen so widely here in the UK. We need a survey of these developments. I hope that in winding up the Minister will explain these Damascene conversions of the Government, how current regional development assistance compares with the previous RDAs, and whether it meets the ambitions of the noble Lord, Lord Heseltine, for this.
What can the UK learn from the industrial and technology policies of Germany, France, and the USA, which we have been hearing about? One matter that we have not discussed is industrial democracy, which is no longer a very fashionable term. There was a great report by Lord Bullock in the 1970s. One of the important roles of the supervisory board in Germany, as some leading businessmen have told me, is its considerable breaking effect on the business of buying and selling companies. It sometimes seems that companies in Britain are just a higher form of gambling—buying and selling and buying and selling. The Evening Standard gets frightfully excited when there is more buying and selling. For the workers, however, this is not always brilliant, and in Germany there is a clear way of looking at this.
Nevertheless, despite the normal Manchester economic liberalism of the Treasury, it is now looking at the idea that industrial democracy, or employee partnership, might have some advantages. Everybody knows that when companies have strong employee involvement—notably, John Lewis—they tend to use UK suppliers, and they help to support other British companies. If a company is bought by an overseas company, it might put together cars, for example, but a lot of the research is often done abroad. I note the example of my noble friend Lord Bhattacharyya, who has been very successful in getting excellent research by incoming investing companies, but this does not always happen, as we have seen with the utilities and other companies.
Another feature of the question whether business is to provide services for the community or a higher form of gambling is that there is now a tendency to think that high-tech science is also a form of high-tech gambling—you find a company, its shares shoot up, it goes on the stock exchange, you sell it, then poof, off you go. I am afraid to say that we have seen a lot of that in the UK. If, in receiving government money, these companies had to ensure a much clearer relationship with the community and the Government, we might very well stop this gambling. I have friends now living in rather exotic places around the world because their companies went whoosh, and off they went. This is not business, it is not science, and it is not helping the country.
Mr Willetts also learnt through government laboratories, in his fast-thinking mode, that technology is very important. We used to have the world famous Royal Aircraft Establishment and the Royal Radar Establishment. Where are they? We had the National Physical Laboratory, which Sir Keith Joseph went to visit and which does survive. When he saw annual reports of research on the shelves of that laboratory, he said, “Why do you do that?”. Of course, Sir Keith Joseph went to Oxford and did not understand science. There are brilliant scientists at Oxford, but All Souls has a problem.
Nevertheless, despite these trends, we have world-famous laboratories. The Met Office has a world-famous laboratory, and we have others run by the Government. The important thing is to ask where we go from here when we have lost many of our laboratories in electricity, hydraulics, gas and so on. What are we going to do? We need a stronger effort to work in partnership with Europe, which has the world’s greatest laboratories, as we have seen with CERN and the European weather centre—and I helped to set up a thing called Ercoftac, which brings together all the aerospace companies and universities across Europe. This is the kind of networking approach that we need. I hope that some of these suggestions will be useful.
Lord Mitchell
My Lords, first, I congratulate my noble friend Lord Haskel on securing this debate. After his recent illness, it is wonderful to see him back in his place, giving them hell as usual. The noble Lord is my mentor in your Lordships’ House. Whenever I need advice, and often when I do not, he has been there to guide me and give me the benefits of his huge experience and wisdom. I thank him most sincerely.
Noble Lords will recall the atmosphere this time last year as we eagerly awaited the opening of the Olympic Games. When the Hammersmith flyover needed major repairs, a whole group of people could hardly conceal their glee. Noble Lords might remember the people who said that it was going to be too expensive at £9 billion, the transport system would not work and the whole place would collapse. They said that it was going to be a national embarrassment, and many of them decided to get out of the country. They went to France or America or wherever, and was it not good to see that we proved them so wrong? Who today complains about the cost?
One reason why the Games were so special was the extraordinary success of Team GB, but this achievement did not happen by chance. That glorious summer of Olympic success was not achieved by a Government who retreated and let the athletes get on with it, nor was it done through government picking winners. The unpredictability of sport, as with business, would have made that a foolish gamble. Instead, it was sustained by an active government programme that provided practical support and funding to British athletes. We in business can learn a lot from this, too.
Britain needs a proper British investment bank with strong regional presence and a long-term focus. We are the only country in the G8 without a state-backed institution like this. Its absence has made it much harder to correct the collapse in small business finance after the banking crisis in 2008. We need an active industrial strategy that can help to remedy one of the chronic weaknesses in British business—a lack of investment and a lamentable achievement in productivity. From the 1970s onwards, investment has been lower in Britain than in most of its competitors. The fall in investment after the financial crash has been greater and longer lasting than for any comparable recession since 1973 or 1990. Without radical change, there is a danger that any economic recovery will be based upon a consumer take-up, rather than an investment surge. It will leave us extremely vulnerable to future economic shocks.
I have serious concerns about the Government’s progress on infrastructure investment. Of the 576 projects that have been announced by the Government, only seven have been completed; 80% have not even been started. I simply do not understand the Chancellor’s recent statement announcing so many infrastructure projects, all of which will be delayed until after the election. Why wait? Why dither? Just do it, and do it now.
I am particularly concerned that poor planning and implementation have hampered the delivery of super-fast broadband to many areas of the country, particularly rural areas. Despite all this, e-commerce in the UK is thriving. We have a higher share of our GDP in this area than any other developed nation. This is brilliant, but we cannot take our feet off the accelerator. I have been horrified by how many business-led reports I have read recently that seem to totally ignore the digital revolution taking place before our eyes. Sometimes I think that politicians think that they are digitally savvy just because they use Ocado or Amazon. In their mind’s eye, too many still seem to regard the digital revolution as a bit player in the wealth of the nation. As I have said before, if business people are not having sleepless nights over their potential exposure to the digital onslaught, their future will be bleak.
Here is the truth: the digital revolution is Schumpeter’s creative destruction writ large. Just look how traditional channels of distribution have been destroyed by the new media—music, movies, printed news, books and photography—and the companies that have gone to the wall, including Jessops, HMV and Blockbuster. There are many more to come. The sectors just about to fall to the advent of this tsunami of technology include banking, medicine and education. The changes in these sectors are particularly breathtaking. This new digital order represents a flat world where my competitor and the person challenging me for my job may well live halfway around the world, and our thinking needs to reflect it.
I take as an example HS2, which I must say I first enthusiastically supported but which I am now having second thoughts about. I do not think that we have factored in the technological changes that are upon us. I do not understand the logic of spending £40 billion and more just to enable people to get from Birmingham to London 23 minutes earlier or Manchester to London 50 minutes earlier for them then to be stuck in monster traffic jams on the Euston Road. I adore using the TGV in France, and I have been envious of that country’s achievements, but could it just have been a 20th-century phenomenon? Just for once, why do we not try and project what the world will look like in 20 years’ time, when HS2 is scheduled to be completed, and in doing so remember what the world looked like 20 years ago? Which of us could have predicted Skype? Who would have thought it would be possible to speak to one’s children in Australia holding a small device in one’s hand, to receive the transmission in high definition and perfect sound, and for there to be no delay in transmission? Who would have guessed it would also be free of charge?
Now let us project forward. In 2033, can we imagine a technology that could transmit a perfect hologram of a person halfway around the world sitting on a chair in front of us—a hologram where you are hard pushed to tell the reality from the image? If this and thousands of other technologies are bubbling away, who in their right mind would journey to a meeting starting early in the day and getting home late at night, no matter how fast the train will travel? That is why we need to project the technology forward in all these mega-expensive infrastructure decisions.
I was going to talk about my new role, which is no longer on the Front Bench, but I shall leave it because I have hit my time.
Lord Kirkwood of Kirkhope
My Lords, it is a pleasure to follow the noble Lord, Lord Mitchell, in his interesting and powerful speech, with which I entirely agreed. This is an important and timely debate. The thing that I am picking up from the debate—I hope that the Government are picking it up —is that things are really seriously changing, not just economically but technologically, in a way that is often hard to grasp. Governments need to make plans on the basis of a much longer-term perspective to try to accommodate some of these changes. We have heard that from the noble Lord, Lord Monks, with whom I agreed, the noble Lord, Lord Skidelsky, with whom I agreed as well, and the noble Lord, Lord Giddens. All of them made important analytical speeches and all were looking forward and trying to understand the significance of the extent of the change that we have seen. I certainly think that investment banks and digital revolutions are part of that consideration and analysis.
The role of Government is twofold. First, we need to start thinking about managing expectations better in terms of what the future is realistically likely to hold. As part of that discussion, we need to consider how sustainable growth will look and can be provided in the middle to longer-term future. I have real fears that the rather loose assumption that we are going back to the trend levels of growth that we have known in the past is likely to be wrong. The Government need to be brave enough, if they believe that the analysis justifies it, to start discussing these issues in a grown-up way with the public and shaping people’s expectations about wages, growth and living standards over the middle to longer term. That is a very important role for the Government at the moment because of the exponential levels of change that we may be witnessing.
Secondly, the Government need to plan a little more coherently and systematically what the future policy framework is. We had some powerful speeches from colleagues earlier about the need for continuity. Two or three colleagues mentioned the importance to SMEs of continuity. I agree with that. As a foot soldier in the modern coalition Government, I struggle sometimes to understand what the growth policy is. I understand what the austerity policy is because that hits me in the face every time I turn a political corner, but I struggle to understand exactly where the five to 10 year programme is heading. I am a little surprised that the important work of the noble Lord, Lord Heseltine, No Stone Unturned, has not been referred to more often today. I wonder whether the Government are founding their thinking on that. Many of the recommendations of the noble Lord, Lord Heseltine, are correct and should be pursued.
How are all of these major programmes—whether it is No Stone Unturned, the European structural funds, apprenticeships schemes or the Work Programme—melded into a vision that the coalition Government can put forward with confidence at the next election in answer to the middle and long-term challenges? That vision is absent at the moment. It is going to be quite difficult because the election is looming and that makes it harder for any sensible policy-making to be worked through and promoted.
The other thing is that in the spin and the stunts that are used to announce important policies—we had an announcement this week about the pupil premium—the policy gets lost in a lot of noise. The Government should really be much clearer in what they are saying. They need more focus, they need more persistence, and they need to concentrate more on delivery than on making public announcements. They need to separate the signal from the noise. I looked at the Financial Sustainability Report, which was published yesterday. Its long-term views about demographic assumptions, climate change costs and a decline in North Sea oil revenues compound my fear that there are some real problems that we are not yet properly addressing.
Finally, I turn to some issues which are second order but are very important to me. They come into the category of inequality to which the noble Lord, Lord Skidelsky, rightly referred. The Government need seriously to address long-term and youth unemployment. Incidentally, if people are trying to address the housing benefit budget in a meaningful way, we need to have some plans for development of social sector housing units over the next five to 10 years. There is a huge agenda that the Government need to be addressing in the middle to longer term. If we do not do that, in the near future we shall find ourselves during an election with only half a story to tell. That would not be in our interests as a coalition Government and it would not be in the long-term interests of the country.
Lord Ahmad of Wimbledon
Before we continue, I remind noble Lords that this is a time-limited debate. When the clock strikes five, noble Lords should be looking to make their concluding remarks.
Baroness Turner of Camden
My Lords, I thank my noble friend Lord Haskel for introducing this debate and for the way in which he did so. Of course, the Government have a major role in generating prosperity and the employment prosperity should promote. The problem is that, as many of us see it, the present Government appear to believe that it all should be left to market forces, even though experience indicates that this is mistaken. We are told that there are “green shoots” and that things are improving, but I have doubts about that. Living standards are continuing to fall. Vital benefits are being cut or frozen. Housing is in crisis, particularly in London. I have said repeatedly in this House that rents are too high and wages are too low.
It is said that employment opportunities are improving. Only a little, it seems to me, and not for young people—or older. Those over 50 have great difficulty getting other employment if they are made redundant. All this indicates that the Government’s policies are not working, and we have yet to feel the effects of the public service cuts due to come onstream in the autumn.
Meanwhile, the Government are proceeding with their policy of cutting back employment rights. Access to tribunals is being made more difficult and will now be charged for. Changes in the law will make it more difficult, if not impossible, for an injured worker to claim compensation. Whistleblowers intent on drawing attention to dangerous situations are to lose some protection. The ridiculous scheme—defeated in this House but endorsed by the Commons—whereby workers can give up all employment rights in return for shares has nevertheless been introduced by the Government, although I think without much success. The Government seem to believe that all this will increase employment opportunities. I do not think so. The Government should understand that an enthusiastic, committed and well paid workforce is a major asset. SMEs have already benefited from a low-paid workforce, and this has not produced an economic revival: quite the contrary.
The role of the unions should not be underestimated. My own union has recently drawn attention to the work being done in the automotive industry, which is currently very successful. There is an industry committee, on which unions participate. The union has drawn attention to the very successful arrangements in Germany where the workforce is involved through workplace committees. Unions are not enemies, although some newspapers insist that this is so. Their contribution in the field of education and training should be encouraged and respected. The TUC programme, Unionlearn, is well known and successful.
Investment, however, is of course the key. There are many areas of the country which were once thriving but where the factories and workshops which once employed the local population no longer exist. As a result, the local economy is stagnant. There is a need for area development. It is now generally agreed by speakers in this debate this afternoon that our economy needs to be rebalanced; we cannot rely just on financial industries, which we have done in the past. There needs to be an investment bank under government direction so that appropriate investment can be made.
None of this will be easy, but current policies are making things worse, not better. Inequalities are becoming wider—a small minority is rich but others are much poorer. It is time to review current policies.
Lord Stone of Blackheath
My Lords, what I am about to propose in this debate possibly applies more to the following debate on the future of civil society, but I am only going to speak here. Perhaps Hansard can cut and paste my speech into the next debate so that I do not have to speak twice.
Seriously, these two issues are inextricably interlinked. The way in which we generate economic activity affects civil society enormously, and when we use terms such as “businesses”, “the Government”, “society” and “the economy”, we must remember that they comprise unique individuals interacting together as a whole, and that the way in which we conduct ourselves as individuals within government, in generating prosperity, and in civil society is greatly affected by our self-knowledge.
I am pleased to be associated with an organisation called Self Knowledge Global Responsibility. It exists to educate and to raise greater awareness of the connection between individual self-knowledge and sustainable development and civic responsibility; and to encourage people to be better citizens in fields such as social business, sustainable agriculture, ethical investment, low-impact buildings, and education and conflict resolution. Essentially, it is saying that if you are globally responsible you must strive for self-knowledge, and with self-knowledge you must be globally responsible. The founders of SKGR, Aaron Cass and John Hill, know that self-knowledge can be engendered by mindfulness. Mindfulness is the gift of mental functioning that can be engendered with practice and, with it, insights and awareness arise.
Your Lordships may feel that I am straying from the subject and that I am talking like some head in the clouds 1960s “flower child”. I suppose I was that—but I was also the joint managing director of Marks & Spencer when we were generating profits of more than £1 billion a year. David Sainsbury was running Sainsbury’s at that time. When we both entered your Lordships’ House both businesses were profitable and growing because the management and the whole team treated as individuals our customers, our staff, our suppliers, even our competitors, our shareholders, the community in which we traded and the global environment. We sought to manage in a caring, responsible, enabling way, with long-term vision. We understood that the effects of our actions in running these businesses were felt by all people at all times.
Coming back to the role of government, Congressman Tim Ryan of Ohio brought out a book recently entitled, A Mindful Nation, in which he shows that mindfulness is being taught and used effectively in classrooms, hospitals, research labs, military bases and in boardrooms and businesses across his country A brilliant business coach, Manj Weerasekera, says that mindfulness can positively impact productivity in all areas because mindfulness is paying attention on purpose in the present moment and in a non-judgmental way and, through this, insights and awareness arise. By the way, studies also show that mindfulness can lead to happier communities.
Returning to the theme of my noble friend Lord Haskel, we have a duty of care to lead the way to economic prosperity and to look at new options with an open mind, especially as so much of the old has failed. Alongside the suggestions made today by noble Lords about quality institutions, pragmatic regulation and enabling government, we must also consider a mindfulness strategy for Britain. I was delighted when David Cameron, the Prime Minister, introduced a well-being measure into the Office for National Statistics, and said that it was not all about GDP. This is a cross-party issue. Mindfulness is the path leading back to the individuals who comprise our society and handing responsibility back to them. It is an energy model based on self-knowledge that is designed to increase productivity. When people are more self-aware, they become more aware of the contributions they make in business and in society as a whole.
This year, a mindfulness strategy is being designed by my honourable friend Chris Ruane MP and my noble friend Lord Layard and others. It builds upon the work currently being done in this field by universities such as Bangor, Oxford and Exeter. They are working on mindfulness in schools and universities for students and teachers, in the health service for patients and staff, in business for employees and management and in the criminal justice system for offenders and police. By the way, for information, noble Lords may wish to know that a mindfulness course is operating here on the estate, with Members of the other place from all parties and a number of Peers. It is run by Professor Mark Williams and Chris Cullen, using their scientifically proven method of training contained in their book, Mindfulness: A Practical Guide to Finding Peace in a Frantic World. We have a new series starting here in the autumn.
Her Majesty’s Government, in considering our approach to the role of government in addressing the need to invigorate the economy, sustain the environment and create a civil society, may wish to help us develop a strategy for mindfulness across several areas of society where scientific proof of its beneficial effects is already on record. Drawing all this together in a cohesive plan could engender widespread well-being and stimulate the economy at the same time.
Lord Shipley
My Lords, I thank the noble Lord, Lord Haskel, for enabling me to say that I count myself as a progressive capitalist. I understand the importance of profit and the private sector to drive growth and tax revenues and the central role of government to intervene in market failure and to prevent abuses of capitalism when it consumes excessive wealth rather than creating it. It is for the public sector to provide leadership in infrastructure, education and training, public research and particularly leadership in business and innovation, identifying and helping to finance growth areas that will increase our competitiveness.
It is, of course, a fundamental task of government to redistribute wealth to reduce social and regional inequalities, otherwise capitalism cannot be progressive. I therefore support the concept of the enabling state. Are the present Government enabling? We have low interest rates, competitive tax rates, an increasing emphasis on science and technical subjects in education, significant investment in infrastructure and increasing access to finance. The Government have, among other things, supported innovation, seen the creation of 1 million private sector jobs and made major investment in roads and railways. There is the Green Investment Bank, the business bank and improved access to superfast broadband. This is all happening as we pursue the rebalancing of the economy away from an overreliance on London and financial services. In this respect the Regional Growth Fund, which is now worth £3.2 billion, is helping to drive that change, so, yes, I think that the present Government are an enabling Government.
There are three areas to which I wish to draw your Lordships’ attention and to which I hope my noble friend the Minister will respond. The first is skills. Employers in manufacturing, processing and engineering have problems recruiting right across the UK. It is a sad reflection of all the money that successive Governments have put into skills that we still have major skills gaps in our economy. Local growth funds may well provide an answer as they can require skills providers to be locally accountable for failures to meet demand, and much better forward planning should result. The concept of local growth funds is drawn from the report by the noble Lord, Lord Heseltine, No Stone Unturned.
Secondly, the Government are doing well on apprenticeships but we need to do much more. Fifteen per cent of our under-24s are unemployed but only 5% of graduates are unemployed. As the noble Lord, Lord Bradshaw, pointed out, we need more high-quality apprenticeships in the right high-level skills. Rightly, we compare ourselves with Germany, where there is much greater structural coherence between the private and public sectors in creating apprenticeships that turn into sustainable jobs. The Higher Apprenticeship Fund is an important contributor but we need to learn much faster from the German experience than we have done.
The third thing that I would like my noble friend the Minister to respond to relates to public procurement policy in the construction sector. We seem to be developing a procurement system between national and local government that favours big national construction companies at the expense of mid-sized regional ones. This is potentially damaging to regional growth. Building firms working up and down the country have recently bid for a place on a national procurement panel for the Priority School Building Programme. While 12 firms have been selected for the north panel and 12 for the south, nine of the firms selected are on both panels. We talk a lot about a lack of competition in the banking and audit sectors, but are we heading in the same direction in the construction sector with the big nine? It is impossible for medium-sized firms to qualify for a place on these procurement panels. Even as a joint venture with a combined annual turnover of £250 million, they are still ineligible even though they may have done excellent and relevant work in the past. Since all these firms ask for is the right to compete and to tender, it is hard to see what public interest is being served in preventing them doing so. There are serious implications for the prospects of regional firms because they will lose the opportunity to grow bigger and generate more jobs and wealth in their local areas.
Then there is the Scape framework used for procurement by some local authorities, housing associations, some parts of the NHS, some police authorities and universities. This framework requires contractors to have an annual turnover of more than £500 million to be eligible to carry out jobs starting even as low as £2 million. Very few mid-sized regional contractors can meet this turnover requirement but they could carry out the work just as well. There is a requirement to take into account local supply chains and subcontractors because they are supposed to be used by national contractors, but it seems that this is frequently not the case. That is an erosion of job opportunities for local people, often in areas of high unemployment.
Then there is the question of the reinvestment of profits. Ten of the contractors on the northern panel that I referred to are headquartered in the south. Do the surpluses made on the projects undertaken in the north of England get reinvested in the place where the work was done, or do they get siphoned off to spend elsewhere? We need to know. The Government accept the need to boost the regions but I ask the Minister to look very closely at regional procurement so that local people can get jobs, skills can be maintained and enhanced in all regions and cash surpluses can be reinvested locally to train the workforce of the future.
Lord Hoyle
My Lords, this House is at its best in debates like this. Everyone who has taken part has tried to be constructive and point the way for the future. We would not be having this very useful debate if it had not been introduced by my noble and good friend Lord Haskel.
I was very pleased that the noble Lord, Lord Bradshaw, talked about engineers because they are not very often talked about anywhere. I say that because I started my career as an engineer in the railway workshops at Horwich. Although locomotives, particularly steam locos, look extremely glamorous when they are going up and down the track, it is not quite so glamorous when you are working in a smoke-box and doing repairs on them. I followed what he was saying on taking National and Higher National Certificates. If you live in a village they know everything about you, and I remember two people talking about me in my own village. One was saying that I started as an apprentice engineer and then took my National Certificate, then my Higher National Certificate, then my Post-National Certificate. The other one said, “You’ll tell me he’s won the ruddy Grand National as well in a moment”.
I start from the importance of manufacturing industry in those days when it was all about manufacturing. From the 1970s onwards we lost about 30% of our manufacturing industry. It was not fashionable to talk about manufacturing industry then; it was all about the service industry. My noble friend Lady Turner and I know this perfectly well, as service industries were a recruiting ground for our trade union activities. We have to have a balance and do all that we can to help the manufacturing industry to succeed. Manufacturing industry went down from 32% in 1970 to 11% in 2010 but, despite that, 46% of our exports are from manufacturing industry. That is why we need to look at where the growth areas are in those fields. We would all agree that the one great manufacturing industry that remains is the aerospace industry, where our success is quite remarkable. I could mention the defence industry but we have to be very careful, given the press reports on some of the countries that we are exporting to—that is a debate for another day, isn’t it? There is room for growth in the pharmaceutical, micro-electronic and chemical industries.
This has been a very progressive and helpful debate. I agree with almost everything said by my noble friend Lord Mitchell. There is a need for a business investment bank to help to promote industry and small industry in particular—a business investment bank that leads and, as my noble friend rightly said, is backed by regional banks. We need to do all that we can and I hope the Minister will agree that the Government ought at all times to favour British industries in its procurement if they possibly can. In this way, and by going for research and development, we can begin to reverse the decline that has occurred in manufacturing industry. If we do that, we have a great future in this country.
As my noble friend Lord Haskel said, Germany, quite unlike us, has always relied on the manufacturing sector. It is the most successful country in Europe and we can learn a lot from it. As my noble friend Lady Turner also said, we must increase the participation of employees and look at the German model of including employers and trade unions in management. They have benefited from that and there is a lot that we can learn.
I see that my five minutes are nearly up. I hope that the Government, who have a central job to do, take note of a lot that has been said in this debate. There is a big role for the future of a business investment bank, backed by regional banks. If we do that, not only will we benefit, but all of us in the country and the country as a whole will benefit as well.
Lord Davies of Oldham
My Lords, the House owes a debt of gratitude to my noble friend Lord Haskel for introducing a debate that has produced so many varied but constructive speeches about the circumstances in which we find ourselves. My noble friend emphasised the advantages to be derived from business and Government working together, and identified the way in which this co-operation was essential if we are to get out of our present difficulties.
Two speakers also put the present position into a more general perspective. My noble friend Lord Giddens stressed the fact that the crisis is very far from being over. No country has successfully re-established itself from the crisis which obtained in 2007 and 2008. In any case, Britain is well down the list. That helps to explain why there are so many difficulties right across our economy and puts into perspective the anxieties of noble Lords such as noble Lord, Lord Cope, and the noble Baroness, Lady Kramer, about SMEs. The reason why the banks have been reluctant to lend is because they have been at the centre of this devastating crisis. That has presented them with problems so great that the state had to step in for two of the major ones, and huge sums of money are at stake.
The noble Lord, Lord Skidelsky, also indicated that if the Government took no responsibility for restoring demand in our economy then it was likely that we would continue in the present difficulties, which are not to be underestimated. Real wages are lower under this Government and, when they go out of office in 2015, will have fallen by 2.4%. We all know about cuts in benefits, so that section of the community is paying the price. So wage-earners and those on benefits are suffering, and we all recognise that unemployment goes right across the economy and affects a very large number of people.
In its economic survey of the UK economy, the OECD made the nature of the problem quite clear: productivity underperforming in relation to the rest of the OECD countries. We had fallen, at the onset of the recession, by more than other countries in the OECD. The noble Lord, Lord Bates, indicated successes with regard to exports, but we have an increasing balance of payments deficit. Despite a 20% sterling depreciation, Britain is still nowhere near earning its way. That is the depth of the crisis into which we must put the context of what we need to do about policy, particularly in relation to industry.
It has been argued that we are making clear success in some areas, and indeed we are. The noble Lord, Lord Bhattacharyya, speaks with great authority about the relationship between science and research, and the fact that we have high-class universities that help our industry. However, the noble Lord emphasised that we need to identify the results of such investment. That surely must be critical because we can live in a fool’s paradise if we think we are doing the right things but have no measurement of the outcome of policy.
This is crucial in one area that emerged in this debate and was raised by many speakers on both sides of the House; I refer to the skills gap and the skills dimension. Successive Governments have addressed themselves to this and gone in with great intentions to invest. Certainly, the previous Labour Government invested greatly in colleges and the Learning and Skills Council, and addressed the skills deficit. We have not solved the problem; indeed, far from solving it, as many noble Lords have identified, we are well behind other European comparators. It is not easy for the British economy and society to adopt German perspectives on how to run industry and develop skills. The German apprenticeship system is very different from the situation that confronts British industry. However, we certainly need to address our minds to the level of skills, which is palpably too low to serve the needs of the nation.
The other question is what can be done to invest in infrastructure to promote jobs and demand, as the noble Lord, Lord Skidelsky, mentioned. One can only say that the Government are acting late on this. They have so far done nothing of any merit with their programme, and it will still be the case that capital investment will be lower in 2015 than it was in 2010. That is not a recipe for success or for the development of our economy. That applies to schools policy and particularly to housing. After all, there should be investment in the construction industry to give some stimulus to the economy but, of course, the Government have done little about it. It is therefore not surprising that the noble Lord, Lord Cope, and the noble Baroness, Lady Kramer, can identify the difficulties faced by small and medium-sized enterprises in obtaining resources.
On our side, although we have faint hopes on this, we think that the Government ought to do what my noble friend Lord Mitchell first referred to, as did my noble friend Lord Hoyle, and establish a business investment bank. We need a bank with a network of regional banks because if there is one clear casualty of this crisis it is the complete collapse of our regional infrastructure. We all know that the Government dispensed with the RDAs and then discovered that the noble Lord, Lord Heseltine, had some pretty sharp advice for them on the problems and how the RDAs actually produced investment in the regions. At present, precious little is being done.
My noble friend Lord Haskel and other noble Lords—generally those on my side, including my noble friend Lord Monks, who was emphatic—raised the issue of how we tackle short-termism in British business. “Quick results reflected in share value” is the nostrum of how our businesses work, and it is not therefore surprising that if one is faced with potential takeover bids, to which the only defence is to enhance share value, that becomes the issue rather than investment in research, skills and development of a longer-term perspective for industry.
My noble friend Lord Haskel referred to the noble Lord, Lord Sainsbury, whose absence from this debate we greatly regret. He is concerned to see how we can build a business model in which shareholders have greater strength to hold boards to account. If anyone wants an illustration of why boards need to be held to account, just consider the salaries of chief executives, board members and directors over the past 20 to 30 years. The enormous disparity between them and the people who actually do the work in industry and companies is a reflection of the power of the boards, which we do not challenge effectively.
We may have to go some way before we follow what my noble friend Lord Stone suggested in relation to Marks and Spencer or the illustration given by the noble Lord, Lord Hunt, in terms of John Lewis Partnership. It may be a considerable time before we are able to engender a framework within which businesses can be organised on those bases. However, at the very least, surely the other side, having preached for so long that the Government must lay off business and let it pursue its own objective, must recognise that the cost of the short-termism of British business—particularly the absurdity of the short-termism of British banks—is that it has contributed to the crisis that we are all facing, which we desperately need to remedy.
I conclude with some questions. I wish to come off the macro and step down a notch. My noble friends Lord Mitchell and Lord Hoyle mentioned the Department for Business, Innovation and Skills. It is a Treasury Minister who is responding to this debate but if we are to make a change to business structure, the Department for Business has to be reformed also. The department is being reduced in size; its staff are recruited increasingly from the south-east, where it concentrates its resources; and it has very little representation in the regions. It is small wonder, therefore, that we have real anxieties about the capacities of that department.
Lord Newby
My Lords, I join other noble Lords in thanking the noble Lord, Lord Haskel, for introducing this debate, particularly because he gave me advance notice that he was to draw some of his remarks from the recently published book by the noble Lord, Lord Sainsbury, which meant that I spent a happy time reading that book while watching the cricket last weekend. I recommend it to all noble Lords.
One of the challenges for a Minister in my position after such a wide-ranging debate is to try to have a theme running through my concluding remarks. I would like to take as my theme—my text, if you like—two of the three defining beliefs of the noble Lord, Lord Sainsbury, in what he calls progressive capitalism. They are the importance of institutions, which he says need to be market-supporting rather than directed, the need for an active and competent state and the need for fairness. We have been talking very much about the first two today and I shall concentrate on those. I should like to take as my core text one sentence from the book of the noble Lord, Lord Sainsbury, which underpins a lot of what noble Lords have said. It states:
“I can think of few more challenging or socially valuable jobs than building up a high value-added business in today’s knowledge economy”.
If that is the text, I think that we are all progressive capitalists now.
The noble Lord, Lord Haskel, discussed these themes and made the point with which no one would disagree: we need to raise our game in a number of respects. I start with skills, and draw noble Lords’ attention to a press release issued today by Young Enterprise about the skills challenges that employers face, and they are quite interesting. The press release states:
“The five most important skills British employers think young people should have when entering the workforce are: communication and literacy … a positive attitude … self-management … people skills … and team working”.
As we discuss curricula and structures, at least four of those five areas of core skills are very rarely debated. I will not spend much time on them today, other than to say that we need to think about them more. I am very pleased to see that the noble Lord, Lord Stone, agrees.
In terms of raising the game, I agree with the requirement of the noble Lord, Lord Haskel, that Whitehall must raise its game. The noble Lord, Lord Mitchell, also talked of games—the Olympic Games. He commented on how much was achieved by the Government working well with high achievers. There are lessons to be taken from that, and the Government have taken one of them in appointing my noble friend Lord Deighton, who oversaw the Olympics, to bring some of the disciplines that he used there to government, not least in terms of the way in which we manage infrastructure. Everybody agrees that Governments in this country have been poor at delivering infrastructure projects to time and on budget. He is focusing his attention on getting government departments to produce infrastructure capacity plans, use private sector expertise and worry, a lot more than they have sometimes done under past Governments, about delivery.
I agree very much with another comment by the noble Lord, Lord Haskel, about the need to replace short-termism with long-termism. I commend to all noble Lords the LSE Growth Commission, which specifically looks at these issues. I am very pleased to say that members of the commission are in detailed discussions with Infrastructure UK to look at how some of their learnings can be brought to bear in the way that we do things.
The noble Lord, Lord Cope, and the noble Baroness, Lady Kramer, concentrated their remarks on SMEs, which they said were crucial. That is something on which we all agree.
The noble Lord, Lord Cope, talked about UKTI’s shift in focus towards SMEs. This is very welcome and is having a real impact. The other specific initiative taken by the UKTI—one of the most cost-effective initiatives that the Government have undertaken—is its appointment of trade ambassadors from across your Lordships’ House. These are having a material impact on developing trade links with some of the countries that we have traditionally ignored; my noble friend Lord Sharman in Morocco and my noble friend Lord Risby in Algeria, for example. We are finding that there is considerable scope for enhanced UK trade with parts of the world that we have tended to ignore.
The noble Lord, Lord Cope, talked about the challenges of the PAYE system. I agree with him. He may be right in saying that companies will find it simpler in the long run to adopt the latest technology. With regard to national insurance, we have introduced a £2,000 per year allowance for businesses. That will be particularly beneficial for SMEs. That is not a mechanical point but it is a hard cash point.
The noble Baroness, Lady Kramer, talked about funding, particularly the challenges in getting new forms of funding into SMEs. I very much agree with her. One of the leitmotifs of this debate has been people drawing on experience from elsewhere in Europe and North America. We can learn from these countries but it is quite difficult, as the noble Lord, Lord Sainsbury, says in his book, to replicate exactly their institutions. The American community development and investment funds work very well in the States, but it is not easy simply to transpose them here. On the question of new sources of funding for SMEs, one of the key things to have happened is that the PRA has in effect torn up the old methodology of the FSA in terms of getting new banks going. It was virtually impossible to start a new bank in the UK and we clearly need a raft of new banks, not least business banks. I believe that the PRA’s approach to this will prove to be extremely beneficial. In the mean time, the Government have introduced the Funding for Lending scheme, which should help small business funding and is in the process of establishing a business bank.
The noble Lord, Lord Giddens, thinks that we should be academic-led in the way that we look at these issues—I suppose that, as an academic, he would. I hope that we do not need to wait to have a raft of academic literature in front of us before we can start doing a lot of the things that he would like us to do. He talked, for example, of shale gas and whether we could take that opportunity quickly enough. As he will know, when the spending review was announced, we announced that we were taking a series of steps in the very near term to move forward on the development of shale gas here. These include developing technical planning guidance for shale gas exploration and looking at how we can put in place a generous community benefits scheme so that those communities that will be affected will be fairly recompensed. We are also consulting on tax incentives to encourage exploration. Hopefully, we are making a lot of quick progress in an important area that is bound to be controversial.
The noble Lord, Lord Monks, used a phrase that I have not heard for a considerable time, “the commanding heights”. It used to be extremely prevalent in political discussion. One of his main concerns was that too many UK companies have been bought by foreign companies and that foreign owners have different priorities from domestic ones. That is right, sometimes. However, we must have a more nuanced view. One of the most impressive success stories in British industry in recent years is that of Jaguar Land Rover. Does anyone think that there was a company in Britain that could have taken over Jaguar Land Rover and made the success off it that Tata did? I do not. It has been a phenomenal success. The Kay review, looking at short-termism and long-termism, will play a part in trying to redress the balance here, but I do not think that a great constraint on foreign ownership of British companies is a good idea.
The noble Lord spoke of the problem of top salaries and growing income inequality. That has been a very significant development in recent years, driven largely, but not exclusively, by the financial services sector. When I served on the top pay board, we looked at methods of beginning to redress this, not least by shareholder activism, and the Government are implementing a large proportion of those measures. Bank bonuses, without a bank bonus tax, have fallen very significantly—they are down 70% in the case of RBS and 40% in the case of Barclays.
The noble Baroness, Lady Valentine, raised a number of issues. I cannot deal with all of them. On airports, all I will say is that the Government taking quick, decisive action would be extremely easy if there were no such thing as public opinion. In this case, any Government would, quite rightly, take public opinion into account, as well as the narrower, though crucial, economic analysis that would underpin any decision.
The noble Baroness made a point about immigration and visas. As she knows, we are looking at methods of improving the situation in respect of visas, not least for China. We have introduced a VIP visa service for visitors from China. I could not claim that we have this right. It would be easier, in a narrow respect, if we were members of the Schengen agreement, but she knows as well as I do that that simply will not happen. We are looking at other ways of redressing the problem.
She pointed out that London is a centre for businesses that want to trade in Europe and that we need to engage in the EU as an equal partner. I agree with everything that she said on that subject. I also agree with the noble Baroness, Lady Donaghy, who pointed out the costs of adopting a Norwegian posture. To me, that is simply a risible option.
I thank the noble Lord, Lord Bates, for his speech, not least because he has saved me from saying a great deal of what I would otherwise have said about what has been happening.
The noble Lord, Lord Bhattacharyya, referred to protecting the science budget. The Government have done that. Any debate about science, particularly this one, should recognise the seminal role that the noble Lord, Lord Sainsbury, played as the first politician for a very long time to take science seriously. Without his persistence, we would not have had the expenditure on science in the previous Government that this Government have been able to build upon.
I share the support of the noble Lord, Lord Bhattacharyya, for HS2. While I agree with the noble Lord, Lord Mitchell, that the way we do business is changing, I have spent a great deal of time travelling to Birmingham over the past 20 years—once to do with developing Brindleyplace, as it now is, in its early stages and, secondly, working for a charity—and in both cases there is no way I could have done that without being there and engaging people face to face. While I am sure that a hologram of myself in front of Birmingham City Council or a head teacher would have been mightily impressive, I simply do not believe that at any point in the foreseeable future we will be able to do without transport.
We will need more of it. One of the things that has not been mentioned is that the population of the UK is set to increase significantly over the coming decades, which means that all forms of transport will need to be enhanced. That is why the Government have put so much effort into looking for longer-term infrastructure proposals, and why those proposals are included in, and form the basis of, the spending review last week.
I liked the point of the noble Lord, Lord Bhattacharyya, about evaluating the way in which we do things. I shall certainly raise that issue with my colleagues in BIS.
The noble Lord, Lord Bradshaw, referred to the value of engineers and said that there were too many apprentices who were not engineers. What we have got to do is to increase the number of engineering apprentices and not reduce the number of apprentices in a range of other industries. An apprentice in the catering industry is as important to me as an engineering apprentice. There are good examples of leading companies in the UK who have terrific records on apprentices—BAE and Rolls-Royce, for example. The university technology colleges will help to change, to a certain extent, the bias against a vocational approach to careers and I hope that they succeed.
I have referred to the points made by the noble Baroness, Lady Donaghy, but I would like to comment again on the shortfall in engineering graduates. One of the matters that the noble Lord, Lord Sainsbury, mentions—and with which I strongly agree although it is controversial—is that we need to better align the courses that we provide in further and higher education with labour market needs. This is a major challenge, not least because many young people are working very hard to obtain degrees in subjects that they think are quasi-vocational, such as law, and then find that the careers that they had envisaged for themselves simply are not available because of the excessive competition. I agree with the noble Baroness that tourism is a hugely important sector that is sadly overlooked.
The noble Lord, Lord Skidelsky, raised a raft of macroeconomic conjectures. The only part of Keynes that I would like to quote back to him is the importance of animal spirits. It seems to me that animal spirits are now operating in a different direction than they were a year ago. That is one of the key reasons why we are seeing growth, and will see faster growth in the future.
I agree with him completely about looking at the unemployed as a resource. However, I think his analysis is flawed because when you look at the level of unemployment in London—8.6%—who can say that there are not jobs in London for every Londoner who wants one? London has hundreds of thousands, if not millions, of people who come from the rest of the world to take up jobs that could be done by Londoners if they were properly trained. This is not a macroeconomic failure. There is a huge supply-side failure that we have completely failed to grapple with over the years, and we need to do better.
The noble Lord, Lord Hunt of Chesterton, referred to the Damascene conversion of Mr Willetts and asked me to comment on it. I am afraid that I cannot see within the mind even of my own colleagues, far less those of my coalition partners. I am sorry that he did not mention the fact that the Government have confirmed that they are investing in the new high-performance computer for the Met Office, which I am sure he will welcome.
The noble Lord, Lord Kirkwood, talked about long-term unemployment, which is a huge problem. The Work Programme is designed to address that. Although it is doing better it needs to be more flexible, and I hope that it will be.
The noble Baroness, Lady Turner, referred to investment being the key. Indeed it is. The Green Investment Bank has £3 billion of government funding, and so far, of the £633 million it has committed, for every government pound committed private investment has brought in three.
The noble Lord, Lord Stone, raised the question of self-awareness. I hope that he will start with Members of your Lordships’ House.
The noble Lord, Lord Shipley, raised a number of key points, some of which I have dealt with. On public procurement policy, the problem that he raised, which was new to me, seems to be a very real one. I shall take it up with my colleagues and write to him.
The noble Lord, Lord Davies, basically suggested that things were extraordinarily gloomy. The only thing I would say to him is that there was a 1.4% growth in real household disposable income last year; over 1.3 million more people are now working in the private sector; last year employment grew faster than in any G7 country; and the number of women employed is the highest it has ever been.
This has been a fascinating debate. We have discussed fundamental issues relating to the economy and society and I am extremely grateful to the noble Lord, Lord Haskel, for initiating it.
Lord Haskel
My Lords, unfortunately our time is up and I cannot respond to each individual speech. I hope that the Minister on the Woolsack will give me a moment to say that this has been an informed, interesting and lively debate. I thank the Front Benches for their responses, which have been most fulsome. I hope that the rest of the Government are listening with an open mind because an awful lot has been said today that is based on knowledge, experience and an enormous amount of good will, which we can all value.
Civil Society
(10 years, 9 months ago)
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Baroness Prosser
To move that this House takes note of the future of civil society.
Baroness Prosser
My Lords, I am pleased to have been given the opportunity to lead this debate today on the future of civil society.
The impact of organisations that we collectively describe as civil society has for many years been recognised across many walks of life as of importance and value. There is, however, sometimes confusion about the term. That is not surprising, because civil society is made up of many and various people and organisations. We have the truly voluntary, such as the Scouts and the Guides, amateur boxing clubs and golf clubs, the National Federation of Women’s Institutes, church groups and play groups. Then we have umbrella groups such as Community Service Volunteers and the National Council for Voluntary Organisations, which among other activities provide networks of support and advice. In the past, CSV has provided educational training on citizenship as part of the school curriculum.
The third wing, known generally as the voluntary sector or the third sector, provides professional help often including advice and representation. This group includes law centres, CABs and advice centres of many kinds, dealing with issues of race or gender, or helping those who have been trafficked or abused or those without housing. Some services are very specific, for example for children and young people, the elderly or drug addicts.
Where does the government initiative on the big society fit in here? The Conservative Party website states:
“The Big Society is about putting more power in people’s hands—a massive transfer of power from Whitehall to local communities. We want to see people encouraged and enabled to play a more active role in society”.
No one, I am sure, would disagree with the second sentence, but a transfer of power from the state to local communities should be considered more warily.
The TUC’s 2011 report, Civil Society and Public Services, contends that the overall concept of the big society is the outsourcing of public services to providers from civil society and to social enterprises. It says that it must be seen in the context of huge cuts to public spending.
The report quotes from another report, Cutting It: ‘The Big Society’ and the New Austerity, produced by the New Economics Foundation. It argues that there might be merit in the theory of empowering communities, opening up public services and promoting social action, but that these aims cannot at this time be separated from the Government’s programme of deep and rapid spending cuts. As the foundation puts it:
“Unpaid labour and the charitable and voluntary sectors are due to fill the gaps left by public services, providing support to increasing numbers of poor, jobless, insecure and unsupported individuals and families”.
Was it a little harsh? Was it jumping the gun in 2011 when the big society had hardly started? We shall see.
Let us look at where we are now. The Charity Finance Group’s March 2013 report, Managing the New Normal—Adapting to Uncertainty, found that 93% of the charities that it surveyed said that they were experiencing a squeeze on fundraising, while two-thirds said that demand for their services had increased.
CSV declares that individual citizens in small community groups cannot tackle widespread complex and costly social, health and social care problems alone, and that a well resourced independent and responsive sector is needed to get the best fit and to find and support the vulnerable and needy. It also says that voluntary sector organisations that involve volunteers need to be properly resourced in order to effectively and efficiently recruit, support and retain volunteers, and that this is particularly important when volunteers are engaging with vulnerable families and individuals as well as people in difficult circumstances.
While the aim of the big society might be laudable, the funding of small, often isolated groups of individuals cannot and will not make up for the gaps that are being left by the cuts to local authority budgets and the subsequent reduction or loss of vital professional services. According to the NCVO, reporting this year on the June spending review, the further reduction in funding from local authorities, together with the negative impact of many welfare changes, will mean the likelihood of more and more people seeking support while the charities that are geared up to providing that support become more and more financially precarious.
The NCVO goes on to say:
“Given that charities play a major role in preventing social problems and therefore reducing costs, councils looking to balance their budgets will need to have meaningful discussions with the voluntary sector about how they can support their communities”.
I hope that when the Minister replies he does not tell us that these decisions are local and local authorities are free to choose their own priorities. While that might be factually correct, the size of the financial pot that largely determines these priorities is very much a national decision.
I turn now to some brief specifics, such as areas of service and/or need that have been hit particularly hard by the current austerity measures. The availability or lack of civil legal aid was discussed at length in this Chamber during the passage of the recent legislation and in a debate last week, so I will not labour the point. Suffice it to say that problems addressed early on do not often develop into major crises. The Law Society is quoted as believing that one in three law centres will be forced to close because of its reliance on legal aid funding. Most of these centres are in areas of deprivation and most need. With nowhere to go for help, many problems are certain to turn into crises.
The 2012 report, Perfect Storms, by Children England, which is the membership organisation for the children, young people and families voluntary sector, cites an example of a national charity providing advocacy, legal representation and information and advice to vulnerable young people and adults that uses both paid staff and volunteers. Despite the local authority duty to provide such a service, the charity has seen the allocation of core funding reduced on all its contracts, which has meant the loss of 15, or 10%, of paid staff, and 19, or 5%, of volunteers.
According to a survey by the National Children’s Bureau, more than 65% of children and young people’s charities responding said that they are reducing both the level and range of services they deliver due to public spending cuts. The TUC has reported that more than 30% of funding to sexual violence and sexual abuse services for women has been cut. Women’s Aid says that it has been turning away 260 women per day because of its cuts. Yet the Government’s announcement only this month of a £4.3 million boost to big society funds to put communities in control cites among other areas of priority: troubled families, improving maintenance arrangements for children of separated families, and improving social mobility. This is virtually the same client group as those currently losing funding. It seems very strange that we are starving well established and experienced organisations of the funds they need to deliver the services in which they are the experts and then providing more funding to set up something unprofessional and new.
The only conclusion I can reach is to go back to the Conservative Party website, which I remind the House talks about:
“a massive transfer of power from Whitehall to local communities”—
in other words, services on the cheap provided by local people with little or no experience to some of our most vulnerable and needy citizens. It will end in tears and somebody in the future will have to pick up the pieces of a very short-sighted and poor policy.
Finally, lest anyone thinks that I am more in favour of bureaucracy than the development of communities, I can tell the House that this is not the case. I spent many happy years in the 1970s and 1980s working in community development and a community law centre, and I absolutely believe that many communities have hidden strengths and that many people very much enjoy participating in local activities, helping those more in need than themselves. However, those people who are in need of help deserve to know that the assistance given to them comes from professional and experienced advisers. The volunteers working in local centres or agencies also deserve the support of those with professional know-how. I look forward to listening to the contributions of noble Lords.
Lord Hodgson of Astley Abbotts
My Lords, I begin by congratulating the noble Baroness on giving us the chance to discuss this important matter and, indeed, on drawing the attention of the House to the multifaceted nature of civil society.
Before I go into my remarks, I have what the police would call “form” on this matter and need to declare some interests. I chaired a task force for the Government that produced a report, Unshackling Good Neighbours, which sought to look at what stopped people volunteering and giving money and what stopped smaller charity and voluntary groups growing. My reward for that was to be appointed the official reviewer of the Charities Act. I produced a report a year ago and here I have to chide my noble friend on the Front Bench somewhat. The report, which contained 100 recommendations, was deregulatory and generally welcomed by the sector but has yet to receive an official response from the Government. It is 12 months now and I have to say to my noble friend that I do not think that that is quite good enough. The sector is anxious to hear whether any of the ideas which I proposed, after consultation, are going to be proceeded with, and the Government need to hurry up. In producing those two reports, I visited many parts of the country and saw at first hand what wonderful work was being done by men and women, often in small groups and with very limited resources, tackling some of the most deep-seated and intractable problems of our society. They deserve our support and encouragement.
I said that I wanted to congratulate the noble Baroness, Lady Prosser, on introducing this debate. I do so, but she will not be surprised to learn that I do not really agree with her analysis of the situation. I will not go through a point-by-point rebuttal but I will say that she completely failed to mention the appalling economic situation that this Government inherited from the previous Administration. There is no way that the charity and voluntary sector can be insulated from that. Indeed, the Government are to be congratulated in many ways on what they have managed to achieve.
I draw the House’s attention to three important aspects of government policy. The first is the coming into force in January of this year of the Public Services (Social Value) Act, which for the first time imposes a duty on commissioners to consider the social, economic and environmental benefits before commissioning a contract. That is a really important way of getting local input and commitment to projects. The second aspect is the changes in gift aid, which have simplified the whole process considerably through the Small Charitable Donations Act. The fact that no donor declarations are needed for smaller amounts of gift aid is really important and helpful to small charities in boosting their ability to raise money and cutting down the amount of paperwork they have to undertake. Last, and most important, is the development of the social investment market, which recent reports suggest grew by 25% last year. This is a win-win situation: more funding for the voluntary sector and the emergence of the UK as a world leader in this whole area of social investment and in the way in which we can carry it out. Those three aspects are extraordinarily important and the Government are to be congratulated on having pioneered them.
My noble friend would not expect me not to have a shopping list of things that the Government should be going on to execute over the remainder of this Parliament. I offer him two or three that he should get his officials to look at with expedition. The first is the rather technical issue of trustee duties. Our trustee law currently makes no distinction between trustees of an ordinary trust and those of a charitable trust. Preservation of capital is exceptionally important in an ordinary trust—you need the capital preserved in your pension fund in order to pay the pension. However, it is perfectly possible for trustees of a charity to spend some capital in pursuance of their charitable objectives. That is an important difference and I hope that the Government will persuade the Law Commission, which is beginning its review of charity law, to begin to undertake a really serious look at this in order to draw a distinction in law between these two types of trust in the future. It would have substantial practical implications and benefits for charities.
The second issue is volunteer and trustee liability. I discovered that there is a perception of risk out there. It is true that some of it is based on myths and some of it is based on completely counterintuitive outcomes to legal cases, which have been well publicised. However, we live in a litigious age and we need to offer our volunteers, trustees and workers in charities and the civil society sector protection and the understanding that the law is on their side when they are acting sensibly. I hope that the Government will continue to look for ways to provide that reassurance. I am sure it will have a great benefit in terms of the readiness of people to volunteer.
The third issue is commissioning. Commissioners tend to be risk-averse. If we are going to find a way to encourage the voluntary sector, we are going to have to provide commissioners with some air cover so that they are prepared to chance their arm, so to speak. We could establish yardsticks that the Government would help promulgate as best practice. The Government would not have to enforce them, but they could be there as a yardstick. These could relate to, for example, the number of tenders that you call for in relation to the size of the contract. You can have only one winner. If you have six or seven tenders, you have to have five or six losers, and all the work and cost that has gone into preparing those tenders is wasted. You could also have yardsticks about the cost of preparing a tender and the cost of monitoring in relation to the size of the contract. All these things would help the charitable and voluntary sector compete more effectively, as it would not be put under undue or unfair competitive pressure.
The last issue is that we are clearly going to see voluntary groups and charities begin to have to form syndicates. They are going to share services with other charities that are providing different expertise to that syndicate, which, of course, brings in the issue of VAT on shared services. Value added tax regulations are a bourn from which no traveller returns and are exceptionally complicated. The Government could do a great deal to help the development of syndicates and to help consortia of smaller groups compete in the brave new world if the VAT situation could be addressed.
Finally, I should like to address the question of failure. We should be prepared to expect and accept that some charities and voluntary groups will fail. The voluntary sector is tackling some of the most difficult and hardest-to-reach areas of our society and not all plans are going to succeed. My noble friend Lord Cope referred to the high failure rate of commercial enterprises and the charitable and voluntary sector is not exempt from similar ratios. Failure is not the same as fraud, but sometimes in the voluntary sector the two are confused. I hope the House will agree that this is not a matter to be defensive about. Indeed, some might argue that if there were not failures that would show that the sector had lost some of its dynamism and its entrepreneurial instincts.
Lord Rooker
My Lords, I congratulate my noble friend Lady Prosser on introducing the debate and welcome the opportunity to say a few words. Before I set out an example of civil society, I want to do a tiny bit of scene-setting. As we saw this week, the UK is home to three times as many banker millionaires as the whole of the EU put together. The RSPCA has raised the pay for top executives into the £150,000 a year range, despite falling donations, and, in my view, is wasting money on prolific private prosecutions. Under the austerity regime that we are experiencing at the moment, when civil servants have been on an effective pay cut due to the pay freeze and pension cuts, the very top Civil Service levels have continued to receive eye-watering five-figure bonuses. I am as annoyed as Eric Pickles is at CLG at the failure to tackle the runaway local authority chief executive salary trough and the perks that are added to it. The Charity Commission, as it appears from the recent BBC “File on Four” programme, is busy certifying non-charities as charities. Seven out of 10 commissioners on the board are new and only one of them has any significant experience in the sector at all.
That is a bit of scene-setting for talking about civil society. Then I read Peter Oborne’s column in the Telegraph today. He says that the coalition has been brave and ambitious in challenging the official culture,
“dominated by the assumption that controlled, state-directed action held the key to national happiness”.
I have never agreed with that and I do not think that my noble friend has, from what she said earlier on anyway. Peter Oborne goes on to say that the programme of social change and economic reform,
“in its scope and audacity has no precedence in the post-war period, including the Thatcher years”.
The undertone of what is happening is extremely dangerous. I do not disagree entirely with everything that he says, but he then fails to ask who picks up the pieces as the state withdraws. That is the key question. If the policy is to have a shrunken state, which it clearly is—it has nothing to do with austerity in many ways—who picks up the pieces?
The effect of local authority funding being decimated is having a real negative effect on some of the frontline civil society organisations. On the one hand, local authorities are retreating from work by raising the bar of intervention—say in social services—and on the other cutting support to the private and third-sector operators in those areas. A young woman I met recently in one of our large northern cities works for an organisation that helps young people who are either homeless or in danger of becoming homeless. Her case workload left me staggered. It did not compare with what I had experienced during my 27 years in the Commons when qualified social workers carried out the work that she described. Social services have not even contracted out the work. They have simply raised the bar, saying that they do not do this any more, and their intervention comes only at the crisis level and then after lots of chasing up. This young woman had recently taken on supporting a very vulnerable female teenager who had run away from home several times and no one knew where she had gone. She had a drug history and was associating with much older men. For the princely sum of a pay rate that was a few pence above the minimum wage, this young woman worked over and above the call of duty in hours, support and liaison, and at levels which I know from experience qualified social workers did in the past.
This cannot be the way to pick up the pieces. As my noble friend said, it will end in tears. I fully appreciate that agencies at the centre and locally are having to make savings. I do not complain about that. I fully understand it and do not wish to be involved in a party-political dialogue about who is to blame. The fact is that that is the reality. It is obvious that the desire to replace services and shrink the state, which is certainly a central policy, is leaving gaps in areas that are difficult at the best of times. These areas were difficult when there was plenty of money. That is the point. By definition they are labour-intensive—very labour-intensive if one gets into the support of families. They are very challenging and often very sensitive. In short, they are the stuff that makes big headlines and calls for public inquiries when something goes tragically wrong in a specific case. That is the reality that we will be called to account for.
Slow growth and austerity are here for a while. I accept that. It would be ridiculous to work on any other basis. The population is ageing. More families are moving away or being moved away from social networks. These types of case will multiply. We need somehow to find a way properly to support the voluntary organisations. They are the bedrock and I am in favour of their not having as much red tape as local government. We need to do this not only with grants—finance is one area—but also with better routes into and support by the existing, remaining public services that can no longer fill their traditional roles. We have to accept that traditional roles are not being fulfilled by the statutory services, but they remain there with expertise infrastructure. We must find a way of enabling the voluntary sector, which is providing these services, to link in. We do not have that at present. It will end in tears if things simply carry on as they are at the moment. This is not all a call for more money. There has to be a better way of operating in the civil society.
Baroness Barker
I thank the noble Baroness, Lady Prosser, for introducing this debate and I declare an interest. I have a small consultancy that works with charities.
I am not a big fan of the phrase “civil society”. Every time that I come across it, I think that it does a disservice to what it is trying to describe, but I cannot think of anything better. I am not always entirely sure what it is. I listened to the noble Baroness, Lady Prosser, giving her explanation at the beginning. For me, civil society means the point at which the statutory, voluntary and private sectors come together to make a difference to the common good and the lives of citizens.
If we had had this debate about 10 or 15 years ago, I do not think that we would have talked very much, if at all, about the role of the private sector in all of this, but we do now. It is the part of civil society about which we know least. There is a new report by Dr Catherine Walker, published by Directory of Social Change, which looks at corporate giving. There is some very interesting information in it that noble Lords will probably not have heard before.
The report is an analysis of the giving of the top 550 corporate givers. It uncovers that companies play an important part in political and social development, but there is little evidence about what they do. They give approximately £700 million to £800 million, though it is a bit difficult to tell, because some multinational companies do not declare. That represents 2% of all charitable income, and 20% of companies give 90% of the cash that is given to charities. Cash donations to charities make up about 77% of the donations and the balance is gifts in kind. The average donation by a company is about £1.1 million. There are 73 companies that give more than £1 million. As far as we can work out, the total contribution as a proportion of pre-tax profits is 0.3%. Does that not say something?
In England, the biggest beneficiaries of charitable corporate donations are in Greater London, which gets about 33%. The West Midlands gets 1%. As far as we can tell—where it is possible to tell—the giving is totally unrelated to need. Corporations give where their offices are. They give primarily to community and social welfare charities, to education and to children’s charities; more than 50% of all giving goes to them. Causes such as human rights and women’s issues are far less popular. They get less than 10%. Arts and culture are traditionally seen as the domain of corporate givers rather than of individuals.
Despite everything that has happened since 2008, the financial sector is still the top sector for charitable giving. It gives about £245 million in cash. The least charitable sector, with an average spend of just about £300,000, is technology. I am glad that the noble Baroness, Lady Lane-Fox, is now in her place. There are also corporate trusts, and they provide about half a billion pounds in grants, 50% of which goes to three causes: education, community and social welfare, and children. This is the first report of its kind and it has set a benchmark in reporting. I hope that it will be possible to repeat the exercise and grow the statistical basis. We know that we need more transparency in reporting. There are also some limitations. We know practically nothing about the corporate giving of small and medium-sized enterprises.
The report is an important piece of work. Why is it important? It shows that giving varies dramatically across the country and that there is a key role for government in making up the deficits geographically and in terms of sectors, because of the disproportionate benefit to different localities.
I hope the Minister saw the Institute for Government’s report Making Public Service Markets Work because the private sector increasingly plays a huge role in and benefits enormously from the delivery of public services. We know that the big four—G4S, Capita, Serco and Laing—get by far the majority of the billions of pounds of public service expenditure. We also know from last year’s NCVO and CAF survey that local charities are beginning to lose out because of the way in which commissioning and, in particular, procurement is being done. The noble Lord, Lord Hodgson of Astley Abbotts, was absolutely right.
In its submissions to government on government procurement, NCVO said that social value ought to be both the strategy objective and at the forefront of the Government’s policies on procurement and commissioning. The Social Value Act is incredibly important as public services will remain large and significant employers in different localities, particularly in hard-hit areas outside London. It is therefore important that we take all this information into account and that the Government rethink the part they have to play in relation to the private sector’s role in civil society and in enabling all citizens in all parts of the country to get the best from it.
Lord Hastings of Scarisbrick
My Lords, I, too, am grateful to the noble Baroness, Lady Prosser, for initiating this debate. I am also very grateful to the noble Baroness, Lady Barker, for her comments about the private sector. I declare an interest as the vice-chairman of the Global Agenda Council on the Future of Civil Society at the World Economic Forum. I draw to the House’s attention the report published at the World Economic Forum in Davos this January. I retain that position for a further two years. The essence of the report, which contains 80 expert interviews and insights from 200 analysts, including those from the charity, not-for-profit, business and government sectors, is that there is a new and very different paradigm for civil society going forward. It is far too easy to think of civil society as the domain of NGOs, charities and foundations and to miss the point—I am not suggesting that the noble Baroness, Lady Barker, did—that there is a lot beyond corporate giving that the private sector actively, persistently and continuously does. We need to see civil society not in purely cash terms but also in engagement terms.
I will give one or two examples and then try to draw a point. I was pleased to have a short conversation in the Bishops Bar with the noble Lord, Lord Livingston, who was introduced into the House this week. He will be the Government’s trade envoy, although he retains his position of chief executive of BT. For the past nine years, I have sat as a non-executive member of the BT responsible business board. The noble Lord and I spoke about BT’s Net Good ambition, which the noble Lord announced the day before the Prime Minister announced his responsibilities in this House and as trade envoy.
BT’s Net Good commitment is that for every tonne of carbon it consumes as a result of its activities, it will replace that effectively. Instead of putting carbon in the atmosphere, it will remove 3 tonnes from the atmosphere—a 1:3 ratio—by working alongside its stakeholders, suppliers and customers to help them learn about not just energy efficiency but different lifestyle approaches. This is not something BT needs to do. As one of the largest consumers of energy in the country, from a profit base it need only pay its bills, but the opportunity to engage the public in a responsible civil society approach to environmental responsibility goes way beyond merely the corporate saving of carbon or the massive contribution of BT to multitudes of charities and voluntary organisations around the country. That is part of the business/civil society engagement.
Another example is another organisation to which I am connected, as a trustee: the Vodafone Foundation. At a board meeting last Friday, we agreed to continue the active support that Vodafone is giving to the establishment of communication hubs in emergency centres around the world. The latest is being established in Goma in the Congo this very week. It will allow refugees to communicate closely with their families and in doing so not only retain those communications but benefit from the opportunity of a life beyond disaster. Again, this is not something that a mobile phone provider needs to do, nor is it CSR. It is the active collaboration of three sectors: the humanitarian relief sector, which would traditionally be seen as civil society; the responsibility of government; and the opportunity of the private sector.
Let us get a little more grainy. Just over a week and a half ago, I visited Wormwood Scrubs as a trustee of the Vodafone Foundation and in connection with the charity Only Connect. Only Connect was established by the great man Danny Kruger, who has written many speeches for David Cameron. It is a great charity that we all respect. It helps offenders and ex-offenders learn how to bring their lives into coherence by using the arts and by connecting to one another in prison to enable them to work together outside prison. During a meeting with the governor, we heard that one of his express desires was to help prisoners begin to build their own groupings of communication connectivity so that they can establish family networks and not be isolated individuals who return to repeat crime. We approved a grant on Friday to enable Only Connect to create its own LinkedIn-sourced connecting system for prisoners within the British system. That is not something that a mobile phone provider needs to do. It is not in the P&L and it is not CSR. It is the combination of all the factors that civil society now represents: the responsibility of government, the opportunity of the charitable sector and the privilege of profit to serve the interests of the public.
In just a few moments, I shall meet the Prime Minister’s special envoy for development in Afghanistan. He is coming to this House, having served in that role in Iraq and having previously been chief executive of KPMG International. Why would he take on that role? It was because, as Gordon Brown and David Cameron acknowledged, you need that kind of private sector expertise to deliver public goods in an efficient, effective and consummate way.
What is the future for civil society? In the judgment of this report—KPMG authored this report with the World Economic Forum, and I am directly responsible for its content—I firmly believe that the new civil society that we all need to welcome is where we allow the three sectors to stand as equal legs of the same stool and find solutions that are not based just on seeking cash from the private sector. I share some of the deep concerns about public sector cash restraints, but the reality of our new world is that we need to bring the three sectors into common understanding to find solutions that are not based just on more money.
I was proud to serve for 21 years as a trustee of Crime Concern and for 15 years as its chairman. One of the most important things it did before it merged with the Rainer Foundation and created Catch22 was to create in 1989 not just the backbone of Victim Support but the basis of Neighbourhood Watch. We all recognise the power of those realities as civil society truths through which we enjoy our safety and community to this very day. Unless we are prepared to take an open stance to involving the private sector, government, NGOs and common institutions in finding solutions, we will have three sectors fighting one another. There is no need for that in the future, and I hope that our speeches and the Government’s response will acknowledge this new opportunity and embrace it.
The Lord Bishop of Derby
My Lords, I, too, thank the noble Baroness for securing this debate. I shall pursue the definition that the noble Lord, Lord Hastings, began to open up in his speech with the notion of the three legs of the stool and what civil society means. I start from the presupposition that we live in an age of liberalism in the technical sense; that is, we are very concerned for the individual to be free, and to be liberal about all those freedoms. Those freedoms are very good things, but any good often creates a problem.
I want to preface what I am saying with some words from TS Eliot. He said that the danger in liberalism is that it releases energy rather than accumulates it. It releases energy and then it is difficult to gather it together, because everybody is free, to make the building blocks of a civil society. He said that it relaxes rather than fortifies. The more we create rights, the bigger the problem with what we call cohesion. The more we are concerned about individual good, the bigger the problem with the common good. The more people have individual freedom, the more chance there is of becoming isolated, lonely and marginalised. It is very important to debate the civil society at this time when we desperately need energy to be accumulated around people for their well-being and flourishing and not dissipated into people being atomised on their own. The Government want to work with civil society—for the state to co-operate in accumulating energy for good things to happen. The National Council for Voluntary Organisations defines civil society as when,
“people come together to make a positive difference to their lives, and the lives of others”—
accumulating energy, making a positive difference to their lives and the lives of others.
I think, however, that we have to remember the historical context in which we seek to reaccumulate energy for human flourishing and public well-being, and I suggest that there are a couple of layers of civil society. The historic one is the institutions that existed between the individual and the state: the family, where there was a negotiation around gender and generation; the nation, which was a mix of kinship groups and regions; and the church, a spiritual hinterland that people explored and shared. Those three sites of civil society—the family, the nation and the church as a symbol of a spiritual hinterland—were not something that anybody chose; you were just born into them and negotiated your way within those frameworks. You started off with an accumulation of energy, in Eliot’s terms, through the family, through kinship groups and regions, through a spiritual hinterland.
Today, energy has been so liberated that civil society is now an elective exercise: people have to be persuaded to join together to create the energy and the momentum for human flourishing. The traditional bits of civil society—the family, the nation and the church, which gave a big framework—have got very weak. The Government desire a big framework for us to operate in so we are scrabbling about to bind people together for a common energy in something about which it is very difficult to persuade people, certainly beyond the local.
In my own experience in Derby and Derbyshire, where I work, the Government are inviting elective groups in civil society to co-operate with, as we have heard, the provision of services and well-being in the community. National charities are coming into our local area to bid for contracts and do the dealing—because they are organised, like the private sector, in a large way—and local charities are suffering, withdrawing and retracting, and the energy is dissipating. On the private model you need big-scale operations and the large charities are coming in to take the ground. That is very dangerous. The local is where you are in touch with people enough to understand what is going on in their lives, to listen to the stories of the homeless or whoever, and to focus the accumulation of energy appropriately to help people flourish and have the care and support they need.
There is a real danger that in trying to reduce big government we may be setting up big civil society. Civil society needs to be quite local and small-scale in many ways. If we set up a big civil society of big successful groups which can bid and deliver contracts all the local voluntary energy and connection is going to be marginalised and disappear. That would be catastrophic in many local communities. We need to encourage local civil society—small-scale civil society that people can elect to join. We need to remember that that kind of activity is committed to human flourishing, not to the delivery of services. It is a big framework, like the one that the family, the nation and the church stood for. People who get drawn in to civil society through their own choice want to share their values with others. They want to improve life on a big scale; they do not just want to deliver services and get a good return so that they can keep doing it. The Government somehow have to create an atmosphere of encouraging aspiration and idealism as well as instrumentalism in the design and delivery of services.
I want to raise three issues for the Minister to comment on. First, how will the Government endeavour to fortify the foundations of civil society—the traditional ones of the family, a sense of a nation and a sense of a spiritual hinterland? That is a big aspiration that excites people. They want human flourishing for themselves and for others and not just a narrow service delivery. Secondly, how will the Government help to encourage the smaller, more local agents of civil society and not dissolve big government into big civil society? Thirdly, how will the Government help civil society to be about human flourishing—the accumulation of goodness, in Eliot’s terms—and not about a more pragmatic, problem-solving exercise in trying to pick up the problems in society, rather than about raising human spirits in the way that civil society has always done and needs to do if it is to be a proper part of the three-legged stool that we have just heard about?
Baroness Gould of Potternewton
My Lords, I, too, thank my noble friend Lady Prosser for initiating this debate on civil society, for it gives me the opportunity to discuss the important contribution made by the women’s voluntary and community services as part of civil society. That is not only my view; it is a view supported by Theresa May MP. When she was Minister for Women and Equalities she said:
“the women’s sector is a model of the Big Society we wish to build. That is a society in which we all work together to address problems, conscious that government has a role to play but that it does not have all the answers, and recognising the role played by charities, voluntary groups and others”.
Irrespective of women’s organisations seemingly being a perfect example of the big society, within a year of the Minister’s comments the voluntary and community sector faced, and still faces, unprecedented uncertainty.
In concentrating my remarks on the women’s sector, I thank the Women’s Resource Centre, the Fawcett Society and other organisations for sending me information based on their own experience and research. Nearly 1,300 women’s voluntary and community organisations have been established since the early 1970s with the aim of challenging inequality and empowering women to overcome discrimination, building on the many initiatives of the then Labour Government. While the organisations vary in size and income, collectively they are a family of volunteers, providing holistic and integrated services, with a mission to ensure that women and children improve their life chances and lead independent lives. These services meet the needs of a diversity of women, young and old, some with multiple and complex needs, some who have experienced domestic and sexual violence, alcohol or drug misuse, or have mental or physical difficulties. These timely interventions improve mental health and well-being, improve financial inclusion, reduce reoffending, improve independence and social and communication skills and provide a pathway to educational and vocational development. For BME women they reduce social exclusion and introduce community cohesion.
In 2010-11 Brighton Women’s Centre, of which I am patron, provided open access and out-of-hours drop-in services for nearly 12,000 women who needed mental health and emotional support. Some 250 women attended counselling services, a 40% increase on the previous year, and 533 women offenders and women at risk of offending accessed Inspire counselling, which was able to demonstrate to them that support, not crime, could provide lasting solutions to their problems. A social-return-on-investment study of Inspire showed that for every £1 invested, £3.57 is generated in social value for women, children and society. An Inspire client said:
“I had to fall to the bottom, to be forced to stop and take a look at the problems I was hiding from. Thank you so much for helping me not only change but save my life”.
Women’s organisations have, however, traditionally found it challenging to find sustainable long-term funding. That might due to a misconception that equality has somehow arrived and they are not needed any more. Maybe donors are a little bit more sentimental about where they give their money. I have nothing against donkeys, but the Donkey Sanctuary receives more donations than the combined incomes of the largest violence against women and girls organisations in the UK.
For these organisations, the income stream has come from a combination of public donations from charitable trusts and grants by local authorities and health bodies. However, financial restraints to all these bodies have spiralled down to reducing support for the women’s voluntary organisations. Research by the North East Women’s Sector Network showed that half of the women’s organisations have lost funding, with those working on violence against women and girls facing cuts of over 40%—this is replicated across the country—while 70% of them are using or planning to use their reserves, leaving no buffer for the future, which could lead to ultimate closure. All the research shows that this is a reality. I was distressed to hear this week that the Government, in giving evidence to CEDAW, said that there is no evidence that women’s services are being affected by austerity. Perhaps the Minister can tell the House the basis on which such a statement was made.
The limited number of available income sources has severely affected organisations, meaning that more and more of them are chasing the same pots of money. There are also unintended consequences by changes to needs-led grants, by commissioning, by the new structure of health services and by payment by results. As the noble Baroness, Lady Prosser, and the right reverend Prelate said, many of the women’s voluntary organisations are too small. They rely solely on volunteers and cannot compete with larger organisations that can dedicate time and resources to compiling complicated bids in order to raise funding.
Coupled with those changes are the levels of cuts to legal aid and welfare reform. Of women suffering domestic abuse, 54.4% do not now qualify for legal aid under the new eligibility criteria. Their only recourse is to go to the voluntary sector for help, 94% of which has seen an increase in demand, with 77% of referrals coming from statutory bodies. The question is where those women will go. Where are they going to get the help and support they need? In an economic culture of budget deficit reduction, cost-effective services that produce positive outcomes are more essential than ever. There is no question that a small investment can produce an increased value to society, financially and practically.
What is the answer? How are the Government and local authorities going to understand that a little resource could have an enormous benefit? We need to think, perhaps, about how positively we can help and what action is required from both the Government and local authorities, which should give due regard to the crucial role played by voluntary women’s organisations, building an equalities framework into the commissioning process, thereby ensuring that the needs of specific communities can be met. The gender equality duty should be used to monitor the impact of policy and funding decisions—if it still exists after the review. If not, a key requirement to end discrimination will be scrapped, with dire consequences.
Commissioners are now commissioning more generic services, which further exacerbates the problem. Political agendas such as the Troubled Families programme do not include an understanding of the need for women-specific services, as they take a whole-family approach when, historically, the women’s sector has recognised that if we are to support our families and communities, we must start supporting women as the primary care-giver. Equally, it is important that women’s voluntary organisations are recognised as partners in meeting local needs, be it the police and crime commissioner, the clinical commissioning groups or the local authority. None of that can be achieved unless there is a mechanism to hear the voices and views of the women concerned. That, unfortunately, is not happening at present. Further, women must be represented on all key decision-making bodies, nationally as well as locally. Their value will then be understood as a crucial part of civil society.
Baroness Tyler of Enfield
My Lords, I, too, congratulate the noble Baroness, Lady Prosser, on securing this timely debate when the combination of public spending cuts, decreasing charitable donations from the public, and sharply falling trends in corporate giving have pushed the sector into a fragile financial state. I declare an interest as president of the National Children’s Bureau, vice-president of the charity Relate and co-chair of the parliamentary inquiry Growing Giving.
As other noble Lords have already said, civil society does not limit itself to the voluntary and charitable sectors but runs across all aspects of public life. However, it differs in one key respect from other sectors, in that it has a mission statement that is focused on the benefit of society and the collective good. Today I will be focusing my remarks on charities and the voluntary sector, concentrating particularly on three issues: the overall funding situation, the reduction in individual donations and improving the impact that the corporate sector can have.
On funding, a recent Charities Aid Foundation report on UK giving found that there had been a 20% fall in individual public giving, leaving charities £1.7 billion worse off. According to NCVO, 43% of charities’ funding is provided by individual donations—the sole largest contributor—and this has left many charities struggling to find other sources of funding. Indeed, one in six charities said recently that it is likely that their charity may have to close in the next 12 months. Other charities, as we have already heard, are having to make heavy cuts to frontline services at precisely the time when the need for the crucial services they provide is going up, particularly for the most vulnerable. The second biggest funding contributor is the state, providing 37% of charities’ income. This is a dangerous balance at a time when, as we all know, public funding is in short supply and approximately 50% of local authorities are cutting charitable grants disproportionately to the rest of their public services.
So the problem is very clear, but what are the solutions? Many charities are adapting to a new climate, and I know from my own experience that many have been doing this through mergers and collaborations, developing new business models such as social enterprises, and seeking new sources of finance, including the newly emerging social investment market. It is also important to remember that the vast majority of charities—the figure is thought to be 75%—do not receive funding from statutory sources and so look to the general public for money. However, there is a clear need for the Government to assist charities in this major change, and I look forward to hearing from the Minister what the Government are doing and what more they plan to do in this respect.
I turn to individual giving. The cross-party parliamentary inquiry, Growing Giving, chaired so ably by the right honourable David Blunkett and of which I am a co-chair, has highlighted a reliance from charities on support from older people and is looking into new innovative ways of getting younger people involved and excited about giving their time and money to charity, with a particular focus on the importance of charities providing volunteering opportunities and helping young people to get involved as youth ambassadors, young trustees and so on. The inquiry has highlighted the need for charities to be more involved in the current citizenship curriculum in secondary schools in order to highlight the issues that they tackle and to give students as much information as possible.
A key point is finding organisations that young people feel passionately about, but also trying to match that with charities that are in greatest need of support. Perhaps it is unsurprising that charities that affect children in particular were found to be the most popular among children, with some 35% of 9 to 11 year-olds selecting those as the type of charity they would most like to support. It is vital that charities can clearly demonstrate the impact of their work to children and the wider public, and I think that this is easier when their involvement is local. What are the Government doing to encourage schools to develop partnerships with local charities, to enhance not only the immediate prospects of those charities but also the long-term benefit of educating children from a young age about the impact that their money and time can make—something that can then take root and translate into more sustained giving in later life?
What is the role of the corporate sector? A recent report by the Directory of Social Change, referred to by my noble friend Lady Barker, found that companies are keen to encourage giving in the workplace by their employees, including by providing volunteering opportunities through company foundations and associations with charities, as other noble Lords have said. Simple initiatives such as Movember—the competitive growing of moustaches for donations to testicular cancer in November—have proved very popular with employees who enjoy showcasing their charitable efforts. The introduction of payroll giving, which takes place in a relatively small number of companies, has certainly helped in the giving of money to charity by providing an easy way for employees to give money every pay day. It has proved a popular scheme. However, it would seem many companies are missing a trick. A recent Charities Aid Foundation report found that one in three employees would be likely to give through payroll giving if they had a chance. That same report, however, showed that only one in 34 employees in Britain gives regularly through the payroll giving scheme, showing the huge margins by which this scheme could be expanded.
Like my noble friend Lady Barker, I was fascinated by the recent report showing the new data on corporate giving, particularly the fact that big private companies, in terms of reinvesting pre-tax profits, are nowhere near the 1% benchmark set, and that the top 420 companies are giving somewhere in the region of 0.3% in terms of cash, making up some 2% of charities’ income.
So what do I think the solution is? I think one solution would be to encourage companies to match the charitable giving of their employees. This has been suggested as one way of increasing the amount donated by companies. Matching schemes, while having the positive effect of the overall company giving, could also galvanise the workforce, giving employees the feeling that they have more power to make a difference if what they donate will be doubled. Perhaps the Government could look at ways of incentivising corporate giving, perhaps through the tax system.
It is important that we do not forget the roles of smaller businesses in the UK, which are also vital players in civil society, often at a more grass-roots level. The sponsoring of sports teams, giving to local charities and paying greater attention to the environment are all aspects that small businesses have worked on, and due to their greater geographic spread they have managed a much wider reach than some of the big corporations that are largely London-based. I conclude by also quoting from the World Economic Forum, which stated:
“Civil society should be the glue that binds public and private activity together in such a way as to strengthen the common good … based on the core values of trust, service and the collective good”.
Baroness Gibson of Market Rasen
My Lords, I, too, wish to thank my noble friend for instigating this debate. Today I want to concentrate most of my speech on voluntary organisations so it follows on quite well from the speech of the noble Baroness, Lady Tyler. Like my noble friend Lady Prosser, before I came into your Lordships’ House, I was a national official of a trade union. In my case it was the Manufacturing, Science and Finance Union, one of the forerunners of Unite. Like my noble friend Lady Prosser also, at one time I had responsibility for our members who worked in the voluntary sector, both full and part-time, in organisations and charities such as the NSPCC, the RSPCA and the National Children’s Bureau. I stress that these were and are workers, not volunteers, whose pay, pensions and working conditions are paramount to them. I always marvelled at our members’ dedication and commitment to those with and for whom they worked. These were and still are people on whom society relies every day to care for those least able to help themselves, such as children and adults, and especially the elderly and those with disabilities, or to take care of animals others no longer wanted or wanted to care for.
Workers in voluntary organisations often carry out the jobs that others do not want to do. I worked as a national union official in the 1980s and 1990s. Over the years views about the role of voluntary organisations have changed quite significantly, and Governments’ attitudes towards them are certainly very different today. Successive Governments have veered towards the voluntary sector and have wanted to work with it in developing political agendas—for example, in the health service, the education system and even in the criminal justice system.
More involvement with government and business has inevitably meant that the voluntary sector role has expanded and developed. In principle, for Government, business and the voluntary sector to work together sounds fine. As the NCVO has said:
“The voluntary and community sector … is a vital and vibrant part of civil society”.
As the right reverend Prelate the Bishop of Derby said earlier, civil society is where people come together to make a positive difference to their lives and the lives of others for mutual support, to pursue shared interests, to further a cause they care about, or simply for fun and friendship. It is where “me” becomes “we”.
This is both encouraging and to be encouraged. However, it must be remembered that if the new formations in society are to work, voluntary organisations must be funded well enough for them to operate properly, to respond to the new challenges facing them and to ensure that their independence is not compromised. Unfortunately, in many cases this is not happening. Stephen Bubb, of the Association of Chief Executives of Voluntary Organisations, recently expressed his worries about the possible impact of public spending cuts on this sector.
There are reasons for concern. I was recently contacted, as I am sure other noble Lords were, by the Charities Aid Foundation, a charity that works to improve the charitable giving environment to ensure that donations are used as efficiently as possible. Over the past year it has investigated the charitable sector and found some interesting but daunting facts. Donations to charities fell by 20% in real terms in 2011-12, the public having given £1.7 billion less than in the previous year. As the noble Baroness, Lady Tyler, said, 17% of charities believe that they may face closure in the next 12 months, 26% of charities have already cut frontline services and 25% said that they had already made staff cuts. These are just a few of those findings. The effect on the viability of the organisations concerned is obvious.
Of course, these were national statistics, but the effects of cuts on local people and services are also important and are vital to civic society. The best way of finding out about these is to read local papers. I have recently seen two good examples. In my own area, Essex County Council is closing a centre in a little town near Colchester because it wants to sell the property. It has given a month’s notice to the organisations that use the centre, which include a local school of dancing and a youth centre. Needless to say, the local people affected are very worried. In Lincolnshire, where I was born and brought up, the county council wants to cut staffed libraries from 40 to 15, and to cut their opening hours. The small market towns and the villages surrounding them will suffer most if this happens.
In the Charities Aid Foundation paper there are some proposals for government and employers to consider to encourage charitable giving which have proved successful. These include reminding people that money can be left to charity in wills and encouraging employees to give to charity by including in a company appeal a photograph of an employee who already gives to charity. It also suggests encouraging effective ways of giving such as payroll giving, as mentioned by the noble Baroness, Lady Tyler, encouraging businesses to maintain or increase their support for charities and getting the Government to work with charities to modernise and improve fundraising. Do the Government have any plans to encourage employers to guide their employees towards charitable donations and will the Government be taking positive steps to assist charities, such as modernising and promoting payroll giving?
Finally, I turn to another phenomenon brought about by the economic circumstances in which we find ourselves. Last week somebody asked me about food banks and I explained that when those of us who can afford to give to food banks do our weekly shopping, we buy an extra item to place in the food bank boxes, which can now be found in many supermarkets and local shops. That item could be a tin of soup, a packet of biscuits or a box of breakfast cereal—anything that would be useful to a family struggling with its finances. A local food bank then collects the boxes from the shops and families go to the food bank as and when they need to. The food banks are usually established in premises that are convenient to local people, such as a shop that might have closed down on the high street. The person to whom I gave that explanation thought it was an excellent idea as, of course, it appears to be. However, it is a sign of how times have changed and how we as a society assist those who would once have probably been helped by charitable organisations or by the Government. I wonder what the Minister feels about food banks and what they signify for the civil society in which we live.
Lord Janvrin
My Lords, I, too, thank the noble Baroness, Lady Prosser, for introducing this timely debate. I declare my interests as recorded in the register and, in particular, that I chair two charities and am on the boards of three others, including one called Philanthropy Impact, which aims to promote and inspire philanthropy.
I welcome this debate for the obvious reasons that many others have already mentioned. Times are difficult for a great many individuals and families and, at such a time, a strong, active, innovative civil society has a vital role to play in addressing social and economic needs. I agree with those who have said that such a civil society has a real role to play at any time and I associate myself with the remark of the noble Lord, Lord Hastings, that this is a partnership between government, business and civil society. In a world where Governments cannot do everything, charities, social enterprises and NGOs can take risks, innovate and go to places at the cutting edge, where publicly funded bodies may not go. If times are hard for individuals, as others have pointed out, times are also very hard for civil society. Charities and voluntary-sector organisations are struggling to make ends meet and several others have already drawn attention to the remarkable figure that funding for charities fell by 20% in 2011-12. We need to recognise that this is a sector under severe pressure.
Against that background, I will focus on one aspect of encouraging philanthropy in support of civil society—as one report had it, encouraging more people to give and people to give more. When it comes to giving, it is not all doom and gloom. As many commentators have often observed, the British people are extremely charitable and, to quote the Charities Aid Foundation, research suggests that when times are difficult, donations to charity are often less likely to be cut back than other forms of spending. There are, as others have mentioned, signs that young people are very positive about giving time and money, and I associate myself with the remarks of the noble Baroness, Lady Tyler, about how important it is to encourage this.
For many, giving is becoming easier, through social media or online giving sites; as in so many other ways, technology is transforming the ways in which we do things. But my point in speaking today is not only to draw attention to the importance of philanthropy and to give credit to those many people who give generously to all sorts of causes, but to urge that we continue to look for ways in which to encourage more giving at every level, many of them mentioned already, including individual, corporate and governmental.
At the individual level, among other things, we need to support those campaigns that encourage people to give in different ways. I draw attention to the Give More campaign, which encourages people to give a little more this year if they can, and a little more than they did last year—a simple idea and a good campaign. I also suggest that we need to sort out how better to recognise generosity. Some donors do not want it, but others shun it because they fear unwelcome consequences. That is a pity. The honours system is better focused on giving recognition to philanthropy, but I hope that more can be done to recognise those who are generous, particularly in the media and at local level.
Many noble Lords have mentioned issues at corporate level. I particularly endorse the remarks about looking for ways to introduce more matched funding schemes, and I was very interested in the reference from the noble Baroness, Lady Barker, to the report about the level of corporate giving. I certainly agree with those who say that more could be done to encourage payroll giving. Many organisations have effective schemes, but many more could do so. Like much of the business of encouraging more philanthropy, it is a question of making it easier to give; payroll giving undoubtedly does this.
Mention has also been made of corporate social responsibility and community investment programmes undertaken by many enterprises. It is easy to dismiss some of these programmes as just a form of marketing but, having been involved in some of them, I think that this is probably too cynical a view. I believe that many young people are introduced to volunteering and engagement with civil society in this way. It needs to be further encouraged, and I welcome the fact that the Government have recently announced consultation to see how CSR could be made more effective.
I pay tribute to what the Government have done in difficult circumstances for philanthropy. Leaving aside perhaps the 2012 Budget, there has been progress with, for example, Legacy 10, encouraging people to leave more to charity in their wills, and a willingness to look at ways of streamlining Gift Aid. There is also the stated aim to look at tax incentives to encourage social investment, which is undoubtedly an exciting and important area where the UK is a world leader, as others have said.
There is more that the Government can look at. I, too, have a shopping list. I hope that they will continue to consider, when the time is right, further fiscal measures to encourage giving, including the merits of lifetime legacies or charity remainder trusts. I hope that they will encourage payroll giving, as I have said, particularly within the Civil Service. I hope that they will keep under review the level of funding of the Charity Commission, because it is in all our interests to have an effective regulator for the charity sector. Above all, I hope that they will continue to support and encourage more philanthropy and giving at every level, and encourage those who seek to make it more effective. This will have a direct benefit on the health and strength of our civil society, which is in all our interests.
Baroness Smith of Basildon
My Lords, I congratulate my noble friend Lady Prosser on securing today’s debate, which is not just enjoyable and interesting but also important. It is important that we recognise and address the challenges facing civil society. I have three points to make.
The first is about the value of civil society. That is not a term invented by any Government; it has been around for a long time. We all think that we understand it, but we all interpret it differently. A key part of civil society is the voluntary and community sector, but I think it is a much broader, a much wider and a much more inclusive concept. When the current Government replaced the Office of the Third Sector with the Office of Civil Society, they relied on the more traditional definition of being synonymous with the voluntary and community sector. They announced that government policy would concentrate on three issues, all related to the voluntary and community sector. The noble Lord, Lord Taylor of Holbeach, in a parliamentary Answer, stated that the Office for Civil Society,
“will support charities, social enterprises and voluntary organisations … encouraging a big society and addressing disadvantage by making it easier to set up and run such organisations … the office will co-ordinate work across government to implement the big society and establish a number of flagship big society projects”.—[Official Report, 21/7/2010; col. 969.]
We now rarely hear about the big society, but my point is that those government definitions miss the point. It is not about structures. As important as the voluntary and community sector is, I will offer a different definition. Civil society is the glue that unites and connects society: the notion that we are not just individuals, but that by coming together and working together we can improve the lives of others, improve our own lives, improve society and contribute to our communities, however local or global those communities may be. It is not part of state institutions.
My second point concerns the role of civil society. I am coming to regret that the role is too often seen as just third-sector delivery of services. I am certainly not against contracts or third-sector commissioning. I declare an interest since I chair the board of trustees of a not-for-profit organisation, Resolving Chaos, and am involved with a number of charities and voluntary organisations that provide services. Some are commissioned, some funded and some are provided voluntarily. I am slightly disconcerted by the Government’s publication yesterday of the lobbying Bill, which, taken alongside comments made before the last election, could fetter and curtail the activities of such organisations in a way that could work against the benefits that civil society brings.
In the previous Government, I was the Cabinet Office Minister with responsibility for the charitable and third sectors. I made it clear that the Labour Government would continue to be a strong advocate for the campaigning role of civil society organisations. The role of voluntary and community sector campaigners provides a voice for some of the most disenfranchised, disengaged and vulnerable in our communities.
To assert, as Oliver Letwin did in a speech to the NCVO Conference in February 2010, that what he treasured about the sector was not its campaigning role but its “special contribution” to do something to “change things” and solve problems is to misunderstand fundamentally the inextricable link between the two. Those that complain that,
“so much … effort in some parts of the voluntary sector is devoted to campaigning”,
should recognise that such campaigning is an intrinsic part of civil society and wider democratic engagement in the system.
I will go further. I will give a hypothetical example of a charity that supports homeless people. It may have some contracts; it may have some funded services. It will raise funds and have supportive donors. If there is an area of council or government policy that in its professional opinion, at the sharp end of service delivery and support, is exacerbating the problem, surely it has a duty to its supporters, to its donors and to civil society to campaign to try to address that issue. It cannot turn away from its campaigning role and its responsibilities in that regard. It has an obligation to the homeless whom it is seeking to help.
It was Dom Helder Camara, a Brazilian Archbishop, who said:
“When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist”.
We need to take care that we do not slide into the position that we accept civil society as long as it knows its place, which is to provide direct help and support, but not to tackle or help tackle the causes of the problems and to campaign to address the causes of those problems. That would be plain wrong.
The lobbying Bill refers specifically to third-party organisations’ campaigns at election time. It does not specify which election, so I assume that it refers to all elections. There are issues to be discussed, but we need to ensure that we do not curtail legitimate campaigning activity or provide an opportunity for government or local authorities to issue bad news and unpopular policies just before elections, thus preventing third-party organisations campaigning against those policies.
My third and final point concerns financial issues. We have heard a considerable amount about the impact that cuts are having on organisations that support the community. I have genuine concerns that the future of civil society is being undermined by funding problems. The previous Labour Government had a number of programmes, including one I particularly liked—the Grassroots Grants programme—that directly supported more than 130,000 local groups to make a real difference in the heart of communities.
A report from the NCVO and research by Compact Voice show that the voluntary sector at the heart of civil society is facing an unprecedented level of cuts and further threats to income. Funding is not the only way of supporting civil society, but we need to take care that funding, whether through contracts, subsidies or grants, provides value for money in both financial and social terms, and the impact on civil society must be taken into account. My community is in Essex—as is that of my noble friend Lady Gibson. When Basildon borough council announced a cut in the subsidy to local community centres for pensioners’ hot meals, local residents were shocked and appalled. They understand the social benefit to civil society of the centres. Perhaps what made that cut particularly shocking was the fact that the responsible council cabinet member declared that the meals were not good value for money while her cabinet colleague defended spending £150,000 on consultants to measure grass—that is bizarre but it is true—as being good value for money, so measuring grass was more important than providing hot meals. I am convinced that the public see that as nonsense and understand that value for money is not just a purely economic judgment. They make those same judgments in their own personal spending. They understand value judgments, not just economics. It is about common sense, communities and the value that institutions of government at whatever level place on society.
Too often, it seems that local authorities find it easiest to impose cuts on the voluntary sector. I strongly believe in the power of volunteering for the volunteer and those being supported. As we heard from my noble friend Lady Prosser, some volunteering grows organically but needs structure and support to obtain the best value from it. Like many others, my local volunteer centre in Basildon has now closed. Due to funding cuts, it could no longer sustain its work. I have sincere worries about the impact that will have on civil society.
In conclusion, engagement in civil society adds value and improves quality of life. It is not something we can just pay lip service to here today and say how wonderful it is, then go away and do nothing. It is intrinsic and essential and it needs and deserves our support.
Baroness Uddin
My Lords, I thank my noble friend Lady Prosser for giving us the opportunity to take part in this important discussion. Civil action in civil society has defined a generation of activism and activists who have changed communities and our country and have given us a more equitable society—we stand on the shoulders of giants.
I want to make a few points about a particular aspect of civil society—Muslim organisations. As a Muslim I think that this is the right moment to discuss civil society; it is the ninth day of the fasting month of Ramadan, which focuses on the Islamic understanding of community, civic duties and equity. During this month Muslims are encouraged to fast from dawn to dusk—an 18-hour stint at present—and share, forgive and show solidarity with those less fortunate than themselves. They are also encouraged to give alms—zakat—and to be aware of the needs and rights of those around them regardless of their ethnicity, culture and religion.
Ramadan is the ultimate month to reinvigorate and renew the recommended spirits of good, responsible and proactive citizenship. Muhammad, the Prophet of Islam, upon whom be peace and blessings, said:
“The best amongst you is the one who is the most beneficial to others”.
At its core, Islam is about enjoining good and forbidding evil, to encourage and facilitate virtuous, practical deeds. This month, British Muslims dedicate their energy and money to benefit their communities. A civil society is the backbone of Muslim communities and is the glue that bonds British Muslims’ lives together. It ranges from street-level self-help groups to the delivery of services. It is as diverse as drug rehabilitation programmes, fatherhood circles, supporting families, women fleeing violence, arts projects, sports clubs, community centres, mosques—masjids—Sunday schools and study circles. However, it is an ad hoc development that has taken place in the face of racism and Islamophobia and in spite of weaknesses in strategic planning and a serious shortage of formal financial support.
As a result, the Muslim leaders who are actively heading these organisations within the civil society sector are struggling and under severe strain. The Muslim-led third sector is unable to consolidate, risks being reactionary in nature and continues to work in silos. Sadly, it is not in a strong position to implement and share some of the core teaching of our faith, which is pertinent and much needed in dealing with some of the social ills facing our society and the vulnerable communities of today. We need to learn more about those who are working in organisations within this sector, have a vision to encourage them and courage to invest in their development.
The aim is to build relevant, sustainable social, cultural and economic institutions; to even more closely monitor the huge amount of zakat, or religious duties, and sadaqah, or charity; and to encourage debate and discussion in the way funds are raised in the UK. They should not be used only to support those who are in need abroad but also to strengthen some of the civic organisations within the UK. The long-term benefit of investment and attention from our institutions would and could be a counter to the imbalance in the attention constantly being paid to the so-called Prevent agenda.
It is estimated that nearly £200 million will be collected this Ramadan alone. The potential here is incredible but it is unregulated or, at least, not part of civil society discussions. Muslims in Britain, more than anywhere else, have a unique opportunity to rediscover and share their unparalleled historical precedent in creating civil society institutions. The pragmatism, wisdom and vision that created the Islamic ideal community in Medina during the life of our noble Prophet have many lessons for us all. The community brought together the generous and the persecuted, men and women, nobility and slave, people of faith and those with no faith. All British Muslims within the UK aspire to the ideals of such harmonious communities, especially during Ramadan, and this is a difficult ambition. Perhaps the most important challenge facing Muslims today is how to recreate this civic society after more than two centuries of colonialism, bad governance and social systems, not to mention migration. Civic society is in absolute tatters, shredded by the “me and me” culture—which has been mentioned before—and by greed and despair.
Not much work is being done with these organisations to consolidate their work or give them recognition and bring them into the fold. This is why I am proud to be part of a project called Faith, Khidmah and Citizenship: Connecting Spirituality and Social Action to Build Civil Society, which is bringing in all the organisations that are working in separate silos. It is a joint effort by an organisation called An-Nisa Society and the Radical Middle Way. Both these organisations have previously worked with the Home Office and other areas of government. The analysis of their report has produced an insight into how these long-standing reputable organisations have evolved and how they can contribute to strengthen communities in difficult times. The report also looks at organisations, how they function and contribute to the overall debate on civic society and civic actions, post-9/11 and 7/7. The report also proposes solutions for a durable and effective civil society to emerge in our country.
It has been interesting to hear the debate and what some have said about corporate social responsibility. Much of this corporate social responsibility has created an elite set of leaders of civil society that excludes many aspects of different communities, women being only one of them. Even when women are discussed, there are divisions over their status—who is included and who is not.
On our doorstep in east London are companies that are worth billions, many of which are owned by outside investors. Yet the connection on their doorstep whereby civil society can be empowered has been ignored—at the peril of the well-being of our common good.
Baroness Pitkeathley
My Lords, we are indeed all grateful to my noble friend for giving us the opportunity to have this far-ranging debate on civil society. However, I must say that at this stage of a debate, I feel a bit like the bishop who, when asked to make a speech about sin, stood up, said that he was against it and sat down again. If I am asked about civil society I can say, just as simply, “I am for it”. Similarly, when asked about the future of civil society, I can say, “There is one”. However, we are concerned to examine the current situation, the potential difficulties and the role that we expect civil society to play, although there are many different interpretations of what constitutes civil society, and we have heard them today. The single common factor that we should remember is that it is about participation in decisions about services in your community, in how services in your community are shaped, in delivering those services and, particularly, in decision-making.
We should be clear from this debate that, despite rashly delivered statements about a broken society, civil society is not in decline. Indeed, to the contrary, although membership of political parties, churches and traditional women’s groups may be in decline, membership of new social movements, non-governmental organisations and pressure groups is flourishing. I want to focus on some of the matters that have been reported to me, and I should declare my interest as patron and president of various charities and as chair of the All-Party Parliamentary Group for Civil Society and Volunteering.
The first thing that I want to mention is, inevitably, funding. I keep hearing Ministers say to the voluntary and community sector, “You must do more with less. Don’t expect government at local or national level to support you financially”. Okay, charities understand that; but let us not forget that, as we have heard, a quarter of civil society organisations rely on government for most of their funding, and that it is a drastic change to go from encouraging voluntary organisations to become service deliverers—encouragement which has been given by successive Governments—to finding that the funding is no longer there. As we have heard today, who is it who suffers when that funding is no longer there? It is, of course, the most vulnerable in our society.
Nor should we be tempted into thinking that more government necessarily means less civil society and that less government means more civil society, as the noble Lord, Lord Rooker, reminded us. It has been shown in inner cities in Russia and the United States that when the state retreats, the vacuum may be filled by crime and gangs, as well as by civil society organisations. Many of the nations with the most active civil societies still have very active and involved governments. We must be wary, too—with the greatest respect to the noble Lord, Lord Janvrin—of thinking that philanthropy will ride to the rescue. It is by no means certain that our society is yet at a stage where philanthropy can fill the gaps, as seems to be expected by some in government. Even the best community organisers and the most enterprising social entrepreneurs need support.
The Government seem to have a suspicion of the infrastructure that exists to support the charitable sector, and they are right to point out that that infrastructure may need reform and rationalisation—far be it from me to argue that we should not expect existing mechanisms to change and develop. As a veteran of two mergers I am an active advocate of mergers and collaborative working—and we have seen some very effective ones, such as the recent one between the NCVO and Volunteering England. However, we must not throw babies out with bathwater. Many of these infrastructure bodies are delivering through their local organisations exactly the kind of innovations—such as time banks, community pledge banks, social enterprises and civil action—that the Government and society need. Let us not forget that.
I turn to social investment. I was a member of the original Commission on Unclaimed Assets, which released the money in unclaimed bank accounts into the social investment sector, and am now a trustee of the Big Society Trust, which oversees Big Society Capital. There is no doubt that this field is developing. Social impact bonds are increasingly popular. They are designed to transfer the risk of social programmes from the public sector to the private sector. An interesting one was launched just yesterday. Developed by the Consortium of Voluntary Adoption Agencies and Baker Tilly, this social investment bond has raised £2 million from Bridges Ventures and Big Society Capital. The money is going into a fund called It’s All About Me, which is designed to invert the market so that a child seeks out adoptive parents, not the other way round. It is a very innovative and interesting approach. I recently saw another such social investment project in south Wales. It helps children who are normally very disruptive in class not to be excluded through intensive intervention. These are excellent initiatives and very welcome developments.
However, we must sound a note of caution. There is a long way to go before the concept is proved. Many would-be investors are having trouble finding investment-ready projects. I do not think that these can ever entirely replace the funding lost, about which we have heard so much today, although they certainly can be part of the funding mix. I would be glad to have the Minister’s view of what proportion of voluntary sector funding social investment will eventually provide.
I will say a final word about volunteering. The statistics about volunteering are always absolutely stunning. The proportion of people volunteering at least once a year has increased from 65% of the population a couple of years ago to 71% recently. The Olympic and Paralympic Games, as we know, inspired volunteering on an unprecedented scale—as is always quoted. However, we must remember that that particular type of volunteering was a pretty easy gig. It was fun, you got to see events, there was a nice uniform, a link with people who were volunteering alongside you and so on. However, it bore little relation to the kind of volunteering that goes on throughout civil society: bringing people back from suicidal intentions, driving people to hospital who are pretty difficult and often not grateful, sitting with people with dementia who are doubly incontinent so that their carers can have a break. I am sceptical about what the Olympics can teach us about volunteering, except for the fact that a lot of trouble was taken with recruitment and selection and fitting people into the right slots. There was a lot of emphasis on supporting those volunteers—investment was made in them. I hope that the Minister will reiterate that the Government continue to see that volunteering needs investment. Volunteering is very good value, but it is not cost-free. I think that that is also a pretty good description of civil society.
Baroness Hayter of Kentish Town
My Lords, we are all grateful to my noble friend Lady Prosser for securing this important debate, because civil society matters, in communities, nationally and here in your Lordships’ House, where so many Members draw on their experiences in a range of non-governmental groupings. Such activity, whether in a tenants’ group, trade union, advice bureau, book club, ramblers’ association, parents’ council or faith community, provides the vitality of civil society.
As we heard, my noble friends Lady Gibson and Lady Prosser first earned their spurs by representing fellow workers, while other speakers helped carers, women, consumers, the old, animal lovers, children or families, far away from any governmental structures.
A healthy civil society produces a community that fosters empathy, trust and respect—the most important feature of a good society, according to a survey commissioned by the Webb Memorial Trust, of which I am vice-chair. Civil society is also about citizens having their own space to develop, free from interference by the state and often outside their work environment. It is a good in itself: it should not be part of—in the words of the noble Lord, Lord Rooker—the shrinking of the state. While it can deliver state-funded services, that should be because the Government recognise the importance of community-driven provision, not because they seek to parcel off parts of our National Health Service to the lowest bidder.
As my noble friend Lady Prosser reminds us, the Government have indeed used the words “the big society”, but it is damaging the voluntary, flexible and innovative sector that gives voice to the voiceless and empowers those who are often only at the receiving end of decisions. Governments can support voluntary organisations but they should not see their value simply as an agent for service delivery, particularly as an agent on the cheap.
The cuts in public services and the economic situation are increasing demands on the voluntary organisations, as we have heard, just when their income is falling through a 20% drop in individual donations and half of local authorities disproportionately cutting their voluntary sector funding, despite three-quarters of voters disapproving of such cuts.
The Minister, the noble Lord, Lord Freud, who is not in his place, may believe that people go to food banks only because they are there but, as the right reverend Prelate the Bishop of Truro corrected him a day later, people are driven to go. They do not choose to go—they have to go. He described food banks in the 21st century as a complete scandal.
We also face a problem with they way in which services are commissioned. It might suit government but not the voluntary sector, particularly the small charities that comprise 97% of the sector. They have had nothing but a negative experience of the commissioning process. Indeed, only one-quarter of small charities surveyed by the FSI feel that they can carry on bidding for local authority contracts. The issues have been well described today by the noble Lord, Lord Hodgson of Astley Abbotts. If the commissioners fail to respond to what he says, small charities will be excluded from service delivery.
It is not only small charities that the process fails. I am a patron of the Blenheim Trust, which works with alcohol and drug misusers, and I am now going to report its views on the procurement, tendering and commissioning process. As has already been mentioned, the cost for the bidders and commissioners is estimated at £300,000 per tender. That is money that is not going to beneficiaries. Contracts are often one-sided, allowing cancellation with three or six months’ notice. There are often minimum turnover requirements of £5 million or £10 million. These preclude small and medium charities or force them into not necessarily advisable mergers. Providers are forced to compete on price rather than on quality, with no reference to the skills of advisers.
This impacts detrimentally on services and undermines the morale among committed, experienced staff and volunteers. Significantly, we are seeing the demise of local third sector organisations that are attuned to their communities as they are replaced by either profit-driven or growth-driven organisations, as has been described by the right reverend Prelate the Bishop of Derby.
I rise to the right reverend Prelate’s defence because the noble Lord, Lord Hastings, referred to conversations in the Bishops’ Bar. I make clear to anyone listening that not only have I never seen a Bishop there but that it is a tea room rather than a bar.
The worry about smaller organisations goes beyond this House. Chris White, the Conservative MP, has criticised his own Government for locking out charities and social enterprises from winning government contracts due to the large size of those contracts.
While under any qualified provider voluntary organisers can bid for NHS contracts, private health companies have won nearly half the bids. As today’s report from the IFG, mentioned by the noble Baroness, Lady Barker, shows, private firms are gaming £100 billion of government services for their shareholders at the expense of the taxpayer. The IFG analysis of outsourcing programmes, such as those to help the unemployed back into work, found private firms creaming off easy cases where they could make profits while parking problematic ones. Furthermore, big outsourcing companies are monopolising services, making it harder for smaller companies or charities to compete. The report says:
“a number of large providers now deliver a wide range of services (commissioned by separate departments) in particular areas of the country. This allows these providers … to undercut competitors, making their services attractive to commissioners”.
The Cabinet Office response was that the Government were encouraging the voluntary sector to get involved in delivering services but, it seems to me, with little understanding that smaller, locally-based organizations are even less able to compete against these giants.
Charity leaders are frustrated and demoralized by being sidelined in the provision of services and are watching aghast as the Cabinet Office’s annual funds for the third sector are being cut by 75% since the Labour Government’s last year in office. The leaders know that their energy is going to be devoted to fundraising rather than responding to their users’ growing needs. If charities cannot deliver services, beneficiaries suffer. Sadly, there is a paradox that civil society flourishes best where it is least needed, and is weakest in areas where there are highest rates of poverty, as the noble Baroness, Lady Barker, described. In the north-east, six out of 10 charities have lost funding.
As the voluntary sector increasingly has to deliver public services, its role in the public eye changes. If it is seen as an arm of the state, civil society risks losing its independence and uniqueness; its ability to enrich lives through connections with others; the informal education of citizenship; the encouragement of plurality and diversity; pioneering ways of doing things; representing users of public services; and holding authorities to account. We must not risk losing these roles.
More than 100 years ago, Beatrice and Sidney Webb set out their belief that the state and civil society should play different but complementary roles. According to them, the proper role for government is to take care of basic needs, guarantee rights and security, ensure a minimum standard of life and provide education and preparation for work. The role of civil society is to operate above this basic minimum and to ensure that citizens participate as full members of society. I could not put it better. Civil society contributes to a healthy, vibrant democracy that neither stagnates nor grows arrogant. We need it and we need the Government to foster, not hamper, its future.
Lord Wallace of Saltaire
My Lords, it is a particular pleasure to answer this debate on the future of civil society because with my FCO hat on I spend some time reading telegrams about attacks on civil society in other parts of the world—the tremendous pressure under which all autonomous institutions in Russia are now operating; the problems in Egypt; tremendous problems in Pakistan; resistance to the growth of autonomous bodies in Saudi Arabia and so on.
So we can at least start by welcoming the fact that we have in this country a thriving civil society alongside the state, but not too dependent on the state. It seems that we are moving towards a consensus in the United Kingdom that the state cannot provide everything that we are going to need in the next 10 to 20 to 30 years. We therefore need a strong and diverse of network of civil society institutions alongside the formal institutions of state and government at local and national levels.
When I was active politically in Manchester 30 years ago, and a parliamentary candidate for an inner city seat, I was appalled by the extent to which the local council and its officers treated the inhabitants of the largest single council estate in Manchester as people who had things done to them. The councillors and the council officials knew what was best for them, they would tell me, and were not going to change their minds—even though the large number of people I met and canvassed suggested that they were not happy with what they were doing—because, in the long run, it was best for them. As we all know, that left a lot of alienated people in our cities, who are still there. As I visit the big council estates in Bradford and Leeds, I find just how many alienated people there are, embittered by the fact that the state does not seem to do enough for them. However, they do not know what to do for themselves yet, which is part of the problem that we face.
On the other hand, as the noble Lord, Lord Rooker, warned us, some free-market radicals believe that there is no such thing as society, that we do not really need local government, that the only individual motivation we are talking about is economic and that the search for profit and financial gain is what drives everyone. I would say to him that it is not the aim of this coalition Government to radically shrink the state. There are some free-market radicals around who would love to do so, in the Institute of Economic Affairs and elsewhere, but we all recognise that we cannot shrink the state very far, given the enormous demands that we all face. I think that we all share, across the parties, a basic emerging realisation that, first, the state cannot provide all that our society will need in the coming years, particularly as the number of people over 70 continues to grow, and as the demands on the National Health Service, on social services and on other services will continue to grow exponentially. I remember an article by Polly Toynbee in the Guardian a few years ago, in which she said that the NHS budget would have to rise at a compound 2% above the rise in GNP, otherwise it would fail. That is part of the problem that we are now up against in the NHS and elsewhere.
Secondly, we are discovering that the public will not pay for the state to provide everything that we want. That, again, is a problem which all political parties now have to recognise. We have to persuade the public that these things are worth paying for. I am afraid to say that almost all of us find on the doorstep that the Daily Mail tells people every day that the state should cut taxes and raise benefits, but that is not possible. I think we also agree that financial gain and individual profit is not what drives everyone, and that altruism and community spirit also motivates citizens and provides, as has already been said, the essential glue that holds our society together. We have to find a way of building the strong local institutions—they have to be local institutions as far as possible—alongside the state, which will help provide the services that the state itself cannot entirely provide.
That raises all sorts of questions about regulation, how far organisations should be financially dependent on the state and how far the state should encourage, as a number of noble Lords have said, giving through one means or another, such as tax advantages. There are other forms of support as well, such as the nudge unit suggestion that one puts in the corner of various government things, saying that you should leave money in your will to various charities, which will increase the amount of giving that takes place.
I recognise the tension that has been spelled out in a number of speeches between national voluntary organisations and local civil society organisations. My experience in Yorkshire is certainly that some of the best voluntary organisations are those that are rooted in their communities, but they are very often too small to attract the attention of national commissioning authorities. The Cabinet Office and other sections of government are struggling with the issue of how you get down to discover which are the really useful local bodies.
Of course, part of that has to be that we devolve more decisions and eventually more authority to local government. The City Deals will help us in that respect, as will double devolution, which we have much talked about but not sufficiently carried through, to re-empower local communities. We also recognise that the character of the sector is in some ways difficult to pin down. Many of the most impressive voluntary organisations that I have met exist as they are because they have a small number of charismatic people driving them along. They can be impossible. Indeed, they succeed partly because they are impossible. That is part of what keeps voluntary organisations going and it is difficult to put that into a major institutional framework.
Much of this has to take place at the local level. I am conscious that the loss or the weakness of the church networks, and particularly the nonconformist ones that did so much, is part of what has gone wrong in many of these areas. I am conscious of this in particular because I live in a village, Saltaire, that has a historical society, a festival committee, an arts trail, a Friends of Roberts Park society and two allotment societies, and frankly does not need anything more by way of local civil society. Three or four miles away from us, in Bradford, there are a number of areas that have very little going on and in which the community organisers, who are part of the Government’s big society initiative, are doing their best to teach people how to get together and do things themselves, rather than sitting around being deeply bitter that someone else is not doing something for them.
I am a strong believer in the big society and there are a number of initiatives that are also pushing us in that direction. National Citizen Service is going into its third summer this year. I was entirely converted last summer by taking part in one or two National Citizen Service schemes in Bradford. We helped show teenagers what they could do for themselves and what they could do together for others, thus teaching them the principle of community service, including how to organise things together, raise money and work together. It is a similar case in local schools around the country. Primary schools and others are learning about how you work and help people in the community. This is all extremely desirable.
I am also a great fan of community foundations as a means of diversifying sources of funding for local activity. I would like to see the Community Foundation Network given a great deal more support. I say to the noble Lord, Lord Hastings, that part of the problem with community foundations and other local activity is that it was the local entrepreneurs and companies that provided local charity. As we have moved towards multinational companies, how you get them to think not only about London but about what happens in York, Bradford and Leeds, all of which have lost so much of their local corporate leadership, is a problem with which we all have to struggle. We are doing our best to learn from the process that is going on. I say to my noble friend Lady Barker that this morning I printed out the Institute for Government report on making public service markets work and it is one of the things that I intend to read at the weekend if my wife allows me not to pick all of the soft fruit on the allotment. I am a member of the Saltaire Canalside Allotment Society.
A number of other major points were raised in the debate. The noble Lord, Lord Hodgson, expressed his regret that the Government have not yet published their response to his extremely useful report last year. The Government thought that it might be preferable to wait for the report of the Public Administration Select Committee that came out on 6 June and was in many ways not just a post-legislative scrutiny of the Charities Act but a commentary on Lord Hodgson’s report. I assure him that the full response to both of these will come out shortly.
A number of noble Lords talked about the problems of a large drop in charitable giving. I am told there are different assessments of how severe that drop has been. Different surveys provide different answers, but in a number of ways, including by encouraging payroll giving and encouraging companies, we are doing our best to encourage more people to contribute.
Perhaps I should say at this point that part of what we all have to do in this country is to change the moral atmosphere from that which was around, in a way, in 2010—the corporate pursuit of individual gain and the City culture as such—and to remind everyone, including my neighbours in London who earn so much more than I do, that they are living in a society to which they should pay not only their taxes but their other dues. As we are all part of a national society and, within that, of various local societies, part of our responsibility is to contribute in all sorts of different ways in time and in money to the society around us.
I welcome those who mentioned the utility of the Social Value Act. We very much hope that that will help in shifting the way in which commissioning takes place. I welcome the fact that the Crown Representative for the voluntary community sector is now beginning to look at social enterprises. In my experience of visiting charities and voluntary sector organisations, I have on occasion been horrified to discover large charities that are entirely dependent on state contracting. That is not healthy for the third sector. I like those that do their best to make sure that they earn some of their income from what they do. That is a definition of a social enterprise that is also a voluntary organisation.
The Government have been making a number of efforts—payroll giving, Big Society Capital, the Innovation in Giving Fund, the Social Action Fund—to ease the transition and to encourage more people to bring in money to this very important sector. For example, the Communities First campaign is a £80 million government-funded programme that helps communities come together through different community groups. I am sure that noble Lords will be familiar with community challenge, the community right to buy and various other schemes that the Government are developing.
In answer to other points, we need to consider corporate giving further. I suspect that we will, in time—whether this Government will be able to do it or whether it will have to be post-2015, I do not know—have to consider a change in company law to make sure that a company’s duty is to all stakeholders, not just its shareholders, if we are to create a sea change in the approach to corporate giving.
The noble Baroness, Lady Gould, spoke about the role of women and the extent to which voluntary organisations support them. This is one of the most fascinatingly difficult areas in the evolution of civil society. My mother was a stalwart of civil society, among other reasons because when she married, she had to give up her job and her career. From then on, she poured her enormous energy not entirely into her children—thank goodness—but also into doing good works wherever she was living. We all know now that the transformation of the role of women means that that dimension of civil society has half disappeared as young women attempt to combine careers, children and family. In their place, the fit retired of both sexes have come to be part of what holds our civil society together.
The right reverend Prelate the Bishop of Derby asked how we maintain or revive the traditional pillars of civil society. I am not sure that that is entirely the role of the state. The state can do some of that, but it is certainly something that the churches themselves should be playing a very large part in and reminding us of. I am happy that the most reverend Primate the Archbishop of Canterbury talks about the church providing real moral leadership to the nation.
The noble Baroness, Lady Gould, mentioned confidence-building for vulnerable women. There is a wonderful charity in Yorkshire called Together Women which picks women up as they come out of prison and does its best to give them a sense that they really can do things again. This is an extremely important part of the work that needs to be done. I entirely share her view that it is a tragedy that we still have a society in which dedication to the welfare of animals is very often stronger, both in financial and commitment terms, than dedication to the welfare of human beings of both sexes and all ages.
The noble Baroness, Lady Gibson of Market Rasen, talked about the current challenges to the sector and asked about the Government’s plans to guide companies to encourage payroll giving. We are providing as many incentives as we can to encourage companies to expand payroll giving. Again, that is not merely a matter for the Government. Companies, the CBI and others should also be encouraging it. It is part of our shared corporate responsibility. None of these things is for the state alone. We can provide leadership but the rest of society has to provide it as well.
The noble Baroness, Lady Smith of Basildon, said a number of things about the Lobbying Bill, as published yesterday, which I did not entirely recognise. We are having an all-Peers meeting on this in Committee Room 3 at 4 pm on Monday and I very much hope that she will come along—
Baroness Smith of Basildon
If it helps the noble Lord, I will explain the point I was making. The Lobbying Bill suggests that third-party organisations would not be allowed to be involved in campaigning during a general election. I wanted to ensure there would not be the unintended consequence of stopping them campaigning at all during elections when there might be legitimate reasons for them to do so.
Lord Wallace of Saltaire
I can allay her concerns on this. I was very struck when I was briefed this morning on this by the sheer scale of the funds some organisations have used and targeted. It is that sort of development we are thinking about. I hope I have covered most, if not all, of the points made in the debate.
Baroness Pitkeathley
Can the Minister answer my specific question about social investment and the Government’s view on what proportion of social investment will eventually find its way into the sector?
Lord Wallace of Saltaire
I would prefer to write to the noble Baroness rather than give her a half-informed answer now, if she will permit me. There are a number of social investment schemes under way but I do not have them entirely in order in my head at the moment.
We all share a commitment to a stronger civil society. I hope we all share a commitment to a stronger local civil society. I am very struck by the problems of large communities in some of our cities who feel themselves powerless but do not know what to do about it. As I said to the noble Baroness, Lady Prosser, that is part of what the big society initiative is really concerned with. It will take a long time. For example, in Harehills and Gipton in Leeds the local Methodist, Catholic and Anglican churches used to do an awful lot but almost no one goes to church any longer. Creating alternative social networks and a sense of local empowerment and local confidence is a huge challenge for all of us and the state, society and others have to work together on it.
I hope we are all committed to this. I thank all noble Lords who have taken part in this debate and I recognise that this is a challenge that will face every Government in Britain for the next 20 years and more.
Baroness Hayter of Kentish Town
There were some more questions about the commissioning of services. It would be really useful if the Minister would undertake to ask other departments, beyond the Cabinet Office, to look at the commissioning process to see whether it can be made better. I do not know what his dialogue with the other departments is but it would be really useful if he was able to play a co-ordinating role.
Lord Wallace of Saltaire
There is now a commissioning academy. We are working with other departments. We are learning from experience how to work more effectively with local organisations where we can. The social value Act also helps us in that regard. I must not overrun my time; I give way to the noble Baroness, Lady Prosser.
Baroness Prosser
My Lords, I thank all noble Lords who have participated in this afternoon’s debate, particularly the Minister for his opening comments, which reminded us that our discussion has been focused around the United Kingdom and civil society. His initial comments, however, brought to our attention the breadth, depth and history of civil society across the world. We ought not to forget that when we consider the importance of all of these matters.
I can safely say that the nature of the debate has demonstrated the huge variety of subject matter that comes under the heading of civil society and the huge variety of provision we have seen. Some parts of it we have had for many years; some have been developed more recently; some may be suffering slightly and in need of some assistance; and others that are developing with great speed—demonstrating the changed nature of the society in which we live—and we must face. Those are all big questions that we will all be chewing over for a considerable time to come.
Something that has struck me about this debate is that there is a great need to be clear when talking about civil society and the nature of the solutions that we might wish to propose. There are many different pieces to this jigsaw but in the discussion about solutions I have detected a blurring between solutions which are suitable for service provision and those which are suitable for what I would call community development. The Minister gave as one such example the people on a housing estate in the north, and that was my experience as well when working in community development in the London Borough of Southwark, where precisely the same issues and difficulties arose. In that project our role was to enable the local people to find their voices and to speak up. The Likes of Us, by Michael Collins, is an excellent book based around some housing estates in Southwark which records how the people there had said that they had been done to, but never given the opportunity to put their own point of view. It is an important point to make. The right reverend Prelate described it as “human flourishing”. I would put human flourishing under the community development umbrella.
Before concluding, I say to the noble Lord, Lord Hodgson of Astley Abbotts, that I was rather pleased that he disagreed with me—I would be asking myself questions about my analysis of these issues if he had said that he felt I was right. I am not upset by that—as I say, I am rather chuffed.
People with Learning Disabilities: Health Inequalities
(10 years, 9 months ago)
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Baroness Hollins
To ask Her Majesty’s Government what steps they are taking to address the health inequalities highlighted by the Confidential Inquiry into Premature Deaths of People with Learning Disabilities.
Baroness Hollins
My Lords, this is such a timely and important debate, coming the same week as the Keogh mortality review, the Neuberger report and the latest report from the Health Service Ombudsman. Our focus tonight is on health inequalities for a group that comprises some 3% of the population. Our focus is on the remit and findings of the Confidential Inquiry into Premature Deaths of People with a Learning Disability. The inquiry’s report was published in March and the Government’s response was released last Friday. The House will wish to be reminded that I have worked as a psychiatrist with people with learning disabilities for over 30 years and that my adult son has a learning disability.
The institutional discrimination and health inequalities suffered by people with learning disabilities come as little surprise to many of us. For me it is a throwback to some of my own research from over 20 years ago when I reviewed the age and causes of death of people with learning disabilities in three London boroughs over a 10-year period. I found that adults with a learning disability were 58 times more likely to die before the age of 50 than the general population. Over half died of respiratory disease—which I presumed to be a final common pathway—compared with only 15% of the general population. The problem was that I could not get the results published. The BMJ and other medical journals said that it was not of wide enough interest. It was eventually published in a specialist disability journal. Government began to show leadership, however, with the White Paper, Valuing People, and Chapter 6, which addressed healthcare, accepted my suggestion that a confidential inquiry should be included as a recommendation.
In 2006 a formal investigation was conducted by the Disability Rights Commission and in 2007 Mencap published Death by Indifference. By this stage, although Valuing People had recommended a confidential inquiry, it had still not been set up. Death by Indifference was a landmark report and it told the stories of six people with a learning disability who had died in NHS care. It triggered an independent inquiry which was led by Sir Jonathan Michael—I should mention that I was a member of the inquiry team—and the Parliamentary and Health Service Ombudsman conducted an investigation into the six deaths. The Michael report, Healthcare for All, made a firm recommendation to set up a confidential inquiry and the Government at last agreed.
What is a confidential inquiry? It aims to identify common causes of deaths and to make recommendations to improve clinical practice. There are many in existence, some going back more than 50 years, with varying degrees of effectiveness. They involve the systematic review of cases with the identity of patients and clinicians remaining confidential and only aggregated findings being made public. Several of these inquiries have resulted in long-term monitoring and regular reports and one of these is NCEPOD, the National Confidential Enquiry into Patient Outcome and Death. It started with a pilot study of mortality related to anaesthesia but steadily expanded into a wider inquiry to cover all hospital specialties, now including near misses as well as deaths. NCEPOD distributes reports on very specific mortality concerns and if it feels that important recommendations are not being met, it lobbies at both local and national levels. It is this ongoing monitoring and national oversight of the uptake of recommendations combined with the fact that it has been in existence for decades which makes this inquiry effective.
In the confidential inquiry that we debate today Dr Pauline Heslop and her team have recommended the establishment of a national mortality review—basically a beefed-up confidential inquiry. This would guide detailed local reviews but also include a national overview panel. Its wider remit and role would provide an oversight of core data relating to all deaths of people with a learning disability. It could monitor and direct where more detailed reviews need to take place and, vitally, it would make recommendations for changes in practice. A longer-term commitment to this vulnerable patient group is needed for a real impact to be seen. The United States started similar mortality reviews and over the past 10 years it has seen an increase in life expectancy among people with a learning disability. The confidential inquiry we are discussing today was only established for three years—effectively as a pilot. It looked at the deaths of 233 adults and 14 children across five PCT areas in the south-west. Its focus was to determine whether the deaths of people with learning disabilities were premature. The principal aims were to detect factors which contributed to death as well as gaps in health and care services.
The results expose the gulf that still exists between the care received by people with a learning disability and that received by the rest of the population. It found that 37% of deaths would have been potentially avoidable if good quality healthcare had been provided. It found that on average, men with a learning disability died 13 years earlier and women 20 years earlier than the general population. Mencap says that this means that over 1,200 deaths each year across England could have been avoided with good-quality non-discriminatory healthcare—almost 25 children and adults per week. That is a shocking figure, which equates to the number of people thought to have died needlessly over a four-year period at the Mid Staffordshire hospital.
I am sure that other noble Lords will address some of the findings in more detail, but I will focus on the wider picture for a little longer. While Mid Staffs rightly hit the headlines, as did Sir Bruce Keogh’s report earlier this week, the avoidable deaths of people with a learning disability, some of the most vulnerable people in our society, go largely underreported and consistently fail to feature prominently on the parliamentary agenda.
What are the Government doing about premature mortality? On 5 March 2013, Jeremy Hunt said in the other place:
“Today, I am publishing ‘Living Well for Longer: A call to action to reduce avoidable premature mortality’”.—[Official Report, Commons, 5/3/13; col. 60WS.]
Sadly but perhaps predictably, the document did not even mention people with learning disabilities. That is despite the fact that in the 2011-12 NHS outcomes framework, the Department of Health added a placeholder indicator for measuring premature mortality in people with learning disabilities. This was further specified as the,
“Excess under 60 mortality rate in adults with learning disabilities”—
“under 60” because that reflects the current average age of death for people with learning disabilities. Unfortunately in the latest NOF—national outcomes framework—for 2013-14, this indicator is still in the inactive “development” stage. Will the Minister advise when the Government will give it live status and assure the House that the threshold will be reviewed year on year to bring it closer to the threshold of age 75, as in the general population? That would ensure the collection and publication of some vital data.
However, one of the problems is the difficulty that we still have in the identification of people with learning disabilities in health and care records. This was one of the recommendations of the Michael inquiry and, again, the confidential inquiry notes it as being of critical importance. Dr Heslop explains that concerns would never have been raised about many cases reviewed by the confidential inquiry had their care not been scrutinised. I agree with her that professionals learn more and change their practice more by being reflective and reviewing cases using a root-cause analysis approach. Merely telling a professional to do something rarely works, as is evidenced by the lack of adherence to the Mental Capacity Act and the Equality Act.
This inquiry provides a firm foundation of knowledge upon which the Government could take real and purposeful action—urgent action—to address these startling and persistent inequalities. However, this is not borne out in the Government’s unambitious response which acknowledges the findings that health inequalities exist but contains no set goals or timescales and no ways of measuring improvements. They could instead have followed the structured style of response they made to the Winterbourne View hospital scandal by working with stakeholders, including families and carers—many of whom are listening to the debate today, and whose presence I welcome. Will the Government consider a concordat to take forward the confidential inquiry recommendations and the construction of a clear, timetabled action plan?
The lack of commitment to the inquiry’s central recommendation about a mortality review body is disappointing. Despite the overwhelming evidence that this is the right thing to do, a decision will not be made until March 2014, by which time another 1,000 children and adults will have died prematurely. I urge the Government to bring this to the top of the agenda, not to push it down the priority list yet again.
As for the Francis inquiry, we say yes; but what about the enormity of the challenge that the Government face in achieving equality in access to healthcare and in health outcomes for this group? I ask the Minister to persuade the Secretary of State to include in the remit of all future health reports and inquiries, and in the work of the new Chief Inspector of Hospitals, the question, “Did people with learning disabilities fare better or worse?”. At the moment the answer is probably “worse” in all aspects of healthcare. I know that noble Lords will pick up many of the specific issues that I have not touched on, and I thank them for their support and passion for this debate. I also look forward to the Minister’s response and hope that he will be able to reassure this House that the Government are not indifferent and will act much more persuasively in future.
Baroness Browning
My Lords, I refer the House to my registered interests regarding disability and health and I congratulate the noble Baroness, Lady Hollins, for bringing this very important debate to the Floor of the House.
I begin with the part of the report that deals with annual health checks. Such checks for people with learning disabilities are an excellent way for doctors to pick up early even more serious problems than the patients themselves realise they have or are able to articulate. In some cases, if a person is not medicated, it could be the only time in a year when a GP sits face to face with them.
Linking the health check with health action plans is extremely important. The regular screenings that the rest of the population almost take for granted—because we are reminded that we are due a certain screening and we welcome this preventive and early opportunity to check whether there is a problem—is something that people with learning disabilities may lose out on because, when a letter arrives telling them it is time to phone for an appointment for a particular screening, they may simply throw away the letter and never have the screening. The annual health check therefore provides that opportunity.
The confidential inquiry found that the weakest link in the chain of the care pathway for people with learning disabilities was problems with diagnosis. It is very easy to misinterpret or ignore something from someone who is unable to articulate their symptoms or pain. I believe that it is key that the annual health check is expanded beyond its current very useful functions to ensure that it is used to provide a much more comprehensive look at, and a holistic approach to, that person’s health. The Government have accepted that there is inequality in healthcare investigations. They have detailed how NHS England will address this through working with clinical commissioning groups, and I understand that they will set out the details later in the year. That will be a crucial piece of work, which I hope will include tangible and measurable objectives on improving investigations that lead to diagnosis.
For people with learning disabilities in particular, and—the House will not be surprised to hear me say—for those on the autistic spectrum, many of whom also have learning disabilities, communication is a major issue. It is important for primary care services to understand the patient; if that person needs to attend a GP or nurse appointment accompanied by someone who can interpret their mood, behaviour and articulation, the primary care services must take into account that this can be quite painstaking and time-consuming. If people with a learning disability are to be treated equally, it is very important that the primary care service, and the services in hospitals when investigations often take place, allow for the fact that there may need to be a person in support who will help the clinicians to interpret how the other person is feeling.
I turn now to the part of the report that deals with the Mental Capacity Act. A number of reports, including the Confidential Inquiry into Premature Deaths of People with Learning Disabilities and the Francis report, have identified problems with how the Mental Capacity Act is understood and applied. They identified the lack of compliant practice with the Act as a barrier to effective NHS care. The inquiry found evidence of disagreement about what professionals understood by “serious medical treatment” and thus a lack of consistency about appointing independent mental capacity advocates to support those without family members to represent their views. There has also been evidence of unlawful NHS practice.
Declaring an interest as a mother, I add at this point that it is not just people without relatives to speak up for them who are not always listened to. In that shocking report from Mencap, Death by Indifference, which the noble Baroness mentioned, and reports that have followed on from the original report, we have seen the deaths of young people whose mothers have stood by their bedside and tried to explain the symptoms of their adult children to clinical staff, only to be told, “He’s over 18 and he hasn’t expressed his wishes in that way”. There is no other word for it but wicked.
So what are the Government pledging to do? The Department of Health has apparently agreed that mental capacity advice should be available 24 hours a day. It said:
“There should be staff trained in the MCA available 24 hours a day, and there should be specialist advice available in all care settings”.
It also says:
“Service providers have the primary responsibility for ensuring existing staff have the required knowledge and awareness of the MCA … The responsibility for the content of education and training curricula … lies with”,
Health Education England and,
“the professional regulators and the appropriate Royal Colleges”.
As a member of the Select Committee in this House that is currently looking at the post-legislative scrutiny on the Mental Capacity Act, I was somewhat concerned, when we took evidence at our first session on 18 June, that we were told by Department of Health officials when asked about the ability to assess for mental capacity,
“the assessment revealed an inconsistency in assessing capacity in some trusts to ensure that the Act was fully embedded”.
Claire Crawley, who spoke on behalf of the Department of Health, said:
“In terms of hard evidence, could I sit here and say, ‘I absolutely know that every local authority has appropriate plans and training processes in place’? I could not say that because I have no way of getting that evidence. The regulator of the industry, as it were, the Care Quality Commission, does not monitor local authorities or inspect them any more, so I would not know”.
Very often the local authority appoints the person who has the day-to-day care for the patient, so local authorities are as much involved in this as the NHS. When pressed by the noble Baroness, Lady Andrews, about the position of NHS trusts with regard to assessment of capacity was concerned, Claire Crawley told us:
“That would probably have been the CQC’s process … rather than the department’s process”.
I say to my noble friend that when a department, particularly the Department of Health, puts a piece of legislation such as the Mental Capacity Act on the statute book, it has a duty and responsibility to ensure that it is complied with, particularly for this vulnerable group of people. It is simply not good enough to say, “Not me, guv, it’s somebody else’s responsibility”.
Lord Touhig
My Lords, I refer the House to my interests as a vice-president of the National Autistic Society. I congratulate the noble Baroness, Lady Hollins, on securing this timely debate, coming, as she said, so soon after the publication of the Government’s response to the Confidential Inquiry into Premature Deaths of People with Learning Disabilities and just two days after the publication of this report from the Health Service Ombudsman, which I want to speak about.
I welcome this debate because it affords us the opportunity to debate the wider subject of health inequalities affecting people with a learning disability. The confidential inquiry is a crucial piece of work and shows that 37% of deaths could potentially have been avoided if good-quality healthcare had been provided. It is a terrible indictment of our care support system for the most vulnerable group of our fellow citizens, who are being let down. They and their carers often find it hard to express themselves in a way that might help prevent the tragic happenings that the inquiry has revealed. Like many noble Lords, I am aware that the support groups and those who work with people with learning disabilities have significant concerns about the Government’s response to the inquiry, a point well made by the noble Baroness, Lady Hollins. They feel that it is simply not strong and purposeful enough to really drive the change that we all wish to see.
On a wider point, a report from the Health Service Ombudsman, laid before Parliament on Tuesday this week following an investigation into a complaint against a GP practice, makes some pretty awful reading and should act as a wake-up call. It reveals how a GP service let down a young man with severe learning disabilities and it starkly draws into focus the attitudes that pervade in the system.
The young man is just 23. He has severe learning disabilities and behavioural problems, and he has epilepsy. He has historically been prescribed a series of medicines in liquid or dissolvable form because he becomes very distressed if he has to take tablets. One of the medicines was midazolam, used in emergencies if his epileptic seizures lasted beyond three minutes. In April 2011 his mother asked their GP for a repeat prescription in liquid form to help her son’s epilepsy. The GP refused her request because it was too expensive. He would only prescribe her son suppositories or tablets in future.
The mother advised the GP that her son had been prescribed only liquid medicine from a very young age, as his learning disabilities caused him to become very distressed if he had to swallow tablets. Despite this, the GP said he would no longer prescribe any of the young man's medicines in liquid form for cost reasons and would prescribe only tablets in future. The doctor told the mother to find a GP,
“‘who has bigger budgets’ and who would ‘be happy to prescribe the medications’”.
The mother was clear that the decision not to prescribe her son suitable medication put him at risk, including of death. However, when she subsequently complained to the GP practice about the doctor's decision, the response was far from understanding and helpful. She got a letter informing her that there had been a “total breakdown” in the doctor-patient relationship and advising her to find a new GP within 21 days as she and her son were to be removed from the practice’s list.
I can only ask noble Lords to imagine the significant distress that followed. The General Medical Council guidance is clear: doctors must ensure that prescribing of medicine is appropriate and responsible and in the patient’s best interests. The guidance also states that doctors should, when appropriate,
“establish the patient's priorities, preferences and concerns”,
and
“discuss other treatment options with the patient”.
After investigating the case, the ombudsman found that the GP had not given the young man the medication he needed on the grounds of cost, and had ignored disability discrimination law in the process. The ombudsman was clear in the report that the doctor,
“did not act in line with the Mental Capacity Act, GMC guidance and established good practice.”
The report found that the doctor,
“did not consider his responsibilities under the Mental Capacity Act in reaching his decision”,
about the young man's medication. He did not assess the young man’s,
“capacity to make a decision about his own treatments or medications. Nor did he take any of the required actions that could have led him to reach a ‘best interests’ decision”,
on the young man's medication.
The case shows a lack of understanding of reasonable adjustments and disability rights. Public bodies are required to comply with the Equality Act 2010, which includes the duty to make reasonable adjustments. They should also have regard to the various statutory codes of practice that have been published to assist in the interpretation of the legislation. The ombudsman’s report brings into sharp focus a specific case and uncovers the treatment that people with a learning disability and their families can face within the health service. The ombudsman, Julie Mellor, said:
“This is yet another case where someone with learning disabilities has been failed. When there are failures in the care and treatment of people with learning disabilities, there are consequences in terms of their health and in too many cases, their life expectancy.”
Unless the Government take strong action in this area, cases such as these will continue to occur. That is why I strongly support establishing a national mortality review body, which would allow for the collection of mortality data and, importantly, for investigations of specific cases, a point made by the noble Baroness, Lady Hollins. Critically, it would provide the opportunity to improve the understanding of the causes of premature deaths and enable the National Health Service to improve care for people with a learning disability.
The ombudsman’s report highlights a terrible wrong committed against a vulnerable young person. I hope that this Parliament and this Government will act to stop these awful and discriminatory cases occurring in future.
Baroness Jolly
My Lords, I, too, thank the noble Baroness, Lady Hollins, for bringing to the attention of the House the report that gives us the opportunity to discuss this issue. The report makes for sobering reading. Many noble Lords speaking in this debate have far more expertise in these matters than I have—in fact, looking around the Benches, I think that they all have—but the first NHS trust board that I sat on more than 15 years ago was a community trust with learning disability, mental health and community health responsibility for all of Cornwall, so I come at this with at least some understanding. I commend the work in this area by both the noble Baroness who, during her tenure as president of the BMA, sought to raise the profile of learning disability, and the noble Lord, Lord Rix, a long-time advocate of those with learning disability, and president of Mencap, which I thank for producing an excellent briefing.
In the past, there have been plenty of situations and reports, and we have heard about some of them today, that should have given successive Governments a wake-up call regarding poor provision for people with a learning disability—Budock Hospital and Winterbourne View, to name two, both of which point to the inevitable health inequalities. For many years now we have known that the health commissioning of learning disability services has been poor. Many PCTs wrote a cheque to providers and effectively asked them to get on with it. Indeed, there is a historic similarity with mental health service commissioning. Mental health now has parity of esteem status with physical health, but it does not feel as if the same can be said for learning disabled people.
The history of a lack of communication between health and social care in this area is well known, too. It was as if, after the move to take people out of large establishments and put them into domestic settings, commissioners and providers decided that the job was done, the spotlight went off, attention moved elsewhere and quality was forgotten. I must acknowledge that there are some splendid services, but that standard is not yet universal.
So what are good services? Here I have to thank Professor Jim Mansell of the University of Kent for the list from his 2010 report, Raising Our Sights. Good services should be individualised and person-centred, treat the family and carers as expert, focus on staff relations with the individual, sustain the package of care and be cost-effective. In addition, they should be supportive, use appropriate advocacy and be predictive and well implemented. I do not wish to belittle the work of the professor but none of this list should come as a surprise to the House. The surprise and shame is that this list is not part of universal practice.
That brings us to the Confidential Inquiry into Premature Deaths of People with Learning Disabilities. The report was commissioned by my right honourable friend Paul Burstow following the events at Winterbourne View. It is thorough and contains a detailed and practical set of recommendations. In the time that we have, I am unable to cover all aspects of the report so shall focus on information, staffing and the Mental Capacity Act. The report puts the spotlight back on mortality. As we have already heard, it is particularly appropriate that we are discussing the mortality of people with a learning disability in the week when the Keogh report did just that for the total population served by 14 hospitals. Sir Bruce was able to do that because he had the data. This report is based on a dataset that is not normally collected for people with a learning disability.
The report’s first recommendation is that people with learning disability should be clearly identified on the central NHS registration system and in all healthcare systems. Although outside the scope of the report, this information should be recorded on social care records too. A learning disability flag should be part of a standardised dataset and I would hope that a combined, patient-held record would be a reality in the not too distant future. Not only does this make identification easier, it would aid audit and research, make joint strategic needs assessments far more accurate and easier to produce and make reasonable adjustments easier to flag, thus improving commissioning and contracting. This is not an unreasonable request, it is an issue of equality, and without it people with learning disability cannot be treated equally. I would like the Government to commit to a clear timeline for this work, so would the Minister tell us what that is, or when we might know what it is?
Moving to staffing, the report calls for a named health worker to be allocated to those with complex or multiple health needs, and I welcome the Government’s response and further suggestion of a named worker in acute settings. There is also a need for specialist learning disability liaison staff in community settings. Can the Minister give an indication of when it is intended to roll this out?
These changes bring a need for training. Will the Minister reassure the House that Health Education England can put training programmes for health workers in place, and when they might become available in local training settings? Would he also confirm that training will be mandatory and included in continuous professional development for all health workers?
Finally, I turn to the Mental Capacity Act, which the noble Baroness, Lady Browning, has covered well. As she has said, it is currently under scrutiny in your Lordships’ House and is pivotal to people with a learning disability, as it is to any vulnerable group. Advice under this Act should be available at all times and easily accessible. That will pose challenges in delivery, and I ask the Government not to forget or ignore patient involvement and engagement in this. Members of the sector are very good advocates, but there is a real need for people with learning disability to be consulted and involved in improving access to the Act.
In conclusion, I have outlined the issues around records, data and information, the Mental Capacity Act and staffing. Would the Minister ask his colleague, my honourable friend Norman Lamb, the Minister for Care and Support, to come to the House in the autumn with NHS England’s new lead for learning disability to share with members of the House its thinking on these issues and the action plan that has arisen from this report?
I think that it was Gandhi who said that society could be judged by how it treated its most vulnerable. Reducing health inequalities should be central to that. It is not an issue which will attract the attention of voters; it is something that we do solely because it is the right thing to do. I would hate it if, 10 years on, we were seen to be wanting.
Lord Wigley
My Lords, I declare an interest as patron of Mencap Wales and Autism Cymru. I welcome the opportunity to speak in this most important of debates. As the noble Baroness, Lady Hollins, has set out very clearly, the figures are shocking and should rightly make us very angry indeed. The fact that 37% of deaths investigated by the confidential inquiry could have been prevented with better healthcare should rightly motivate us to do all that we can to tackle the startling health inequalities that people with a learning disability face. I share her concern that the Government have not gone far enough in order to bring about the change we really need to see. It is particularly disappointing in light of the fact that the issue was brought to the attention of the Government before and met with similar inaction.
In 2006, I was a commissioner at the Disability Rights Commission and worked on the formal, 18-month investigation into healthcare given to people with mental health problems and learning disabilities. It was then that I first came across the findings of the work undertaken by the noble Baroness, Lady Hollins, that those under 50 years of age with learning disabilities or mental health issues were 58 times more likely to die from medical conditions not associated with their disability than was the general population of that age group—58 times more likely is a staggering figure.
The DRC’s resulting report, Equal Treatment: Closing the Gap, found that those with learning disabilities or mental health issues regularly get worse treatment than others. The study, carried out in England and Wales, examined several million health records and found that people with learning disabilities and mental health problems were more likely to have a major illness, to develop a serious health condition younger, and to die sooner than the rest of the population. Despite this, the same group of people were less likely to have routine tests and screening to pick up signs of a problem at early stages. For example, people with learning disabilities who have diabetes have fewer measurements of their body mass index, while those who have had a stroke have fewer blood pressure checks. The investigation also identified a problem known as diagnostic overshadowing, whereby symptoms of physical ill health are often seen as part of a patient’s mental health problem or learning disability and are not properly investigated or treated.
One of the aims of the work was to see which areas of the NHS would need to improve in the context of the then recently introduced Disability Discrimination Act, including the duty to make reasonable adjustments for disabled people, something which was in place since 1999. We were clear that GPs needed to make reasonable adjustments in order for people with a learning disability to access healthcare effectively. This included simple things such as making appointments by e-mail, providing treatment information in alternative formats or sending text or phone appointment reminders. Also important in terms of reasonable adjustments was raising awareness and understanding among both GP clinic and hospital staff in terms of learning disability.
This is demonstrated powerfully through the story of Susan. Susan died on 1 February 2011 in St Christopher’s Hospice in Sydenham, having been transferred the previous day from Lewisham Hospital. She was 59 and had cancer. Although Susan had been diagnosed with breast cancer some years previously, she had lived happily with her sister Brenda. Both were actively involved with their local Mencap in Lewisham and Susan often volunteered at events and outings. Susan was admitted to Lewisham Hospital on 15 January 2011 with vomiting and jaundice. Like so many other family members and carers, Brenda visited Susan every day and made herself known to staff as Susan’s main carer. As there was no learning disability specialist nurse available on the ward, Brenda found herself regularly explaining to staff about Susan’s care needs and becoming increasingly frustrated by the general lack of understanding and awareness about learning disability, which seemed to permeate the hospital. At one low point, Brenda was told by the matron that her staff, “don’t encounter people with learning disabilities in hospital that often”. Consequently, no adjustments were made to accommodate Susan’s needs, leaving Brenda fearful and anxious for Susan’s treatment unless she was there on an almost round-the-clock basis. Despite a complaint to the hospital by Brenda about a potential breach of the Equality Act for a failure to make reasonable adjustments to accommodate Susan’s learning disability, progress was slow, and a year after Susan’s death, the hospital had still failed to demonstrated that staff had any more awareness about learning disability and their duty of care and duty to provide equal access to healthcare to patients with a learning disability.
I emphasise the need for reasonable adjustment. Sadly, it seems that things have not changed nearly enough since our investigation. In 2006, we made the point on numerous occasions that reasonable adjustments were not being made as a matter of course. The confidential inquiry builds on this by highlighting that:
“The lack of reasonable adjustments to facilitate healthcare of people with learning disabilities, particularly attendance at clinic appointments and investigations, was a contributory factor in a number of deaths. GP referrals commonly did not mention learning disabilities, and hospital ‘flagging’ systems to identify people with learning disabilities who needed reasonable adjustments were limited”.
Its recommendation therefore seems sensible and measured that reasonable adjustments required by, and provided to, individuals be audited annually and examples of best practice be shared across agencies and organisations.
The Government’s response to this is far from purposeful, saying that they will instruct NHS England to look at the possibility of strengthening provider contracts to include an annual audit. Public authorities have a duty to make reasonable adjustments, and that includes adaptations and accommodations to ensure that people with a learning disability can access healthcare on an equal footing. Back in 2006, we were clear that there was no excuse, the duty having been there since 1999. In order to move this forward, strong leadership is needed by the Government and key agencies if we are to avoid these failures persisting within the healthcare system and thousands of vulnerable people paying the price.
Lord Rix
My Lords, as president of Mencap, I welcome the opportunity to speak in this important debate, having rushed from the other Lord’s in St John’s Wood to support my noble friend Lady Hollins in her battle to achieve health equalities for learning-disabled people.
As someone who has worked in the world of learning disability for more than 60 years, I am of course aware of the persistent health inequalities that exist. The figures from the confidential inquiry are shocking and the report makes sober reading. That over a third of those investigated died due to poor healthcare is nothing short of an outrage and should be front-page news. The fact that, on average, men with a learning disability die 13 years earlier and women with a learning disability die 20 years earlier than the general population should be reported alongside the horrific facts, figures and stories from the Mid Staffordshire scandal. Instead they appeared in only a handful of articles, well tucked away. It is a further disappointment that no Oral Statement was made, either when the inquiry was published in March or last week when the Government published their response. That is why this debate is so important.
As many of your Lordships know, I chair the All-Party Group on Learning Disability together with the right honourable Tom Clarke MP. For many years we have brought in people with a learning disability, their families, advocates and professionals, to create a dialogue with MPs and Peers. On Monday I chaired a well attended meeting on this very subject where we heard from the confidential inquiry team and the learning disability public health observatory together with people with a learning disability, family members, carers and the Minister, Norman Lamb.
The inquiry team is to be commended on an excellent, robust piece of work, exposing the stark health inequalities that people with a learning disability face and providing the Government with 18 excellent recommendations on which to move forward. As my noble friend Lady Hollins stated, it seems that the key recommendation, that a national mortality review body be set up to collate data and investigate and report on deaths, is critical in order to keep momentum going, as well as to start the kind of culture change that we must see within the NHS. It is therefore deeply disappointing that the Government have shied away from this critical recommendation, putting off any sort of decision until March 2014. Like my noble friend, I wonder how many more people will have died unnecessarily by that date.
The most powerful account given at the meeting was that of Christine, a mother who tragically lost her daughter Tina in 2009. Tina lived at home with her parents and her sister. She had learning disabilities, epilepsy, Russell-Silver syndrome—a form of dwarfism—and severe scoliosis of the spine. Tina had generally been physically well but developed a cough and a high temperature. Her parents called the doctor and Tina received a home visit from her GP during which she was prescribed antibiotics and paracetamol. Her condition deteriorated, however, and her parents rang the surgery to request a second home visit. This was refused, as was their first request to the out-of-hours service.
It was not until a second call to the out-of-hours service—which resulted in a home visit and a diagnosis of aspiration pneumonia—that Tina was referred to Basildon hospital. Once in hospital she was diagnosed as suffering from pneumonia and a chest infection. The hospital did not give her the treatment she needed or even meet her basic care needs. She suffered several seizures in hospital and went for four days without food. She died on 30 January 2009.
Tina’s death has had the most profound impact on Christine, of course, and her family. At the meeting she said:
“Our daughter was a human being and we protected her and cared for her all through her life until she became ill. We argued with the Doctors from day one; firstly the GP and then the hospital. They saw a child laying there with a disability and decided her life wasn’t worth saving”.
The Parliamentary and Health Service Ombudsman’s investigation of the case found failures and delays in diagnosing Tina’s condition, a failure to act in line with the Mental Capacity Act 2005, failures in the communication of Tina’s condition to her parents, a failure to implement Tina’s transitional care plan and a failure in meeting Tina’s rights as a disabled person.
Christine is rightly concerned about Vikki, her other daughter, who also has a learning disability. She described at the meeting how she and her family were fearful every time Vikki became ill and when she had either to visit the doctor or go to hospital.
We owe it to Christine and her family, as well as to countless others, to stop these health inequalities leading to death by indifference—the apt title of a report by the Royal Mencap Society.
Baroness Tyler of Enfield
My Lords, I add my congratulations to the noble Baroness, Lady Hollins, on initiating this critically important debate. As the title of the debate states—it bears repeating—we are today discussing the health inequalities of a particularly vulnerable group, highlighted by the confidential inquiry into the premature deaths of people with learning disabilities. I speak today not because of any specialist knowledge but because of my interest in health inequalities, of which this is such a stark example, and I am grateful to the National Development Team for Inclusion for its briefing.
I am sure we can all agree that many of the findings of the report were horrifying. I will not repeat the statistics that many other noble Lords have already given the House. Suffice it to say that nearly three times as many people with learning disabilities die avoidably than die among the general population. Like many noble Lords, I find this shocking. Surely the issue should be treated with the same seriousness and urgency as responses to the appalling events at both Winterbourne View and Mid Staffs. The latter led to the highly influential Francis report and the immediate implementation by government of some of its key recommendations.
I will first make a few points on the factors leading to this vulnerability and these premature deaths. The confidential inquiry found that a fifth of people with learning difficulties experience significant difficulty or delay in diagnosis of their illness and that, as a result, there is often too little proactive care for this group and too many crisis-driven responses. It found a lack of reasonable adjustments to help healthcare, particularly in basic things such as attendance at GP surgeries and clinics; that GP referrals often do not mention learning difficulties; and very limited hospital flagging systems. Additionally it found that poor record keeping is creating problems and that, in some instances, even “do not resuscitate” orders in patients’ records have been found to be inappropriately or poorly documented. As others have said, there was poor adherence to the Mental Capacity Act and, finally, the inquiry identified poor co-ordination of care across and between different disease pathways and service providers, which failed to understand the episodic nature of care provision. That is only a few.
We know a great deal about the problem and we cannot continue to allow one group of people, those with learning disabilities, to experience such drastic healthcare inequality. It is because I know that the Government have such a strong commitment to reducing health inequalities that today I ask the Minister to consider immediate action in the specific areas on which I will focus my contribution. I am encouraged to do so in the knowledge that the Care and Support Minister, my honourable friend Norman Lamb, recently said:
“It is not good enough that people with learning difficulties are at a greater risk of dying earlier due to poor health care. … We are making progress on improving standards of care but we have to go further and keep driving forward our plans”.
I could not agree more.
First, regarding the confidential inquiry’s concern about a lack of adherence both to the Mental Capacity Act and the Equality Act, outlined by other noble Lords today, will the Minister clarify the Government’s plans to address this concern? Secondly, while details about the deaths of people with learning disabilities identified by the inquiry illuminate the severity of the problem, they only provide a snapshot. As anyone who has taken at least a basic course in statistics knows, cross-sectional data—what the confidential inquiry has assembled—cannot tell us as much as longitudinal data.
The confidential inquiry recommended that the Government should create a mortality review body and has offered three different models for doing so in subsequent discussions with the department. This would provide a critical ongoing lens into the mortality of people with learning disabilities. Will the Minister explain the Government’s plans and timetable for creating such a body?
Thirdly, the confidential inquiry also describes the current healthcare situation as one largely driven by crisis, with a lack of evidence of sufficient forward planning. Will the Minister provide his reaction to this assessment and say how forward planning can be improved?
Finally, on the care of those with learning disabilities, the only support currently available to clinical commissioning groups and local authorities is provided through the Learning Disabilities Specialist Public Health Observatory, which is part of Public Health England. This work involves a specific work strand on promoting learning and on sharing that learning with the wider sector and local areas. It is very important that this work continues and, given the number of people with learning disabilities who are supported both through social care and who live with their families, that this work programme includes specific action to support social care, understands the action needed to reduce premature deaths and works alongside action targeted at family carers. Will the Minister say what support the Government intend to put in place to ensure that local areas are able to implement the recommendations of the inquiry?
I finish by suggesting some additional practical actions for the Government to consider to try to improve the current situation. First, they could identify those people with learning difficulties who are afraid of seeking medical assistance and provide them and their carers with support and training now, before the need for urgent medical treatment arises. Secondly, they could offer a named healthcare co-ordinator to all people with learning difficulties with two or more long-term conditions and to those who live unsupported or with minimal support in the community with one or more long-term conditions. This would be akin to the Government’s recent proposals to refresh the NHS mandate, including by providing a co-ordinating clinician for the non-hospital care of another very vulnerable population—the elderly. This is something I very much support.
Thirdly, the Government could require all health and care services to assess and document the reasonable adjustments that individuals with learning disabilities need to access healthcare equitably and to share this information with providers so that people with learning disabilities are properly identified and providers have the duty to ensure that these reasonable adjustments are made. It must be possible to co-locate community learning disability nurses into GP practices to work alongside GPs.
Finally, will the Government consider requiring all acute hospitals to have at least one learning disability liaison nurse in post? These are just practical and specific examples—we have already heard others today and I am sure that we will hear more. I look forward to hearing the Minister’s response to these and other points.
Baroness Emerton
My Lords, I thank my noble friend Lady Hollins for this timely debate and for her contribution over the years on the issue of learning disabilities. I declare an interest as a retired general nurse. Not holding any qualification in mental handicap, as it was then referred to, I have limited experience with learning disabilities, mainly associated with relocating patients from the large hospitals in the 1970s until the late 1980s. However, that experience was one that has stayed with me in terms of demonstrating that people with learning disabilities and their families are a group who require a range of specialties to come together to ensure that their quality of life is the best possible.
Although this debate is asking the Minister what steps the Government are taking to address health inequalities, it is difficult just to debate health, as has already been illustrated today, because so much is dependent on the part played by education, social care and families. The opportunity has now been given to us, with the new Health and Social Care Act and the Care Bill, to develop healthcare pathways further. We should take this opportunity to ensure connection and communication through the education system, social care and specialist mental health care and that learning disability staff are involved in the total well-being of the individual and the family. Otherwise it is likely that there will be gaps which, in turn, may be detrimental to the general health of the individual with the learning disability.
It is now 65 years since the NHS was introduced with the assurance of free care for all at the point of delivery. During those 65 years, we have seen many developments for those suffering a learning disability, which have come step by step and usually following the unfortunate findings of inquiries into poor care, such as in Ely, Farleigh and Whittingham—all large hospitals that were found wanting in the delivery of care. In the 1970s, we abolished long-stay large hospitals and moved patients into the community, which was a big step towards a pathway for each individual that set a programme of care according to their needs. However, even within the 20 years since that move, we have cause for concern about small units that have failed in their delivery of care.
This confidential inquiry into premature death provides the opportunity to address the pathway for learning disabilities and for health and social care professionals, support workers, educationalists and families to contribute to the development of a meaningful, holistic pathway for every individual person with a learning disability. This surely demands a culture change and leadership, as well as offering a learning opportunity for all health and social care professionals and general educationalists to understand the philosophy of caring for those with a learning disability. It requires good communication links between all of those, with each of them understanding the overall philosophy and strategy of an integrated pathway for the individual. It is clear that this would be a large piece of work and would take time to be achieved. It will require all of the disciplines to be involved, as well as the families, who we know have had to fight a long battle to break down the barriers between all the involved agencies. There needs to be shared ownership of that responsibility—everyone has to ensure that the pathway is high quality and leads to people living as normal a life as possible with the appropriate support and with regular physical health checks.
Coming back to the confidential inquiry, I would make four points. The first is about health records, which has already been mentioned in detail by the noble Baroness, Lady Tyler. I am sure that in this day and age it is not beyond the wit of any of us to see that it would be possible to get a health record that can not only integrate the issues relating to the handicap but attach a personal profile to the health action plan that could be implemented and given quickly to the person and to the family.
Secondly, there is advanced healthcare planning. I suggest that the Government need to give further guidance once long-term problems are diagnosed. There should be a trigger for the plans to be instigated and a risk assessment and a crisis-point plan drawn up. These health plans could easily be put together as long as there is communication between all aspects and that the medical side is aware of the way forward.
My noble friend Lord Rix has already mentioned palliative care and the dreadful time that the patient in Lewisham experienced. The confidential inquiry identified some problems with end of life care. It is clear that palliative care teams need to be supported during the time that palliative care is being provided to a learning disability patient. A specialist learning disability nurse should be available to those teams when this is required. At least two patients in every hospital have a learning disability. Of these some may have profound multiple learning disabilities. The role of the registered learning disability nurse is important in giving guidance in hospitals on the specialist support of patients. Can the Government ensure that workforce planning outcomes include a calculation for the roles of nurses qualified in learning disabilities to be available for such teams?
If the noble Earl agrees that this should be the way forward, what steps will the Government take to ensure that that NHS England, Public Health England, local authorities and professional regulators develop the curriculum and standards for health and social care professionals and general educationalists, Healthwatch, well-being boards, and charities such as Mencap to meet the requirements for the best possible pathway for healthy living within the capabilities of the individuals suffering a learning disability and their families? This would include a model to maintain general good health and the reduction of the rate of premature deaths as is suggested by the inquiry.
If the philosophy and strategy are clear for the person suffering from a learning disability, we can then be assured that all aspects of their life will be taken care of, with the support in place where necessary. This in turn will be effective for other members of the family who, over time, as experience tells us, have had to overcome tremendous difficulties through sheer lack of professionals understanding the situation being described or the damage that can occur, including breakdown to the family unit.
Lord Hunt of Kings Heath
My Lords, I declare an interest as president of GS1, chair of a foundation trust and a consultant trainer with Cumberlege Connections.
It is a great pleasure to follow the noble Baroness, Lady Emerton, and to congratulate the noble Baroness, Lady Hollins, on her initiative in securing this debate. I applaud her efforts in again raising in your Lordships’ House the appalling health outcomes of so many people with learning disabilities. I shall not repeat what other noble Lords have said. The statistics are clear and there is a clear consensus that they are accurate, and the outcomes are very disturbing. We must recognise that this is now an issue that has been identified for at least six years; the evidence from Jonathan Michael’s report, Death by Indifference, which found that patients with a learning disability experienced delays in diagnosis and treatment, a lack of basic care and poor communication from health professionals, is now six years old. Clearly, the confidential inquiry findings have endorsed the original findings of the Jonathan Michael inquiry.
The noble Baroness, Lady Hollins, was a member of the inquiry team, which is significant. Sir Jonathan Michael is a very distinguished chief executive of an NHS trust. In some ways, it was even more persuasive coming from that quarter, when he found so many examples of indifferent healthcare for people with learning disabilities.
As noble Lords have said, when one thinks of our recent impassioned debates about health outcomes, the Keogh inquiry and the Mid Staffordshire inquiry, the number of premature deaths of people with learning disabilities is so shocking that it is disappointing that society as a whole, the media and the political world are not taking it as seriously as they ought. These debates are very important in alerting the public and the Government to the need for action to be taken.
The noble Baroness, Lady Browning, made some very good points about the need for annual health checks and screening and the substantial problems of diagnosis and communications. The noble Baroness, Lady Tyler, mentioned “do not resuscitate”, and it made me wonder whether the follow up to the Liverpool care pathway that will be taken forward in the light of the report by the noble Baroness, Lady Neuberger, will be an opportunity to look specifically at the needs of people with learning disabilities to ensure that they are captured within the new approach. I hope it is something that the Minister may be able to take on board.
The noble Baroness, Lady Tyler, spoke about the employment of specialist staff in hospital. My trust has recently employed two people to do that. If one looks at the recent seminar that the noble Baroness, Lady Hollins, chaired under the auspices of the BMA, it is noticeable that many of the recommendations coming from it are about communications; training staff to identify and understand the needs of intellectually disabled and mental health patients; changing the culture of the NHS from unfounded, ill informed judgments about mental health and intellectual disability patients; and ensuring those patients are subject to the same access standards as physical health patients. Given all the problems over the past few years, there is no doubt that specialist staff within hospitals have an important role to play.
Given all this, it is difficult to know why the Government seem to be dithering over establishing a national confidential inquiry. The noble Baroness, Lady Hollins, described the national confidential inquiry into perioperative deaths. Over the decades, it has done outstanding work in indentifying patterns of death that have led to improvements in services. The noble Baroness may recall Mr Brendan Devlin, one of the great pioneers of the ECEPOD, who never achieved the recognition that he ought to have received for his work; I suspect that at the time he was not popular with his colleagues in the profession. I remember talking to him and seeing the results of those inquiries and the reports that were issued. I hope that the Minister will be able to say something a little more positive about the Government’s intentions. The benefit of a permanent confidential inquiry is that year after year, in report after report, evidence will be brought forward and statistics will be made available. I am convinced that it is a very powerful way to drive up standards in future. The great risk is that if we do not have another inquiry, the issue will go away and will be forgotten in the health service. That is why one needs permanent machinery to enable it to be done.
If it is a question of finance—I have to be very cautious about what I say on funding issues—comparisons concerning the cost of a permanent national confidential inquiry into the deaths of people with learning disabilities could only be minimal in terms of the human cost to those people and their families of the premature deaths that are caused by the current problems in services.
When the appalling events at Winterbourne View came to light in the report—it is not so long ago that the Minister made a Statement to your Lordships’ House on this—a great deal of discussion concerned the role of commissioners. In the case of Winterbourne, once the commissioners had placed a person in the home there was virtually no contact. What is being done to enhance the role of commissioners? We have an opportunity to come back to this on Report in the Care Bill, in which there is a provision around the role of the CQC in regulating the commissioners of local authority services. I hope we might come back to debate whether we can give more power and ammunition to the CQC in this regard.
I have two final comments. My noble friend Lord Touhig raised an important issue about the role of general practitioners and some of the failings in our primary care medical services. The Minister knows now that the responsibility for contracting with GPs lies with NHS England. It would appear that NHS England also has a big role to play in ensuring a continuous and permanent confidential inquiry. Is the Minister satisfied that NHS England has the capacity to develop and drive policy in this area? Surely it is in its hands. It has the ability to fund and organise a national confidential inquiry. It also has the ability to ensure that the issues my noble friend raised about access to GP services are dealt with effectively in contracts with general practitioners. I hope there will be further opportunities to debate these important issues in the future and that the Minister might be prepared to take back the pressing question of a permanent confidential inquiry.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, I thank all the speakers in this excellent debate for their very powerful contributions, not least the noble Baroness, Lady Hollins. I want to start by paying tribute to Mencap, which has been campaigning vigorously against the preventable deaths of people with learning disabilities. Mencap has revealed fundamental failures in communication between care providers, on the one hand, and parents and carers, on the other, as the main cause. However, it has also concluded that the only other explanation for these preventable deaths is prejudice. The disturbing reality is that this prejudice, although rarely revealed in words, finds its expression in deeds, sins of omission and neglect. Any failure to understand what should be a fundamental tenet of NHS practice is shameful: every life is different, yet every life has the same value.
I want to take this opportunity to make the Government’s position clear. Mencap’s report, Death by Indifference, marked the start of six years of shocking revelations of inhumane and degrading treatment, culminating in the recent publication of the Confidential Inquiry into Premature Deaths of People with a Learning Disability. We established the confidential inquiry in 2010 and funded and supported it for three years. As Sir Jonathan Michael’s report, Healthcare for All, recommended, it was time limited. Its purpose was to provide evidence on the relevant issues and guidance on preventing premature deaths. It has done this very effectively and I thank the confidential inquiry team for its excellent work.
This important report reached the conclusion that people with learning disabilities are continuing to die or experience poor outcomes because they are not getting the right care, and noble Lords have cited some graphic and disturbing examples this afternoon. Although the report makes for sobering reading, it gives us a clear indicator of the areas that need to be tackled, preparing the ground for the Government’s response to the confidential inquiry which was published last Friday. Our response makes clear our determination to eradicate substandard practice and to work in partnership across the health and care system to deliver the improvements that we all want to see.
In our response, we set out a series of specific actions. We will use the information strategy for health and care to improve how we identify and respond to people with learning disabilities and their health and care needs. We will link data about cause of death with other information to better understand and respond to premature mortality among people with learning disabilities. We expect local organisations to use local mortality data to inform joint strategic needs assessments and joint health and well-being strategies. We will support named healthcare coordinators being available to people with learning disabilities. They will coordinate a person’s care, talk to other professionals and be involved in planning the individual’s care.
NHS England will review plans for learning disability annual health checks. We know that appropriate health checks can identify needs which can then be addressed by referral to appropriate services. We will try to strengthen the NHS standard contract to improve the care of people with learning disabilities. We know that the contract is a powerful lever to incentivise good practice. We will monitor, through the mandate, the progress the NHS is making to ensure that people with learning disabilities in vulnerable circumstances receive safe, appropriate, high-quality care all the time.
We will work with partners to review awareness and understanding of the Mental Capacity Act and how it works in practice in making sure that people receive appropriate care at all times, including at the end of life. We will work with partners to review guidance on cardiopulmonary resuscitation. NHS England will appoint a national clinical director for learning disabilities, who will help improve the experience of people with learning disabilities in care. Local areas can set up their own arrangements to review mortality in people with learning disabilities. Some are already doing so, working with the confidential inquiry team. This work will be shared more widely for other areas to develop similar approaches. Building a strong understanding of what is happening in local provision will be critical to making change happen.
Over all that, in the Health and Social Care Act, we have a new specific statutory duty on the Secretary of State, NHS England and clinical commissioning groups, with the aim of focusing on reducing inequalities throughout the health service in both access to services and outcomes achieved. This will be an enormously powerful tool in addressing the health inequalities which people with learning disabilities face.
However, the response to the confidential inquiry is just part of a programme of activity from government and partner organisations designed to deliver system change and a shift in culture and attitudes. Changes in health and social care delivered by the Health and Social Care Act 2012 provide the building blocks for that shift. First, safe, appropriate, high-quality care is a key priority for NHS England. The noble Lord, Lord Hunt, asked about the capacity of NHS England to focus in this area. It is under a specific legal duty to tackle inequalities and advance equality. Priority areas where we expect progress to be made by 2015 include supporting people with multiple long-term physical and mental health conditions and improving their quality of life, and preventing people from dying prematurely.
Secondly, the NHS Outcomes Framework 2013-14 will allow us to measure the quality of services and outcomes for people with learning disabilities. This framework includes an indicator on preventing people with learning disabilities from dying prematurely. Improvements for people with learning disabilities will also be a crucial element of success across the framework as a whole.
Thirdly, Transforming Care, our national response to Winterbourne View hospital, sets out a programme of actions to ensure that people with learning disabilities or autism no longer live inappropriately in hospital, and receive optimum care. A wide range of delivery partners signed up to a programme of action designed to deliver transformed care in the Winterbourne View review concordat. The concordat sets out a number of specific actions for NHS England, including ensuring that all primary care trusts develop registers of people with learning disabilities or autism who have mental health conditions or behaviour that challenges, and making clear to clinical commissioning groups that they are expected to maintain local registers and, with the local authority, review individuals’ care. All reviews will be completed by the end of July. By next April, every area will have a joint plan to ensure high-quality care and support in line with best practice. By next June, everyone will have moved to community-based support where appropriate.
Baroness Hollins
I hope the noble Lord will forgive me. The Winterbourne View concordat does not address the physical health needs that we are talking about in this debate. I asked whether the Government might consider a similar concordat to look at the physical health needs of people with learning disabilities. Would the Minister care to comment?
Earl Howe
My Lords, I would like to deal with some of the points raised in the debate. Can I say, as I always do, that if I fail to cover all the questions raised, I will of course write to noble Lords afterwards? On the issue of a concordat, which was raised also by my noble friend Lady Jolly, our response makes clear that we have already been able to take action in some areas—for example, by asking organisations to review and update guidance. In other areas, progress relies on several issues, such as new and emergent organisations developing their strategic approach, and key individuals being in post. Across all of the actions, there is a broad timescale with a commitment to provide regular updates on progress. The Department of Health will continue to review progress through the Learning Disability Programme Board.
On records, data and information we are working with the Health and Social Care Information Centre, NHS England and the Improving Health and Lives Learning Disability Observatory to address the issues. There are several areas we need to look at. For example, we know that there is already information in GP practice learning disability registers. We want to make better use of this by linking it to other data that is already collected. We will have an update on progress by the end of the year. I will write to supplement those comments because my time is running short.
My noble friend Lady Tyler asked what support the Government will give to local areas to implement the confidential inquiry recommendations. The department is working closely with the public health observatory to make sure that its work to share good practice includes the issues raised by the confidential inquiry. We have already suggested to the inquiry team that we need to work in partnership with NHS England and other stakeholders. To make progress on the actions we need to align with work that the inquiry team is already doing at a local and regional level.
The noble Baroness, Lady Hollins, asked when the outcomes framework indicator on premature deaths will be live. It is live from 2013-14. We are currently collecting data to underpin the indicator and we will have data by November of this year.
The national mortality review body was a subject raised by many noble Lords. The department and the confidential inquiry team organised a meeting in March to discuss the proposal for a mortality review body. I am aware that the noble Baroness, Lady Hollins, and other stakeholders with expert knowledge and interest attended that meeting. Our response confirms that NHS England will consider the proposal to establish a national mortality review body, including looking at the costs and benefits by March next year. Noble Lords expressed their concern about that timeline and I have no doubt that NHS England will take note of the strength of feeling expressed by noble Lords on this issue during today’s debate.
I have a lot more to say about liaison staff, the Mental Capacity Act, reasonable adjustments and other themes, not least those raised by the noble Baroness, Lady Emerton, on care pathways and the role of nurses. I will write on all of those issues. I want to end with a reassurance that people with learning disabilities and family carers remain at the heart of everything we do. The Government must lead by example. That is why the Learning Disability Programme Board includes learning-disability self-advocates and family carers as well as a self-advocate and the chief executive of Mencap. We have a long way to go but change must be effected at scale and pace. There can be no more excuses or procrastination from any part of the system if we are to achieve our collective goal of a society where everyone is valued and has the chance to lead productive and, most importantly, healthy lives.