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Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
1. What recent steps she has taken to improve the humanitarian situation in Democratic Republic of Congo.
The Secretary of State for International Development (Justine Greening)
May I take this opportunity to welcome the right hon. Member for East Renfrewshire (Mr Murphy) and his colleagues to their Front-Bench roles in International Development? I also offer the apologies of my hon. Friend the Parliamentary Under-Secretary of State, who is unable to be here today. She is visiting Uganda to see what more DFID can do to improve the lives of the millions of people living with disabilities in the developing world.
I am deeply concerned by the ongoing conflict in eastern Democratic Republic of Congo. For that reason, last week DFID agreed an additional £5 million of UK funding. That funding will provide life-saving interventions to more than 130,000 people and support protection for girls, women and children affected by the conflict.
Tom Blenkinsop
I thank the Secretary of State for her answer. The UK is the second largest bilateral donor to the DRC. Does she agree that the UK should therefore seek to play a leading role in the humanitarian effort, including the opening of a DFID office in the east of the country?
Justine Greening
The hon. Gentleman may be aware that we are the single largest contributor to the common humanitarian fund, which does precisely what I think he wants us to do—provide the humanitarian support needed by so many people affected by the conflict. Alongside that work, we have an additional fund for emergency response; that focuses particularly on providing for people’s health and sanitation needs. As I have explained, I have extended that by a further six months. I assure the hon. Gentleman that we are absolutely playing a leading role in that regard.
Mr Henry Bellingham (North West Norfolk) (Con)
A large amount of money is involved and a significant amount is, rightly, being spent on the crisis. Does the Secretary of State agree that it is essential that her Department gets the full support and co-operation of the DRC Government? Does she also agree that it is equally essential to have the total engagement and commitment of the President of the DRC? In the past, that has not been fully forthcoming.
Justine Greening
My hon. Friend is absolutely right. Ultimately, we need a political solution to the conflict, and that has to be led by President Kabila. The solution also has to be regional if it is to be sustainable. Furthermore, Mary Robinson, the special envoy appointed by the United Nations Secretary-General, can have a key role in bringing together the various countries that must be brought together if we are finally to achieve long lasting and long overdue peace.
Helen Goodman (Bishop Auckland) (Lab)
Has the Secretary of State had any discussions with the mobile phone companies that source some of their rare minerals in Democratic Republic of Congo, thereby financing the warring parties? If she has not, may I suggest that she does?
Justine Greening
I very much take the hon. Lady’s point on board. A lot of DFID’s work is in addressing corruption, and that includes illicit flows of money. As part of the G8 this year, for example, we led the way on challenging the leading economies of the world to up their game on tax, trade and transparency. Illicit flows of money were a core part of that. I assure the hon. Lady that I take her point on board and will follow it up.
Mr Philip Hollobone (Kettering) (Con)
Is it not the case that diarrhoea caused through poor sanitation is one of the leading causes of infant mortality in the developing world, and that in the Congo it results in the second highest rate of infant mortality in Africa? How many people will benefit from Britain’s investment in the water and sanitation system in that benighted country?
Justine Greening
We have delivered life-saving support to 2.1 million people in DRC. My hon. Friend is absolutely right. If we look at the millennium development goal on child mortality, we see that one of the reasons it has not had more success is the continued fatal effect of diarrhoea. He is right to highlight that. It is one of the things we particularly work on in DRC, and it is why sanitation is so key.
Alison McGovern (Wirral South) (Lab)
The Secretary of State will know that 46% of people in DRC are under the age of 14, and reports say that youth unemployment is nearly 90%. Will she say a little more about the long-term plans for DRC? What conversations has she had with colleagues in the international community about getting those children to school and giving those young people a future?
Justine Greening
I very much welcome that question. The hon. Lady is absolutely right to say that one of the key challenges in DRC is to blend together what we are doing from a humanitarian perspective with the country’s longer-term development needs. That is why we are keen to see a long-lasting peace settlement there. I can assure her that alongside the work on the humanitarian effort we are looking at what we can do with partners on the development effort, including in education.
Nadhim Zahawi (Stratford-on-Avon) (Con)
2. What recent assessment she has made of the humanitarian situation in Syria. [R]
The Secretary of State for International Development (Justine Greening)
The humanitarian crisis in Syria has reached catastrophic proportions. Since the start of the conflict, over 100,000 people have been killed, 2.1 million have become refugees, and nearly 7 million people within Syria are in need of urgent humanitarian assistance.
Nadhim Zahawi
Let me declare an interest as a member of the International Rescue Committee’s policy and advocacy committee. Given that 60% of Syrian refugees are living outside refugee camps, what steps are the Department taking to ensure that there is adequate support for urban refugees and the communities that are supporting them?
Justine Greening
My hon. Friend is absolutely right. I think that for some countries the total is possibly in excess of 70%. In Jordan, for every refugee who is in the Zaatari camp, there are four outside it. We are therefore working very closely with Governments such as Jordan’s through the World Bank trust fund that we helped to set up—we launched it when I was at the World Bank just a couple of weekends ago—to make sure that we have the investment in infrastructure and public services that the host communities need to be able to support not only their own day-to-day lives but those of the many people who have arrived in their midst.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
In order to try to reduce the terrible humanitarian crisis not just in Syria but throughout the region, with the prospect of conflict in Lebanon, does the right hon. Lady agree that the non-governmental organisations are right to seek to work with local organisations, and will she encourage them in that objective?
Justine Greening
We are encouraging NGOs to work with grass-roots organisations, and they, too, understand that they need to do that. This is vital if we are to maintain the support of the host communities, who have been incredibly generous in accepting refugees. I should also point out to the right hon. Gentleman that one of the challenges is making sure that we can work with NGOs, which have the breadth and capacity to be able to work across the piece and across communities but are absolutely working on the ground with existing civil society organisations.
Sir Malcolm Bruce (Gordon) (LD)
May I thank the Secretary of State for the comprehensive evidence session that she gave to the International Development Committee yesterday? I welcome the leadership role that the UK has played in committing these funds, but will she urge other countries such as those in Europe and the middle east also to step up to the plate and ensure that the UN appeal is fully funded and Britain is not left in front without followers?
Justine Greening
I could not agree more with the right hon. Gentleman. Britain has done exactly the right thing in playing a leading role in the humanitarian response. It is absolutely right for the Syrian refugees, but right for us too, to try to do what we can to keep stability in the region. However, we cannot do that on our own, and it is now time, in the run-up to the next donor conference in January, for other countries in the international community to ask themselves what more they can do alongside the UK in making sure that the next UN donor appeal, unlike the last one, is fully funded.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Some 58,000 Syrians have sought refuge in Jordan since the onset of the civil war. Organisations such as the International Committee of the Red Cross are aiding those displaced individuals with the basics to live. What more can Governments do to help charities such as the Red Cross?
Justine Greening
We need to do a number of things. First, we need to make sure that the financing and resources are in place so that not just the life-saving work, but the broader work on educating the 1 million children who are now refugees can take place. As I have said, we also need to work with host Governments—such as the Jordanian Government, who have been incredibly generous—to make sure that they are well placed to be able to cope with this huge, unprecedented number of refugees.
Miss Anne McIntosh (Thirsk and Malton) (Con)
9. Mindful of the impact on Jordan, Lebanon and Turkey, and mindful of the fact that this is an international humanitarian crisis, what international co-operation are we receiving with regard to the refugees in those countries?
Justine Greening
As I have said, it is deeply concerning that the United Nations donor appeal is only half funded. Having said that, as a result of the Prime Minister’s leadership, since the G20 we have managed to get an additional $1 billion of funding. The key test for us all will be whether the donor conference in January can be successful so that we can meet the needs of the UN agencies that are working so hard.
Mr Jim Murphy (East Renfrewshire) (Lab)
This refugee crisis is the greatest since that in Rwanda and the Secretary of State has our support in trying to get aid to those civilians, including 1 million refugee children. If the violence continues at its current ferocity, what is her Department’s assessment of the likely refugee numbers by the end of this year and of the capabilities of neighbouring nations to absorb them without destabilising their politics and economies?
Justine Greening
Some non-governmental organisations would assess that the number of refugees could reach the 3 million mark by next spring. That is deeply concerning and it is one of the reasons why, alongside all the humanitarian work we have done on the ground, the UK has brought together top donors and UN agencies to make sure that they can work together effectively as a single team on a single strategy for not just supporting refugees outside Syria, but, critically, reaching those in need in Syria.
Mr Murphy
We look forward to the Department’s assessment of possible refugee numbers by the end of the year. Refugees are not just scampering across borders; they are also clambering on to small boats in order to seek safety by travelling across the Mediterranean. The tiny dot of an island, Lampedusa, has become a checkpoint for people seeking refuge from north Africa and Syria. Sadly, 300 people have drowned on that journey. Does the Secretary of State accept that the international community has to do more to prevent those desperate people from dying in such dreadful circumstances as they flee civil war only to drown in the Mediterranean?
Justine Greening
What we have seen is shocking and it is one of the reasons why international development is so important. We need to make sure that we can work with developing countries so that they can provide people with opportunities, prosperity and a future so that they can pursue their lives with their families where they grow up. Surely that has to be the best thing and surely it is sensible to help Governments tackle instability and conflict on their own territory, rather than allow it to spread to ours.
Mr Marcus Jones (Nuneaton) (Con)
3. What plans her Department has to assist with elections in Nepal in November 2013.
The Minister of State, Department for International Development (Mr Alan Duncan)
Our budget of £14 million for Nepal’s elections will cover items such as £5 million to the United Nations Development Programme for the electoral roll, £8 million to the Election Commission of Nepal for the administrative costs of the election itself, and a further £1 million to cover independent observers.
Mr Duncan
I know that my hon. Friend has in his constituency a Nepali community to which he pays a great deal of attention. Nepal has faced a bit of a logjam for a number of years, in that it has needed elections to approve a constitution and a constitution to approve elections. We hope that the November elections will take place with full participation and no violence.
Nick Smith (Blaenau Gwent) (Lab)
What work is the Department doing to stop any violence between competing parties in the November elections?
Mr Duncan
The UK is at the forefront of engaging with politicians of all parties in Nepal. My right hon. Friends in the Foreign Office and we in the Department for International Development visit them regularly and have urged all of them to participate. When I visited in April, I was very robust in urging some of the smaller Maoist parties to participate when at the time they were minded not to do so.
Valerie Vaz (Walsall South) (Lab)
4. What contribution her Department is making to the implementation of the Government’s preventing sexual violence initiative.
The Secretary of State for International Development (Justine Greening)
The UK will co-host a call-to-action event in November with Sweden, which will focus on protecting women and girls from all forms of violence in emergencies. That work builds directly on the G8 Foreign Ministers’ declaration on preventing sexual violence in conflict, which was led so ably by the Foreign Secretary.
Valerie Vaz
I am grateful for that response. In Burma, reports of rape and sexual violence against women by the army have increased. Given the level of aid that we send to Burma, will the Secretary of State encourage the Burmese Government to sign our declaration and ask her colleagues to raise the matter in Europe and at the United Nations?
Justine Greening
The hon. Lady makes a powerful point about what is happening in Burma. Aung San Suu Kyi is in the country and I will be meeting her today. I will be sure to raise those issues with her. I am sure that she takes them as seriously as this House.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
As a means to encouraging the wider implementation of the convention on the protection of children against sexual exploitation and sexual abuse, the Council of Europe launched a campaign in February to encourage its member states to have their municipal and regional authorities sign a pact to stop sexual violence against children. Will the Secretary of State say whether she is aware of that campaign and what contribution her Department can make?
Justine Greening
I am not aware of that campaign. The Department sets a lot of store by the work that it does to protect children, whether in Syria or Democratic Republic of the Congo. Only today, I announced £2 million to take care of the Syrian children who are turning up in Iraq unaccompanied. I will write to my right hon. Friend to respond more fully on the campaign that she mentioned.
Paul Blomfield (Sheffield Central) (Lab)
5. What assessment she has made of the adequacy of the levels of food, fuel and medical supplies entering Gaza each day.
The Minister of State, Department for International Development (Mr Alan Duncan)
Although the supply of food in Gaza is adequate, prices are rising fast. The level of fuel and medical supplies has dropped, exacerbating an already precarious humanitarian situation and threatening the basic needs of ordinary people in Gaza.
Paul Blomfield
The Minister has recognised in his reply that the humanitarian situation in Gaza is increasingly fragile. The impoverished Palestinian population is reliant on the tunnels for affordable goods. The tightening of restrictions by the Egyptian and Israeli authorities is resulting in shockingly high prices for fuel and basic commodities. With access to, and the affordability of, food becoming a huge problem, will the Government acknowledge that the blockade of Gaza is a violation of international humanitarian and human rights law and constitutes collective punishment?
Mr Speaker
There are extremely serious matters of life and death in Gaza. Let us hear the questions and the Minister’s answers.
Mr Duncan
I recognise exactly what the hon. Gentleman says. We would far rather see free movement and access for trade and economic activity in Gaza than an economy that is channelled through tunnels in a way that benefits Hamas. Israel’s plan to expand the capacity of the Allenby crossing between the west bank and Jordan is a welcome example of the sort of steps that can be taken to improve trade.
Sir Tony Baldry (Banbury) (Con)
The truth is that the international community and the United Nations Relief and Works Agency will have to continue supporting thousands of people in Gaza and the west bank until a two-state solution is found or until Gaza and the west bank are incorporated into de jure Israel. Permanent occupation is a perpetual hell for thousands of people. When will the international community find a long-term solution for Gaza and the west bank?
Mr Duncan
I hope that the efforts that are under way will lead to exactly the kind of agreement that my hon. Friend is seeking. The efforts of my right hon. Friends the Foreign Secretary and the Prime Minister, in particular in working with the US Administration, will hopefully lead to a two-state solution and a long-lasting agreement that lead to peace and security between the two countries.
Ann McKechin (Glasgow North) (Lab)
The Minister will be aware that the price of fuel in Gaza has almost doubled in recent weeks. What steps is his Department taking to assist small businesses in Gaza, particularly fishermen, who have been hit hard by that increase?
Mr Duncan
The hon. Lady makes a very fair point. The amount of fuel that enters Gaza via the tunnels has halved from about 1 million litres a day in June to about 500,000 litres this month. The Gaza power plant is operating at half its capacity, triggering electricity blackouts of up to 12 hours a day, exacerbating the already difficult economic and humanitarian situation in Gaza.
John Mann (Bassetlaw) (Lab)
T1. If she will make a statement on her departmental responsibilities.
The Secretary of State for International Development (Justine Greening)
During the past month I have attended the UN General Assembly, meetings at the World Bank and I have put in place a new £30 million “Lost Generation” initiative to provide protection, counselling and basic educational supplies to children affected by the Syrian crisis. I have announced a £1 billion commitment to the Global Fund to Fight AIDS, Tuberculosis and Malaria, and the Department is committed to transparency, results and value for money. I am proud that in procurement in DFID, despite competition from the public and private sectors, my departmental procurement team recently won the annual award for best international procurement from the Chartered Institute for Procurement and Supply.
Justine Greening
I assure the hon. Gentleman that I will look into the specific point he raises. Human rights run through all DFID programmes, and when dealing with Governments we have partnership principles that also include human rights.
Andrew Jones (Harrogate and Knaresborough) (Con)
T3. What is my right hon. Friend’s Department doing to promote the business skills of developing countries so that they can promote their own economies?
Justine Greening
I know that my hon. Friend was involved in excellent work on business mentoring in Burundi over the summer, and last week I met the Institute of Chartered Accountants—of which I am a fellow—to discuss accounting and auditing standards in the developing world. I hope the UK’s excellent professional services will play a role in driving standards and skills in the developing world over the coming months and years.
Sheila Gilmore (Edinburgh East) (Lab)
T2. What progress has been made since the G8 in curbing illicit financial flows from developing countries by revealing more information about the beneficial ownership of companies?
Justine Greening
I am pleased the hon. Lady raises that issue. This country played a leading role in using the G8 to raise the issue of illicit flows, and ensure transparency alongside our efforts on tax and trade. The Department for Business, Innovation and Skills is now consulting on beneficial ownership, which the hon. Lady referred to, and that is a key route through which we can help developing countries ensure they get the tax takes they are due.
Mary Macleod (Brentford and Isleworth) (Con)
T5. When I visited India two weeks ago with my local gurdwara from Hounslow, I had a useful discussion in the Punjab with ActionAid and other organisations about female feticide, which I am sure my right hon. Friend agrees is a disgrace to humanity. What can she do through her Department to improve the way that women are valued, so that they are protected worldwide?
Justine Greening
My hon. Friend raises an important issue. Female feticide is shocking, and I pay tribute to organisations such as ActionAid, and others that work and campaign on that issue. In too many parts of the world, women are treated as chattels or assets and are bought and sold, often through early forced marriage or trafficking. The lack of basic human rights for women underpins much of what my Department works on.
Paul Flynn (Newport West) (Lab)
T4. Many billions of pounds of taxpayers money have rightly been spent investing in schools and community centres in Afghanistan. What proportion does the right hon. Lady believe will remain open after the departure of our troops next year?
Justine Greening
The hon. Gentleman is right to point out that a huge amount of work through the Afghanistan Reconstruction Trust Fund has gone into education and building schools, including in Helmand. Given the work that is taking place in the run-up to the troop draw-down and beyond, I hope not only that those schools will continue, but that more schools will join them and extend education to more Afghan children.
Sir Andrew Stunell (Hazel Grove) (LD)
T6. Will the Secretary of State tell the House what progress has been made since the G8 on cutting illicit financial flows from developing countries, and on setting up a public register of the beneficial ownership of those companies?
Justine Greening
I reiterate that a consultation on beneficial ownership is under way. Since taking up this role I have increased the amount of funding that my Department gives to the Met police to track down and prosecute those involved in illicit illegal flows, and they are doing an excellent job.
Mr Jim Cunningham (Coventry South) (Lab)
T8. Will the Secretary of State say what discussions she has had with the Israeli Government about the price of petrol for the Palestinians?
The Minister of State, Department for International Development (Mr Alan Duncan)
The Department is in regular discussions with the Israeli Government, and as mentioned earlier, we are particularly concerned about the limitation that exists on fuel in Gaza. We fully understand that those pressures exist, and we make representations whenever we can.
Sir Malcolm Bruce (Gordon) (LD)
T7. What steps is the Department taking to ensure that ethnic conflict in Burma is brought to an end? Otherwise, it threatens both the stability and the development prospects of that country.
Justine Greening
The Department is working hand in hand with the Foreign Office to play its role in improving governance and accountability, not only at regional and governmental level, but at community level, where, clearly, so many of the root causes of that situation lie.
Mr Julian Brazier (Canterbury) (Con)
Q1. If he will list his official engagements for Wednesday 23 October.
The Prime Minister (Mr David Cameron)
I am sure the whole House will wish to join me in paying tribute to Lance Corporal James Brynin of 14 Signal Regiment, who died in Afghanistan. It is clear from the tributes that he was a highly talented and professional soldier. Our thoughts are with his family, his friends and his colleagues at this very difficult time. He has made the ultimate sacrifice, and we must never forget him.
On a happier note, I am sure the House will join me in celebrating the christening of baby Prince George later today.
This morning I had meetings with ministerial colleagues and others and, in addition to my duties in the House, I shall have further such meetings later today.
Mr Brazier
I join my right hon. Friend in his tribute to Lance Corporal Brynin. Our thoughts and prayers are with his family and comrades in 14 Signal Regiment. I also join the Prime Minister in his applause for the christening of Prince George this morning.
Does my right hon. Friend believe it is a good time for an apology from those regional branches of the Police Federation who so traduced our right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), and from the Leader of the Opposition?
The Prime Minister
Let me start by saying on behalf of all hon. Members that we should put on record what an incredible job the police do on our behalf every day. I see that at very close hand, and the Leader of the Opposition and I saw it at the police bravery awards last week. However, as I said last week, my right hon. Friend the former Chief Whip gave a full explanation of what happened. The police in the meeting said that he gave no explanation. It is now clear, reading the Independent Police Complaints Commission report, that the police need to make an apology. The officers concerned and the chief constables are coming to the House today. I hope they will give a full account and a proper apology to the Home Affairs Committee. It is a moment for all hon. Members to consider what we said at the time. I hope the Leader of the Opposition does the same.
Edward Miliband (Doncaster North) (Lab)
I join the Prime Minister in paying tribute to Lance Corporal James Brynin of 14 Signal Regiment, who died on his second tour of duty in Afghanistan. He was a brave, professional soldier. I send our deepest condolences to his family and friends.
I also join the Prime Minister in celebrating the christening of Prince George later today and send best wishes to the Duke and Duchess of Cambridge.
The Prime Minister has said that anyone who wanted to intervene directly in energy markets was living in “a Marxist universe”. Can he tell the House how he feels now that the red peril has claimed Sir John Major?
The Prime Minister
We are intervening—[Interruption.] I am not surprised the right hon. Gentleman wants to quote the last Conservative Prime Minister and forget the mess the people in between made of our country. Let me be absolutely clear that I believe in intervening in the energy market. That is why we are legislating to put customers on the lowest tariff. John Major is absolutely right that bills in this country have reached a completely unacceptable level. We need to take action on that. We need to help people to pay their bills, and we also need to help to get bills down. This is where we need a frank conversation about what is putting bills up. The Government are prepared to have that conversation; the Leader of the Opposition is employed in cynical ploys and gimmicks.
Edward Miliband
Of course, John Major was a Conservative Prime Minister who won a majority, unlike this Prime Minister. The Prime Minister has said something rather interesting. He obviously now agrees with Sir John Major that the energy price increases are unacceptable. If we agree that they are unacceptable, the question is: what are we going to do about it? The former Prime Minister said that,
“given the scale of those profits”,
we should “recoup that money”. He wants to do it through a windfall tax; I say we need a price freeze. What does the Prime Minister want to do to “recoup that money” for the consumer?
The Prime Minister
Let me answer that question directly. We need to roll back some of the green regulations and charges that are putting up bills. We all know who put them in place. [Interruption.]
Mr Speaker
Order. The House is very over-excited. I want to hear the answers. Let us hear the Prime Minister.
The Prime Minister
The right hon. Gentleman talks about John Major winning an election, and he is right. He beat a weak and incredible Labour leader. Is that not rather familiar? The first thing that John Major said is that Labour’s policy is unworkable, and he is absolutely right. What we need to do is recognise that there are four bits to an energy bill: the wholesale prices, which are beyond our control; the costs of transmission and the grid, which are difficult to change; the profits of the energy companies; and the green regulations. It is those last two that we need to get to grips with. So I can tell the House today that we will be having a proper competition test carried out over the next year to get to the bottom of whether this market can be more competitive. I want more companies, I want better regulation and I want better deals for consumers, but yes, we also need to roll back the green charges that the right hon. Gentleman put in place as Energy Secretary.
Edward Miliband
The Prime Minister really is changing his policy every day of the week. It is absolutely extraordinary. His Energy Secretary, who is in his place, says this has nothing to do with green taxes, and 60% of green taxes were introduced by him. Who is the man who said, “Vote blue to go green?” It was the Prime Minister. I will tell him what is weak: not standing up to the energy companies. That is this Prime Minister all over.
The Prime Minister
The right hon. Gentleman talks about the big six energy companies. Who created the big six energy companies? When Labour came to power there were 17 companies in the market, now there are just six. I can help Opposition Members, because I have the briefing that Back-Bench Labour MPs have been given about their own energy policy. In case they have not read the briefing, they might want to hear it. Question 7:
“what would stop the energy companies just increasing their prices beforehand?”
Absolutely no answer. Question 6. [Interruption.] No, let me share their briefing with them. Question 6:
“How will you stop companies just increasing their prices once the freeze ends?”
Here we have the great Labour answer:
“the public would take a dim view”.
A dim view—how incredibly brave. Let us have question 9, because this says it all. This is what Labour’s briefing says:
“Ed Miliband was Energy Secretary in the last government - isn’t he to blame for rising bills?”
We all know the answer: yes, he is.
Edward Miliband
I will tell the Prime Minister what happened. When I was Energy Secretary, energy bills went down by £100. Since he became Prime Minister, they have gone up by £300. Let us clarify where we are. The Prime Minister says these price rises are unacceptable. He says he wants to act. He is the Prime Minister—I know he can sometimes forget that, but, heaven help us, he is the Prime Minister, so he can act. I have a suggestion: he should implement Labour’s price freeze. The Energy Bill is going through the other place. We can amend it and bring in the price freeze right now—two parties working together in the national interest. Let us do that—
Edward Miliband
I think the right hon. Gentleman has been following his own advice too much: wearing too many woolly jumpers and getting overheated. Let us do it—we can bring the price freeze right now.
The Prime Minister
The right hon. Gentleman knows perfectly well it is not a price freeze; it is a price con. He admitted it was a price con the very next day, because he could not control global gas prices. The truth is that prices would go up beforehand, he would not keep his promise and prices would go up afterwards. It is a cynical ploy from the Energy Secretary who wrecked the energy market in the first place.
Edward Miliband
I will tell the Prime Minister what is a con: telling people last week that the answer was to switch suppliers and that that would solve the broken energy market. What does he say to someone who took his advice last week to switch from British Gas, only to discover that npower was raising its prices by 10%?
The Prime Minister
It is worth people looking at switches—they can save up to £250 if they switch—but we want a more competitive energy market. The right hon. Gentleman left us a market with just six players, and we have already seen seven new energy companies enter the market. We need an annual audit of competition to make this market more competitive—something he never did in office—and to roll back the costs imposed on people’s energy bills, part of which he was responsible for. One of the first acts of the Government was to take away the £179 that he was going to put on to energy bills through his renewable heat initiative. He put bills up and is trying to con the public; we will deliver for hard-working people.
Edward Miliband
John Major said what we all know. We have a Prime Minister who stands up for the energy companies, not hard-pressed families. Many people face a choice this winter between heating and eating. These are the ordinary people of this country whom this Prime Minister will never meet and whose lives they will never understand.
The Prime Minister
The difference is: John Major is a good man; the right hon. Gentleman is acting like a conman. That is what we are seeing. He is promising something he knows he cannot deliver. He knows he cannot deliver it because he never delivered it when he was in office.
Andrew Stephenson (Pendle) (Con)
Q2. In the town of Colne, where I live, unemployment is down and small businesses are flourishing, but serious traffic congestion is holding back the economic growth of the area. Will the Prime Minister join me in welcoming the start of a six-week consultation on a Colne bypass that would address this problem and boost job creation in Pendle and east Lancashire?
The Prime Minister
I very much welcome what my hon. Friend says. He is absolutely right about the need to build bypasses and roads in our country, which is why we are spending £3 billion over the Parliament on major upgrades. I welcome the consultation on the Colne bypass. As he says, it comes at the same time as very good news on unemployment and employment, with 1 million more people in work in our country.
Dr William McCrea (South Antrim) (DUP)
On this day 20 years ago, the Provisional IRA brutally murdered innocent men, women and children on the Shankill road in Belfast. Will the Prime Minister join me and my right. hon. and hon. Friends in ensuring that no one in a civilised society will ever equate innocent victims with guilty murderers?
The Prime Minister
I join the hon. Gentleman in commemorating the appalling act and loss of life that day. We all remember it. Of course, no one should ever glorify, in any way, terrorism or those who take part in terrorism, but he and I know that everyone in Northern Ireland has to try to come together to talk about a shared future and to try to leave the past behind.
Mr Alan Reid (Argyll and Bute) (LD)
Q3. Rural post offices are vital, but they need more government work to survive. They must continue to pay pensions and benefits and are ideally placed to handle universal credit applications, provide banking and identity check facilities and act as a front office for government. Will the Prime Minister encourage all his Ministers to give more government work to post offices?
The Prime Minister
We all want to see the post office network survive and thrive. Unlike the last Government, who saw nearly a third of the rural post office network close, we have committed that no post office will close in this Parliament. I absolutely hear what my hon. Friend says. The current arrangements for collecting pensions and benefits at post offices will remain in place at least until 2015, and the Department for Work and Pensions and the Post Office are discussing an extension to 2017.
Jim Dobbin (Heywood and Middleton) (Lab/Co-op)
Q4. A total of 1.5 million people in the UK are addicted to the benzoates diazepam and “Z drugs”. I know of one individual who has been on those products for more than 45 years—a total life ruined. They are not drug misusers; they are victims of the system of repeat prescriptions. Will the Prime Minister advise the Department of Health to give some guidance to the clinical commissioning groups to introduce withdrawal programmes in line with the advice from Professor Heather Ashton of Newcastle university, who is the expert in this field, to give these people back their lives?
The Prime Minister
First, I pay tribute to the hon. Gentleman, who has campaigned strongly on this issue over many years. I join him in paying tribute to Professor Ashton, whom I know has considerable expertise in this area. He is right to say that this is a terrible affliction; these people are not drug addicts but they have become hooked on repeat prescriptions of tranquillisers. The Minister for public health is very happy to discuss this issue with him and, as he says, make sure that the relevant guidance can be issued.
Mr Brian Binley (Northampton South) (Con)
I know that the Prime Minister is very well aware of the concerns that many of our people have about rising energy prices. Will he therefore act to reduce the effect of Mr Huhne’s unfortunate legacy by cutting the carbon reduction policy, elongating the targets and relieving the burden on both consumer and business man?
The Prime Minister
My hon. Friend makes a good point; as I say, this is why we have to have an honest discussion about this, because the fact is that on our energy bills is £112 of green taxes and green regulations. We need to work out not only what is necessary to encourage renewable energy and what is necessary to go on winning overseas investment into the UK, but how we can bear down on people’s bills. It simply is the politics of the conman to pretend that you can freeze prices when you are not in control of global energy prices. The proper approach is to look at what is driving up bills and deal with it. [Interruption.]
Mr Speaker
Order. I let it go the first time, but the word “conman” is, frankly, unparliamentary; the Prime Minister is a man of great versatility in the use of language and it is a bit below the level. We will leave it there.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Q5. Yesterday, The Independent reported the Government’s failure to close the quoted Eurobond tax loophole, which could be losing the Exchequer £500 million a year. Has the Prime Minister ever been lobbied on the loophole? Will he now pledge to close it immediately?
The Prime Minister
To my memory, I have never been lobbied on this particular issue. I looked at it this morning. The Treasury has listened very carefully to the arguments and has made the decisions for the reasons that the hon. Lady knows.
Richard Benyon (Newbury) (Con)
More than 300,000 new businesses have been registered in the United Kingdom over the past three years—that is a record figure. The key priority in supporting those businesses over the difficult first few years of trading is to make sure that we bear down on regulation. Much has been done through the red tape challenge, one-in, one-out and other measures. What more can the Government do to support these risk-takers at this difficult time?
The Prime Minister
I am grateful to my hon. Friend for his question. The news out today is that we now have the largest number of companies we have ever had in our country, and over the past three years we have seen 400,000 extra companies established. What we have to do is help them in every way we can. The most powerful thing we are doing is cutting the national insurance that they will have to pay by £2,000, starting next year. That will be a real boost to small businesses. On the red tape they are currently throttled with, we are dealing with that at every level, including at the European Council coming up this week, where I have organised a meeting for our businesses to explain their proposals for cutting red tape to fellow European leaders from Finland, Italy, Germany and elsewhere. It is an agenda right across the board to help small businesses grow our economy.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Q6. New research shows that the right hon. Gentleman’s Government are trapping low-earning aspirant parents on benefits. His benefit cap is hitting vulnerable children, stopping parents working and costing the taxpayer—is it not time for a rethink?
The Prime Minister
We know that the Labour party is against the benefit cap. It wants unlimited benefits for families. It is no longer the Labour party; it is the welfare party. That is very clear from the questions Labour Members ask. We think it is right to cap benefits so that no family can earn more out of work than they would earn in work. The early evidence is showing that this is encouraging people to look for work. For a party that believes in hard-working people, that is good news. Presumably for the welfare party it is bad news.
Roger Williams (Brecon and Radnorshire) (LD)
The Prime Minister will be aware of the business model of Welsh Water Dwr Cymru, which is a not-for-profit company that is responsible to its consumers rather than to shareholders. Does he agree that such companies would introduce real competition in the energy supply sector?
The Prime Minister
We want more competition in the energy sector, whether it comes from private businesses, from co-operative businesses or, as the hon. Gentleman says, from charitable enterprises. We want an open energy market, but the fact is that we were left with the big six by the party opposite. We were also left an Ofgem in which the Leader of the Opposition had appointed five of the nine people. The reason that the energy market is not working properly lies largely at his door.
Yvonne Fovargue (Makerfield) (Lab)
Q7. Wigan and Leigh Housing estimates that it will take approximately seven years to rehouse the 1,400 tenants who wish to downsize because they cannot afford to pay the bedroom tax. Would the Prime Minister advise those tenants to move to private rented accommodation, thereby increasing the housing benefit bill, or should they try to save money by turning off the heating and wearing a jumper?
The Prime Minister
What is fair about removing the spare room subsidy is that it makes the situation fair between private rented accommodation and council sector rented accommodation. It is that sort of fairness that we want to see in our country. The Labour party has opposed every single welfare reduction that we have proposed; it would have to find £85 billion to fund its opposition to every single thing that we have done to help this country get back on track.
Mr Crispin Blunt (Reigate) (Con)
The positive outlook for Osborne Construction in my constituency this year, with its increased turnover and a strongly increased forward order book, is mirrored in the real economy all over the country. Will the Prime Minister undertake not to be diverted from the long, hard slog of righting the public finances and reducing the burdens on business, so that plan A can continue to enable businesses in my constituency—Osborne and all the others—to put our economy right for the long term?
The Prime Minister
I am very glad to hear that Osborne Construction is working in my hon. Friend’s constituency, just as it is around the rest of the country. That is very worth while. I shall take this opportunity to pay tribute to him, as a constituency MP, for standing up for people and businesses in Reigate and for knowing that what Reigate needs is what the country needs, which is to stand up for hard-working people and to get more businesses, more jobs and more investment turning our country around.
Mr Tom Watson (West Bromwich East) (Lab)
Q8. Fixed-odds betting machines allow the user to stake £100 every 20 seconds for up to 13 hours a day. They have transformed the local bookies from places where people went for a flutter on the horses into high street digital casinos. Will the Prime Minister consider banning these addictive machines, as has recently happened in Ireland?
The Prime Minister
This is an issue on which I have been repeatedly lobbied by people across the House and more broadly—[Interruption.] I do think that it is worth having a proper look at the issue to see what we can do. Yes, we want to ensure that bookmakers are not over-regulated, but we also want a fair and decent approach that prevents problem gambling.
Nadine Dorries (Mid Bedfordshire) (Con)
In Mid Bedfordshire last year, 130 parents, teachers and staff were very disappointed when their free school application failed. That application was managed by the Barnfield Federation, which is now under investigation by the Department for Education and the Department for Business, Innovation and Skills. Will the Prime Minister please use his good offices to ensure that the failed free school application in Mid Bedfordshire is incorporated into that inquiry?
The Prime Minister
I am grateful to my hon. Friend for her suggestion. Obviously, we need a proper policy of ensuring that proposals for free schools are ready to go ahead before they go ahead. It is worth making the point that two thirds of the free schools in our country have been judged to be good or outstanding, which is a higher proportion than for schools in the state sector. It is therefore worth not only continuing with this policy but putting rocket boosters on it so that we see many more free schools in our country.
Mr George Howarth (Knowsley) (Lab)
Q9. When he next plans to visit the Liverpool city region.
The Prime Minister
I visited Liverpool earlier this year to launch the city’s international festival for business 2014. While there, I discussed with mayor Joe Anderson the prospects for the city in overseas investment and the importance of the international festival. I also met Hillsborough families, and I am sure I will visit the city again soon.
Mr Howarth
I am grateful for that answer. Does the Prime Minister accept that Government support to local government should be related to need? If so, how does he explain the fact that households in my region have lost £40 over the last two years, whereas households in his constituency have gained £6?
The Prime Minister
Let me give the right hon. Gentleman the figures. We need to look at spending power per dwelling, which is the combination of grant plus council tax. In the right hon. Gentleman’s area, the spending per dwelling is £3,122 whereas it is £1,872 in West Oxfordshire. I fully accept that the need is much greater in Knowsley than it is in West Oxfordshire, but I would argue that that provides a relatively fair balance between the two.
Simon Wright (Norwich South) (LD)
Q10. Following decades of underinvestment and hollow promises from previous Governments, the coalition’s early decision fully to dual the A11 is driving investor confidence in Norwich and East Anglia. May I urge the Prime Minister to continue to look east, as a powerhouse for economic growth, and to back the opportunities available for investment in the great eastern main line?
The Prime Minister
My hon. Friend is absolutely right to stand up for Norwich and for Norwich’s economy. The £100 million we are investing in the A11 is an important part of that. It will be completed in 2014, and it will cut congestion on the route between Cambridge and Norwich. For once, I have said something that the shadow Chancellor agrees with, because I know that he wants to go and watch the Canaries. Now we will be able to get him there a little bit quicker. There is no end to my munificence in trying to help the shadow Chancellor.
Paul Goggins (Wythenshawe and Sale East) (Lab)
Two weeks ago, the head of the Security Service warned about the extent of Islamist extremism. This week, two individuals have been charged with serious terrorist offences. What is the Prime Minister going to do in January when, as a result of his Government’s legislation, some of those whom the Home Secretary has judged to pose the greatest threat to our security are released from the provisions of their terrorism prevention and investigation measures?
The Prime Minister
We have put in place some of the toughest controls that one can possibly have within a democratic Government, and the TPIMs are obviously one part of that. We have had repeated meetings of the extremism task force—it met again yesterday—setting out a whole series of steps that we will take to counter the extremist narrative, including by blocking online sites. Now that I have the opportunity, let me praise Facebook for yesterday reversing the decision it took about the showing of beheading videos online. We will take all these steps and many more to keep our country safe.
Julian Smith (Skipton and Ripon) (Con)
Q11. Following the reckless handling by The Guardian of the Snowden leaks, will the Prime Minister join me in paying tribute to the women and men of our intelligence services, who have no voice but who do so much to keep this country safe?
The Prime Minister
My hon. Friend is absolutely right. It is one of the greatest privileges of my job to work with our intelligence and security services and to meet some of the people who work for them. He is right to say that they do not get thanked enough publicly because of the job they do, but I am absolutely convinced that the work that GCHQ, MI5 and MI6 do on behalf of our country helps to keep us safe. We have seen that again this week with the arrests that have taken place. Once again, this came from brilliant policing work and brilliant intelligence work, helping to keep our country safe. We cannot praise these people too highly.
Andy Sawford (Corby) (Lab/Co-op)
Q12. The realities of work for millions of people—low pay, short time, zero hours, agency exploitation—were exposed on Channel 4’s “Dispatches” this week. Did the Prime Minister see it? If not, will he use catch-up, so that he can watch it and then wake up to real life in Britain?
The Prime Minister
Everyone in our country wants to see living standards increase, more people in work and for people to keep more take-home pay. That is why we have cut taxes for the typical working person—by £705 if we look at what will be in place next year. Let me make a point about zero-hours contracts. The proportion of people in employment on zero hours in 2012 was the same as it was in the year 2000. The number of people on zero hours increased by 75% between 2004 and 2009—when that lot were in government.
Henry Smith (Crawley) (Con)
Q13. Businesses in Crawley are creating hundreds of jobs, and as a result unemployment fell to 2.7% last month. Does my right hon. Friend agree that the way to raise living standards is to increase and continue the policies of economic growth rather than the Labour party’s discredited policies of debt?
The Prime Minister
My hon. Friend is absolutely right. What we see in our country is business confidence rising and consumer confidence rising. Our exports are increasing, construction and manufacturing are up, and we are seeing a good growth in employment: there are a million more people in work in our country than when we came to office. Of course we want to do more to help people to feel better off by reducing their taxes, which is exactly what we are doing. All that would be put at risk if we gave up on reducing the deficit and having responsible economic policies. The Labour party would give us a double whammy of higher mortgage rates and higher taxes, and that is just what Britain’s hard-working families do not need.
Diana Johnson (Kingston upon Hull North) (Lab)
Does the Prime Minister think it fair that a sacked pregnant woman will now have to pay £1,200 to take a maternity discrimination case to an employment tribunal?
The Prime Minister
It is very important for people to have access to employment tribunals, and they do under this Government. One thing that we have done is ensure that people do not earn such rights until they have worked for a business for two years, and I think that that is the right approach.
Andrew Griffiths (Burton) (Con)
Q14. Thanks to the Chancellor’s economic policies, unemployment in Burton and Uttoxeter fell by 10% last month, and is now at its lowest since September 2008. Many of the new jobs were created in small businesses which now have the confidence to invest. Will the Prime Minister commit himself to supporting those small businesses, to help us to “grow” the economy?
The Prime Minister
My hon. Friend is right. Unemployment in the west midlands fell by 14,000 during this quarter. However, my hon. Friend does not just talk about helping people back into jobs; he has also set up a job fair in his constituency, which has done a huge amount to bring businesses large and small together with those who want jobs. That is the sort of social action in which Conservatives believe: not just talking, but helping.
Mr Kevin Barron (Rother Valley) (Lab)
I wrote to the Prime Minister on 8 May about the possible involvement of Lynton Crosby in public health matters. I raised his failure to reply on 19 June at Prime Minister’s Question Time, and again during the summer Adjournment debate on 18 July. I have served under four previous Prime Ministers who replied to Members’ letters—[Interruption.]
Mr Speaker
Order. This question will be heard with some courtesy, which is what I expect in the case of all questions. That is very simple and very straightforward.
The Prime Minister
I will certainly reply to the right hon. Gentleman’s letter, but let me give him a reply right now. Public health responsibility is a matter for the Department of Health. Lynton Crosby’s job is the destruction of the Labour party, and he is doing a pretty good one.
Probation Service
(10 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Iain Wright (Hartlepool) (Lab)
I rise to present a petition initiated by the Hartlepool probation service, which is part of the Durham and Tees Valley Probation Trust, and I understand that every single officer, manager and administrator working in the Hartlepool office has agreed with, and signed, the petition.
The petition states:
The Petition of a resident of the UK,
Declares that the Petitioner opposes the Government’s plan to abolish the Probation Service in its current form and to privatise up to 70% of work currently undertaken by it. The Petitioners believe that those convicted by a Criminal Court should be supervised by those employed by a publicly accountable Probation Service such as currently exists; further that the Petitioner opposes the Government’s plan to abolish the 35 public sector Probation Trusts replacing them with one Probation Service that only supervises those deemed to be of a high risk of harm to the public. It is envisaged under the current plan, 70% of probation’s work will be subject to a competitive process which excludes the Probation Service. The Petitioner believes that such a plan is “high risk” in that it could place the public at a greater risk of harm.
The Petitioner therefore requests that the House of Commons urges the Government to stop the planned changes to the Probation Service.
And the Petitioners remain, etc.
[P001232]
Grangemouth Refinery
(10 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Caroline Flint (Don Valley) (Lab)
(Urgent Question): To ask the Secretary of State for Energy and Climate Change if he will make a statement on the Government’s contingency planning in the light of the closure of the Grangemouth refinery.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
I thank the right hon. Lady for her question. Let me inform the House of the latest situation in respect of the disruption at the Grangemouth refinery and petrochemicals complex in Scotland.
I recognise the concern of many Members, and, in particular, the active involvement of the hon. Member for Linlithgow and East Falkirk (Michael Connarty). The Government have been in regular contact with both sides throughout the dispute, and we continue to talk to both sides. We are working very closely with the Scottish Government, and I spoke to John Swinney, the Cabinet Secretary for Finance, Employment and Sustainable Growth, again this morning.
This morning INEOS made a statement confirming the decision of its shareholders to place the Grangemouth petrochemicals plant in liquidation, which puts 800 jobs at risk. The Government are saddened by the move, particularly because of the uncertainty that it will bring for the work force and all those who indirectly owe their livelihoods to the Grangemouth plant. The Government do not underestimate the plant’s importance to both the local community and the Scottish economy.
While respecting INEOS’s right to make this decision, it is regrettable that both parties have not managed to negotiate a fair and equitable settlement that delivers a viable business model for the plant. Even at this late stage, the Government urge them to continue dialogue, and we will offer all possible help and support with that. We want the petrochemicals plant to stay open if at all possible but, should redundancies be made, support will be available from Partnership Action for Continuing Employment, which includes the Scottish Government, Skills Development Scotland, Business Gateway and Jobcentre Plus.
INEOS’s statement this morning made it clear that the situation regarding the refinery is different from that of the petrochemicals plant. The owners of the refinery, INEOS and PetroChina, have announced their intention to keep their refinery open and their wish to restart full operations as soon as possible. The Government stand ready to help with discussions between the management and the union to ensure that that can happen, and I am speaking to both parties again today.
Throughout the disruption, fuel supplies continue to be delivered as usual. Moreover, my Department has been working closely with industry and the Scottish Government to put robust contingency plans in place to ensure that supplies of road fuels, aviation fuels and heating oils will continue to be available to Scottish consumers and to fuel the Scottish economy.
The Secretary of State for Scotland and I will be giving a briefing at 4.15 pm today in Dover house for MPs with Scottish constituencies and any other interested hon. and right hon. Members who wish to discuss the situation in more detail after these exchanges.
Caroline Flint
I appreciate the right hon. Gentleman’s remarks and the support, through Jobcentre Plus or anyone else, for those who have lost their jobs so that we do whatever we can to help the workers and their families at this difficult time.
The closure of the petrochemical plant at Grangemouth means that the 800 people employed there, and more who are employed as subcontractors, will lose their jobs. The INEOS chairman, Jim Ratcliffe, said at the weekend that if the petrochemical plant closed, it was likely that the refinery would go too. John Swinney, the Scottish Finance Minister, claimed yesterday that he was in discussions with potential buyers for Grangemouth. Is the Secretary of State aware of those discussions and what involvement have he or his Ministers had?
The Unite union committed not to strike, with no preconditions, while negotiations over pay and conditions were undertaken. PetroChina, the 50% shareholder in INEOS’s refinery business, made a statement calling for all parties to get back around the table and reach a consensus but today, sadly, rather than coming back to the negotiating table, INEOS has announced that it will close the—profitable—petrochemical plant. Sadly, there were reports on the BBC this morning that management delivered the news with smiles on their faces. Does the Secretary of State agree that INEOS should have got around the table to negotiate, rather than delivering ultimatums?
In its July report “UK oil refining”, the Energy and Climate Change Committee found a mismatch between refinery supply of petroleum and demand, but we are still waiting for the Government to respond. Can the Secretary of State be confident that the Grangemouth refinery will stay open? Will he tell us more about the contingency plans that are in place to secure fuel supplies for Scotland, Northern Ireland and the north of England? Given the current shutdown and uncertainty over the closure of Grangemouth, will he reassure us that he will commit to undertake the review of UK refining capacity that the hon. Member for Wealden (Charles Hendry) promised in June 2012 in response to the closure of the Coryton refinery?
Mr Davey
I thank the right hon. Lady for her questions. Her first was about the recent statement by the Finance Secretary in the Scottish Government that they were looking for potential buyers. I have spoken to Mr Swinney about that, and we in the Westminster Government certainly stand ready to assist. It is a devolved responsibility, but my right hon. Friends the Secretary of State for Scotland and the Secretary of State for Business, Innovation and Skills will be making all efforts, through Departments and UK Trade & Investment, to assist should we need a buyer for the petrochemicals plant.
The right hon. Lady asked whether INEOS should have got around the table. Throughout the dispute, I have personally been asking both sides to get around the table. At one stage, INEOS was not prepared to go to ACAS. I personally spoke to INEOS and persuaded it to go to ACAS, which it then did, and I regret that those ACAS talks were not successful at avoiding the situation that we have arrived at today.
The right hon. Lady asked about the contingency plans that we put in place. We have been working for a significant time to ensure that there were contingency plans, should the disruption become any worse. As she knows, the refinery is currently closed down, but fuel is coming through the refinery—refined fuel is being loaded from ships into the plant and then on to racks to go into tankers. That is a part of our contingency plans, but they are much more detailed and granular than that. They go into minute detail about how we would ensure that fuel—heating oil, road fuel and aviation fuel—is supplied throughout Scotland, which is why I can say confidently that the people of Scotland may be reassured that we will keep fuel going through that economy.
Finally, the right hon. Lady asked about the review of refineries, and we expect to have that—probably—by the end of the year. It is very detailed and has been under way for some time. She will understand that there has been a big switch in the way in which motorists use fuel—away from petrol to diesel—but most refineries in the UK produce petrol rather than diesel. We import a huge amount of diesel, and that is one of a number of issues being considered in that review.
Sir Malcolm Bruce (Gordon) (LD)
I welcome my right hon. Friend’s statement. The dispute has been characterised by intransigence on both sides and it is regrettable that it has resulted in this decision. I support the fact that the Governments who have jurisdiction in Scotland—the Scottish Government and the UK Government—are working together to ensure that we get a solution. What assurances can my right hon. Friend give about any guarantees that we can secure for the future of the Scottish and the UK economies, which are threatened by the present situation, and not least for the future of North sea oil production?
Mr Davey
I am grateful to my right hon. Friend for his question. The Scottish Government and the Westminster Government have been working extremely closely and I am grateful for such work. The partnership has been successful and constructive, and we will need to continue to work together in the days and weeks ahead for the people of Scotland—and, indeed, for the people of the UK, because as he suggested, this has UK-wide implications. Beyond that, I remind the House that Her Majesty’s Treasury has been working with INEOS to look at potential infrastructure guarantees, should INEOS make a decision to invest in the petrochemicals plant. My right hon. Friend the Chancellor of the Exchequer has developed innovative infrastructure guarantees and we stand ready to assist with that. I know that the Scottish Government have plans to assist as well.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
I thank the Secretary of State for recognising that I have kept the Government and Opposition Front Benchers, and also the Scottish National party, informed of developments. There is common purpose in this.
On 14 October, I sat with Calum MacLean as he told me about the bright future that was available to Grangemouth Petrochemicals—the chemicals side—if it could go across the bridge to a point where it would be breaking even and then making money in large amounts, with ethane coming from America after 2022. It is unfortunate that there seems to have been an ultimatum approach, rather than a negotiation approach. There is still time for all parties—the Opposition, the Government and the Scottish Government—to ask the company to rewind the tape, get back to negotiations and think of the bright future that can be shared with the community after negotiations.
I heard the general secretary of Unite in Scotland saying this morning that the entire survival plan and all the terms and conditions of employment are on the table for negotiation, so there is still time to save the plant, which supplies 30% of the ethylene to the UK down the pipeline. It not just refines 300 barrels of oil a day for Scotland, the north of England and Ireland, but feeds the chemical industry of the whole of the UK.
Mr Davey
I once again pay tribute to the hon. Gentleman, who has been representing his constituents with his usual skill. I agree with much of what he says but, as the Government must look at all potential scenarios, we have to look at the potential scenario of liquidation, as announced by INEOS today. We very much regret that, but we have to plan for all potential outcomes. The hon. Gentleman is right that a better outcome would be to get both sides around the table so that we can get agreement on a way forward and secure the investment that we wish to see. We want to see the petrochemicals plant staying open and developing.
David Mowat (Warrington South) (Con)
The impact of Grangemouth closing is far in excess of the 800 jobs because of the issues regarding ethylene and refining capacity throughout the country. Will the Secretary of State assure us that, in the same way that European countries go to the nth degree to prevent their refineries from closing even though there is overcapacity in Europe, he will do the same in this country?
Mr Davey
My hon. Friend is right to say that the ramifications, severe though they are for the 800 people, their families and the communities in which they live, go wider than that, which is one of the many reasons why I and my colleagues have been working so hard to secure a resolution that sees the investment and sees the plant staying open. As I said in answer to the right hon. Member for Don Valley (Caroline Flint), we are very much focused on looking for the right approach to maintain the refinery capacity that the UK needs. We have already seen—I think it was two years ago—a refinery at Teesside closing, and recently there was the situation at Coryton. Refineries in the UK and throughout Europe are under severe pressure; their margins are very narrow and there are serious economic issues. I have referred to one of the reasons for that—the switch from petrol to diesel—but there are others as well. We need to ensure that our response is strategic and based on evidence, and that it will have the results that we need. We do need a successful refining industry in the UK and that is the purpose of our work.
Mr Alistair Darling (Edinburgh South West) (Lab)
I think that everyone in the House recognises the importance of the Grangemouth plant—not just for Grangemouth, but because, if we lose it, there will be huge hole in the Scottish economy and the loss of the refining capacity would have a serious implication for the UK. Does the Secretary of State agree that two things are necessary? First, the Government and the Scottish Government should do everything that they can to try to persuade the employers to start negotiating again. It would be a tragedy if we were to lose the plant as a result of it falling victim to rhetoric that looks more like the 1970s than the industrial relations we would expect today. Secondly, if that is not successful and INEOS is determined to walk away, what steps will the Government and the Scottish Government take together to try to find an alternative? Frankly, losing such a facility would be a major loss and, once lost, we would never get it back again.
Mr Davey
The right hon. Gentleman is absolutely right. It is critical that we do everything possible to keep the petrochemicals plant and the refinery working. I am clear that, working with the Scottish Government, we will do everything that we can to get negotiations going again. I understand from INEOS this morning that it will be talking to Unite today, not just to tell it about the shareholders’ decision, but to discuss the issue in more detail. Let us see what comes from those talks. Should they not be successful, and should INEOS decide to walk away, of course we will be very much involved in trying to find a future. The Scottish Government have a key role for the petrochemicals plant in particular, and we will work with them on that. A lot will depend on the process that the INEOS management at the petrochemicals plant decides to follow. It says that it will talk to liquidators, but it has other options, so we will be in close contact with it as it develops those options. There may be alternatives with INEOS’s involvement. Whatever happens, we will be active in seeking an acceptable solution for the people involved and the Scottish economy.
Andrew Selous (South West Bedfordshire) (Con)
The loss of any jobs is, of course, a real tragedy for those concerned and their families. May I welcome what the Secretary of State says about a review of refining capacity, especially with regard to diesel? My understanding is that much of the diesel used in the UK is refined in Russia, which obviously adds to costs for motorists, who have been under a lot of pressure recently.
Mr Davey
My hon. Friend is absolutely right. When we decided to undertake the review of refinery capacity, we did so in the light of a huge amount of evidence that we needed to ensure that our economy was not vulnerable, yet with the developments in the refining industry, there was a danger that it would become increasingly so. He is right that we are importing a lot of refined fuel at the moment, and we need to ensure, as an energy security issue, that we know where our supplies of transport fuel are coming from.
Sheila Gilmore (Edinburgh East) (Lab)
Does the Secretary of State not agree that this situation shows the importance of good, mature industrial relations? My right hon. Friend the Member for Edinburgh South West (Mr Darling) suggested that it was reminiscent of the 1970s, but I suggest that lockout, threats and ultimatums are more reminiscent of the 1870s. Any new buyer must have a better industrial relations policy, and the Government must encourage that and not undermine it.
Mr Davey
I understand the hon. Lady’s concern, and indeed anger, and am sure that in that regard she speaks for many local people. As the Government working with the Scottish Government, we have been, and must remain, balanced in our approach, because our job is to try to get both sides to negotiate. That is the most effective role we can play, so we will continue to do that in as balanced a way as we can.
Jackie Doyle-Price (Thurrock) (Con)
The competitive challenges facing the refining market have been well established for a number of years and led to the closure of Petroplus in Coryton last year. In view of the competitive challenge, is it not regrettable that the local branch of Unite was more interested in manipulating the Labour party in Falkirk than in representing the interests of its members?
Mr Davey
The hon. Lady asks me to comment on an issue, the details of which I am not privy to. There is a disciplinary investigation under way, which INEOS has been leading. I understand that it might publish, or at least share with Unite and the convenor involved, the results of its investigation later this week, but I do not think that it is for me to comment on that.
Stewart Hosie (Dundee East) (SNP)
I thank the Secretary of State for many of the answers he has given so far, but ask him to reiterate the following three important points: it is vital that the refinery is reactivated, that both Governments continue to take steps to mitigate even the threat of job losses, and that there is continued joint working between both Governments to keep the plant open and to search for a new buyer.
Mr Davey
I can say yes to all three points. It is vital that the refinery gets going again, as I said in my initial remarks. We must do everything we can to prevent job losses. I am afraid that it is not in our power to prevent the threat of job losses, which the hon. Gentleman asked me to do, but we will certainly do everything we can to prevent that threat being realised. Both Governments are absolutely duty-bound to co-operate for the people involved and for the Scottish economy.
Michael Moore (Berwickshire, Roxburgh and Selkirk) (LD)
I think that everybody here accepts the seriousness of what is at stake in this dispute, but we are in danger of downplaying the impact that closure would have not only on Grangemouth, Linlithgow and central Scotland, but on Scotland’s economy and, as other Members have said, that of the United Kingdom. The closure of the Grangemouth complex, or indeed any part of it, would be an act of industrial vandalism the scale of which we have not seen in decades. Given the seriousness of that, I welcome what my right hon. Friend and the Secretary of State for Scotland have been doing, including working with the Scottish Government. Can he assure me that he is willing, before we give up on negotiations, to work with the Scottish Finance Secretary and anybody else and to meet the key players around a table so that we do every last possible thing before thinking of this being sold to somebody else?
Mr Davey
I will first pay tribute to my right hon. Friend, who worked extremely hard on this case when he was Secretary of State for Scotland. Much of the contingency planning we have in place is down to his hard work, for which I am grateful. He knows better than anyone what the impact on the Scottish economy would be if part or all of the Grangemouth plant were to close. I can reassure him that we—I am sure that I speak for the Scottish Government on this—will do everything we can together, leaving no stone unturned, to try to reach a resolution.
David Simpson (Upper Bann) (DUP)
As well as the concerns about supplies to Northern Ireland, it is estimated that upgrading the refinery will cost £300 million. What discussions have the Government had with the owners on helping them through the infrastructure guarantee loan?
Mr Davey
I am grateful to the hon. Gentleman for his question. My right hon. Friend the Chief Secretary to the Treasury is in charge of the discussions with INEOS on infrastructure guarantees. Of course, it is impossible to guarantee an investment proposition until it is put forward, so we await the business case. Given today’s news, it does not look like it will be immediately forthcoming, but I can tell the hon. Gentleman, the House and INEOS that, should a business case be put forward for investment in the petrochemicals plant, we will look at it extremely closely.
Andrew Percy (Brigg and Goole) (Con)
This is obviously very sad news for those at Grangemouth, but many others working in the chemical and petrochemicals industry, including many thousands on the south bank of the Humber, will also view it with concern. Can the Secretary of State give us an assurance of the Government’s long-term commitment to the sector and inform us whether any lessons can be learnt from this case and applied to other areas, such as the Humber?
Mr Davey
My hon. Friend is right to focus on the chemical industry not only in his area, the Humber, but across the UK. The chemical industry is the UK’s leading manufacturing exporter, and it has significant growth potential. My right hon. Friend the Secretary of State for Business, Innovation and Skills has been working with others to try to maximise the growth potential. The chemistry growth partnership strategy has been developed, and the aim is for the Government to do everything we can to support our important chemical industries. We have been looking at the impact of a closure of the petrochemicals plant at Grangemouth on the rest of the UK’s chemical industry, and that is also being led by the Secretary of State. So far we believe that the supplies that would be needed for the rest of the UK’s chemical industry can be found, and obviously that is quite an important industrial issue, but we keep that under close review.
Mr Tom Watson (West Bromwich East) (Lab)
I thank the Secretary of State for the way he is handling the crisis and for his comments to the hon. Member for Dundee East (Stewart Hosie). I am sure that the Secretary of State will be as saddened as many of the workers were to hear that the negotiations that he managed to secure around the table at ACAS were slightly thwarted because the billionaire hedge fund manger who runs INEOS, Mr Jim Ratcliffe, was on his yacht in the Mediterranean, so the negotiating team had to phone him. I think that shows a lack of seriousness. One of the big concerns people have is that tax avoidance disguises the profitability of the site. Will the Secretary of State consider conducting an independent financial assessment of the site to see what options future buyers might have?
Mr Davey
We will not have access to all the information, because the site is the property of a private company, as I am sure the hon. Gentleman would recognise, but we have made it very clear to INEOS, and indeed to the joint owners of the refinery, that we stand ready to assist. I do not think that I can take up his proposal, but he should not take that as an indication of any lack of resolve on the part of Government to do everything possible.
Mr Philip Hollobone (Kettering) (Con)
I understand that INEOS believes the plant to be loss-making. What assessment has the Secretary of State or his counterpart in the Department for Business, Innovation and Skills made of the source of those losses? Given that the plant is so important in producing a third of Britain’s ethylene product, what assessment has been made of the knock-on effect on all the other companies that depend on that product throughout the United Kingdom economy?
Mr Davey
On my hon. Friend’s latter point, we have already made that assessment, as I have said, and at the moment we are convinced that the chemical supplies required can be supplied from other sources. With regard to why the petrochemicals plant is making a loss, I can only tell him what INEOS has said publicly: that the cost of pensions and salaries make the plant unprofitable. However, as I have said throughout my answers, the Government will remain balanced and even-handed on this issue, so we are not going to say that one party is right and the other is wrong, because we want both sides around the table.
Jack Dromey (Birmingham, Erdington) (Lab)
I know Grangemouth well. As a former deputy general secretary of the old Transport and General Workers’ Union, I well remember when the tanker drivers broke the fuel blockades to restore fuel to a Scotland then in crisis.
Make no mistake: today’s announcement poses a serious question mark over the whole of Grangemouth. I recognise that the Secretary of State has done everything he can thus far, but he must not give up. Will he meet INEOS representatives and express to them the strong feeling across the House that, even at this late stage, they should come back to the negotiating table so that we secure the future of the whole of Grangemouth?
Ian Swales (Redcar) (LD)
I thank the Secretary of State for his answers so far—in particular, his recognition of the importance of the chemical industry. I ask the Government to give maximum support and have close discussions with the petrochemical industry in my constituency—in particular Sabic, with its ethylene cracker. Furthermore, when does he expect to get state aid clearance for his measures on energy-intensive industry, which the Grangemouth complex clearly represents?
Mr Davey
I am grateful to my hon. Friend for his question. Many of his requests fall under the responsibility of the Secretary of State for Business, Innovation and Skills, although we work closely together on all these issues, not least those to do with energy-intensive industries.
My hon. Friend is right to say that we have an application in front of the Commission with respect to state aid clearance on the costs to energy-intensive industries of the carbon price floor. We already have state aid clearance for our proposals to assist energy-intensive industries with the indirect costs of the European Union emissions trading system. As he will know, we are consulting to help energy-intensive industries with the costs of contracts for difference. Like other member states, we have a comprehensive programme to support energy-intensive industries. We continue to press that case.
Ann McKechin (Glasgow North) (Lab)
I concur with others in saying that the closure of the Grangemouth plant is a disaster not only for its staff and the local community but for the Scottish economy. It also has ramifications for the wider UK economy. Does the Minister agree that now is the time for an urgent review of how we regulate the owners of critical infrastructure of this country, to make sure that it is fit for purpose and that we do not again end up having to urge a reluctant company to come back to the negotiating table?
Mr Davey
The Government have looked at all aspects of critical national infrastructure—not just in the petrochemical sector, but across the piece—to make sure that, in the face of a whole series of potential disruptions to critical national infrastructure, whether industrial action or natural causes, critical national infrastructure is available for our country, economy and people.
We have had the most comprehensive review of policy to ensure that CNI is available. I apologise, but I am not sure what the Minister for the Cabinet Office, my right hon. Friend the Member for Horsham (Mr Maude), who is leading that, has published on it. However, he is leading that work and it is extremely thorough.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Is what has happened not a puzzling action to take about what many feel is in reality a money-making petrochemical plant? Does the Secretary of State agree with the First Minister, Alex Salmond, that the Grangemouth site has a positive future?
Mr Davey
I certainly believe that it can have a positive future. We need the investment to go in; the Scottish Government will offer the maximum they are able to, £9 million, as part of regional assistance support if investment does go in. I agree with the thrust of the hon. Gentleman’s question. It is incumbent on us to ensure that the plant has a positive future.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
I also welcome the Secretary of State’s statement. Any investment in our country is welcome, whether it be foreign or otherwise. However, that should not come at the cost of the livelihoods of the workers—many of whom, along with the local community, pay taxes, unlike Mr Ratcliffe. If there is to be state intervention, and I hope there will be, will the Secretary of State make sure that it does not end up on anyone else’s profit sheet? Will he make sure that we speak to the Chinese partner involved, to see what it has to say?
Mr Davey
We have been in discussion with PetroChina, and my right hon. Friend the Member for Sevenoaks (Michael Fallon), the Minister, is due to meet its representatives next week. We are talking to everyone involved. Given our infrastructure guarantees, we are now more engaged in state support than Governments have been in the past. That makes sure that we get good value for both the taxpayer and the economy. I do not think that what the hon. Gentleman is rightly concerned about will come to pass. As part of the way we do the infrastructure guarantees, we will make sure that we get the outcomes we need for our country.
Eric Joyce (Falkirk) (Ind)
Is the Secretary of State aware—I am sure he is—that people who work for big powerful multinationals need effective, intelligent trade union representation? Sadly, that is the last thing that people in Grangemouth have had for the past few months.
Today we have heard a lot of personalising—who owns INEOS and so forth—but at the root of all this is Unite’s placing a petty party political issue at the very top of its priorities and ignoring the looming train running along the track. Will the Secretary of State be aware of that in the coming weeks, when he will do what he can to help people at Grangemouth? Is he also aware that INEOS continues to be the main income driver for thousands of families across the Falkirk area?
Mr Davey
Like my hon. Friend the Member for Thurrock (Jackie Doyle-Price), the hon. Gentleman invites me to talk about a disciplinary dispute. The investigation is due to be published and shared with those involved on Friday and it would be wrong for me to speculate about the rights and wrongs of any individual or individuals involved.
Nic Dakin (Scunthorpe) (Lab)
I welcome the Secretary of State’s approach. Will he say more about how he will assure the UK’s fuel security and secure a sustainable future for UK refineries, including those on the South Humber bank?
Mr Davey
I am grateful for that question. One of the first issues I had to deal with when I became Secretary of State was the potential for a tanker drivers’ dispute. I got very involved in thinking about energy security with respect to transport fuels. The Department has set up a unit that was not there before. When we talk about energy security, we normally mean the security of the electricity supply, but actually the issue is much wider than that. I have personally given a lot more focus to that than previously, particularly in respect of what the hon. Gentleman mentions—not just for Scotland, but for the whole UK. The review of refinery capacity is part of that, but only part; we have to look at a number of issues to make sure that the people who drive the cars, lorries and vans on the roads get the fuel they need, given the critical role that that transport sector plays for our economy.
Gavin Shuker (Luton South) (Lab/Co-op)
To what extent does the Secretary of State believe that the current structure of the industry—a small number of large sites, often with foreign owners—effectively stacks the deck in favour of those owners and against the needs of the wider community?
Mr Davey
The hon. Gentleman is asking me to speculate about the outcome of our review. Given that I have not received the report, that would be unwise. However, large complexes are needed to refine fuels in what is a capital-intensive business. Small players would be unlikely to have such capital. Whether the hon. Gentleman or I like it or not, there are going to be big players. The question is whether we have the right fiscal, financial and regulatory framework to make sure that we have the refinery capacity that our economy needs. That is what the review will answer.
Bill Presented
Counsellors and Psychotherapists (Regulation) Bill
Presentation and First Reading (Standing Order No. 57)
Geraint Davies, supported by Dr Julian Lewis, Jonathan Edwards, Mrs Siân C. James, Jessica Morden, Chris Evans and Mr Mark Williams, presented a Bill to provide that the Health Professionals Council be the regulatory body for counsellors and psychotherapists; and for connected purposes.
Bill read the First time; to be read a Second time on Friday, 22 November, and to be printed (Bill 120).
Funding for Local Authorities Bill
(10 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
I beg to move,
That leave be given to bring in a Bill to establish a commission to identify the changes in the law necessary to provide for the differing requirements for funding of local authorities taking into account the varying demand for the services they provide; and for connected purposes.
The title of the Bill mentions local authorities, but I want to focus on cities. Cities are the engines of economic growth, and one does not go for growth by switching off the engine. In the words of the Centre for Cities:
“Cities don’t follow the national economy—they are the national economy.”
Let me start by declaring not so much an interest as a bias, and a strong one. I am a Birmingham MP, and one of the landmarks of the centre of Birmingham university is a tower known as Old Joe. The Joe in question is Joe Chamberlain, founder of the first civic university with an emphasis on business, who in November 1873, almost exactly 140 years ago, accepted the nomination for mayor of Birmingham and began the two-and-a-half year term of office that has been widely acclaimed as the most outstanding mayoralty in English history. He municipalised gas, which he allowed to make profits that would be ploughed back into the city; municipalised water, which, as a public health good, was not allowed to make a profit; initiated a massive housing programme; and, together with George Dixon and others, established the principle of free education in the city. He did so in two and a half years. We would still be running pilot studies or requesting permission from Westminster to do anything.
We have devolved power, but in today’s Birmingham it is clear that we have not devolved enough. Devolution has gone to Northern Ireland, Scotland, Wales and London, but not to our cities. In Birmingham we have Europe’s largest local authority, with a population of over 1 million. We are the fastest growing young city in Europe, with 40% of the population aged under 25, yet Ladywood and Hodge Hill constituencies consistently feature in the top three national unemployment figures. England is clearly unfinished business in terms of devolution. I regret that we do not have more directly elected mayors and that we have not completely moved towards unitary authorities. One fact remains: we are still the most centrally controlled developed country in western Europe and, probably, in the G20. In the UK some 30% of public expenditure is controlled by local government, but Whitehall needs to let go of much more. In the US and Sweden, 50% is devolved; in Canada and Denmark almost 70% is spent at Länder, or city, level.
Last year’s report by Lord Heseltine, “No stone unturned in pursuit of growth”, made a powerful case for decentralising economic powers. He looked at the various regional contributions to UK gross value added over the last 30 years; it makes depressing reading. In England, in London and the south-east, contributions have steadily increased; in the east of England and the south-west they have remained roughly level; and in all the other regions to the north of that line they have continued to decline. Allowing the south to overheat and the midlands and the north to be drained of energy is bad for the whole country. Central Government talk about letting go, but when it comes to the crunch they lose their nerve. There are regional growth funds, city deals, enterprise zones, and all kinds of pilots, and all that is great and commendable, but it is simply not enough.
Things are not only not moving in the right direction; they are getting worse. The undeniably necessary cuts in spending are made in a distorted framework that hits hardest those who most need support. It is wrong to devolve responsibilities but not match the funding or the freedom to rearrange the money available. It is wrong to have the largest cuts in areas where the jobs are fewest. It is wrong to have a situation where the National Audit Office warns that 12% of councils are at risk of being unable to balance their books in the future, with potentially disastrous consequences. The Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis), who is on the Front Bench, did not challenge that figure when I raised it earlier this week. The Local Government Association calculates that in the current Parliament local government’s core funding will fall by 43%, and by 2020 there will be a £15.6 billion funding gap. The future looks worse for our core cities. For 2013-14, the difference is negligible, but for 2014-15 there is a forecast fall of 5% compared with a 3.4% fall nationwide.
Yesterday Birmingham came to the Jubilee Room to show what the city has to offer: food, music, ideas, energy and diversity. By the way, we still make things in Birmingham. However, the future could look pretty bleak. In a phone-in from local residents conducted that morning, the three areas they said they wanted local government to address were better transport, the creation of jobs, and better regional co-operation. None of those things can be done in a framework of short-term, unco-ordinated funding cuts. Over the past three years, our spending power in Birmingham has declined by 13% compared with a national average of 9.3%. There is something not right when every man, woman and child in Birmingham has had £149 taken from the money given by the Government, while people in prosperous Wokingham in Berkshire lost just £19 a head. That cannot be fair. Birmingham has calculated that from 2011 to 2017 it would need to find savings of £825 million—£210 million more than expected. Cuts of that magnitude threaten the future viability of local government. At present, only a third of Birmingham’s £1.3 billion budget is controllable. The predicted shortfalls suggest that we will have a cut of two thirds in that one controllable third of the budget.
So why are things so bad in Birmingham? First, cuts nationwide to local authorities average £74 per person, while in Birmingham the figure is £149. Secondly, there is a colossal revenue shortfall created by keeping council tax rises artificially low for five successive years—1.9% during the Tory years and frozen for past two years. Thirdly, two thirds of the city’s funding comes directly from central Government rather than taxation and other sources—a much higher proportion than in most local authorities.
But this Bill is not asking for money or putting a case of rural versus urban; it is asking for a commission to be set up that addresses the currently broken model for financing and running local government in general, and our big cities in particular. The commission should be guided by three principles. First, it must recognise the need for financial stability and sustainability; money needs to be distributed in a way that recognises the real needs and responsibilities of our cities. Secondly, money raised in our cities should stay in cities, releasing them to drive the growth and prosperity we will all share. Thirdly, checks and balances should be provided to prevent any one Government from unsettling the funding structure on a political whim.
The Chartered Institute of Public Finance and Accountancy has said:
“we are clear that the current system of local government funding allocation needs to change. The susceptibility of the local government settlement to the see-saw of political influence means that it is well overdue for fundamental reform.”
I believe that we can build on the work of the Heseltine review of 2012 and the Michael Lyons inquiry into local government of 2007. I want a third commission that looks specifically at funding structures and revenue flows and has at the core of its thinking the future sustainable prosperity of our cities and the recognition that, whether we talk about city regions or not, cities are the driving force of their regions, and if we go on cutting them, we will destroy the surroundings areas as well.
Question put and agreed to.
Ordered,
That Ms Gisela Stuart, Richard Burden, Mr Liam Byrne, Jack Dromey, Mr Roger Godsiff, Mr Khalid Mahmood, Shabana Mahmood, Steve McCabe, Mr Clive Betts, Mr Nicholas Brown, Paul Goggins and Fabian Hamilton present the Bill.
Ms Gisela Stuart accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 29 November and to be printed (Bill 117).
Opposition Day
(10 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text
Northern Ireland
(10 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)
I beg to move,
That this House notes the ongoing discussions in Northern Ireland chaired by Dr Richard Haass on a number of important issues including the legacy of the Troubles; recognises the deep sense of loss still felt by the innocent victims of violence and their continuing quest for truth and justice; acknowledges the valour and sacrifice of the men and women who served and continue to serve in the armed forces, the police and the prison service in Northern Ireland; and is resolved to ensure that those who engaged in or supported acts of terrorism will not succeed in rewriting the narrative of this troubled period in Northern Ireland’s history.
It is a privilege to move the motion standing in the name of my right hon. Friend the Member for Belfast North (Mr Dodds) and other colleagues on dealing with the past in Northern Ireland. First, I wish to record an apology on behalf of my right hon. Friend. As Members will be aware, he is attending a memorial service in his constituency to mark the 20th anniversary of the Shankill bomb on 23 October 1993, in which nine innocent people tragically lost their lives.
Today we remember the families of John Desmond Frizzel, aged 63, in whose fish shop the bomb was exploded; his daughter Sharon McBride, aged 29, married to Alan with one child; George Williamson, 63 years old, married with two children, and his wife Gillian Williamson, 49 years old; Evelyn Baird, 27 years old, married with two children; her daughter Michelle Baird, seven years old, a schoolchild; Leanne Murray, 13 years old, a schoolchild; Michael Morrison, 27 years old, married with three children; and Wilma McKee, 38 years old, married with two children.
Today I am sure that all right hon. and hon. Members will join me in saying that the tragic loss and pain suffered by those families and the thousands of innocent victims—whether Protestant, Roman Catholic or of other faiths—killed or maimed in Northern Ireland, here in Great Britain or elsewhere during our troubled past will never be forgotten by those of us who cherish the value of human life, reject violence and pursue peace as the only way forward for Northern Ireland. Today we especially remember the families of the victims of the Shankill bomb.
I also wish to acknowledge the presence of the Secretary of State. I am aware that she had other obligations and commitments this week outside of the United Kingdom, and we appreciate her presence today.
Discussions between the political parties at Stormont have failed to achieve sufficient consensus on dealing with the legacy of the troubled past to which I have referred. Therefore, the First Minister and Deputy First Minister have invited Dr Richard Haass to chair discussions about this and related matters such as parades and protests, flags, emblems and symbols. Dr Haass is assisted in this work by a small team, including Meghan O’Sullivan, who is his vice-chair of the talks presently under way.
I also acknowledge the work of the previous Consultative Group on the Past, led by Lord Eames and Denis Bradley, and the recommendations set out in its report. However, I must place on record the fact that many of those recommendations were rejected at the time, not least because of the schism that exists at the very heart of the debate on the past and the definition of a victim.
The Democratic Unionist party remains firmly of the view that we cannot equate the perpetrators of terrorist violence with their innocent victims, yet that is precisely what the current law does in Northern Ireland under the Victims and Survivors (Northern Ireland) Order 2006. This is a law that the DUP seeks to change, and for that reason I have proposed a private Member’s Bill that is due to be given its Second Reading in December. My Bill would ensure that an individual killed or injured as a result of their own act of terrorism or convicted of a terrorism-related offence as defined in law would not be classified as a victim for the purposes of deriving any benefit from schemes designed to assist victims and survivors.
I referred at the outset to the Shankill bomb and the innocent people murdered by the IRA in that incident. One of the IRA terrorists on that day, the bomber Thomas Begley, was killed when the bomb exploded, and his accomplice Sean Kelly was seriously injured. When convicted of this heinous crime, Sean Kelly was given nine life sentences—one life sentence for each life he had destroyed—yet under the early release scheme that formed part of the Belfast agreement, Kelly was released after serving just seven years in prison. That is less than one year for each life that he destroyed that day on the Shankill road.
That is an enormous burden for the families of those victims to bear. Michelle Williamson, whose father and mother were murdered by Sean Kelly, campaigned vigorously to prevent his release. Regrettably, Kelly walked free. To have this injustice compounded by the fact that the law currently defines the IRA bombers Sean Kelly and Thomas Begley as victims in just the same way as the nine innocent people who died that day on the Shankill road are defined as victims is an outrage. It is an affront to decency and the rule of law, and it is something that this Parliament should act to change. For the sake of the nine innocent people who died on that terrible day 20 years ago to this day, I trust and pray that parties throughout the House will support the necessary change to the legislation.
That is fundamental to finding an agreed way forward on dealing with the legacy of the past in Northern Ireland. On the definition, let me be clear: whether the innocent victims were murdered by those IRA bombers or by the Ulster Volunteer Force gang known as the Shankill Butchers that operated on the Shankill road, or whether the victims were Protestant or Roman Catholic or of other faiths or none, it does not matter. There cannot be equivocation between the innocent victims of terrorism and those who perpetrated those acts of terrorism. The principle applies in all cases. Those who commission or commit murder cannot be equated in a definition with their innocent victims.
Of course, this is not the only challenge we face in dealing with the legacy of the past. This summer has been a stark reminder of the difficulties surrounding very sensitive issues that we desperately need to address and resolve. I am bound to say, in the absence of the Sinn Fein Members elected to this House, that their attitude in the summer and recently has not helped to create an atmosphere in which we can make progress.
I refer specifically to an event that occurred in Castlederg in August when we witnessed a blatant glorification of terrorism by senior members of Sinn Fein. Castlederg is a small town in County Tyrone near the border with the Irish Republic. Many terrorist atrocities were committed there during what we call the troubles. The IRA waged a vicious sectarian campaign against the local Protestant community and especially targeted the security forces.
This August, republicans held a commemoration event in Castlederg to unveil a memorial to two IRA terrorists, Seamus Harvey and Gerard McGlynn, who 40 years ago, like Thomas Begley, were killed by their own bomb. I cannot understate the insensitivity of this event. Initially, republicans even sought, as part of the commemoration, to have a parade past some of the locations where the IRA had murdered people in Castlederg.
The speeches that were made on that day, most notably by the Sinn Fein Member of the Legislative Assembly, Gerry Kelly, were undoubtedly interpreted as a glorification of terrorism, and rightly so. Mr Kelly was convicted of trying to blow up the Old Bailey in London in March 1973. In his speech, he asserted that his actions were not acts of terrorism. I ask every Member of this House the following question: if a gang that includes Mr Kelly plants a bomb outside a courthouse in a public place and that bomb explodes, killing one person and injuring more than 200 people, is that an act of terrorism or something else? My understanding is that that is an act of terrorism as defined by the law of the United Kingdom and international law. We have the ridiculous situation whereby republicans are trying to redefine what terrorism is and to recast the actions that they perpetrated during the troubles. They are trying to explain away the heinous nature of those actions by some form of twisted justification. That will not do and we will not stand for it. There can be no redefinition of terrorism in Northern Ireland.
Mr John Baron (Basildon and Billericay) (Con)
I congratulate the right hon. Gentleman and his colleagues on raising this important issue. It is important that we do not paper over the fact that terrorists committed horrendous crimes during the troubles. We should all congratulate the civilians and soldiers on their courage and steadfastness at that time. Will he admit that it is important to remember those terrorist acts if only because, in remembering the horrendous nature of those crimes, the Province stands a better chance of having a brighter future?
Mr Donaldson
The hon. Gentleman is absolutely correct and I will speak about commemoration and dealing with the legacy of the past in a moment.
Kate Hoey (Vauxhall) (Lab)
I congratulate the right hon. Gentleman and his party on calling this debate. He mentioned the fact that Sinn Fein MPs do not take their seats. Does he think that it is time for this House to get to grips with that issue? There is an idea that we cannot have that debate in this House. However, those MPs still receive allowances and support. Is it not time that we all stood up to the blackmail, almost, that we have from the Sinn Fein MPs, who think that they are entitled to decide whether they come here or not, and yet—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Lady wishes to speak later, but she is in danger of cutting the time that she is allowed.
Mr Donaldson
I concur entirely with the hon. Lady’s remarks. She can be assured that that issue will be raised on another day in the House of Commons.
On the same day that the IRA commemoration took place in Castlederg, 11 August, there was a memorial service in Omagh to commemorate the Omagh bombing of August 1998, in which 29 innocent people lost their lives. Sinn Fein members were present at that event in Omagh. I pose a simple question: how can the same party, on the same day, in the same county engage in an act of glorification of terrorism in one town and stand alongside the victims of a similar atrocity in another town, and claim that there is no double standard?
Dr William McCrea (South Antrim) (DUP)
For 14 years, I represented Omagh and Castlederg in the House of Commons. Sinn Fein have a twisted mentality that means that they can easily do that, because they were not associated with the Omagh bomb and they close their minds to all the other bombings, including Teebane and the many other atrocities across the Province.
Mr Donaldson
I thank my hon. Friend for those words. I pay tribute to the way in which he has represented people in Northern Ireland over many years. The personal cost that he and his family have borne for that representation is often overlooked. He is absolutely correct.
We cannot equivocate on this matter. The finger would be pointed in our direction if we sought to justify an act of terrorism by one paramilitary organisation in Northern Ireland while condemning the same kind of action by another paramilitary organisation. The two bombers whom Sinn Fein commemorated in Castlederg were transporting a bomb that was designed to murder innocent people in a country town. The people whom they condemned in Omagh on the same day were doing the same thing: they transported a bomb into the heart of a town in the same county of Tyrone and it was designed to murder innocent people. What happened in Castlederg and what happened in Omagh must be condemned equally. It is time that Sinn Fein grew up and recognised that wrong is wrong, no matter who the perpetrator. There can be no rewriting of the history of the troubles in Northern Ireland.
Lady Hermon (North Down) (Ind)
I am most grateful to the right hon. Gentleman for allowing me to intervene, particularly given that I was a few minutes late for the debate, for which I apologise to all Members. I invite him to confirm to the House, as I am sure he will do gladly, that his party leader, who serves the entire community in Northern Ireland as First Minister, has brought those criticisms of Sinn Fein’s behaviour to the attention of his Deputy First Minister, Martin McGuinness. I would like that assurance.
Mr Donaldson
I know that the hon. Lady takes a keen interest in all these matters. I confirm to the House that our party leader, the First Minister, Peter Robinson, has on numerous occasions brought to the attention of the Deputy First Minister the inconsistency and double standards adopted by Sinn Fein in these matters, and the damage that that does to the building of community relations and the development of reconciliation in Northern Ireland. Sinn Fein needs to address this issue.
We will not stand for a process that seeks to paint the forces of the state as the bad guys and the terrorists as the good guys. I remind the House that the Sutton index, which tabulates and records all the deaths associated with the troubles in Northern Ireland, is very clear that of the 3,531 deaths recorded to date, the Army was responsible for 297. Many of those were entirely lawful and legitimate, and were carried out by soldiers acting in the course of their duty to protect human life. The Ulster Defence Regiment, in which I was proud to serve, was responsible for eight deaths. When one hears the attacks that are made against the integrity, valour and sacrifice of the Ulster Defence Regiment, one would think that it was responsible for many more. I reiterate that those deaths were the result of soldiers acting in the course of duty. The Royal Ulster Constabulary, which is also demonised at times by Irish republicans, was responsible for 55 deaths. Interestingly, the Garda, the Irish police, were responsible for four deaths and the Irish army for one.
Let us look at the record of the paramilitary organisations. On the republican side, the Irish National Liberation Army and the Irish People’s Liberation Organisation, which were part of the same grouping, were responsible for 135 deaths and the Provisional IRA was responsible for 1,707 deaths. The Ulster Defence Association and the Ulster Freedom Fighters were responsible for 260 deaths, and the Ulster Volunteer Force was responsible for 430 deaths.
Let me say that every death associated with the troubles in Northern Ireland is regrettable. I do not seek, in any sense, to diminish the sense of loss that people feel when they lose someone.
Mr Gregory Campbell (East Londonderry) (DUP)
My right hon. Friend is outlining the distinction between the various paramilitary groups of all kinds and the security forces. Does he agree that there is one massive and very simple distinction: the forces of law and order were committed to maintaining law and order, whatever may be said about a tiny percentage of their number who exceeded lawful authority, while the paramilitary groups were set up precisely to kill, murder and create mayhem, which they did for many years until they were prevented from continuing to do so?
Mr Donaldson
I thank my hon. Friend; he is absolutely correct and I need not add anything to what he said.
The reality is that republican terrorists were responsible for 60% of the totality of deaths during the troubles in Northern Ireland. Loyalist paramilitaries were responsible for 30%, and forces associated with the state—whether in the Republic of Ireland or the United Kingdom—were responsible for 10% of those deaths. As my hon. Friend stated clearly, the vast majority of those killings were within the law and carried out in the course of duty by soldiers and police officers protecting the community.
However, when we look at the current process for dealing with the past, whether the Historical Enquiries Team, the Office of the Police Ombudsman for Northern Ireland, or an inquest or inquiries funded by the state, the vast majority of resources to examine the past in Northern Ireland are devoted to the 10% of killings, with a scant amount devoted to the 90% of killings carried out by paramilitary organisations on both sides. That cannot continue as it only adds to the sense of disillusionment felt by many people about the current process in Northern Ireland. It is one-sided, biased, and is assisting Irish republicans to rewrite what is called the narrative of the troubles. That has to stop. We must find a process to ensure that attention goes to the more than 3,000 unsolved murders in Northern Ireland, the vast majority of which were committed by illegal paramilitary organisations on both sides. The victims of those atrocities deserve better than they are getting at the moment.
Sammy Wilson (East Antrim) (DUP)
Does my right hon. Friend agree that that is reinforced by successive Governments who have permitted, endorsed and financed inquiry after inquiry into the role of the security forces during the troubles in Northern Ireland, while at the same time there is no such inquiry into the role of republican paramilitaries?
Mr Donaldson
My hon. Friend is absolutely right. We hear republicans talk about a truth process and the need for truth, yet when the challenge has been brought to their door, I think, for example, of the Saville inquiry into the events in Londonderry in 1972. When Martin McGuinness, now Deputy First Minister of Northern Ireland, gave evidence to that inquiry, he refused to tell the truth, the whole truth and nothing but the truth, citing some IRA code that he had signed up to when he joined the Provisional IRA.
Sinn Fein agreed to co-operate with the Smithwick inquiry, which is investigating circumstances surrounding the murders of the two most senior officers of the Royal Ulster Constabulary—Harry Breen and Bob Buchanan—killed by the IRA in south Armagh. Sinn Fein agreed to assist the inquiry with its investigation, and designated two IRA members from south Armagh to meet lawyers representing the Smithwick inquiry. It was a farce. The two IRA members arrived at the meeting; lawyers were present, there was a discussion, and questions were asked. Each time a question was asked that might in some remote way have caused the IRA members to implicate any member of the IRA in any way whatsoever, they left the room, made a phone call, came back in and said, “We cannot answer that question.”
That was a private meeting with lawyers. It was not on the public record or in the public domain, yet even in those circumstances the IRA could not tell the truth about what happened and the circumstances surrounding the murder of the two most senior RUC officers to be killed in the troubles. What hope do we have of getting the truth from Irish republicans when their leadership, when called on to tell the truth, cannot do it, and when those members who have been designated by the leadership to tell the truth also refuse to do so? The problem for me is that when the state is called on to tell the truth, records are brought out, filing cabinets opened, and it is all laid bare.
Ms Margaret Ritchie (South Down) (SDLP)
I thank the right hon. Member for Lagan Valley (Mr Donaldson) for initiating this important debate on dealing with the past. Is he aware of the several hundreds of files lodged in a place in Derbyshire that have not yet been released to the Historical Enquiries Team? Those would bring great benefit to the Police Service of Northern Ireland in investigating many unsolved crimes.
Mr Donaldson
I thank the hon. Member for South Down (Ms Ritchie)—that beautiful part of Northern Ireland—for her intervention, but I think she would be better directing that question to the Secretary of State. Of course the state has a duty to co-operate, but the difficulty I have is that paramilitary organisations are not under any such duty to co-operate, and show no indication whatsoever of a willingness to co-operate in providing the truth. Through the Historical Enquiries Team, a number of cases have been reviewed. Have republicans come forward at any stage in that process to assist the families of those victims with information that might help them get to the truth? No, they have not in any case.
Jim Shannon (Strangford) (DUP)
For the record, there have been occasions when the authorities have inadvertently given evidence or information that they should not have given, thereby disclosing people who were involved in helping the security forces. On occasion evidence has been given that should not have been given, and compromised people who were helping the security forces.
Mr Donaldson
Indeed, and I am sure my hon. Friend will wish to elaborate on that important point in his remarks. The extent to which the state is co-operating, whether with an inquest, the police ombudsman, or through the Historical Enquiries Team, could potentially compromise the modus operandi of the security services, and others who are tasked with protecting the community, not only now but in the future.
Before drawing my remarks to a close I want to place on record some principles that I feel are important as we seek to address the legacy of the past in these talks with Richard Haass. The first principle is that victims have the right to justice and must continue to have that right. Last Monday, as part of the Haass process, I met a number of victims at Stormont. I want to quote the words of one young woman, whose brother I had the honour to serve with in the Ulster Defence Regiment. He was a young man called Alan Johnston from Kilkeel, my home town, and I served with him in the 3rd (County Down) Battalion, Ulster Defence Regiment. He was murdered one morning on his way to work with his lunchbox under his arm. He was a joiner and a part-time soldier, cut down by the IRA. His sister said this:
“A denial of justice would only serve to re-victimise the innocent victims.”
I agree with her. It would be wrong to deny victims the right to justice.
Paul Goggins (Wythenshawe and Sale East) (Lab)
I congratulate the right hon. Gentleman and his party on raising this important issue. He referred to his meeting with victims as part of the Haass process. Does he agree it is important that Dr Haass takes an inclusive approach to the process, and engages not just with the parties but also with victims and survivors?
Mr Donaldson
I commend the right hon. Gentleman on the excellent work he did in Northern Ireland when he was a Minister. He is right, and I assure him that Dr Haass is meeting a wide range of people—as is Meghan O’Sullivan—including the victims. Indeed, some of the victims we saw on Monday had already met Dr Haass. It is important that their voice is heard in this debate.
The second principle I want to be clear about is that there must be no amnesty for the perpetrators of terrorist violence. Thirdly, as I have already stated at length, the definition of a victim of the troubles in Northern Ireland should exclude those who were killed or injured as a result of engaging in an act of terrorism, or convicted of a terrorist-related offence. We hope that that will be taken forward either in this House, or through the Haass process. Fourthly, the glorification of terrorism should not be facilitated or allowed, and if the law needs to be strengthened in that regard, it should be strengthened. This is a free country and a democracy, and we are proud of freedom of speech, but there are times when we have to step in and say that what people say and how they behave is irresponsible, provocative and should stop.
The Democratic Unionist party is strongly opposed to the establishment of any kind of one-sided and unbalanced inquiry process. Any evidentiary process such as a truth commission will inevitably focus on the state, because the paramilitary organisations did not keep records or documents and, as I have stated, are unlikely to tell the truth. Such a process would create an unfair narrative of the past, in which the true perpetrators of the vast majority of the deaths and injuries—more than 90%—will seek to legitimise their actions. They would not be held to account or held responsible for what they have done.
The needs of the victims and survivors must be met as far as possible. Their loss and circumstances should be treated with respect and sensitivity. They deserve and need proper recognition. Victims should have the opportunity to tell their story without it having to be intertwined with the voices of the perpetrators. Innocent victims should be remembered through a significant act of remembrance and commemoration, and, potentially, through a significant regional memorial in Northern Ireland. That could take the form of a memorial garden to the innocent victims of terrorism.
In conclusion, the narrative of the past should reflect core values, including that terrorism was and is wrong, and that it is not a legitimate method of obtaining a political or other objective. The narrative must clearly reflect the fact that approximately 90% of the deaths were the result of terrorist actions, and that the majority of those were by republican groups, so we are very clear that we condemn murder on all sides.
All hon. Members have a responsibility to address the issues relating to our troubled past. The Government have a responsibility—I hope the Secretary of State tells us what role the Government will play—and the process cannot be down to the political parties in Northern Ireland. Equally, the Irish Government have a responsibility. Some of the atrocities were committed in the Irish Republic; some were committed by those acting from the territory of the Irish Republic. The Irish Government have questions to answer about the arming of the IRA in the early days of the troubles, their extradition policy, and their failure at times to co-operate fully with the RUC in a way that would have brought to justice those responsible for terrorist actions in Northern Ireland. The Irish Government therefore have a role and a responsibility in the process.
Finally, I pay tribute to those who have served this country and protected the community, whether they were in the Royal Ulster Constabulary or, as it is today, the Police Service of Northern Ireland; in the armed forces and the regiments that came faithfully to Northern Ireland to serve and protect the community, some of whom are current Members of the House; or in the Ulster Defence Regiment, the locally recruited regiment of the Army, and its successor, the Royal Irish Regiment.
It is worth reminding the House that the RUC was awarded the George cross by Her Majesty the Queen, as a recognition of the collective courage and dedication to duty of all who served in the RUC and accepted the danger and stress it brought to them and their families. The Ulster Defence Regiment and the Royal Irish Regiment were awarded the conspicuous gallantry cross by Her Majesty the Queen in recognition of their valour and sacrifice over the years in Northern Ireland. It pains me when I hear nationalist parties attacking the RUC, the UDR and the Royal Irish Regiment in the way they do—without any balance in their approach to the service that those men and women provided in protecting the community.
I trust that the House will support the motion.
The Secretary of State for Northern Ireland (Mrs Theresa Villiers)
I thank the Democratic Unionist party for giving the House the opportunity to discuss matters of such great significance not only for Northern Ireland but for the whole United Kingdom. I congratulate the right hon. Member for Lagan Valley (Mr Donaldson) on a passionate and moving speech on Northern Ireland’s troubled past.
As the right hon. Gentleman reminded the House, and as we heard in Prime Minister’s questions, the debate coincides with the anniversary of one of the most appalling atrocities of Northern Ireland’s past: the Shankill bomb, which had the tragic consequences set out by the right hon. Gentleman. In the days following the attack, my predecessor as Secretary of State for Northern Ireland, my noble Friend Lord Mayhew, spoke in the House of the revulsion that people felt at such a hideous and atrocious attack on people going about their business on that Saturday morning 20 years ago.
I echo those sentiments today, and repeat the long-standing position of this and previous Governments that politically motivated violence, from wherever it came, was never justified. The Government will not condone attempts to glorify or legitimise acts of terrorism. We will never treat the men and women of the police and the Army who acted with such courage and self-sacrifice in upholding the rule of law as equivalent to those who used terrorism to try to further their political ends.
My noble Friend Lord Mayhew, in concluding his statement to the House on the Shankill bomb, reaffirmed:
“In this democracy, it is only through dialogue—dialogue between those who unequivocally reject the use or threat of violence—that the foundation will in the end be found for a fair and hence a lasting peace.”—[Official Report, 25 October 1993; Vol. 230, c. 578.]
Thankfully, over the ensuing years, that dialogue did go forward, beginning with the 1993 Downing street declaration and continuing with the 1998 Belfast agreement and its successors, and the basis was found for the relative peace and stability that Northern Ireland enjoys today.
Twenty years on from the Shankill bomb, Northern Ireland has its own inclusive, devolved Administration. Whatever the imperfections of the devolved institutions, they are a vast improvement on what went before. Relations within these islands—both between north and south, and between London and Dublin—have never been stronger, with both Governments determined to work closely together on the economic and other challenges our two countries face. The main paramilitary campaigns that led to more than 3,500 lost lives and such widespread and tragic suffering, which we have heard about this afternoon, have come to an end. Lethal though they are, the people who continue to seek to pursue their aims through violence are small in number and enjoy almost no public support whatever.
The transformation that has taken place over the past 15 years is a great testimony to the leadership and courage shown by so many of Northern Ireland’s political leaders, a number of whom are in the Chamber. It also vividly demonstrates the power of dialogue as a means of dealing with problems that were previously viewed as intractable. Yet, for all the progress, there is no doubt that the legacy of the past continues to cast a shadow and have an impact on today’s Northern Ireland. I see that whenever I meet victims of terrorism, as I did, for example, in Castlederg just a few weeks ago. I also see it when I meet those who believe that the unjustified actions of the state robbed them of their loved ones. All of them have highly personal tales of tragedy, and it is impossible not to be moved by their stories.
It is therefore not surprising that there are calls from a number of quarters in Northern Ireland for a mechanism or process to be initiated to deal with the past and grapple with the questions outlined today by the right hon. Member for Lagan Valley. I agree with him that, in taking forward that process, we must put the needs of victims at its heart. He is right to look at the options that involve enabling victims to tell their stories, so that the facts of what happened to them are on record and never forgotten.
Numerous attempts have been made in the 15 years since the 1998 agreement to come up with a so-called overarching process on the past. In 2008, the previous Government established the consultative group on the past under the chairmanship of Lord Eames and Denis Bradley. On coming to office, my predecessor as Secretary of State published a summary of the responses to Eames-Bradley and embarked on an extensive round of meetings with Northern Ireland’s political parties, victims groups and other interested bodies. Since becoming Secretary of State just over a year ago, I have had wide-ranging discussions on the subject both within Northern Ireland and with the Irish Government.
However, so far, none of the initiatives by either the previous Government or the current one has succeeded in establishing a consensus on how best to take things forward. That is certainly not to say that nothing is happening on the past—far from it. As well as a host of local and oral history projects and the tireless work by the voluntary sector in supporting victims, there are initiatives such as the CAIN archive at the university of Ulster, the renowned collection at the Linen Hall library, and thousands of hours of historical footage held by the BBC and Ulster Television. In fact, given the wealth of archive material available, Northern Ireland’s troubles are probably one of the most comprehensively recorded and documented periods in history.
For our part, the Government are committed to accelerating the release of state papers, so we are moving from the 30-year rule to a 20-year rule, although this will always have to be done in a way that is sensitive to the article 2 rights of all parties and to national security considerations. We are working with the Irish Government on the decade of centenaries that is now under way. Both Governments want to use the forthcoming anniversaries to promote mutual respect and understanding between different traditions, and to prevent them from being exploited by those intent on causing division and conflict. We continue to support the work being done in the devolved sphere, for example by the Police Ombudsman for Northern Ireland, the Historical Enquiries Team and the Victims’ Commissioner. The Government have been fully prepared to apologise where the state has failed to uphold the highest standards of conduct. That has been done in the cases of Claudy, Patrick Finucane and, of course, Bloody Sunday, where the Prime Minister acknowledged to the House in the frankest of terms that what happened that day in Londonderry in 1972 was “unjustified and unjustifiable.”
There is no doubt that some want a broader initiative, a so-called “overarching” process, and they have asked the Government to deliver it. I understand that, and of course the UK Government are prepared to play their part in dealing with legacy issues, but I am also very clear that we do not own the past. The reality is that for any process to succeed it must command a substantial consensus among the Northern Ireland political parties and across the wider community.
The Government strongly welcome the initiative by the five parties in the Northern Ireland Executive to begin to take local ownership of this issue through the establishment of the Richard Haass working group on flags, emblems, parades and the past. While not formally part of this group, the Government are fully engaged with it. I and my officials have had a number of meetings and discussions with Dr Haass and his team, and I am seeing him again next week. Last Thursday, Dr Haass had talks in Downing street where he met the Prime Minister and the Deputy Prime Minister, who gave their full backing to the crucial task that Dr Haass has undertaken. It is clear that the Haass talks are dealing with some of Northern Ireland’s most difficult and long-standing fault lines and there is no guarantee of success, but I believe that there is a genuine willingness on the part of Northern Ireland’s political leadership to make progress. From my discussions with Dr Haass, I believe that there is no better person to help achieve that. With 12 months of protests and tensions around flags and parades, it is essential that progress is made.
While the focus of today’s short debate is about dealing with the past, it is also important that we do not lose sight of the overriding need to build a better future for everyone in Northern Ireland. That is particularly true on the economy and on building a shared society that is no longer blighted by the sectarian divisions that have caused so much damage over the years, both areas on which the Government are working very closely with the Executive. As I have made clear, progress cannot await the outcome of the Haass talks; it is vital that momentum is maintained. On the economy, there are now clear signs that, like the rest of the UK, Northern Ireland is turning a corner, with business activity growing, unemployment falling, the property market stabilising and construction finally starting to pick up after the disastrous crash experienced under the previous Government.
There is much more that needs to be done, which is why the Government and the Executive are pressing ahead with implementing the economic package we signed in Downing street in June, and on which we jointly published an update a fortnight ago. As part of that package, the Prime Minister and I attended a highly successful international investment conference at Titanic Belfast, where senior business figures from across the world were shown just what a great place Northern Ireland is in which to invest and to grow a business.
On addressing community divisions, my right hon. Friend the Prime Minister and I have repeatedly pressed for progress. We therefore warmly welcomed the community relations initiative by the First Minister and Deputy First Minister, with the publication of “Together: Building a United Community” in May. It was a significant moment last week when the First Minister of Northern Ireland broke new ground for a Unionist leader in addressing a Gaelic Athletic Association event. As the First Minister himself pointed out, this would have been unthinkable a few years ago and is another sign that Northern Ireland is moving forward.
In conclusion, I would like to echo the right hon. Member for Lagan Valley in paying a warm tribute to the members of the police, the prison service and the armed forces who served with such distinction, valour and courage in defending and upholding the rule of law, defending democracy and protecting the community in Northern Ireland. This is a welcome opportunity to reiterate the thanks of this House for all they did during the troubles and to reiterate the thanks to all those who currently defend the community in the security forces in Northern Ireland.
Lady Hermon
I am grateful to the Secretary of State for allowing me to intervene. I have waited patiently for the Secretary of State to put on record the Government’s deep and sincere appreciation of the members of the Royal Ulster Constabulary George Cross—not just within the general title of the police, but the RUC George Cross, which made an enormous sacrifice: 302 murdered police officers, men and women. Too often, this House lets the opportunity go past without putting on the record the debt of gratitude we owe the RUC, particularly the families of those who stood by them and those who did not come home.
Mrs Villiers
I am only too happy to put on record once again the support and tribute to the members of the RUC and their families, who suffered greatly at the hands of terrorists during the troubles, and to their successors in the PSNI, who even today are subject to repeated targeting by the terrorists who still operate in Northern Ireland.
Kate Hoey
Will the Secretary of State tell us what her view is on the recent announcement that the PSNI will try to persecute and prosecute some of the soldiers involved in the terrible incidents of Bloody Sunday so many years ago? Does she think that this is a way of moving forward? Does she not realise that this is making one side of the community feel, when they cannot even get an inquiry into Omagh, that there is not even-handedness?
Mrs Villiers
In the Prime Minister’s statement on Bloody Sunday, he reiterated very clearly that the vast majority of those who served in Northern Ireland, whether in the Army or the RUC, served with distinction, integrity, courage and valour. He also said, however, that one does not defend the British Army by defending the indefensible. What happened in Londonderry in 1972 was indefensible. Whether that will lead to criminal prosecutions is a matter for the police and the prosecution authorities in Northern Ireland. It is not a matter for politicians to intervene in. I am sure that great care will be taken in deciding whether it is appropriate for a prosecution to go forward in relation to what happened on that day.
Ms Ritchie
I emphasise that murder was and is always wrong, and that terrorism was and is always wrong. In so doing, and to bring some relief to the victims, may I ask the Secretary of State if she would consider immediate discussions with the Secretary of State for Defence to ensure that the files held in Derbyshire are released to the Historical Enquiries Team for its investigation? That would bring relief right across Northern Ireland in terms of all the unsolved cases.
Mrs Villiers
I am certainly happy to have a conversation with the Secretary of State for Defence on that matter, which the hon. Lady has raised on a number of occasions. I reiterate, however, that the need for transparency always has to be tempered against the need to protect people who might come under threat if their names were disclosed, and to take account of national security interests.
In her historic speech during her visit to Ireland and Dublin castle in 2011, Her Majesty the Queen spoke of being able to bow to the past, but not be bound by it. It is impossible to be involved in Northern Ireland and not be aware of the power of the past to affect current events, but we know that with the same kind of leadership and courage shown over recent years, the people of Northern Ireland can build a prosperous and united future together. Working with them, that is what the Government are resolutely determined to achieve.
Mr Ivan Lewis (Bury South) (Lab)
I am pleased to have the opportunity to contribute to the debate on behalf of the official Opposition. Hon. Members will agree that we do not get the chance to discuss Northern Ireland often enough on the Floor of the House, so I thank the Democratic Unionist party for giving us this opportunity and the right hon. Member for Lagan Valley (Mr Donaldson) for his opening statement. I know that for him this is not only politically important, but personally extremely salient, because of the losses that he and his family suffered as a result of the troubles.
I also acknowledge the work of Northern Ireland Members who have dealt with these sensitive and complicated issues from the perspective of the friends, neighbours and families of those killed and injured. Their work, alongside voluntary organisations in Northern Ireland such as the Commission for Victims and Survivors, led by Kathryn Stone, provides crucial and unwavering support for the families of victims. As the right hon. Gentleman and the Secretary of State said, it is also important to acknowledge that today is the 20th anniversary of the appalling Shankill road bombing and horrendous loss of life. We should also remember the awful events at Greysteel the subsequent week.
The debate comes at a crucial time in the aftermath of recent concerning disturbances, and in the midst of the Haass talks, in which all the parties in Northern Ireland have agreed to participate. I have been in this role for only 15 days, so I have no intention of presenting myself as an expert on Northern Ireland, but I promise to listen and learn, and then to provide leadership on issues on which I believe that the Opposition can help to make a positive difference. Over the weekend, I had the opportunity to visit Northern Ireland for the first time in my new role. In the past fortnight, I have met the First Minister and Deputy First Minister, and many of the Northern Ireland MPs here at Westminster, and attended meetings with Members of the Legislative Assembly, business people and community organisations. I have met people whose sense of place and belonging, and connection to family and community, shines through. I would like to take this opportunity to express my gratitude for the guidance and support that I have received during the transition into my new role.
Notwithstanding the many remaining challenges, Northern Ireland has been transformed over the past two decades by the peace process. My party played an important role in making that process possible, and I am aware of the many people in the House who have shown tremendous leadership by supporting that process through the good times and the bad. Irrespective of the many continued challenges, we have a shared interest and responsibility to ensure that Northern Ireland continues on its journey to build peace, fairness and prosperity.
Make no mistake: on the whole, Northern Ireland is on the up. Most recently, we saw the successful investment conference in Belfast, and in 2013 alone, Northern Ireland has hosted some of the most important global political, cultural and sporting events. The G8 summit was held in the beautiful surroundings of Lough Erne, while the 10-day world police and fire games, the third-largest sporting event in the world, which attracted competitors and supporters from around the globe, was hosted in Belfast for the first time. Moreover, Derry-Londonderry was designated the UK’s inaugural city of culture. Northern Ireland is in the spotlight for all the right reasons and is taking its rightful place on the world stage.
Despite that remarkable progress, however, significant challenges remain and we cannot afford to be complacent. The disgraceful scenes of rioting that we witnessed over flags in the early part of the year and over parades in the summer, and the terrible murders of two weeks ago, are a reminder that deep wounds still exist and that the legacy of the past continues to afflict communities in Northern Ireland. In that context, it is important that we pay tribute to the courageous work of the men and women of the Police Service of Northern Ireland, who do such an important job on the front line.
As others have said, violence can never be condoned. It is unacceptable and should be condemned by politicians from all parties and all community leaders. We have welcomed the all-party Haass talks as a crucial opportunity to address the contentious issues of flags, parades and the past. It is essential that these talks lead to meaningful progress and action that has the confidence of the vast majority in all communities. That will require not only courageous and visionary political leadership from Northern Irish politicians, but the active and consistent engagement of the UK and Irish Governments. It therefore remains a source of serious concern that too many people in Northern Ireland feel that the present UK Government are insufficiently engaged. Engagement is essential, given the need for recognition of the responsibility the UK Government have for their role in the troubles and of the reality that any process to deal with the past will have financial and legislative implications that, ultimately, will require their support.
Mrs Villiers
The hon. Gentleman repeatedly makes the allegation of disengagement, which is very far from the truth, as I outlined in my speech and at Northern Ireland questions. If he is concerned about disengagement, is he concerned about Opposition Front Benchers, given that his predecessor, the hon. Member for Gedling (Vernon Coaker), was barely seen in Northern Ireland during what was a very difficult parading season?
Mr Lewis
I have made it clear to the right hon. Lady that when we agree with the Government on security issues, we will continue to operate on a bipartisan basis—that is how we should work in the context of Northern Ireland. As an old boss of mine once said, however, perception is reality, and if many politicians and others active in Northern Ireland believe that there is insufficient engagement from the Government, it might just be, with respect, that they are telling the truth. As for her comments about my predecessor, there are very few politicians who, when they leave a job, receive such widespread acclaim—[Hon. Members: “Hear, hear.”] That acclaim came from all political parties that are doing their best to make a difference in Northern Ireland, so her criticisms of him were not worthy of her.
Mrs Villiers
My concern is about perceptions and reality. If the hon. Gentleman believes that the Government are disengaged, I am surprised that he took the trouble to point out two great successes for Northern Ireland—the G8 conference in Fermanagh and the recent investment conference—that would not have happened without the close engagement of the UK Government.
Mr Lewis
With respect, I have been in this job for only about 13 or 14 days, but the majority of politicians I have met in Northern Ireland feel that there is inadequate engagement from the Government on a range of issues. It is not just about turning up at the high-profile events. Of course, the fact that the Prime Minister attended the recent investment conference was incredibly important, but this is about rolling one’s sleeves up and working, on an ongoing basis, on a range of issues, so that people feel that one has a passion for and a commitment to the challenges facing Northern Ireland.
Sammy Wilson
Whatever the Secretary of State might say about the former shadow Secretary of State, the view of parties in Northern Ireland is that he was assiduous in his work. He visited almost all the constituencies and spent all day with Members going round them, so the Secretary of State was unfair in her allegation that he did not perform his role with enthusiasm, zeal, passion and a concern for people in Northern Ireland.
Mrs Villiers
It is simply not true that the Prime Minister’s involvement in Northern Ireland consists only of his turning up at a few high-profile events. A huge amount of planning went into delivering the G8 summit, and it is this Prime Minister who has delivered a wide-ranging economic pact that enables us to work with the Northern Ireland Executive in an unprecedented way to deliver a more prosperous future for Northern Ireland.
Mr Lewis
The best thing I can do at this stage is to move on with my contribution. The right hon. Lady should reflect on how many people in Northern Ireland feel, and think about the implication of those feelings.
Engagement is essential because any process that deals with the past will involve financial and legislative implications requiring the support of the UK Government. I want to highlight an initial view of the principles that we believe should apply to any credible process seeking to deal with the past. First, as the right hon. Member for Lagan Valley said, any process must put victims and their families centre stage, while recognising that they will have different views and needs—I have learned that during my first couple of weeks in the role. One of the most powerful meetings I had during my visit to Belfast was with representatives of the families of victims who disappeared during the troubles—they have been described as “the disappeared”. As a result of the peace process, the families I met have had their loved ones returned and have been able to lay them to rest. They told me of not only their pain and trauma, but their desire not to pursue further action against those responsible. However, I am acutely aware that some families have still not experienced similar closure and that others may feel very differently about those responsible. I intend to meet and hear directly from victims and survivors from all backgrounds, as well as from their families and those who care for them. Their stories deserve to be heard and listened to, and their experiences need to be respected, as the right hon. Gentleman said.
Mr Lewis
After 14 days in my post, I can say that any violence, from whatever source, is to be condemned unequivocally. I would regard anyone who is a victim of violence, intimidation or terror as a victim. If we want to get into a detailed debate about this, I would want some more time in my post so that I can carry out further work and engagement—I have tried to respond as much as I can to my hon. Friend. A big and important part of my job is to spend time with victims and their families to get a sense of how they feel and what the definition of justice means to them. In different circumstances, there can be a different response, so we need to be sensitive to that fact.
A second important principle is that any process must recognise that significant progress can be made without trying to achieve a shared narrative about the past, as achieving such a narrative would be an unrealistic expectation. What is of paramount importance is that nationalists and Unionists learn to respect the equal status and legitimacy of their fellow citizens now and in the future.
The third principle is that while it is, of course, right to consider all options about addressing responsibility and accountability for past wrongdoing, it is also important to say that any process must recognise the rights and responsibilities defined by the European convention on human rights. The convention is clear. It stresses the importance of ensuring justice, truth and reparation in response to violation and abuses, which would require a deep and sensitive understanding of what that would mean for the wishes and expectations of victims and their families.
I have always believed that the public expect politicians, on the whole, to focus primarily on change and the future. However, it is clear that part of securing a better future for Northern Ireland requires us to deal with the unresolved issues of the past, which is why the Haass talks are so important and cannot be allowed either to fail, or to arrive at superficial solutions. Haass has the potential to achieve meaningful transformational change if all political parties, and the UK and Irish Governments, show leadership and seek common ground in the interests of all people of Northern Ireland.
Lady Hermon
Will the hon. Gentleman confirm that he, his party leader and his party will make a submission to the Haass talks, albeit he has been in his post for only a short period? Will he kindly publish any such submission so that rest of us can be au fait with the requirements of the Labour party?
Mr Lewis
I am delighted to give the hon. Lady that assurance. I will be meeting Richard Haass next week, or the week after, and we will certainly make any written representations public and ensure that hon. Members are aware of our position.
Just as it would be wrong to minimise the importance of the past, it would be equally mistaken to suggest that that, in itself, is Northern Ireland’s biggest challenge. The greatest challenge is the corrosive cycle of poor educational attainment, worklessness and intergenerational deprivation that continues to afflict far too many families and communities in Northern Ireland. That lethal cocktail has the potential to be the breeding ground for extremists, and for perpetual conflict and instability. Although those issues are primarily the responsibility of the Northern Ireland Executive, the UK Government have a key role to play in pursuing an active industrial strategy to generate jobs and growth, while reflecting on the negative impact that pernicious policies such as the bedroom tax have on the most vulnerable and also would have on Northern Ireland’s block grant.
This year’s disturbances should teach us a number of lessons, one of which is undoubtedly that unfinished business remains in relation to the past. However, we must also reflect on the impact of social and economic inequality, which cannot be allowed to prevail if peace in Northern Ireland is to move from a political accommodation to a society built on genuine reconciliation and mutual respect.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. If we have a 10-minute limit, we will, I hope, get everybody in.
Mr Laurence Robertson (Tewkesbury) (Con)
I thank the Democratic Unionist party for today’s two debates, both of which are very important. I pay great tribute to the right hon. Member for Lagan Valley (Mr Donaldson), who has been a friend of mine for many years, for the way in which he introduced the debate. I think that the whole House will have found it extremely moving and very sad when he read out the names, ages and family connections of those murdered 20 years ago today—it really reminds us of what a terrible time in Northern Ireland we have seen. I would like to add my sympathies and condolences to all those who survived that attack and lived with the pain of it—it is unimaginable what they went through then and what they are still going through.
Just last year, I visited Enniskillen with the hon. Member for Vauxhall (Kate Hoey) for the 25-year anniversary commemoration of another terrible atrocity. I was in Dundalk the day the bomb went off at Omagh and have since visited Omagh three times. I have also met the families in relation to the events at Kingsmill and Ballymurphy, and the Finucane murder. Terrible though those atrocities were, it is worth remembering that they all took place some time ago and since then enormous progress has been made in Northern Ireland—it is very important to remember that. We have seen Her Majesty the Queen pay an outstanding, historic visit to not only the Republic of Ireland, but to Northern Ireland, when she shook hands with Martin McGuinness and many other people. We have also seen power sharing and several important events in Northern Ireland which have been referred to already: for example, the G8 meeting was held there and Londonderry is the city of culture. There are many tourism opportunities in Northern Ireland, such as Giant’s causeway and the Titanic centre—there are very many reasons to go to Northern Ireland. We have seen so many changes, even just over the years I have been going there.
It is also right to say that challenges remain, however. There is unfinished business in Northern Ireland and sadly it is still, in some ways, a divided society. For example, there are more peace walls there now than there were 10 years ago, which cannot be a good thing. There are still dissidents attempting to murder members of the security forces and, over the summer and during the flag protests at the end of last year, we saw so-called loyalists throwing bricks at police officers. That simply cannot be right.
Much has been done, but this debate is about dealing with the past. How do we deal with the past? Can we ever do it successfully? There has been a call for an inquiry to be held into the Omagh atrocity, and there are powerful arguments for doing so, but there are also people who do not want such an inquiry because it would bring back the pain and rake over the past. It would risk prolonging the pain.
Perhaps the only way to deal with the past is to build a better future. Since 2010, the Select Committee, which I have the honour of chairing, has been concentrating on the future. For example, it has been inquiring into and making recommendations on economic matters such as corporation tax and air passenger duty—which we shall discuss in a short while—in an attempt to cement the peace that has been achieved by building a better economy, and by giving people greater opportunities and allowing them to feel that the peace process has been worth while for them. This is about building a Province that is very different for present and future generations from what it was in the past.
The Select Committee also considers security matters and issues relating to the past. For example, we are meeting Dr Richard Haass next Tuesday to discuss his work. We will also be meeting the Chief Constable and Deputy Chief Constable to discuss the security situation. Shortly after that, we will meet the Secretary of State to discuss all those issues and more.
One issue that the Committee cannot look into in any detail, because it is devolved, is that of education and schooling. I believe, however, that we need to make more progress on integrated education. We need to bring children together at the age of four, rather than separating them and allowing them to live separate lives. We need to show them that there is no difference between a Catholic and a Protestant, and that what differentiates us is the way we behave rather than the labels that are placed on us.
Kate Hoey
I thank the Chair of my Select Committee for giving way. It is important to remember when we talk about integrated education that many of Northern Ireland’s grammar schools are highly integrated. The idea that the only way of getting Catholics and Protestants to be educated together is through the introduction of integrated schools does not reflect what is actually happening.
Mr Robertson
I accept that the hon. Lady knows an awful lot about this subject, and I accept her point about grammar schools. She will also be aware, however, of the turmoil surrounding the ability of children to qualify to go to those schools. I suggest that there is still a need to move the general principle of integrated education forward in the wider sense.
Mr Brian Binley (Northampton South) (Con)
My hon. Friend is making a thoughtful speech. I congratulate the Select Committee, which he chairs, on its work. I also congratulate my hon. Friends in the Democratic Unionist party on securing this timely debate. Does my hon. Friend agree that one of the best ways to make progress on burying the past would be for Sinn Fein Members to come to this House and take part in debates such as these? It is a matter of great sadness that they do not do so. I appeal to my hon. Friend to make a plea to that effect—
Mr Robertson
I thank my hon. Friend for that powerful intervention. That point was also raised earlier, and I agree entirely. I have in fact taken the matter to the very top, in that I have said to Mr Gerry Adams and Mr Martin McGuinness that that is exactly what they should be doing. They should be coming here to argue their case. They travel to Westminster and hold meetings here in this building, but they will not come to the Chamber to discuss these issues. They are not serving the people of Northern Ireland very well by pursuing that abstentionist policy. Almost a third of the Province is unrepresented here in this Chamber, which is a tragedy for the people of Northern Ireland, regardless of whether they are republicans or Unionists.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
As a fellow member of the Northern Ireland Select Committee, I congratulate my hon. Friend on the way in which he chairs it. Does he agree that we have begun to make progress, in that Sinn Fein has started to attend some meetings of the Select Committee, including when we are in Belfast? We have opened a dialogue of some sort. We have much further to go, but that will be down to my hon. Friend’s activities as well.
Mr Robertson
I thank my hon. Friend for his kind remarks. It is true that Sinn Fein has started to give formal evidence to the Select Committee, and I regard that as progress. Despite what I just said in response to my hon. Friend the Member for Northampton South (Mr Binley), I must point out that these things sometimes take a little while. There has been progress in that respect, as my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) says, and I hope that it will continue because I see it as a positive move. It is sensible for Sinn Fein to make that move, but there are still a number of steps that it will have to take.
I was talking about integrated education, and I am very keen on that concept. I attended a Church of England secondary school, and I am proud to have done so, but I must point out that Bolton in Lancashire is very different from West Belfast—as you will know, Mr Deputy Speaker—and presents very different challenges. I want to see a society in Northern Ireland in which peace walls are no longer required, and in which we stop counting and publishing the percentages of Catholics and Protestants in organisations. We need to reach a point at which that does not matter.
We must move towards a society in which, rather than segregating children almost at birth, we teach them to live together. That is the way to achieve a shared future, because a shared future involves sharing institutions and sharing lives. The peaceful future that we all want to build in Northern Ireland will not be secured through treaties or international agreements; it will be secured through changing hearts and minds. That is something that we must try to work towards.
I have mentioned the violence in Northern Ireland over the summer and at the end of last year. I was there during the marches in mid-July, and I witnessed many thousands of people celebrating their culture. There was not a single problem among all those thousands of people. Of course, as ever, the 0.1% did cause problems and, unfortunately, those are the pictures that get flashed across the world. The Select Committee visited America a few months ago, and the people we spoke to told us how disconcerting it was to see the pictures of the flag protests and of the problems relating to marches. We had to point out to them that the problems were due to that 0.1% of the people. Unfortunately, however, those pictures that are flashed across the world lose revenue for Northern Ireland. They lose us tourists and inward investment, and that cannot be right. Those acts of violence cannot be right, whether they are the result of political ambitions related to republicanism or loyalism or the result of pure thuggery, which I suggest some of them were.
Either way, we have to move forward and try to build a better Northern Ireland, so that this generation and future generations do not suffer as those in the past have done, in the ways that my right hon. Friend the Member for Lagan Valley so graphically described earlier. To summarise, perhaps we can best deal with the past only by building a better future.
David Simpson (Upper Bann) (DUP)
It is good to follow the hon. Member for Tewkesbury (Mr Robertson), and I congratulate him on the good work he has done as Chairman of the Northern Ireland Select Committee.
It was L. P. Hartley who famously said of the past that it is
“a foreign country: they do things differently there.”
He was right in the sense that we should learn from past mistakes, either as individuals or collectively as a community, in order to ensure that they are not passed down to be repeated by a further generation. Perhaps because of the immediacy of the troubles in Northern Ireland, however, we have not yet reached the stage where we can describe the past as another country or as something foreign; it is not. There are tens of thousands of people, including hundreds of my own constituents, who live with the trauma caused by past events. They have lost loved ones—fathers, mothers, brothers, sisters, husbands, wives—to the conflict, and that legacy of hurt is enduring, despite the progress made over the last decade or so. We owe it to our fellow citizens to ensure that they are at the heart of the transformation process that our society is undertaking. They cannot be left behind.
In every sphere of life, people see things from different perspectives. If we ask two people to describe an event they both witnessed, we will often get two very different descriptions of it. If we did not, there would be no need for football commentators or current affairs television shows. This is especially the case in historical debate and discussion.
When the premier of the People’s Republic of China, whose name I will not try to pronounce, was asked about the impact of the French revolution, he famously declared that it was “too early to say”—some 200 years after the event. We were tasked with addressing issues that happened within the living memory of most people in Northern Ireland. History is, and always will be, a contested field, and there will never be any agreed interpretation of historical events. This is the case in every society. In that regard, Northern Ireland is no different.
Although there are differences of emphasis and differences of approach to the interpretation of past events that occurred in Northern Ireland, I believe it essential to establish a basic framework of first principles. Truth is not a relative concept; it exists independently of historical visions or approaches. Without the establishment and widespread acceptance of such truth, we cannot adequately hope to address the legacy of pain and suffering that still exist in our society as a consequence of past events.
The first and most obvious statement of truth is that not everyone in Northern Ireland is a victim. There are some who would seek to claim that every single person in our country is a victim. That is an insidious concept for two reasons. First, it diminishes the genuine suffering and pain of those who were directly affected by the actions of terrorists during the troubles. Secondly, it elevates those who engaged in criminal acts to equal status with those whose suffering they caused in the first place. Terrorists of whatever variety or hue do not exist on the same moral plane as those whom they terrorised. They cannot ever enjoy such standing.
Secondly, although general attitudes in society shape people’s outlook and perspective, we must accept that people are ultimately individuals and that, as such, they must be responsible for their individual actions. Society, even one as divided and conflict-riven as Northern Ireland was, did not make people engage in murder or other such crimes. While we are not all victims, we are also not all collectively responsible for the actions of terrorists. No one made Sean Kelly and Thomas Begley plant a bomb on the Shankill road that murdered nine innocent people, as we have already heard, and ultimately cost Mr Begley his own life. That applies to any other atrocity carried out by either side of the community in Northern Ireland. To latch on to the concept of society and to use it to justify such barbaric acts is a measure designed only to placate the conscience of evil people and to lay the blame for their actions at the door of the huge majority of the citizens of Northern Ireland. That is much like a wife-beater saying that his unfortunate spouse made him do it. For terrorists to blame society is a lazy get-out clause, with no moral basis at all.
The third principle we must adhere to is that those who engaged in armed insurrection against the state are in no position to demand the recovery of openness and truth from anyone while they lie about what they did. We have reached the absurd point in Northern Ireland today where the President of Sinn Fein would seek to deny he ever was a member of the Provisional IRA, yet would then with a straight face demand truth and honesty from the state. People cannot lie through their teeth while at the same time demanding truth. It is time that Sinn Fein grew up and accepted the fact that they will never—I say never—be allowed to rewrite the history of Northern Ireland.
You will be aware, Mr Deputy Speaker, that the intensive talks process involving Dr Richard Haass is currently under way in the Province. I suspect that of all the challenges he faces, dealing with the legacy of the past will be the greatest, but I believe it is essential that we do so in a way that is victim-centred and founded on principles that are rooted in justice, honesty and the truth.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I congratulate the right hon. Member for Lagan Valley (Mr Donaldson), along with his Democratic Unionist colleagues, on securing the debate. I also congratulate the hon. Member for Bury South (Mr Lewis) on his new post as shadow Front-Bench spokesman on Northern Ireland. I have to say that I hope he will have his shadow job for a very long time, but only because it would help him to gain a better understanding of what happens in Northern Ireland. I have been a member of the Northern Ireland Select Committee for the last three years, and I certainly think I have a better understanding now than I did beforehand. Let me also pay tribute to the previous Minister of State in the Northern Ireland Office, who has now gone to the Department for Work and Pensions. He was incredibly helpful to me and did a very good job. I know that his successor, the former Defence Minister, will do an equally good job.
As I have said, I have been a member of the Northern Ireland Select Committee for the last three years, so I have been able to see first hand some of the real problems that confront many families, having been through the experience of seeing their loved ones killed, murdered or maimed. I attended a number of meetings with such families and I was particularly struck by our meeting with the victims of Kingsmill—a horrendous story. While visiting Northern Ireland, I took the opportunity to look at some of the paperwork from historic inquests. Reading some of these accounts of what happened—there were lots of them—was incredibly moving.
I want to pay tribute to the armed forces—of course, I would do that, because I represent a constituency that is a naval garrison city—and to the Royal Marines, who have certainly given their lives in support of ensuring peace in Northern Ireland.
Bob Stewart (Beckenham) (Con)
Speaking as an ex-member of the armed forces who frequently went to Northern Ireland, I would like to pay full tribute to those people wearing uniforms who lived in Northern Ireland and who had to leave their families behind as they went out, day after day, to do their duty. Risk is something that we normally do not have to deal with, but the courage of people in the Royal Ulster Constabulary, the Ulster Defence Regiment or the Police Service of Northern Ireland was quite breathtaking.
Oliver Colvile
I thank my hon. Friend for his moving tribute. I pay tribute to him as well, because I know that he experienced some very difficult times when he was serving in Northern Ireland. There were bombings, including the discotheque bombing.
David Simpson
May I add to the hon. Gentleman’s list the Northern Ireland Prison Service, especially in view of the fact that Mr David Black was murdered recently in my constituency?
David Simpson
I very much agree with the hon. Gentleman.
The riots in Northern Ireland were one of the main stories during the summer, along with the flags issue. I welcome Dr Haass’s efforts to find solutions, because I found the riots quite appalling. On 12 July last year I visited Belfast and saw the loyalist parade that was taking place. I learned a great deal from all that. I witnessed some of the marching at first hand, and observed that a number of Roman Catholics and nationalists found it difficult to accept.
If we are to find a solution to the past, we must recognise that Northern Ireland now has a devolved Assembly with its own responsibilities. One of the problems that my right hon. Friend the Secretary of State may encounter is the difficulty of ensuring that she does not tread too much on what the devolved Assembly and the devolved Executive are seeking to do.
A key issue is the feeling among some of those aged between 16 and 24 that they are not really involved in the peace process. They do not understand it, and they do not have a sense of engagement with it. They are the NEETs—those who are not in education, employment or training. My hon. Friend the Member for Tewkesbury (Mr Robertson), who is an excellent chairman of the Northern Ireland Affairs Committee, made a serious point about the importance of improving education and skills, and it is in that connection that I have argued in the Committee that it is time for a review of the progress made following the Belfast agreement, or Good Friday agreement. I hope that Dr Haass will conduct such a review, because it is the only way in which we shall be able to reach some conclusions about what else may happen. Before I was elected to the House, I ran a small public relations company which advised developers on how to obtain help with public consultation. I think there is a very big job to be done—the job of engaging with small, deprived communities in order to understand what they are up to. We need to think about the likely impact on those youngsters.
Another key issue is the need to rebalance the Northern Irish economy. A good 70% to 80% of people still work in the public sector, and I am sure that they do an extremely good job, but I think that unless more people in the private sector invest in the economy, things will be very difficult. It is important for us to create opportunities and jobs if we can possibly do so.
We must retain our commitment to striving for peace. I strongly support the peace campaign, and also the work done by both Tony Blair and, more importantly, John Major, who kicked off the whole peace process. Before I became a member of the Select Committee, I was very much aware of what was going on in South Africa, where there was the Truth and Reconciliation Commission. That would not work in this instance, because many people would feel intimidated by the idea of becoming involved in such a process, and would fear for their own futures.
I believe that we need to expand the university technical colleges, which are working very well; there is one in my constituency. We also need to increase the amount of development, and to encourage the Americans to invest in Northern Ireland, so that we can create private sector jobs and bring about aspiration and hope.
Dr Alasdair McDonnell (Belfast South) (SDLP)
I thank those who tabled the motion for giving us the opportunity to discuss this subject today. I should like to think that the debate will lay some foundations for the work of Dr Haass and Meghan O’Sullivan.
Let me begin by endorsing the honest comments of the Rev. David Clements, who said this morning that neither the past nor victims should be used by anyone to advance a selfish political agenda. Let me also draw Members’ attention, as others have done already, to the fact that today is the 20th anniversary of one of the most horrific events of the troubles. I offer my sympathy, and the unconditional sympathy and support of the SDLP, to all the innocent people who were killed in that horrific Shankill road bombing.
Dr Richard Haass has, in essence, been invited to help us to sort out critically important unfinished business dating back to the time of the Good Friday agreement, more than 15 years ago. We are grateful to him and his team for agreeing to help us. Our failure to grasp the issues of flags, parading and the past has cost us dear, summer in and summer out, year in and year out, during most of those 15 years.
The SDLP’s firm goal in the Haass negotiations is a further comprehensive agreement that would grab the imagination of people in Northern Ireland—and, indeed, further afield—and would inspire hope and create ambition for the future. Not least, such an agreement would send a resounding message to potential investors that Northern Ireland is an even more secure and stable place to which to bring business, thus creating the jobs and prosperity that we dearly need. A piecemeal, temporary, cobbled-together agreement would sell Northern Ireland short and dash the hopes of our people, who look to us, the politicians, to deliver meaningful change.
Stephen Lloyd (Eastbourne) (LD)
Does the hon. Gentleman agree that real progress was made 10 years ago in Derry/Londonderry, when both communities worked together to ensure that parades in that great town did not cause the strife and difficulties they are causing in Belfast?
Dr McDonnell
I could not agree more with the hon. Gentleman. All the difficulties have been resolved in Derry. Everything is now a celebration, and the contention surrounding the parades has gone. Derry’s month as UK City of Culture has been an outstanding success story. I congratulate the people of Derry, and, indeed, my hon. Friend the Member for Foyle (Mark Durkan), who represents them.
We in the SDLP seek from Dr Haass—in broad terms—a bigger and better agreement. We want an agreement that transcends the narrow issues of parades and flags, and addresses the past in an expansive way; an agreement that celebrates rather than denigrates the expression of culture, allegiance and political identity across the communities in Northern Ireland; an agreement that promotes healing and reconciliation, and enables us to grow up politically and develop mature politics in the atmosphere of growing mutual respect that was promised in the Good Friday agreement, after which—in 1998—the people voted for
“reconciliation, tolerance and mutual trust”
and for
“partnership, equality and mutual respect”.
Only a radical change of attitude all round that embraces the values and ambitions of that agreement will deliver the successful outcome that Northern Ireland needs so much. Surely, given ambition, flexibility and resolve, that much is not beyond our reach. We in the SDLP are up for the challenge posed by Dr Haass and Professor Meghan O’Sullivan.
In recent weeks—I put my hand up at this point, as indeed we all must, because we have all made mistakes and must now join others in making progress—we have sought to make our small contribution to the healing process by addressing an issue that has been raised in the House from time to time. Some months ago, our councillors in Newry voted to retain the name of a local play park that the council had named after an IRA hunger striker 10 years earlier. Our councillors genuinely believed that if the name were allowed to remain, a line would be drawn in the sand and no other public spaces would be similarly named in future. In local terms, perhaps, that was a pragmatic decision—it was, perhaps, understandable in terms of local government. Our representatives acted entirely in good faith. They reassured me, one and all, that it was neither in their thinking nor was it their intention to cause hurt or distress to anyone. I want now to reaffirm the SDLP’s position. Our position is that no public place or public space should be named after any person involved in state or paramilitary violence of any sort.
The issues addressed in the Haass process can be resolved only on the basis of mutual respect, equality and parity of esteem. The SDLP will not be found wanting in generosity or determination to bring about a comprehensive agreement that will be an example to divided communities everywhere. The atmosphere for these talks would be greatly improved, and Belfast traders would breathe a huge sigh of relief, if the loyalist flag protesters called off their planned demonstrations in the city in the run-up to Christmas and if the Orange Order agreed to call a halt to its continuing irresponsible protests at Ardoyne, which are resulting in a policing operation that the PSNI estimates is costing £50,000 a day—which amounts to £5 million over the period. That would have paid for 200 or more young teachers, 200 nurses and perhaps even 200 extra police that we so badly need
Mr Donaldson
The point the hon. Gentleman makes about the economy is an important one. Is it not therefore a matter of regret—this is not an issue for this House but it is nevertheless worth placing on the record—that yesterday the Minister for the Environment, who belongs to the SDLP, refused to move a Bill that could transform our planning system and help attract a lot more investment into Northern Ireland? Should not the SDLP act on its own words?
Dr McDonnell
At this point, may I welcome you, Madam Deputy Speaker, to your place and say what a privilege it is to speak in this Chamber under your chairmanship?
I will respond later to the comment that was just made, because it is a clear example of what is wrong, rather than what is right.
The past is a more intractable and complex issue than flags and parades and it casts a long shadow in Northern Ireland. By far the best and most coherent blueprint for tackling the past is the report of Lord Eames and Denis Bradley. The group jointly chaired by Lord Eames and Denis Bradley carried out an immense amount of work, publishing a report that ran to almost 200 pages and carried more than 30 main recommendations. It is unacceptable that such a balanced and carefully considered document should apparently be forgotten—gathering dust on a shelf somewhere—because of the controversy that attached to one of its recommendations in relation to ex gratia payments. The SDLP believes Eames-Bradley still has much to commend it. All would benefit from giving it the reconsideration it has well-earned and is due, while, of course, bringing additional ideas of their own to the table.
There are many among us who would wish to forget the past, but there are many victims out there whose lives have been wrecked and who cannot move on without closure.
Ms Ritchie
Nearly 20 years ago six people from my constituency of South Down were murdered in cold blood at O’Toole’s bar in Loughinisland, and nearly 20 years later the victims and families of those six good men have still not received justice or an answer as to why they were killed, and those who carried out this heinous crime have still not been brought to justice. Does my hon. Friend agree that the PSNI must now complete its investigation, based on the work of the former police ombudsman, so that families have a pathway to justice and truth?
Dr McDonnell
I agree with my hon. Friend. [Interruption.] I also agree with others who are whispering from a sedentary position that there are many victims out there whose lives have been wrecked and who cannot move on without closure and without answers. I do not distinguish between people based on what their politics were or what their religion was: innocent victims are innocent victims.
Unfortunately, time and again the past comes back to haunt us. I am told that this evening “Channel 4 News” will bring us some horrible truths about the past in Northern Ireland, and on Friday a book will be published called “Lethal Allies”, chronicling some of the criminal collusions between renegade elements of the security forces and loyalist killers. I am given to believe that, among its revelations, it will throw some light on the horrific murder of a former colleague of mine, Dinny Mullen. Dinny was the father of my friend and colleague, Denise Fox. Dinny was targeted and murdered in his own home because he was an SDLP activist. His crime was that he was the election agent for my colleague, Seamus Mallon, a former Member of this House.
There is a murky past out there, and while I must put on record my view that the vast majority of the members of the RUC—as the hon. Member for North Down (Lady Hermon) said earlier—and the security forces, including many who are now Members of this House, served with integrity, honour and distinction, a small number of others acted in the shadows and they dishonoured that honourable vast majority. They acted in a way that was no better than those they were attempting to oppose—the terrorists they were challenging. They acted well outside the law, and lines of accountability were blurred and, indeed, ignored. They acted directly and indirectly in acts of terrorism. The gang that murdered Dinny Mullen went on within a short space of time, and with little challenge by police or security forces, to murder well in excess of 100 people, including members of the Miami show band. We need to get closure on a lot of these issues.
I want to say a few words about the two Government co-guarantors and about an earlier point that was made. The British and Irish Governments, who are co-guarantors of the Good Friday agreement, must be bold, decisive and vigilant in standing up to the narrow self-interest of the DUP and Sinn Fein, which the right hon. Member for Lagan Valley (Mr Donaldson) referred to. The DUP and Sinn Fein made a savage attack on what was otherwise a very positive and creative planning Bill. They tried to hollow it out and destroy it, and the Minister responsible had no choice but to dismantle it. This was petty party self-interest to destroy the Bill.
The two Governments must remain centrally involved in the Haass process and be prepared to underwrite the comprehensive agreement that I hope we will have, with good will and mutual respect. I compliment Peter Robinson, leader of the DUP, on what he has said in two recent very significant recent speeches. With attitudes such as that, we can achieve a further agreement and achieve peace.
Stephen Lloyd (Eastbourne) (LD)
It is a privilege to serve under your chairmanship, Madam Deputy Speaker.
I thank the right hon. Member for Lagan Valley (Mr Donaldson) and his party colleagues for introducing this important debate. As they know, I am half-Northern Irish and have made many visits to Northern Ireland ever since I was a child—since the beginning of the troubles. I share the right hon. Gentleman’s profound belief that we have to manage the past properly and fairly if we are ever to have a positive future. I also pay tribute to my hon. Friend the Member for Tewkesbury (Mr Robertson), who made a very thoughtful contribution. I agree that we must try to move forward in a much more inclusive way if Northern Ireland is ever to have the wonderful, prosperous and peaceful future that all of us in the House wish for it.
Having said that, in Northern Ireland the past is always a challenge. Although I am only half-Northern Irish—and half-English—I know that it is an incredibly delicate area to tread in, and I also know that that is one of the reasons why there have been so many piecemeal attempts to try to get on top of the past. In some ways, I think that Northern Ireland has succeeded. When compared with the situation of only a few years ago, the recent progress has been substantial, but the complexity of Northern Ireland, its past and the troubles cannot be resolved easily or simply, because otherwise that would have happened many years ago under the previous Government. Strong movement in one direction tends greatly to upset people on the other side of the divide.
A good example of that, to which the hon. Member for Belfast South (Dr McDonnell) alluded, was the Eames-Bradley report, which I thought was outstanding, detailed and fair. It tried honourably to address the immense complexity of the sectarian divide, but we all know the result: it was shelved, ostensibly for one reason. My personal view is that that reason was used as an excuse to shelve the whole report, which was disappointing. However, the report is still in a drawer somewhere in Whitehall, so perhaps one day we can bring it out, re-evaluate it and use much of its learning, because the Eames-Bradley report was a good way forward.
On the one hand, I am optimistic about the Haass initiative, which I think is a good, positive step. On the other hand, however, I am slightly depressed about it because Dr Richard Haass’s consultation has come about because we have yet again reached an impasse. My hon. Friends from Northern Ireland will know that “impasse” is a French word, and impasse may be a common occurrence in Northern Ireland, for the reasons that we know. I am glad that the five political parties have endorsed and supported Haass. After he has spoken to people, including the Secretary of State and the shadow Secretary of State, but more importantly the political parties in Northern Ireland, and his group presents some recommendations, I am pretty sure that not everyone will agree with all of them, as the day when that is not the case in Northern Ireland will be the day the Liberals sweep to sunny uplands and have a majority in government. That will take a few years yet; I like to be an optimist—I am a Liberal. However, I hope that when Haass’s recommendations come forward, we will engage with them properly and seriously.
Lady Hermon
First, may I congratulate our newest Deputy Speaker? I am delighted to see you in the Chair, Madam Deputy Speaker.
May I double-check something with the hon. Gentleman, as I did with the shadow Secretary of State? Will the Lib Dem wing of the coalition Government make a separate submission to the Haass talks? If so, will the hon. Gentleman confirm that it will be published?
Stephen Lloyd
The hon. Lady raises an important point. The honest truth is that we are still considering the matter, but if we make a separate submission, it certainly will be made public. I sound as though I might be obfuscating only because I am not entirely sure that, separate from our colleagues in the coalition Government, we would have anything productive to say, but I promise her that if we do make a submission, it will be made public.
When we receive the Haass report, I hope and trust that all of us in the House, and particularly in Northern Ireland, will do what is necessary to move forward on key and extremely difficult issues. As I am someone who perhaps is not as steeped in the issues as some hon. Members from Northern Ireland, I imagine that there would be nothing more irritating than for me to pretend that those issues were anything other than challenging and complicated.
I was struck by a recent quote from Amnesty International. I do not always agree with everything that Amnesty says, even though I have been a member for around 30 years. I would, however, like to repeat some comments from Amnesty International so that they will be recorded in Hansard because I think that they sum up the problem. Amnesty International says:
“the piecemeal approach to investigations adopted in Northern Ireland is too diffuse and too incomplete to provide a comprehensive picture of all the violations and abuses that occurred during the decades of political violence. Inherent limitations within the mechanisms…have meant that much of the truth remains hidden while those in positions of responsibility have remained shielded. It has also contributed to a failure to develop a shared public understanding and recognition of the abuses committed by all sides.”
Without in any way taking sides, I believe that that is a true statement. From my relatives and my relatives’ friends from both sides of the divide, I know well that in the Northern Ireland that I love so much, there is often a lack of understanding and appreciation, and a sense of “more evil was done to us than to you”. As someone who has one foot in Northern Ireland and one foot outside, my observation is that both sides in their own way are right and both sides in their own way are wrong. That is the tragedy, and that is why I tread delicately but sincerely. I treat with profound seriousness the shadow role on Northern Ireland that I have in my party. I profoundly respect the right hon. Member for Lagan Valley and his party for calling this debate as it has demonstrated the strengths and weaknesses of the whole challenge in Northern Ireland.
I hope that the Haass report will move matters forward. As an observer, I think that the impasse has hit the Executive—and has done so for a while. It may equally have affected our own Government. We have got stuck, and that is unfortunate, but I hope that the Haass consultation, which will see him and his group talking to all the key individuals and parties in Northern Ireland, will lead to progress.
Finally, I pay tribute to the Royal Ulster Constabulary. The RUC and the security services had an incredibly difficult role, but they played an incredibly important part in ultimately defeating terrorism. The Royal Ulster Constabulary was not perfect in every way and the security services were not perfect. Mistakes were made and a tiny proportion of people clearly worked in the shadows, but overall, without the bravery of the RUC and the security services, Northern Ireland would have lost to terrorism, and that would have been wrong. Both my uncle and my grandfather were in the RUC, and my uncle survived a couple of assassination attempts. That demonstrates the importance of this debate and the importance of Northern Ireland, because while my uncle and grandfather were Catholic, the paradox is that, on the one hand, the IRA tried to blow them up a couple of times and, on the other hand, a section of the Loyalists would not trust them as far as they could throw them. That sums up the challenges facing us in Northern Ireland.
I hope that a positive and productive debate such as this, and moving forward in the way that my hon. Friend the Member for Tewkesbury outlined, leading towards the Haass discussions, will mean that, within the next few months, Northern Ireland will begin to move forward from the past in a more positive way. It is timely and necessary, and the blockage should come to an end.
Dr William McCrea (South Antrim) (DUP)
It is a pleasure to see you occupy the Chair, Madam Deputy Speaker, and I wish you great wisdom as you give leadership to the House.
I thank my colleagues for tabling the motion at a time when many of our fellow citizens are gathering with my right hon. Friend the Member for Belfast North (Mr Dodds) to remember the tragedy of the Shankill bombing 20 years ago today. On that day, many innocent lives were lost because of the atrocity committed by the Provisional IRA.
I acknowledge that Dr Richard Haass and Professor Meghan O’Sullivan have been given the task of seeking a way forward on a number of important issues that have divided our community for years, and I know that the House wishes them well in their endeavours. Today, however, my colleagues and I believe that there are issues that cannot be airbrushed out of existence, as some would wish, as if they had never happened. Nor must we let Sinn Fein and its republican fellow travellers rewrite the narrative of our troubled past in Northern Ireland.
I pay tribute to the thousands of men and women who donned the uniform and stood in the gap between community and anarchy throughout the long years of IRA terror. Those soldiers who patrolled the roads of Ulster over the years, alongside the RUC/RUCR, GC, USC, UDR and RIR, did so with valour and distinction. They rightly deserve our deep gratitude, having faced gangsters and thugs who reigned over 30 years of terror on a law-abiding population. We must never forget the sacrifice of our security forces and their bravery. We must also never forget the sacrifice of their families—mothers and fathers, sons and daughters—who anxiously waited, hoping that their loved ones would return home safely—alas, many of them did not.
The deep sense of loss still felt in the hearts of many innocent victims of violence across our Province today is raw, and no one except those who have walked this dark and lonely path can understand the pain. But this anguish has been made worse by the coat-trailing exercises of the republican movement, and Sinn Fein in particular, over recent months. The leader of my party has on many occasions gone out on a limb, seeking to reach the hand of friendship to nationalists and republicans in an effort to build a stronger community spirit and give the generations to come a better future and a prosperous Province of which we can all be proud. But, sadly, many Sinn Fein representatives just cannot leave their failed past, while others pretend they have—that is, of course, until the mask slips. Yes, some politicians speak piously of a shared future, but in reality the proof is that they cannot bear to see Orange feet walk the Queen’s highway. They cannot even share a road in Belfast or Portadown for a few minutes to allow a small contingent of Orangemen to walk home after a day when Protestants celebrate their culture. The reality is that when we scrape beneath the surface, we find that the old leopard has not changed his spots.
As Mr Robinson sought to build a peaceful future, Sinn Fein representatives such as Gerry Kelly defied the law by hanging on to police Land Rovers in north Belfast, and on another occasion, they celebrated the escape from the Maze prison, in which a prison officer was murdered. Sinn Fein coat-trailed through Castlederg and north Belfast, lauding as heroes those who blew themselves up with their own bombs, leaving a trail of innocent blood across the Province. Today people gather to remember the slaughter of the innocent on the Shankill, but no world attention will be focused on this event of course: they were only Protestants—innocent men, women and children, slaughtered by the blatantly sectarian IRA.
In reality, the authorities here on the mainland, as well as international Governments, have granted favoured status to those who murdered and maimed, while the law-abiding people of Northern Ireland were left to suffer and then told simply to move on. The Prime Minister made an apology to the families in Londonderry. The media spent hours of air time propagating one single event in the history of our Province just as if no one else had endured any injustice over the years of turmoil and trouble. No apology has been given to the law-abiding Unionist majority for the years they were plagued with IRA terrorism. I have no doubt that our security forces were well able to crush these terrorists, but political expedience would not allow them to do so. We are expected, and were expected, to suffer in silence, while world leaders kowtowed to, and wined and dined, Adams and McGuinness. Over the years, I have wept and comforted many families of innocent victims, and I carry in my heart deep wounds because of what the IRA has done. However, if we allow hatred and bitterness to take over our lives, we destroy ourselves and allow the enemy a victory over us.
The IRA were terrorists, formed as an organisation with the aim of removing the British from Northern Ireland and bringing about the unification of Ireland by force. They were doomed to fail, not because the Governments of the day stood up for the rights of the people, but because tens of thousands of ordinary people were determined to remain part of the United Kingdom and exercised their democratic right accordingly. Do not forget that Ministers from the Fianna Fail governing party in the Irish Republic diverted funds intended as emergency aid illegally to import weapons directly for the provos. Surely it is time for an unreserved apology from the Prime Minister of the Irish Republic for the actions of a former Government who helped to spawn and support IRA terrorist gangs. An apology from the Irish Republic’s Government would go some distance to assure the Unionist community that the pain of innocent victims of terror has been recognised. How long we will have to wait for such an apology, I do not know, but time will tell.
The Provisional IRA was responsible for the deaths of 1,706 people up to 2001. Of those, 497 were civilian casualties, 183 were members of the UDR, 455 came from regiments of the British Army and 271 were members of the RUC. Of its victims, 340 were Northern Ireland Roman Catholics, 794 were Northern Ireland Protestants, and 572 were not from Northern Ireland. The university of Ulster also states that the IRA lost 276 members during the troubles. However, in 132 of those cases, IRA members either caused their own deaths as a result of hunger strikes, premature bombing accidents and so on, or were murdered due to allegations of having worked for the security forces.
Let me put the record straight in the House. The IRA was not fighting a just war, but through bombings, assassinations, kidnappings, punishment beatings of civilians, torture, extortion, robberies, racketeering and so on, it forced successive British Governments into endless concessions. Those who were involved in terrorism should be called terrorists and must not be granted a similar status to those they terrorised, irrespective of what part of the community they come from. The IRA terrorist made a deliberate choice to join a terrorist organisation. Their victims and the families are worthy of justice, but their chance of getting that seems small. If the IRA claims it was a war, Gerry Adams, Martin McGuinness and Martin Ferris whom, on 20 February 2005, the then Justice Minister of the Irish Republic, Mr Michael McDowell, publicly named as members of the IRA army council, should be hauled before the war crimes tribunal for their acts of brutal crimes against humanity.
Some suggest that a truth commission should be enough to satisfy the innocent victims, but what would that achieve? When asked about his terrorist past, Gerry Adams looked into the camera and quietly, brazenly denied that he had ever been in the IRA. Martin McGuinness was exposed by the report into the events in Londonderry, but he told the Saville inquiry:
“I wish to make it clear that I will not provide the Inquiry with the identities of other members of the IRA on 30th January 1972 or confirm the roles played by such persons whose names are written down and shown to me...As a Republican I am simply not prepared to give such information.”
Yet that same person had the audacity and the cheek to welcome the £192 million report into Bloody Sunday pointing the finger at soldiers while dismissing the findings of the same report in regard to his being identified as having a submachine gun in Londonderry. Now they talk about prosecuting soldiers who put their necks on the line to preserve life in Northern Ireland, yet those others are lauded and applauded worldwide.
There will be no films or documentaries made about the Shankill bomb, even though there have been bloody Mondays, Tuesdays, Wednesdays, Thursdays, Fridays, Saturdays and Sundays that must never be forgotten by this House. We must ask: why did the innocent have to die on Ulster soil? Was it because there was an acceptable level of violence, as was said, or because, as a previous Prime Minister said, his Government had no strategic interest in Northern Ireland?
We need closure, but we must not allow republicans to rewrite history or romanticise their murderous campaign. No one can understand the nightmare that the people of Northern Ireland have been through. They were terrorised in their kitchens and bedrooms, while walking on the streets as they went to restaurants and hotels, or while worshiping in their churches. They left their children in the morning not knowing whether they would ever come home to see them again in the evening. We lived through that. It was reality. We need the truth; we need justice. No one should be too high or mighty to escape the rule of law.
Mark Durkan (Foyle) (SDLP)
Like other Members, I want to say how pleased I am to be here today under your chairmanship, Madam Deputy Speaker.
I obviously cannot agree with all the terms and tone of the hon. Member for South Antrim (Dr McCrea), but I share his strong sense of solidarity with those gathered today in sombre commemoration of the terrible Shankill bombing. Equally, we will all lend our solidarity to those families who go through next week’s anniversary of the Greysteel attack, and all the others who lost loved ones, sometimes in lonely deaths that are not remembered in the commemorations of the landmark atrocities of the troubles, because they, too, have their feelings touched or stirred by commemorations such as today’s and by debates such as this. I also concur with him completely on the need to repudiate any pretence that some sort of claim about a just war can be made in relation to the IRA campaign, or indeed any other campaign of republican violence over recent decades.
It is supposed to be a Russian proverb that to dwell on the past is to lose an eye, but to forget the past is to lose both eyes. That is why we must properly acknowledge and address issues of the past. It is not enough, as some people sometimes suggest, to draw a line under the past and move on, or just to find some glib form of closure. Too many people are burdened by the past, carrying hurt and feelings that are all too present. They cannot just decide that they are well adjusted victims and move on when they are confronted with denial about what actually happened to them and about the nature of the crimes committed against them, their loved ones or their community. In those circumstances, we cannot treat victims as though some are well adjusted and some are badly adjusted because of where they are on the reconciliation scale according to some commentator or other.
We have to confront the past properly if it is not to be repeated. We currently have a group of dissidents who are basically happy to say that they are continuing the methods and principles of struggle pursued by the Provisional IRA. Thankfully, many of those who were involved in the Provisional IRA now choose to repudiate and reject the violence pursued by these dissidents, but it is important that current and future generations know the truth about the nature of the Provisional IRA campaign. Those who were involved in the Provisional IRA cannot give themselves some sort of moral superiority over the violence carried out by today’s dissidents, which is targeted in the same vicious and reckless way.
Other hon. Members—I want to acknowledge the opening statement by the right hon. Member for Lagan Valley (Mr Donaldson) in particular—talked about the breakdown of victims in that sense, but it was also important that he read out the names, particularly the names of those whose deaths are being commemorated today, so that we remember not only the numbers, but the “whoness” of those people. They were loved and loving members of families and communities. That needs to be remembered as well.
My hon. Friend the Member for Belfast South (Dr McDonnell) referred to the fact that the Pat Finucane Centre will soon publish a book called “Lethal Allies” by Anne Cadwallader, which looks at some very dark aspects of the troubles. It relates to a number of cases—10 in particular—that have been investigated by the Historical Enquiries Team, but the reports have never been made public because the HET reports are offered as the private property of the families. That is a weakness that I think we need to address. I agree with the point the hon. Member for Eastbourne (Stephen Lloyd) made, picking up from Amnesty International. That is one of the reasons why I tabled amendments to the Northern Ireland (Miscellaneous Provisions) Bill to give the Secretary of State new powers and new responsibilities to do more to consolidate the value of the HET’s work and draw on its work. It should not just be left to the Pat Finucane Centre or somebody else who happens to have had the reports shared with them. That is something that we, as a Parliament, should take more responsibility for. The truth about many of those deaths and murders is coming out now in different ways, but the fact is that here in this House untruths were told about many of those deaths and murders. The claims of my colleagues Seamus Mallon, John Hume, Joe Hendron and Eddie McGrady about the dirty war, and our concerns about intelligence not being properly shared or used, about people not being apprehended and about collusion, were all denied. But the truth shone through in the De Silva report on the Finucane murder and it will shine through in the book I mentioned as well.
As my hon. Friend the Member for Belfast South said, some of the victims were targeted by loyalist gangs, which included some members who served concurrently in the security forces. Those victims were targeted not because they were involved in the IRA or anything else, but because they were obviously seen as uppity Fenians—they had been associated with the civil rights movement, were involved in the SDLP, were buying property and developing businesses, so they were put down. It is clear that the people specifically targeted in their homes and cars came into that class. Others, of course—including members of the security forces themselves—were more randomly targeted.
Other Members have paid tribute to members of the security forces. Let us remember that some of those lost their lives in attacks that could have been prevented had intelligence been shared and acted on. However, there was a warped game going on, in which some inside the security forces—particularly in the intelligence services—put the long war intelligence game ahead of the immediate protection of the lives of civilians and members of the security forces.
Collusion was not just something whereby agents of the state allowed loyalist attacks to happen; they also allowed republican attacks and servants of the state and people in the community to be killed. That truth needs to be told. If we do not have the truth about the dirty war, we will be settling for a dirty peace. If we do not have the truth about the viciousness and nastiness of all the violence that took place from all the paramilitaries, we will be selling future generations a false narrative about the experience of the past.
I was amazed to be told by a young man in my own city that the IRA only ever killed so-called “legitimate targets”—only those in the security forces and only in the high heat of active service incidents. That, of course, is completely untrue. It is one of the reasons why we need a proper truth process about the past to spell things out. Will we get the truth from the victim makers? No, but we need at least to gather and consolidate the truth from the victims. They need to know that their truth will be remembered and acknowledged. They must not die with the burden of remembrance heavy on their shoulders, as it is for too many of them.
We have to resolve the issue with a proper framework for dealing with the past. It will not be a one-size-fits-all approach, and it will mean that we politicians have to face up to our failures on this issue. Ever since the Good Friday agreement, every time there were talks and an impasse, both my party and I made proposals about the need to address the past. We were constantly faced with evasion, both from the two Governments and from other parties.
As I was told by the right hon. Member for Torfaen (Paul Murphy), the Secretary of State at the time, the reason why there was nothing in the 2003 talks in Hillsborough for victims and the past was that both Sinn Fein and the Ulster Unionist party were absolutely clear that there should not be. The past was not to be touched and there was to be nothing for victims in that deal, which was meant to be a breakthrough.
There was a good speech from the Opposition Front Bench today, but we need to remember that the last Government produced the most insulting effort on the past that anyone could have—the Northern Ireland (Offences) Bill. We were told by the then Secretary of State, the right hon. Member for Neath (Mr Hain), that the Bill was about bringing closure, but it would have given all sorts of secret immunity certificates to all sorts of people. In fact, the only people who might have been prosecuted or sent to jail for any past crimes in Northern Ireland would have been any journalists or victims who reported or speculated on those who might have got one of those certificates, who might have been at a tribunal and what might have been involved. That was a gross insult.
Stephen Lloyd
I would like to hear more from my hon. Friend. Does he agree that the Haass initiative is absolutely crucial, and that if all the political parties in Northern Ireland and the Government dropped the ball, that would be another blow and another impasse?
Mark Durkan
I think that the Haass process really does give us another chance. At least the parties are gathered together and we are engaged in a process. Previously we have been arguing about whether there should be a process or the shape of it. People resiled from the very good recommendations in Eames Bradley, and I think that the Haass process will look at those. The HET has already done good work in a lot of areas, but it has not been consolidated and built up. A lot of good and strong recommendations in Eames Bradley need to be revised and revisited.
There is also very good work going on in the cultural sector. I think of Theatre of Witness, which has done so much to portray the true stories and experiences of people, whether loyalists, republicans, innocent victims, members of the security forces, prison staff, or whoever. Those true stories are all brought together compellingly, not in any controlled or contrived balance but in a very powerful and emotional way. That is a strong way of helping to discharge us from the past so that people can see truth instead of injustice and reconciliation instead of retribution.
Jim Shannon (Strangford) (DUP)
I congratulate you, Madam Deputy Speaker, on achieving your position and wish you well in your job for the future.
I also congratulate the shadow Secretary of State and welcome him to his new post. He is only 14 days into the job and already finding his way in what could be a very difficult portfolio. We are a bit disappointed that the shadow Minister of State, the hon. Member for Ealing North (Stephen Pound), is unable to be with us because he is away on parliamentary duties. I think he would use the phrase “erudite tones” of the debate if he were here. It is a pity that he is not, and we are obviously disappointed to miss his contribution.
I recently attended Irish Fest in Milwaukee, USA, where I highlighted the other side to the history that many of Irish descent and many of Ulster descent had learnt from the propaganda and an often slanted media view. Americans and those from mainland USA watch films like “The Devil’s Own”, which have a degree of artistic licence that I fear greatly rewrites history. These and other stories make it seem as though 302 RUC men and women—men and women with the George Cross—were not human beings with families and lives but simply moving “legitimate target” signs; or make it seem as though 30 prison officers and 763 armed forces members were simply numbers on a score sheet, not people whose spouses and children still feel the devastating loss to this day. These histories and films would glibly portray a prison break as a great lark and not take into account the lives that were destroyed by the loss of a father and husband. One of those was my constituent Mr Ferris, and other people were shot and injured as a result of that escape. Never portrayed in a film is a scene where a busy fish shop is bombed with no warning on a busy Saturday, killing one terrorist and nine people, including two children, and injuring 57 others. Nor do we see depicted the unveiling of a plaque in memory of this terrorist, yet that is the legacy that we are dealing with in Northern Ireland today, as so ably laid out by my right hon. Friend the Member for Lagan Valley (Mr Donaldson).
This is history. It should not be rewritten to glorify what were nothing more than acts of evil. I watched the snippets of the Shankill bombing and saw one of the bombers on the one hand apologising but, on the other hand, stating that he was proud to be unveiling a plaque in memory of his fellow murderer. That certainly stirs up the feelings of anger and loss in communities that are determined that they cannot and should not let their heartbreaking histories be displayed in a light that would dull the horrific nature of what has taken place.
Ian Paisley (North Antrim) (DUP)
How does my hon. Friend think that people would feel if anyone in the Unionist community were to suggest that next week a commemoration was held to acknowledge and to celebrate what happened at Greysteel, when eight innocent people were slaughtered? How would he feel if we decided that there should be a band parade and a celebration? What would that say about this community, and does not it say the very same about nationalists and republicans whenever they decide to do that about the Shankill road bombing?
Jim Shannon
I thank my hon. Friend, who makes the point exactly. That would annoy me no end, as it would annoy everybody in this Chamber and everyone right across the whole of Northern Ireland. It does a disservice to every man, woman and child in Northern Ireland who has ever suffered loss on either side of the troubles. It does a disservice to those who are rehabilitated and living with injuries caused by the troubles, and to those who work hard to see the past for what it was and still try to find a way forward.
I want to make it clear that I believe there is a way forward for Northern Ireland, because I am positive and always try to be so. I would even go so far as to say that Northern Ireland is at long last on a journey forward, but it is not an easy task. There are many bumps in the road and many hurts that must not be whitewashed, and must be sensitively handled. Sometimes that happens, but a lot of the time it does not. Make no mistake: there are tensions. They are stirred up in all communities by agendas that would not seek to move forward while ever remembering the past, but that would seek to throw us into turmoil once again.
The removal of the Union flag from city hall is one such tension-stirring issue. There was no doubt about the strength of feeling in favour of retaining the flag. I asked people at Irish Fest in the United States of America how they would feel if they were asked to remove their flag at the Alamo. They would never do it, and yet the people of Belfast had it enforced on them in the name of progress. That is not progress: it is not now and it will not be so in the future. It is disrespectful. We are trying to engage with those on the ground to ensure that it does not derail the good that has been done thus far.
The Haass talks will, I hope, be positive. I would like to think that they will pave the way for another step forward, but if people continue to disrespect and alter what has gone before, that will not take us forward but leave us for ever going over the same ground. It is important that we be positive, but some in the community are not and are holding things back.
I am delighted that our party tabled this motion and it is only right and proper that we address the attempts to rewrite what really happened. Winston Churchill, whom I admire greatly and who was one of my childhood heroes, once said:
“History will be kind to me, for I intend to write it.”
The history of Northern Ireland is too fresh to undergo a rewrite and we can never defend the indefensible or justify the unjustifiable, no matter whether a tweet about a 30th anniversary is sent by a twit—I can think of other words, but I am not allowed to use them in this House—and no matter how many people gather to celebrate the lives of terrorists and murderers.
Anyone who saw the faces of those family members who gathered at Castlederg during the despicable and wretched IRA parade—I was there—would say that the history of that area is not written but etched on the lines on their faces and the breaks in their hearts. The Protestant and Roman Catholic members of the Castlederg community had no wish to see the glorification of atrocities committed there. They had no wish to listen to the words of IRA members and elected leaders, or to see them parading through their streets with blatant disrespect. They stood silently in dignified protest with photographs of their murdered loved ones.
There are 28 unsolved murders in Castlederg and only one person has been held responsible. Imagine the anger and pain that the people of Castlederg felt at the time. My cousin Kenneth Smyth, a sergeant in the Ulster Defence Regiment, was murdered along with his Roman Catholic friend on 10 December 1971. That caused real pain, real sorrow and real frustration. An elected representative tried to elevate the position of two would-be killers, and the parade disregarded totally the feelings of those who were only 100 or 150 yards away.
We can move forward and find a way to make things work in Northern Ireland, but we cannot do so when such events are perpetually thrown in the faces of victims. Those real victims—as opposed to the perpetrators—have enough daily reminders, and it is essential that they feel supported by their community, their representatives and this House.
I ask Members to send a message of support that they will stand with my party and me against the artistic licence that is too often used to lessen the impact through phrases such as “legitimate targets” and “collateral damage”. There is no such thing: there is no such thing in Castlederg, on the Shankill road or at La Mon in Castlereagh in Belfast. There is certainly no such thing in Ballydougan in Downpatrick, where four UDR boys, three of whom I knew personally, were murdered by the IRA. There are only evil people, carrying out evil deeds for a cause that even those they think they represent do not want.
Today I stand for every true victim of the troubles and say to them: even as we attempt to move forward to a functioning society, your loss has not been erased, you were not irrelevant, your family were not ignored or emotionally isolated, and you are not now—indeed, you will never be—forgotten. That is my promise and the promise of my party.
Kate Hoey (Vauxhall) (Lab)
I pay tribute to the DUP for the extremely well phrased motion, which covers everything that anyone who has been involved in Northern Ireland for many years sees as essential to the future. I feel a little like an interloper, but I think it important that somebody from the Labour party speaks, other than my hon. Friend the Member for Bury South (Mr Lewis).
I pay tribute to the previous Minister of State, the hon. Member for Hemel Hempstead (Mike Penning), and the previous shadow Secretary of State, my hon. Friend the Member for Gedling (Vernon Coaker), both of whom I had the pleasure of being with at Northern Ireland football matches. I hope that the new shadow Secretary of State, the new Minister of State and, indeed, the Secretary of State will come to the next Northern Ireland international match, which will hopefully take place at the newly developed Windsor Park stadium. We will not talk about the results in the World cup.
Much has been said about the Eames-Bradley report. The Northern Ireland Affairs Committee discussed that report and took evidence on it. As the right hon. Member for Lagan Valley (Mr Donaldson) said in his speech, Eames-Bradley could never have gone any further until the whole section on victims was changed. As he said, we cannot have a situation in which innocent victims are equated with perpetrators who die in the act of undertaking a killing or an atrocity.
I am sorry that so few Members from both sides of the House have been here to hear the very moving speeches of Members from all parts of the House, particularly those from the DUP and the SDLP, who have lived through what we are discussing. Those of us who are involved in Northern Ireland have observed it and have been there a lot, but they have lived through it. The speech of the hon. Member for South Antrim (Dr McCrea) encompassed so well the frustration, anger, despair and misery of the many people in Northern Ireland who feel that they have not received justice. We cannot have a proper look at the past or look to a brave new future until there is honesty and truth. Honesty and truth are not coming from Sinn Fein-IRA. Until those leaders are honest about what happened in the past, we will not move forward.
I welcome the honest statement from the SDLP about the decision of its councillors on the naming of the park, which it knows caused huge distress. It is important that the leader of the party was prepared to say what he said. I also welcome the U-turn from the DUP on the Maze. It would have been quite shocking if it had become a shrine to terrorists, so that visitors could have gone to the Titanic in the morning and to the shrine in the afternoon. I am delighted that that has been dropped. I just hope that Sinn Fein does not throw its toys out of the pram and that the proper development of the site can go ahead.
Kate Hoey
We are all very happy about that.
We have to recognise that there is a feeling among the pro-Union community in Northern Ireland that there has been an unevenness about the way in which we have investigated atrocities, particularly in relation to the huge amounts of money that were spent on the Bloody Sunday inquiry. That inquiry did produce a very good report and the Prime Minister made an excellent contribution in recognising that, but the idea that the PSNI will spent thousands and thousands—
Dr McDonnell
Does the hon. Lady accept that the reasons why so much money was spent on the Bloody Sunday inquiry were, first, that a whitewash job was done on it in the beginning and the lies had to be reversed and, secondly, that half the money was spent because of Ministry of Defence obstruction, which caused endless amounts of money to be spent on lawyers, who had to move all over the place? A fraction of the money could have brought us to the same conclusion.
Kate Hoey
The fact is that a huge amount of money was spent on that inquiry. We have had the report and the apology, and I do not see the necessity of the PSNI spending a lot more time and money trying to prosecute people who are now pensioners and who, whatever happened in the past, and whatever went wrong, were doing what they thought at the time was their duty.
Why have that money, time and effort not been spent investigating atrocities such as that at Kingsmill? That was a shocking atrocity, as the hon. Member for Tewkesbury (Mr Robertson) who met some of the victims said. This is something people do not understand. They do not understand why no one has been investigated further for Omagh or Enniskillen—we could go through a whole list. It is just not acceptable because it seems that things are investigated only when the military or armed forces have been involved in some way. I know that their standards have to be higher, but when it comes to looking at justice, people feel aggrieved because they feel they have not had justice.
I join the right hon. Member for Lagan Valley in paying tribute to the Royal Ulster Constabulary. People who did not live in border areas in those days realise that they do not understand what many of those RUC officers and their families went through in dark nights, when they were subject to the most appalling retribution. I add my tribute to the RUC to those of other hon. Members.
Dr Richard Haass has a huge task. He may find that he can move some things forward and get some more agreements, but ultimately, one man coming in from the United States will not change what people feel. This is interesting because we are talking about the past, and I hope Dr Haass recognises his country’s past role in the way it spent thousands and thousands of pounds allowing money to come to Ireland that was then used to fund the IRA and kill innocent civilians. I hope he realises that the United States had a bit of involvement for some time in ensuring that money was coming through to the IRA. We must remember that kind of thing as well; otherwise, the issue is again seen as one-sided.
I see huge changes in Northern Ireland, and tourism now is brilliantly up on all the figures we have had in the past. The Titanic centre, the new Giant’s Causeway centre—I can name something in every constituency in Northern Ireland that has improved and is bringing in tourism.
Jim Shannon
Tourism in Northern Ireland is up by 4% in the last year, and is aiming for more. One of the great places to visit is Strangford Lough in my constituency.
Kate Hoey
I have had the honour of speaking at the annual dinner in the hon. Gentleman’s constituency, so I do know it.
Finally, we must remember—this is a point for those on the Front Benches—that there is a feeling in Northern Ireland that it is somehow great and okay to be Irish and have the Irish flag. The Irish Government are always speaking up for nationalists in Northern Ireland, and people who feel more Irish than British. Somehow, however, there is almost an embarrassment somewhere about sticking up for people in Northern Ireland who feel British and have the British flag. Our Government and Secretary of State have to feel that they are above it all and neutral, but the Irish Government do not feel like that. They are quite clear: they support people in Northern Ireland who would ultimately like to be part of an all-Ireland state. We must be careful about that issue.
People voted to stay part of the United Kingdom. They want to stay part of the United Kingdom, and until there is a vote, I do not understand why anyone is saying that the British flag should not be flying anywhere in Northern Ireland, particularly on our town halls. There are all these nice words about everybody getting on well with each other. Of course that has to happen, and the work going on in our communities is making that a lot better than it was. However, we cannot divert the important issue of identity. That would be important to people in my constituency, so why should it not be just as important to those in Northern Ireland?
Finally, on victims, would mainland MPs—we do not have the same law on victims as Northern Ireland—accept it if someone who had committed the most appalling atrocity was treated as a victim in the same way as those who suffered from their atrocity? We would not let that happen. I hope Northern Ireland will be part of the UK for a very long time—for ever. People in Northern Ireland must be entitled to the same rights and privileges as people in the rest of the UK. That is fundamental. Until that approach to victims is changed, we will never be able to move forward to the future all hon. Members want.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Before I call the hon. Gentleman, I should inform the House that I will not apply the 10-minute limit to the winding-up speeches, but I trust he will adhere roughly to it.
Mr Gregory Campbell (East Londonderry) (DUP)
Thank you, Madam Deputy Speaker. I will adhere to that time. It is a pleasure to serve under your deputy speakership.
The debate has been telling and important. As many right hon. and hon. Members have said, it is being held on the 20th anniversary of the Shankill road massacre. My right hon. Friend the Member for Lagan Valley (Mr Donaldson) outlined in very emotional yet diplomatic terms what happened on that day. October 1993 was an horrendous month. As the hon. Member for Foyle (Mark Durkan) and others have outlined, we had not only the Shankill massacre, which resulted in nine murders, but the Greysteel massacre a few days later in my constituency, which resulted in eight murders. They are to be condemned equally. Without equivocation or hesitation, we utterly and totally condemn all those murders. In fact, 28 people died in October 1993, such was the nature of the violence that year.
Ian Paisley
My hon. Friend will vividly recall that on that morning we were sitting in a meeting of party officers in a hotel in Dungannon when we got the news of the atrocity at Shankill. Many of us raced to the Shankill road and saw for ourselves the horrid vista of violence that was visited on the people of Northern Ireland. When we witness such things with our own eyes, it drives home how atrocious terrorism in Northern Ireland has been, and how grateful we should be that we can start to move on.
Mr Campbell
We all recollect exactly where we were and our reactions at that time.
I welcome the shadow Secretary of State to his new position. He indicated that he has been in place for only 14 days, and yet he is rapidly getting to grips. He understands that his position is a challenging profile. The hon. Member for Tewkesbury (Mr Robertson)—the Chair of the Northern Ireland Affairs Committee—said that the future had to be better than the past. All hon. Members concur with that. My hon. Friends the Members for Upper Bann (David Simpson) and for South Antrim (Dr McCrea), and other colleagues, elaborated on double standards.
The hon. Member for Belfast South (Dr McDonnell) made a reasonably positive contribution, although I do not get what connection the Planning Bill, which was debated yesterday in the Northern Ireland Assembly, has with dealing with the past. I will leave that to one side. The hon. Member for Eastbourne (Stephen Lloyd) spoke at some length about the need to reconcile the distinctive and profound differences, which all hon. Members understand.
The hon. Member for Vauxhall (Kate Hoey) said that honesty was required, and I shall speak in the remaining moments I have on the theme of honesty. There is a distinction in Northern Ireland, but it is not between Unionism/loyalism and nationalism/republicanism. There is a distinct difference in how we look at the past. The vast majority of people, be they Unionists or nationalists, look at the past and see that there were those who carried out evil, heinous atrocities. There were then those in the RUC, the UDR and the Army who had to respond and try to deal with the problem that had been created by the paramilitaries. The vast majority of people on both sides know that that distinction is absolutely clear. The security forces endeavoured to contain the paramilitaries that carried out so many atrocities, whether they were republican or loyalist organisations. Unfortunately, that containment was for many years restricted by political considerations. We always knew that the decoded message was, “Do not rock the boat. We’re trying to include republicans in the political process. Please do not rock the boat.”
Mark Durkan
I thank the hon. Gentleman for giving way. He rightly talks about the nefarious activities of all paramilitaries, but does he not recognise that the UDA, which carried out the murders that the right hon. Member for Lagan Valley (Mr Donaldson) talked about, carried out many of those murders while it was a legal organisation, with the British Government failing to proscribe it and both main Unionist parties supporting keeping it as a legal organisation, even though everybody knew it was up to its necks in sectarian murder?
Mr Campbell
The hon. Gentleman makes an intervention that, unfortunately for him, is not based on fact. Whether there was murder by the UDA or the UVF, or any overreaction by security forces, our position has been that if there is any evidence against anyone, no matter what their standing is, it should be brought before a court of law and that person should face the full rigours of the law.
Unfortunately, there are those in the republican community who engaged in paramilitary violence and seem to be beyond the reach of the courts and the prosecution service. No matter how much pressure people bring to bear by indicating their knowledge of previous events, there seems to be a reluctance to call in for questioning Gerry Adams, the former Member for West Belfast, Martin McGuinness the former Member for Mid Ulster, and a host of others.
The position is this: the past is there and we, in different communities, are trying to grapple with it. We are having a difficult time coming to terms with how we move forward. Dr Richard Haass and his team have been involved, and will be involved in the course of the next few months, in trying to help us to come to terms with that past. The perpetrators of violence might not acknowledge their part in it and not accede to the rest of the community that they were wrong. That has been Sinn Fein’s position to date and it gives no indication of changing it. If it holds to it, it may well be that we cannot deal comprehensively with the past. It would have to admit that it was wrong to engage in murder on Shankill road and so many other places, as others were equally wrong to engage in murder in Greysteel and in other locations.
While the guilty refuse to admit their guilt, we cannot come to a successful conclusion about the past. We may have to make do with whatever agreement we can reach to try to minimise the impact the current situation brings to all sides and say, as the Chair of the Northern Ireland Affairs Committee said, that we have to make a future that is better than the past. As we are dealing with honesty, as the hon. Member for Vauxhall said, it would be churlish of us not to say that we must move forward. Let us try to indicate to everyone that what we have done in the past has been done. If the guilty refuse to own up and we cannot bring the evidence to bear to bring them to court, we will have to move beyond that and leave them to the contempt that, hopefully, their peers and successive generations will heap upon their heads.
Mrs Villiers
Madam Deputy Speaker, I join others in congratulating you on your new role. I also thank all Members for their contributions. It has been a very good and, at times, extremely moving debate, and I echo the praise of the hon. Member for Vauxhall (Kate Hoey) for the number of the contributions. We all in the House should pay particular tribute to political representatives and MPs in Northern Ireland who were prepared, courageously, to put their heads above the parapet during the troubles. It is an honour to have them in the House and to hear directly from them, who lived through these events, about their experiences.
A theme that has pervaded the whole debate is our profound sympathy for all those who suffered in Northern Ireland’s troubles. We have heard some desperately sad stories, and I am sure I speak for the whole House in again offering our condolences and sympathies to those who were injured, to those who lost loved ones and to those whose injuries might not be visible or physical, but are none the less deep-seated. It is a privilege to have the opportunity, thanks to the DUP, to debate these matters in the House.
The second thing common to almost every speech was a profound and sincere tribute to the men and women of the armed forces and police, particularly the Ulster Defence Regiment and the RUC, for all they did in upholding the rule of law and protecting the community in Northern Ireland, despite huge personal risk to themselves. Of course, many of them made the ultimate sacrifice.
Too many points were made in the debate for me to cover them in the short time available. The hon. Member for East Antrim (Sammy Wilson) expressed his concern about pubic inquiries, and certainly the Government have also expressed their scepticism about public inquiries as a means to deal with the past. In particular, it simply is not possible for each of those 3,500 victims to have their own public inquiry, which means that those we have are uneven and can divide opinion. Several other speakers, including the hon. Member for Vauxhall, raised that potentially uneven approach. She was also concerned about so-called Government neutrality. I can assure her that the Government are not neutral on the Union, but are fully supportive of Northern Ireland’s place within it. It was the previous Government who professed neutrality on the Union.
On the comments from the hon. Member for Bury South (Mr Lewis), yes we had a little episode of non-bipartisanship, but there will always be areas in which the Front Benches work together—that has always been the case—and I welcome his reiteration of that this afternoon. As he said, we have a shared responsibility to do all we can to help Northern Ireland make progress. Crucially, I can provide the warmest of assurances that the Government remain determinedly engaged in Northern Ireland matters, as was seen not least in the Prime Minister’s bringing eight of the world’s most powerful leaders to a summit in County Fermanagh as a means of demonstrating what a fabulous place Northern Ireland is and how much affection he has for it.
Lady Hermon
Picking up on the comments and criticisms made by the shadow Secretary of State, I say very gently to the right hon. Lady that the perception in Northern Ireland is of a polite disengagement by the Government. If 54 police officers had been injured in rioting in Manchester or Birmingham, Cardiff or Bristol during the summer, the Home Secretary would have gone there, and it would have been equally nice and appropriate had she gone to Northern Ireland and said to the Chief Constable and the Justice Minister, “We support you all the way.” That is just one example of what I regard as polite disengagement. Will the Secretary of State address that concern?
Mrs Villiers
I assure the hon. Lady that I was fully engaged throughout this summer. I was in Northern Ireland for much of it, and I kept in close touch with the Chief Constable and the Justice Minister because of my grave concerns about what was going on. I assure her that I was the first very publicly to condemn the violence and the attacks on police officers, which were absolutely unacceptable. I will continue to call on all to ensure that they comply with the determinations of the Parades Commission, that they respect the rule of law and that these disgraceful attacks on police officers are not repeated.
My hon. Friend the Member for Tewkesbury (Mr Robertson), the Chairman of the Select Committee, was right to focus on the future. Like other hon. Members, he expressed concern about the parading system and the violence we have seen. He was right to emphasise that hundreds of parades take place in Northern Ireland every year that are entirely peaceful, but it is important to point out that not only were the attacks we saw on police officers unacceptable, but they do huge economic damage to Northern Ireland because of their impact around the world. That is an important reason why I hope we will see a resolution of the current situation in north Belfast. It is a concern to have a protest camp and nightly parades so close to a very volatile interface, and I hope that local conversations can take place to try to find a way to resolve the situation.
The hon. Member for Bury South and my hon. Friend the Member for Tewkesbury made a number of points about the importance of going forward with educational improvements. We heard an exchange about whether integrated education was the way forward. I am sure that all in this House recognise the importance of ensuring that children in Northern Ireland have the chance to learn alongside others, whether that is through shared education or integrated education.
The hon. Member for Upper Bann (David Simpson) started his contribution by emphasising that it is vital to learn from the past, and I fully agree with him. Like him, this Government will not accept attempts to rewrite the history of the troubles. As many hon. Members have done today, he called for any process to have the victims of the troubles at its heart.
My hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile) paid tribute to my hon. Friend the Member for Hemel Hempstead (Mike Penning) for the excellent work he did as Minister of State. He also told us of the poignant and moving meetings he had with victims, including those of the horrendous Kingsmill massacre. Like others, he paid tribute to the armed forces, doing so as a Member of Parliament for a constituency with a proud naval tradition. The hon. Member for Upper Bann, too, talked about the importance of education and skills in building a successful future in Northern Ireland. I firmly agree with that and I am sure that the Northern Ireland Executive, who have responsibility for education now, do as well.
The hon. Member for Belfast South (Dr McDonnell) spoke frankly about his party’s position on naming places after those responsible for previous violence, and it was welcome that he was able to clarify that. I share his call for a move towards a truly reconciled society. I am sure that everyone in the House will agree with calls made by him and by many others for all the political parties to approach the Haass process with the determination to give courageous leadership and to make progress. He also spoke, as others did, about the Eames-Bradley report. That proved quite divisive when it was published, but no doubt Dr Haass and others will seek to look at aspects of that report to see whether any of them are appropriate in terms of the outcome of the work that is undertaken by the Haass process.
My hon. Friend the Member for Eastbourne (Stephen Lloyd) was right to focus on the complexity of this issue and the fact that there are no easy answers. It is of grave concern that so many victims are still seeking the truth and still feel that they have not had justice. He also talked about whether lessons could be learned from the Eames-Bradley report as part of the process that is now going forward.
The hon. Member for South Antrim (Dr McCrea) spoke movingly about his experiences, and I wish to pay tribute to all the work that he has done in Northern Ireland on behalf of his constituents. They could not possibly have a more resolute defender of their interests, and I know that he and his family have personally suffered as a result of the terrorist campaigns in Northern Ireland. This House owes him a great debt of gratitude for all that he has done for his constituents. The hon. Gentleman said that, in his view, there was a need for an apology from the Government of the Republic of Ireland. I hope that he will welcome, as I did, the speech made recently by the Tánaiste, Eamon Gilmore, at the British-Irish Association conference, in which he acknowledged the concerns and the perceptions around the way in which his Government had occasionally approached the troubles. That was a welcome speech, and an important step forward by the Tánaiste.
The hon. Member for Foyle (Mark Durkan) spoke with great determination and passion, and repudiated any suggestion that the troubles amounted to a just war. He was right to emphasise how important it had been to start this debate with a list of names being read out by the right hon. Member for Lagan Valley. It is crucial, in this debate and in the Richard Haass process, that we remember that this is about individuals, each with their own story of tragedy. Hearing their names was an entirely appropriate way in which to commence what has been an excellent debate.
We have heard much about the past this afternoon, but a number of people have also called for a determination to move forward and build a better future for Northern Ireland. Much is being done to improve the economy, and important work is under way to address sectarian divisions and build the genuinely united community that we all want to see. The Executive, the political leadership and the people of Northern Ireland all have the full support of the UK Government in taking that important work forward.
Question put and agreed to.
Resolved,
That this House notes the ongoing discussions in Northern Ireland chaired by Dr Richard Haass on a number of important issues including the legacy of the Troubles; recognises the deep sense of loss still felt by the innocent victims of violence and their continuing quest for truth and justice; acknowledges the valour and sacrifice of the men and women who served and continue to serve in the armed forces, the police and the prison service in Northern Ireland; and is resolved to ensure that those who engaged in or supported acts of terrorism will not succeed in rewriting the narrative of this troubled period in Northern Ireland’s history.
Air Passenger Duty
(10 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:59 - The House divided: - Ayes: 0 / Noes: 0 - Question accordingly negatived.
Sammy Wilson (East Antrim) (DUP)
I beg to move,
That this House recognises that the UK has the highest rate of air passenger duty (APD) in the world; believes that this is detrimental to attracting inward investment, encouraging exports, drawing more tourists to the UK and helping ordinary families to benefit from aviation; notes research carried out by PricewaterhouseCoopers and others stating that abolishing APD would not only pay for itself but would be a permanent economic boost to the UK economy and create tens of thousands of jobs; further believes that the abolition of this tax would be of benefit to all regions of the UK; further notes that it is the intention of the Prime Minister to review green taxes; and calls on the Government, as part of that review, to give high priority to the abolition of air passenger duty.
May I offer you my congratulations on achieving your position, Madam Deputy Speaker? This is the first time I have spoken while you have been in the Chair.
I am pleased to say that the debate has received endorsement from the very highest level. During today’s Prime Minister’s questions, the Prime Minister made it clear during his exchange with the Leader of the Opposition that it was his intention—and presumably therefore that of the Government—to “roll back…green regulations”. His office has also promised a review of green taxes.
Henry Smith (Crawley) (Con)
I also welcome that statement by the Prime Minister. However, air passenger duty should not be confused with green taxes. It is a tax that costs the economy more than it brings into the Exchequer, so it is important that we concentrate on that as well.
Sammy Wilson
I will come to that in a moment, but we must make it clear that APD started off as a green tax and that it is still regarded by many as a tax that is meant to cut down emissions from the aviation industry. Like many other taxes that started off as green taxes, it is highly damaging to the economy.
Graham Stringer (Blackley and Broughton) (Lab)
Given the hon. Gentleman’s views, I expect that I will agree with most of what he says, but he is wrong on that point. I went back to Hansard and checked what the Government said at the time of the introduction of APD. It was not introduced as a green tax. It has been stolen by the green movement, but it was introduced because the right hon. and learned Member for Rushcliffe (Mr Clarke), who was Chancellor of the Exchequer at the time, thought that aviation was under-taxed, even though that was not the case. I agree with most of the hon. Gentleman’s points, but the tax was not introduced as a green tax.
Sammy Wilson
I am not going to go back into the history of Hansard to dispute that point. However, whether the tax has been hijacked, or whether it was originally intended to be a green tax, it is still cited today as one of those taxes that we need to hold on to if we are to cut our carbon emissions.
There is, of course, general concern about electricity prices, the cost of air travel and a whole range of issues affecting the UK economy. The previous Government were, of course, the same on green issues as the present Government, but the zeal of UK Governments to deal with such issues is not found in other parts of the world or of Europe, and that places us at a disadvantage. We have to stop this King Canute attitude to climate change whereby the UK Government think that they can somehow use fiscal powers to affect what is happening to the climate across the world, although they are damaging our own economy at the same time.
Lady Hermon (North Down) (Ind)
A label has been attached to the hon. Gentleman—quite unfairly, I am sure—to the effect that he is a climate change denier. I cannot believe for one moment that that could be true. Would he like to take the opportunity to put on record the fact that he actually believes that there is climate change?
Sammy Wilson
Only a fool would deny that there is climate change. The world’s climate has been changing ever since the world was in existence. The question is what is the cause of that climate change, and what impact might the fiscal measures introduced by the House have on it.
Mr Nigel Evans (Ribble Valley) (Ind)
On measures to address climate change, does the hon. Gentleman agree that air passenger duty has led to passenger change? Instead of flying from UK domestic airports, people are going to Schiphol, Paris, Frankfurt and Madrid for their long-haul flights, which means that the UK just loses out.
Sammy Wilson
We in Northern Ireland, of course, feel that much more than anyone else because we share a land boundary with another country and are just 100 miles away from what is now a major international airport at which there is no air passenger duty. That places airports in Northern Ireland at a grave disadvantage.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I will glide over the hon. Gentleman’s advertising of Dublin airport. Is not his main point that this has nothing to do with climate, as it is really about demand management at Heathrow, where there is not enough capacity to deal with demand? That demand-management tool then damages other airports in Scotland, Northern Ireland or wherever.
Sammy Wilson
I do not know whether it is about demand management at Heathrow, but I do know that there has been an impact not only on the pattern of where and how people fly but, much more importantly, on economic growth in the United Kingdom and on the connectivity that many of the regions need if they are to develop markets elsewhere in the world.
Let us look at the facts. Since air passenger duty was introduced, it has increased by 160% for short-haul flights and by 225% for long-haul flights. The tax brings £2.8 billion into the Exchequer, and that is expected to rise to £3.8 billion by 2016-17. If we make a comparison with other EU countries, we can see where the problem lies. Many EU countries do not have any APD, while some introduced it but abandoned it because of its impact. The countries that have retained it have done so at a lower level than here in the United Kingdom. I shall not bore the House with all the percentages, but others might want to cite them to demonstrate the impact on airports in their areas.
I do not want to be parochial, although other Northern Ireland Members may wish to spell this out in much greater detail, but it would be remiss of me not to point out that air passenger duty has a significant impact on the economy in places such as Northern Ireland. We cannot transfer between air and train travel, so the only option for people who wish to travel to places outside Northern Ireland, whether in Great Britain or elsewhere, is to travel by aeroplane, and hence to pay the duty. The Irish Government abolished air passenger duty in the Republic, with which we share a land boundary, because they recognised the importance of air connectivity to the general well-being and growth of the economy, the promotion of jobs, the attraction of inward investment, and a range of other economic benefits.
David Simpson (Upper Bann) (DUP)
Is not a typical example of the benefits of zero air passenger duty provided by the Dutch Government who, having abolished it in 2010, discovered that £1.3 billion had been lost to infrastructure and the economy since its introduction?
Sammy Wilson
The Dutch Government were not the only Government to change their mind in that regard.
It would be churlish of me not to accept the role played by Ministers—especially the Exchequer Secretary to the Treasury, who is in the Chamber, and the former Minister of State for Northern Ireland, the right hon. Member for East Devon (Mr Swire)—who listened to what was said by Northern Ireland Members about long-haul flights and, in particular, one long-haul flight to north America that connects us to a major investment market. We have managed to attract a great deal of inward investment from that place, but the main fear expressed by the Northern Ireland Executive was that the loss of that route—which was likely to go because of the air passenger duty issue—would lead to the loss of an important economic lever in the investment package of the Minister of Enterprise, Trade and Investment.
Notwithstanding what has been said about this not being a listening Government, on that issue the Government did listen and act. As a result, we have retained the long-haul flight to north America, which is still paying dividends in terms of connectivity and investment. The industry Minister has announced a number of investments from north America in the last few months, and I have no doubt that part of that success is due to the ease with which managers from New York and Boston, for example, could fly into Northern Ireland for meetings with the firms that they had set up there.
Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)
I pay tribute to my hon. Friend for the leadership that he provided in discussing these issues as Northern Ireland’s Finance Minister. Does he agree that what Northern Ireland really needs—apart from a solution to the APD problem—is a proper air strategy that takes account of the role of each of our airports and enables us to adopt a joined-up approach?
Sammy Wilson
I think that that applies to the United Kingdom as a whole. The debate about whether Heathrow should be expanded or whether there should be an alternative to Heathrow is relevant to regional airports in not just Northern Ireland, but other parts of the United Kingdom, to which I am sure other Members will refer.
Paul Goggins (Wythenshawe and Sale East) (Lab)
The hon. Gentleman rightly emphasises the importance of protecting the existing route between Northern Ireland and north America, but does he agree that APD is also preventing new routes from opening up? May I offer an example from Manchester airport in my constituency? AirAsia X was looking to open a new route from Kuala Lumpur and was considering Manchester as the destination, but it dropped the plan in favour of Paris Orly simply because of APD.
Sammy Wilson
That is one of the reasons why the Northern Ireland Executive sought the devolution of long-haul APD. We pay the price for that, as the lost revenue has to come out of the block grant for Northern Ireland, but despite that, it was important because of the freedom that it gave us to look for new long-haul routes, which would be good for the economy. I have heard time and again from regions in England and Scotland that industry leaders believe it is important to try to get new long-haul routes for connectivity in terms of selling exports, getting inward investment and making business connections, but that is being held back because of the high level of APD for long-haul flights.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
I have listened with great interest to what the hon. Gentleman is saying about the effects of APD on Northern Ireland and the complexities of the issue. Is he aware that it is also a tremendous issue in the Caribbean? Because of the arbitrary way in which it has been zoned, people pay more APD to go to the Caribbean than to go to north America. Does not all this point to the need for a holistic look at APD and its effects on not only the economy of Northern Ireland, but traditional allies of Britain in the Caribbean?
Sammy Wilson
I do not want to get into the complexities of how APD is calculated, but anyone with just a basic knowledge of geography knows that the Caribbean is closer than California, yet California is regarded as closer in terms of calculating APD. Even here there are anomalies that have regional impacts.
Mr David Lammy (Tottenham) (Lab)
Have the Northern Irish been able to forge any solidarity with the small nations in the Caribbean that are suffering in this way? The hon. Gentleman will recognise that there are many British citizens of Caribbean background and, as they are certainly not the country’s richest citizens, many of them cannot afford, as a family of four, £332 extra in APD to fly back to the Caribbean on a once-in-a-lifetime trip.
Sammy Wilson
The right hon. Gentleman makes an important point. Although this tax is regarded by some as a tax on the rich and therefore a progressive tax, it is not: it is a flat-rate tax and therefore it is a regressive tax. Many of those who are hit are travelling on holidays or to see their families, and they save up for that even though many of them are on low incomes. Indeed, 45% of those who are hit by it would be regarded as being on medium or below-medium incomes, yet they pay the same tax as those earning more than £80,000. Leaving aside the impact on growth, on exports and on industry, the regressive nature of the tax makes it an unfair tax, and that is another reason this issue needs to be looked at.
Sir Alan Haselhurst (Saffron Walden) (Con)
Bearing in mind the huge revenue APD currently yields for the Government and the fact that passenger demand is rising, it would be quite a good idea to concentrate on some of the anomalies in the structure of the tax at present. That might be the weakest point of the shell around the argument—the perverse way it impacts in Northern Ireland, as the hon. Gentleman has persuasively been saying, in the Caribbean and, indeed, in other parts of the Commonwealth.
Sammy Wilson
The right hon. Gentleman is right. One of the reasons why we in Northern Ireland sought devolution of the long-haul tax is that we could not have afforded to have all our passenger duty devolved, with the impact that that would have had on the block grant. Nevertheless, chipping away at APD as the right hon. Gentleman describes is important.
I will come later to the revenue that the Government currently make from APD, as I am sure that is the point that the Minister will make. It is one thing to rant about the unfairness and inequity of air passenger duty, but where will the Government get the money from otherwise?
Mr MacNeil
Does not all that the hon. Gentleman is highlighting show the mindset of the zero sum game? There is no concept that, if APD were devolved, that would cause growth in the economy and the Government doing that would be rewarded. All that happens is that devolved Governments are penalised, while another Department in London gets the extra revenue in the economy.
Sammy Wilson
I have dealt with the issue in Northern Ireland, so I shall deal with that as a general issue for the United Kingdom economy as a whole. Let us look at the Government’s present objectives. We wish to achieve economic growth. We have heard the Chancellor on many occasions in the House argue that growth cannot be achieved simply by injecting more public funds into the economy, although some of us would query whether a particular type of injection, especially in infrastructure, would not have benefits.
Leaving that aside, the Government’s main thrust is that, if industry in the United Kingdom became more productive and more export-oriented and sold goods abroad, we would be able to achieve economic growth. Yet if there is one tax militating against export-oriented growth, it is this tax. Businesses currently pay about £500 million per year in air passenger duty. That, according to all the reports that have been done, influences the willingness and the ability of businesses to go overseas to look for suppliers, markets, investment and opportunities, and the frequency with which they do so. Therefore, air passenger duty has a deflationary effect and reduces the incentive for businesses to do what the Government want them to do. It therefore impacts on the ability of firms to increase their markets, increase their productivity and bring in investment, which can create further competition and help to increase the health of the economy.
Mike Thornton (Eastleigh) (LD)
The hon. Gentleman raises some interesting points, but I am puzzled about one thing. If reducing APD increases flights, where will those planes land? We seem to have a shortage of capacity at present. If we were full because we were doing so well, what would happen?
Sammy Wilson
The point was made earlier by my right hon. Friend the Member for Lagan Valley (Mr Donaldson) that APD must be seen in the context of an overall strategy. However, as has been pointed out by a number of Members, there are airports other than Heathrow and Gatwick which are capable of taking long-haul flights. Having those direct long-haul flights or even short-haul flights to other destinations would help many regional economies significantly, and there is excess capacity there. We should not always think in terms of only the main hub airports when we are talking about the industry’s capacity.
Studies have been done on the impact of removing air passenger duty and a report by PricewaterhouseCoopers went to the Chancellor. All economic models can be challenged. As an economist, I used to tell youngsters when I was teaching them in school that the model is only as good as the assumptions put into it, and those may change before the model has been run for sufficient time. We always have to be careful about economic modelling, and I am sure that the Minister will make the same point. The model used by the consultants took cautious views about elasticity of demand for tourism and elasticity of fiscal changes. It used a model that is used by the Treasury to measure the impact of policy changes. When the Chancellor comes to the House with Budget policies and tells us that behavioural changes will lead to this or that, he uses exactly the same kind of models that were used in this report. The outcome was that to remove air passenger duty altogether would lead to GDP growth in the first year of 0.45%, and in the next two years of 0.3%. During those three years, £16 billion would be added to GDP and there would be 60,000 jobs, an increase in exports of 5% and an increase in inward investment of 6%.
When people asked me for money, I would ask where it was to come from. If they wanted me to spend money on this, I would ask where we would spend less. If they wanted taxes on business reduced, I would ask where we were to get the money from. There must always be a counterbalance, but the good thing about this proposal is that it is fiscally neutral. If anything, given its impact on exports, investment and growth, the £4 billion that would be lost by 2016-17 would be more than compensated for by the increase in tax revenues and the reduction in benefit payments. That is most unusual for any fiscal change. The reasons for it are, first, that the level of taxation is so high in the UK compared with elsewhere that there would be a positive impact. Secondly, there is the importance of transport. This is borne out not just by the model but by the Department for Transport. The importance of transport to the economy is such that there is a huge multiplier effect. Lastly, because of the connectivity that this gives to other markets, there would be a positive impact.
The coalition Government promised to look at a replacement for air passenger duty and said that the revenue raised—they did not say that more would be raised—would be used to offset income tax changes. If the Government changed the method of taxation for air travel, they did not see that money as going into the general pot, either to reduce borrowing or to facilitate spending on other Departments, but as something that would be given away anyway to taxpayers. Therefore, as for how we pay for it, all the work that has been done indicates that it should be revenue-neutral. However, I assume—perhaps I am just being naive—that if the Government had made a promise that the revenue from taxing air travel would be given in income taxes and that had been factored in already, they did not actually need it for their fiscal reduction plans anyway.
I was going to talk about the environmental concerns. Members might have gathered that the impact of CO2 emissions, or whatever other emissions there might be from air travel, on the world environment does not feature very high on my list of priorities. I am one of those who believe that there is a big orange globe up in the sky that has influenced the Earth’s climate for billions of years and will continue to do so and that the impact humans have on that is very limited. We should certainly not be strangling our economy in order to try to change the climate, especially when countries around the world that emit far more CO2 than we ever will, do not give two hoots about emissions, so anything we do strangles our economy and is likely to have very little impact anyway.
Another reason why I do not believe that we should spend too much time on the environmental concerns is that air passenger duty, as a number of Members have pointed out, is not a green tax anyway. In that case, I am sure that Members will not be using arguments about polar bears sinking to the bottom of the Arctic ocean, or whatever other emotive arguments and blackmail they might wish to use, during this debate. Actually, it also means that I do not even have to deal with the environmental concerns.
Sammy Wilson
There probably is a sigh of relief from hon. Friends behind me, because they do not all share my views on that.
Nigel Mills (Amber Valley) (Con)
I was enjoying that part of the hon. Gentleman’s speech. For the Assembly, how close did the abolition of APD in Northern Ireland come to being a viable way of encouraging investment? Was it anywhere near that, or was it way down the Assembly’s list of priorities?
Sammy Wilson
It was very high on the Assembly’s list of priorities. We entered into the devolution of air passenger duty for long-haul flights not knowing what the final bill would be, but we did so in the knowledge that, regardless of what the bill would be, it was a very significant issue for the Northern Ireland economy—I can say that now because the bill has been settled, but if I had said it earlier Treasury Ministers might have thought, “Oh well, we can stick the arm in as far as we like.” It was one of our top priorities. Indeed, many people argued at the time that it was all about tourism, but it was not; it was essentially about the investment strategy that had been set out for Northern Ireland and the need for connectively with one of the main markets from which we attract inward investment. All the indications we had from investors show that ease of travel was very important, whether for their managers into Northern Ireland or for staff going to north America for training purposes or whatever, so for Belfast to have that connection was essential. For those reasons, the Northern Ireland Executive decided to seek the devolution of air passenger duty for long-haul flights.
Nigel Mills
I understand that completely, but can the hon. Gentleman explain why the Executive are not taking a similar view on short-haul flights and why it presumably thinks that there are better ways to encourage inward investment or tourism than at least partially reducing APD for flights from Northern Ireland?
Sammy Wilson
It really comes back to the point made in an earlier intervention about chipping away at it and trying to use arguments to undermine the tax and its anomalies and to highlight its impact at the regional level. We took the view that it was most important that the long haul part of the tax should be devolved because we were about to lose Continental Airlines flights into Northern Ireland. That issue had immediate priority.
As the Executive have discussed again just this week, we believe that the problem is UK-wide. One of the reasons why this debate is important and why we did not frame it solely in terms of Northern Ireland is that we believe it is about a UK-wide issue. If there is to be change, it should be made here in Westminster rather than the full cost—anything up to £90 million—being borne solely by Northern Ireland. That would have a significant impact on the block grant.
Kate Hoey (Vauxhall) (Lab)
I fully accept that, but does the hon. Gentleman not accept that Northern Ireland is special and different because there is a lot of sea between it and the rest of the UK? Those who cannot afford to fly have to take a long route. It might help if Ministers sometimes did not fly to Belfast, but took the route that many poorer people have to take because it is so much cheaper to go all the way up to Stranraer.
Sammy Wilson
That is exactly right. The road or road-and-rail journey is also long and expensive.
To sum up, I trust that during this debate we will hear from Members about the impact that they have seen the tax having on the parts of the economy that they represent across the United Kingdom. Since there is to be a review of green taxes, semi-green taxes, pale green taxes, taxes that used to be green but are no longer, or whatever, and given that this issue should be revenue-neutral yet fit in with the Government strategy of export-led growth, I trust that APD will be given serious consideration in the review of fiscal policy.
The Economic Secretary to the Treasury (Nicky Morgan)
Madam Deputy Speaker, it is a real pleasure to speak in this debate, particularly given that you are in the Chair. It does not seem that long ago that we were meeting on the Terrace and you were giving me advice on how to become a Member of Parliament—and now look at where we both are.
It is a pleasure to respond to the hon. Member for East Antrim (Sammy Wilson). I thank him for raising the issues, which relate to the two greatest challenges facing the Government and Britain today—rebuilding the British economy and restoring the public finances. The House well knows the state of both challenges when the Government came into office. The economy was still reeling from the impact of the recent banking crisis and Britain had the largest fiscal deficit in our peacetime history.
The hon. Gentleman started talking about zealousness, particularly in respect of green taxes. I thought he was going to talk about zealousness in tackling the fiscal deficit, although I am not sure that I heard that from him. The Government have had to face up to those challenges and take tough choices. My right hon. Friend the Chancellor committed to tackling our budget deficit and getting our national debt under control. Fixing the public finances is vital to maintain confidence in Britain and the stability that is an essential condition of growth, as the hon. Gentleman mentioned, and recovery.
In recent months, the statistics on gross domestic product, employment, business investment and consumer confidence have all shown that our efforts are beginning to bear fruit. The process of recovery is, of course, far from complete, but, building on the stable foundations that the Government put in place, the economy is now healing. I am sure that the whole House welcomes the signs of recovery so far and looks forward to seeing them continue.
In particular, I am sure that the hon. Gentleman will join me in welcoming the recent good economic news from Northern Ireland. This year, Northern Ireland’s exports have risen by 4% in the second quarter of the year and in September they rose at the fastest rate in nearly six years. September also saw the third consecutive month of growth in Northern Ireland’s GDP, with activity rising in the manufacturing, retail and services sectors. It also saw the third consecutive month of rising private sector employment, while total jobs have grown by more than 5,000 over the course of the year. That has kept unemployment in Northern Ireland well below the UK average and the fourth lowest of the 12 UK regions. Just as Northern Ireland makes a key contribution to the UK economy overall, growth and recovery in Northern Ireland are making a key contribution to the UK’s wider recovery.
Supporting strong transport links is a key part of building our economic recovery. The Government are therefore bringing forward record investment in transport infrastructure, which the hon. Gentleman mentioned, to ensure the connectivity of all parts of the United Kingdom, including Northern Ireland. That is why in this year’s spending review we announced a £20 million fund to improve air connectivity between London and the rest of the United Kingdom. Where the case is made for a public service obligation, the Government will use this fund to support regional air links. Northern Ireland will be able to bid for that support. This would build on existing support for the Northern Irish economy—for example, the additional £94 million of capital spending power for the Northern Ireland Executive announced in this year’s Budget and the action plan set out in the Northern Ireland economic pact published this June.
Ensuring sound public finances is indispensable to economic recovery. With forecast revenues of £2.9 billion in 2013-14, air passenger duty—APD—makes an essential contribution to the Government’s strategy for tackling the current budget deficit and getting debt under control.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I welcome the Minister to her post on the Treasury Front Bench. She will be aware that this time last year the Silk commission in Wales argued strongly that minor taxes such as airport duty should be devolved to the National Assembly and the Welsh Government with more or less immediate effect, to be implemented in the most recent Finance Bill. We are still waiting for the UK Government to respond to the first part of the Silk commission’s report. Is she able to enlighten us on when we are likely to have that response?
Nicky Morgan
I am afraid that I cannot give the hon. Gentleman a specific date. All I can say is that Ministers are continuing to evaluate all this and ask for his patience for a little longer. I do appreciate that this matter is part of those discussions.
Despite these challenges, the Government have frozen APD in real terms since 2010, and since then APD rates have risen by only £1 for the vast majority of flights. Given the fiscal challenges we face, no responsible Government would simply relinquish nearly £3 billion of revenue.
Ms Abbott
The whole House understands the fiscal challenges, but given the particular problems that APD zoning is causing in the Caribbean, why are Treasury Ministers not prepared even to consider a change in the arrangements that would maintain their total tax take, as I appreciate they want to do, but be fairer to millions of people in the Caribbean and millions of people who live here, who are British voters, and who are having to pay this tax to go backwards and forwards?
Nicky Morgan
First, I am not sure that all hon. Members do understand the fiscal challenges facing the Government, but I will assume that the hon. Lady does, very much so. I listened carefully to what she said about the Caribbean. I know that Ministers, including my predecessor, have engaged with representatives. I could be wrong, although I do not think the hon. Lady will be surprised if I said that I know more about air passenger duty today than I did this time last week, but I think that zoning for the Caribbean was introduced by the previous Government. All Ministers keep all taxes under review. However, I heard what she said, and we will listen to the representations that are made.
Mr MacNeil
I, too, welcome the hon. Lady to her new position. What are these fiscal challenges that the Westminster Government face? The hon. Member for East Antrim (Sammy Wilson), as Finance Minister in Northern Ireland, has to balance his books. The UK has not paid its way since 2001; in fact, in the past year it has borrowed £120 billion. There is a good argument that says that changing the management of APD will increase GDP and tax revenues. With that body of evidence behind it, is it not worth listening to the wise words on APD rather than ploughing on regardless?
Nicky Morgan
I thank the hon. Gentleman for his comments. I think that the fiscal challenges are very apparent. We still have a large debt and a deficit run up under the previous Government which this Government have said we need to tackle. Later in my speech I will talk about the PricewaterhouseCoopers report, the impact on GDP, and the assumptions that are made.
Mr Andy Slaughter (Hammersmith) (Lab)
I welcome the Minister to her post. She is at least the sixth Minister whom my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott) and I have approached on this subject and I think she may have slightly misunderstood the point made by my hon. Friend, which is that it is possible to be fiscally neutral while also being fairer. Will she go away and consider issues related to the Caribbean in particular, although this does affect other countries as well? Before the last election, the then shadow Treasury Ministers were very eloquent in advocating per-plane taxes and readjusting banding so that many of my Caribbean constituents, as well as those of many of the other Members present, would not be disadvantaged. Will the Minister at least give an undertaking to look at the issue with a fresh pair of eyes?
Nicky Morgan
I assure the hon. Gentleman that I am keeping a very fresh pair of eyes on all areas of my Treasury brief. I look forward to meeting him and the hon. Member for Hackney North and Stoke Newington (Ms Abbott) to discuss the issue further. We will certainly keep it under review.
As I have said, we must continue to work hard to reduce the deficit, so if we were to abolish APD, an alternative source for the revenue would need to be found. We never seem to hear any suggestions, but if we hear any today my hon. Friend the Exchequer Secretary will respond to them in his winding-up speech.
Some have argued that, in the case of APD, no such off-setting measures would be necessary and that abolishing the tax would pay for itself by increasing economic activity overall and thus receipts from other taxes. The motion cites the report by PricewaterhouseCoopers arguing exactly that. I will turn to the report shortly, but first let me address the general question of the impact of the tax system on the UK economy and the UK’s international competitiveness.
Ian Paisley (North Antrim) (DUP)
I welcome the Minister to her place and congratulate her on her new post.
May I suggest that one way in which the Government could make money out of this and increase productivity would be to incentivise the 50,000 Australians who visit Northern Ireland every year to fly through Heathrow and use that as their hub, instead of flying to Dublin before travelling up to Northern Ireland and then leaving via Dublin and spending their money there?
Nicky Morgan
I welcome the hon. Gentleman’s suggestion and I will certainly think about it. My earlier remarks hinted at the existence of the Airports Commission, which will look at all the UK’s airports, the role they play for travellers and how we deal with those who come here by whichever means.
Nicky Morgan
I thank the right hon. Gentleman for his remarks. As a Conservative, I believe in the lowest tax possible, but I also believe in running the economy as responsibly as possible, meaning that what we get in, we spend out. That was put out of kilter by the legacy of the previous Government. We have been very clear about the reason for APD and the role it plays. We cannot choose to ignore £3 billion when we have to deal with the deficit and legacy left to us by the previous Government, of which the right hon. Gentleman was at times a member.
Mr MacNeil
On balancing the books and spending what we raise, if that were the case the UK would raise income tax by 8p to 10p in the pound, such is the size of the UK deficit in a country that has not paid its own way since 2001.
Nicky Morgan
This Government are making progress in making sure that we do pay our way. We also believe that people should keep as much as possible of the income they earn. I will come on to talk about household income and the impact APD has on it, but for now I want to address UK competitiveness.
When comparing different countries’ tax regimes, it is important to view the system as a whole. Comparisons between individual elements can be misleading, especially if companies’ decisions about where to invest are driven by the impact of the system as a whole, not its individual parts. As my right hon. Friend the Chancellor has made clear many times, the Government are committed to ensuring that the UK has the most competitive tax system of all advanced economies. We want to have a tax regime that supports the attractiveness of all parts of the UK as places to invest in and that ensures that the whole of the UK is open for business.
Graham Stringer
I welcome the hon. Lady to her position. What she is saying about inward investment may or may not be true. As the hon. Member for East Antrim (Sammy Wilson) said, if we reduced this tax, the Revenue would not lose any income. However, what she is saying cannot possibly apply to tourism. Tourists from all over the world are flying to Charles de Gaulle and Schiphol rather than to Heathrow because of air passenger duty, and certain routes are not coming to regional airports in this country because of air passenger duty. Routes such as Bangkok, Hong Kong, Delhi, Mumbai and Beijing could be coming into Manchester if we did not have air passenger duty.
Nicky Morgan
I return to my original point, which is that if we were to abolish air passenger duty, as is called for in the motion, it would have to be replaced by something else to meet the Government’s commitment to put the nation’s finances on a sound footing and reduce the deficit. Although the hon. Gentleman makes an interesting point, I have not heard from him—indeed, I have heard from only one hon. Member—a suggestion as to how that revenue could be replaced.
I will come on to talk about investment and the PWC report. The hon. Member for East Antrim will not be surprised to hear that the Government have some questions about the assumptions that are made in that report.
Nigel Mills
I welcome my hon. Friend to her new post. I accept that the Government cannot fully abolish air passenger duty, but will she consider a short holiday for new long-haul routes, especially at regional airports? For example, if there was a new route from East Midlands airport to India, it could be spared APD for the first three to five years to give it a chance to bed in and to become viable. That would have no immediate cost to the Exchequer, but it may well help to generate the growth that we need.
Nicky Morgan
I thank my hon. Friend for that suggestion. Like him, I know East Midlands airport very well as an east midlands Member of Parliament. The difficulty with regional holidays or variations is that they must be quite substantial to change passenger behaviour. That takes us back to my original point that the £3 billion that is raised by APD is a significant contribution to the Exchequer when we are tackling the deficit.
Mr Nigel Evans
I congratulate my hon. Friend on her new position. She said that the changes would have to be significant to alter passenger behaviour. Is not the fact that we have the most expensive APD in the world changing passenger behaviour, because people are taking short-haul flights to Schiphol, Charles de Gaulle, Dublin or even Belfast in order to take longer-haul flights, saving several hundreds of pounds for their families?
Nicky Morgan
I thank my hon. Friend for his remarks. The previous question was about regional variations within the United Kingdom. That is why I was talking about changing behaviour. As I said, this all goes back to my original point that air passenger duty raises £3 billion a year, which is a sum that cannot be ignored if we want to do what this Government were elected to do, which is to repair the nation’s finances. Obviously, my interest in this area is growing as every second of this debate passes.
Graham Stringer
The hon. Lady is being very generous with her time. I appreciate her difficulties because, as she says, she is a new pair of eyes on these issues. Will she meet an all-party delegation on behalf of regional airports to discuss these matters in more detail away from the heat of the Chamber?
Nicky Morgan
I am always happy to meet hon. Members to discuss these matters. That sounds like an interesting idea. It might help me to learn more about these issues, as I am doing in this debate.
In order to make our tax system more competitive, we plan to reduce the rate of corporation tax to 20% from April 2015. At that point, the UK will have the joint lowest corporation tax rate in the G20 and by far the lowest rate in the G7. Increased rate relief on research and development, combined with the patent box, will make the UK one of the most attractive places to innovate. As a result, the latest KPMG annual survey of tax competitiveness rated the UK as the No. 1 most competitive tax regime internationally.
As well as supporting UK competitiveness, within the constraints of the need to repair the public finances, the Government are also supporting households to meet the cost of living. By April 2014 the Government will have increased the personal allowance to £10,000, which will take 2.7 million people out of income tax altogether. In Northern Ireland, since 2010 the rising personal allowance has already taken 75,000 people out of tax. In recognition of the impact of persistently high pump prices, the fuel duty increase that was planned for 1 September this year was cancelled, and the Chancellor has also announced his intention to cancel the September 2014 duty increase.
On aviation taxes, the House will recognise that the UK is one of only four EU countries that does not charge VAT on domestic flights. That stands in contrast to rates of VAT on those flights of 19% in Germany and 20% in the Netherlands. There is also no duty charged on the fuel used in international, and virtually all domestic, flights. Finally, as I have already said, despite the fiscal challenges, the Government have ensured that APD rates have been frozen in real terms since 2010, rising by just £1 for the vast majority of passengers since then. The Government therefore reject the suggestion that we have pushed taxes on aviation too high.
Let me turn to the report on APD published earlier this year by PricewaterhouseCoopers and to which today’s motion refers. The report claims that abolishing APD would give such a boost to the wider economy that it would make other tax receipts increase by enough to offset the loss of APD revenue—the £3 billion I referred to a moment ago. The report’s conclusions, however, are based on economic models that rely on a series of significant assumptions. In particular, the report makes a series of assumptions about the behavioural impact of scrapping APD—how much business air travel would increase by—and the resulting increase in overall UK productivity.
The Government have reviewed the report, its modelling and the underlying assumptions carefully. We do not agree with the assumptions needed to justify the claim that abolishing APD would be revenue neutral overall, and, in our view, abolishing APD would have a significantly smaller impact on UK economic activity than PWC has estimated. There would therefore be a smaller increase in other taxes than PWC predicted, with overall tax revenues falling as a result. We also note that under some of the less optimistic assumptions that PWC considered in its report, its models predicted a net loss of revenue in the longer term. As I have said, any revenue loss would either need to be made good by increased revenues from other sources, or would need to be compensated for by further reductions in public spending.
The Government dispute the claim by PWC that APD is a regressive tax—I am sorry that the right hon. Member for Tottenham (Mr Lammy) is no longer in his place, as this goes to the heart of what he was talking about. PWC compared APD rates with average weekly household expenditure of different income groups, but its analysis took no account of the fact that not all households pay APD at all. A better measure of fairness would be to compare what households spend on APD, relative to their incomes. Using that measure, statistics from the Office for National Statistics show that lower-income households spend a lower proportion of their disposable income on APD than higher income households.
Sammy Wilson
I am amazed at the way the Minister is trying to deal with this issue. Surely we only measure the impact of a tax on someone who consumes a service. The PWC report looked at various income groups and found that the tax fell far more heavily on those with lowest income levels—that is 45% of travellers— compared with those with the highest levels. We are already comparing travellers. Indeed, the tax represented 28% of their average weekly income. If that is not regressive, I do not know what is.
Nicky Morgan
ONS statistics show that lower-income households spend a lower proportion of their disposable income on APD than higher-income households. We are looking at what people actually spend.
Siobhain McDonagh (Mitcham and Morden) (Lab)
How would the Minister explain that to my Caribbean constituents, many of whom come from Jamaica or other Caribbean islands and have lived here for 40 or 50 years on low incomes? They now find themselves being excessively taxed in order to stay in contact with their family and friends in their home countries.
Nicky Morgan
I do not know whether the hon. Lady has just arrived in this debate, but we have already discussed Caribbean issues [Interruption.] Well, I think I have dealt with that issue. [Interruption.] I am sorry—I had not appreciated that the hon. Lady was present, but there were questions on this matter from the hon. Member for Hackney North and Stoke Newington and the right hon. Member for Tottenham, and I have addressed the issue of the Caribbean. ONS statistics show that lower-income households spend a lower proportion of their disposable income on APD than higher-income households. In relation to the Caribbean, APD must adhere to international rules on aviation tax, specifically the Chicago convention. The capital city convention on APD ensures that our APD complies with those rules.
The hon. Member for East Antrim spoke of the impact of APD on Northern Ireland in the context of recently announced changes to the rate of air travel tax in the Republic of Ireland. I thank him for saying that this is a listening Government and for his recognition of the moves we have made in that regard. We recognise the position of Northern Ireland as the only part of the UK that shares a land border with another EU member state with a different rate of aviation tax, which is why we have devolved to the Northern Ireland Assembly the power to set APD rates for direct long-haul flights. The Government and the Northern Ireland Executive recognise that decisions on further fiscal devolution of any taxes require careful consideration. We expect recommendations on further devolution to be put to the Government and Northern Ireland Executive by autumn 2014.
The debate highlights some of the most important issues facing Britain today, including repairing the public finances and bringing debt under control, thus ensuring the stability on which economic recovery depends. APD makes a vital contribution to the Government’s fiscal strategy—it would be irresponsible of us to abandon it—and forms part of the wider tax system that we are making into one of the most competitive in the world. I thank the hon. Gentleman for giving us the opportunity to debate those important issues, but I cannot agree with his proposal that the tax should be abolished.
Mr Speaker
Order. Before I call the shadow Minister, I point out to the House that nine hon. Members have indicated to me that they wish to catch my eye. In recognition of that fact, and of the time constraint we face, I will impose an eight-minute limit on Back-Bench contributions, the first of which will follow the speech of the hon. Member for Newcastle upon Tyne North (Catherine McKinnell).
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Thank you, Mr Speaker. I commend the Democratic Unionist party, and particularly the hon. Member for East Antrim (Sammy Wilson), for bringing this timely issue before the House. He gave a thoughtful and considered introduction to the debate.
It is clear from the hon. Gentleman’s contribution that air passenger duty causes concern to many hon. Members on both sides of the House and their constituents. More than 100,000 people backed the petition of the fair tax on flying campaign, which resulted in a Backbench Business Committee debate in November 2012. Who can blame people for being concerned when they face a worsening cost-of-living crisis, with soaring energy bills, increasing child care costs, countless other demands on household budgets, and prices rising faster than wages in 39 out of the past 40 months since the Government came to power?
The fair tax on flying campaign is driven by a number of the UK’s leading travel organisations, including airports, trade associations and destinations. In my new role as shadow Economic Secretary to the Treasury, I look forward to engaging with those bodies and their concerns with my fresh eyes.
Lady Hermon
Given that APD is loathed and detested by our constituents throughout the United Kingdom, will the hon. Lady take this opportunity at the beginning of her contribution to commit any future Labour Government to the complete abolition of APD, and cheer us all up before we go home this evening, please?
Catherine McKinnell
It is interesting that the hon. Lady mentions cheering up—an ONS report out today says that Northern Ireland is one of the happiest places in the UK—but I appreciate that APD is a cause of unhappiness, as was clearly articulated by a number of hon. Members, particularly the hon. Member for East Antrim. I will set out the Labour party’s position on the subject later, but I want to focus on the Government’s approach—[Interruption.] Given the Prime Minister’s performance today, one wonders who is running the country.
Kwasi Kwarteng (Spelthorne) (Con)
To be specific, what exactly is the position of the Labour party, not the Government, on air passenger duty?
Catherine McKinnell
As I said, I will set out the Labour position, but it is interesting that Government Members are keen to deflect responsibility. It is important to reflect on what the Government have said to date on air passenger duty.
I would, however, first like to reflect on the contribution by the hon. Member for East Antrim, who made a well-thought-out speech, particularly on the 2013 PricewaterhouseCoopers report into the impact of APD. The report concluded that APD affects not just the travel and tourism sector, but the economy as a whole. PWC was commissioned by British Airways, Virgin Atlantic, Ryanair and easyJet, and suggested that the abolition of APD could result in a 0.45% increase per year in GDP and the creation of almost 60,000 jobs between now and 2020. The Government dispute those figures, but I will return to them later in my speech.
Mike Thornton
I congratulate the hon. Lady and thank her for giving way. Is it not significant that the companies that would benefit most from getting rid of APD want to get rid of it? Is it not pretty obvious that they would back the report’s conclusions?
Catherine McKinnell
I thank the hon. Gentleman for his kind wishes. The companies commissioned the report, but it is for the Government to set out their position and their own findings. I would like to focus on the Government’s statistical analysis and assessment of APD. I know the value added to the north-east economy by Newcastle airport. I know how critical certainty and stability on issues such as APD are for the airport and the businesses that rely on it, and for the export-led recovery that the hon. Member for East Antrim referred to on a number of occasions. Newcastle airport alone supports 7,800 jobs across the north-east region, with 3,200 on site, and more than £250 million of UK exports were shipped through the airport in the last year—facts that speak for themselves. It is therefore little wonder that the Government’s dither and lack of direction has caused significant frustration for passengers, the travel and tourism sector, and the industry as a whole.
What have we heard so far from the Government on APD? The Conservative 2010 election manifesto pledged to:
“Reform Air Passenger Duty to encourage a switch to fuller and cleaner planes”.
The Liberal Democrats went further, suggesting that they would ensure that pollution was “properly taxed” by replacing the per-passenger APD with a per-plane duty and that air freight would be taxed for the first time. They also said that they would introduce an additional, higher rate of PPD on domestic flights if realistic, alternative and less-polluting travel was available.
Mr MacNeil
The hon. Lady makes a good point about the views of the Liberal Democrats. The Liberal Democrats held a multitude of views in opposition and hold another multitude of views now they find themselves in government, so her words do not surprise me at all.
Catherine McKinnell
The hon. Gentleman anticipates my next comment. It is important not to take a Liberal Democrat election manifesto at face value, but one might reasonably have expected to see some action from Ministers given that the coalition agreement promised that the Government would:
“reform the taxation of air travel by switching from a per-passenger to a per-plane duty.”
and
“ensure that a proportion of any increased revenues over time will be used to help fund increases in the personal allowance.”
The Chancellor then announced in the 2010 Budget that major changes to APD, including switching to a per-plane duty, would be subjected to public consultation, but nothing happened, and almost one year later, at Budget 2011, he announced that the Government would consult on simplifying the structure of APD. In between, the fair tax on flying campaign was launched not only to raise concerns about this issue, but to elicit a modicum of action or at least certainty or clarity from the Government. Budget 2011, however, saw the Chancellor U-turn on the coalition agreement pledge made less than 12 months earlier to switch to a per-plane duty, informing the House:
“we had hoped that we could replace the per passenger tax with a per plane tax. We have tried every possible option, but have reluctantly had to accept that all are currently illegal under international law. So we will work with others to try to get that law changed.”
Will the Minister update the House on how that work on changing the law is going?
At Budget 2011, the Chancellor went on to state:
“In the meantime, we are consulting today on how to improve the existing and rather arbitrary bands that appear to believe that the Caribbean is further away than California. We will also seek to bring private jets, which pay no duty at all, into the scope of taxation.”—[Official Report, 23 March 2011; Vol. 525, c. 963.]
The APD rate rise due in April 2011 was deferred to April 2012.
Catherine McKinnell
Not just yet, because I need to make some progress.
At the same time, we saw an 8% increase take effect, with APD rates thereafter rising in line with inflation. As announced at Budget 2010 and then again at Budget 2011, the Government did indeed consult on the structure of APD, in a consultation that covered several areas, including private jets, different tax bands, premium economy flights, flights from regional airports and the possible devolution of APD. The consultation paper raised the concern that the existing four-band structure was damaging UK competitiveness and contained several anomalies, such as the higher rate on Caribbean flights than on flights to destinations in the USA, about which several hon. Members have raised concerns.
The paper set out two options: returning to the pre-2009 structure of two tax bands and a different rate between two classes of travel; and combining the two higher bands for flights over 4,000 miles to create a three-band structure and retaining different rates between different classes of travel—an option, however, that would not have resolved the Caribbean concern. The consultation also raised the prospect of a lower rate of APD for flights from regional airports and the question of whether APD should remain a UK-wide tax or be devolved.
The Government spent the best part of a year apparently listening to interested parties that took considerable time and effort to respond in good faith to the consultation. And then what? For the whole of the UK, apart from announcing that APD would be extended to business flights, they did absolutely nothing. In their response to the consultation, they confirmed in December 2011 that they did not propose to make any changes to the tax’s banding structure, to how different classes of flight were taxed or to the application of APD to the regions. It is little wonder then that industry players described the consultation as
“a sham and a waste of taxpayers’ money”.
Of course, we saw action on Northern Ireland, following the July 2011 Northern Ireland Affairs Committee report, which urged the abolition of APD on flights to and from airports in Northern Ireland owing to the specific problem faced there—direct competition from airports in the Republic and its lower rates of APD. In order to maintain the transatlantic route from Belfast to Newark, the Chancellor announced in September 2011 that the APD rate on long-haul flights using airports in Northern Ireland would be cut, because Continental Airlines had, unsustainably, been paying the APD itself at a cost of some £3.2 million a year. Then, in the Finance Act 2012, APD on direct long-haul flights departing from Northern Ireland was devolved to the Northern Ireland Assembly, which then abolished it on these flights from 1 January 2013.
Clearly, flights from Northern Ireland face specific challenges, as I have noted and as was set out clearly by the hon. Member for East Antrim. It is the only part of the UK that has a land border with another EU member state. George Best Belfast City airport and Belfast International both compete directly with Dublin in attracting airlines, routes and passengers. So the Opposition supported the Government’s move on APD in relation to long-haul flights and Northern Ireland. Given that Northern Ireland also largely relies on air transport for its link to the rest of the UK, we are sympathetic to the argument for reducing APD on all routes from Northern Ireland, but we would need to examine the impact of that in the round, including on the block grant, which the hon. Member for East Antrim acknowledged.
Other options are, of course, available. We could consider protected routes, which already exist in the UK—the air link to the Scottish islands being an example—with Belfast to Heathrow being suggested as the obvious choice. But the Government’s piecemeal approach to dealing with APD, an issue that affects the UK as a whole, is regrettable, particularly given the importance of long-term certainty on this issue for industry and the wider economy. Leaving aside the changes we have seen in Northern Ireland, it appears that the Government have simply given up on this issue altogether.
In May, the Select Committee on Transport published a number of proposals on APD as part of its wider inquiry into aviation strategy. Included in the recommendations were that: the Treasury should conduct and publish a fully costed study of the impact of APD on the UK economy; the Government should carry out an objective analysis of policies such as differential rates of APD; the Government should conduct a 12-month trial on an APD holiday for new services operating out of airports not in the south-east; and the Government should not further devolve APD at this stage, as it may have negative impacts, for example, in the north of England. Some of those recommendations stemmed from the February 2013 PricewaterhouseCoopers report, to which reference is made in the motion.
Ministers appear to have totally dismissed both reports, rejecting all the Select Committee’s recommendations apart from the one on devolution. They have stated:
“The Government disagrees with the findings of the PwC report. The Government believes that abolishing APD would have a smaller impact on GDP than the report implies and would cause a net loss of tax receipts. This reduction in receipts would need to be paid for through tax rises or spending cuts elsewhere, which would themselves have an economic impact.”
The response went on to state:
“The Government has no plans to undertake a review of the economic impact of APD at this point.”
So, the Government do not believe the findings of others about the economic impact of APD, but have no plans to verify them or otherwise undertake their own review.
There is no doubt that APD brings in a significant amount of funding to the Treasury, with a yield of £3 billion anticipated this year and next, as the Minister mentioned a good number of times. The matter does need to be considered in the round, but the Government’s unscientific approach to this issue seemed to be a cavalier one to take to economic growth, given that we have had three years of a flatlining economy.
The motion states:
“that it is the intention of the Prime Minister to review green taxes; and calls on the Government, as part of that review, to give high priority to the abolition of air passenger duty.”
In preparing my comments for today, I wondered whether this review actually existed, but the Prime Minister seems to have confirmed it at questions, because he is apparently waking up to the fact that struggling families need support and believes that this is the way forward. We then read, however, that this review has been kiboshed by the Liberal Democrats before it has even begun. Perhaps the Exchequer Secretary will shed some light on that issue, too, in his concluding comments.
In conclusion, despite various promises of action on this issue, we have seen anything but. The reforms in Northern Ireland addressed the very specific situation in that part of the UK, but this issue affects the whole of our country. After three years of a flatlining economy, and with households up and down the country in the midst of a cost of living crisis, the Government’s complete lack of direction on APD has been extremely unhelpful at a time when family purse strings have been tightened and businesses have been crying out for support. The lack of certainty on this issue from the Government simply risks investment decisions being delayed and future development being jeopardised, which, crucially, puts jobs at risk, too. This just is not good enough, but it is what we have come to expect.
Kwasi Kwarteng (Spelthorne) (Con)
I intervened during the speech made by the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) to ask what the Labour party’s policy on this issue actually was. The hon. Lady made a good speech, but she did not answer my question. She spoke for 17 minutes without providing any clarity on the Labour party’s position, and I remain unsure about the nature of her objections—if they are objections—to this tax.
It is important to review the tax’s history. It was introduced in 1994 by my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), and at that time it was not a green tax. Like most taxes, it was brought in as a revenue-raising exercise and there was no mention whatever of its environmental impact. It was only under the previous Labour Government that the tax mutated into a green tax. It was doubled in 2007, and the banding was introduced in 2008. The right hon. Member for Tottenham (Mr Lammy) and the hon. Member for Hackney North and Stoke Newington (Ms Abbott) have spoken of how their constituents who travel to the Caribbean are particularly affected by the banding, but we did not hear any mention that that banding was introduced by the Labour Government. It seems peculiar that the hon. Member for Newcastle upon Tyne North has not mentioned that Government’s contribution to the development of the tax and nor has she set out the Labour party’s current position on it—that remains perfectly obscure.
We need to consider the deficit. As a free-market Conservative, I do not like taxation, and I yield to no one in my desire and enthusiasm to cut taxes and to stimulate the economy through reducing the burden of taxation to promote growth and enterprise, and to encourage risk-taking and other forms of business enterprise. However, I recognise that we have a deficit, and that deficit completely shapes the nature of our debates on taxation—[Interruption.] I sense an intervention coming on.
Mr MacNeil
I was trying to resist the urge to intervene, but the deficit in the UK has been in existence since 2001. The UK has been in a fiscal black hole since then, which was seven years before the economic crisis; it has not been able to pay its way since that time.
Kwasi Kwarteng
The hon. Gentleman shows an admirable grasp of our recent economic history; he is absolutely right. From 2001 to today, we have consistently run a deficit. Conservative Members have always been struck by the fact that, although the economy was actually growing during the first six of those years, between 2001 and 2007, the Government of the time saw fit to run a deficit in every one of those years. The present Government inherited a deficit of £160 billion—12% of our gross domestic product—and the fact that it has now been reduced by a third represents a remarkable success. It now stands at somewhere between £110 billion and £115 billion, depending on how the figure is calculated. In the context of deficit reduction, any Government would be reluctant to abolish air passenger duty in a peremptory way, as it brings in more than £3 billion a year. We all recognise that the deficit is a real thing—it is an ongoing annual sum that we have to close—and the £3 billion a year raised by APD makes a real contribution to its reduction.
I fully understand all the supply-side arguments. I understand that, if we were to abolish the tax, we could perhaps reap economic rewards at some future date. However, those who promote reducing or abolishing it must tell us how they would replace that revenue from day one. Where would they find the £3 billion that APD currently brings in? Conservative Members are familiar with general tax-cutting arguments. One could argue for the abolition of most taxes on the basis that that would stimulate growth, and that the money would be recouped in the long run through increased tax revenues. However, we have to face the fact of a real deficit, which is something that Opposition Members never seem to acknowledge in their speeches.
I was entertained by the speech made by the hon. Member for East Antrim (Sammy Wilson), who put forward in a typically trenchant way his views on green taxes, the environment and all the rest of it. I have often heard such arguments in the pub in Staines among my constituents and others, so I am familiar with them, but I shall not touch on green taxes, because what I am concerned about is the deficit.
If we were balancing our books and if we had succeeded a fiscally responsible Government, I would be among the first to say that this APD tax should be abolished. I would absolutely recognise the compelling argument that lowering taxes increases business enterprise. However, because we run a deficit, I feel that the £3 billion coming into the Exchequer is too high an amount simply to discard and forget about.
We need to look at the effects of such taxation on the aviation industry. I think it was my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) who made the point that although APD is quite high, the industry is expanding and more people are flying. From the Government’s point of view, as a revenue collector, the tax is not impeding the growth of the industry, so it would be irresponsible for them to forgo such tax revenue, especially given our record deficit.
Going forward to a time when we are balancing the books under the next Conservative Government, I will be at the forefront of those arguing to abolish APD. Earlier in this Parliament, I wrote and often said that while, in principle, the tax might not be the best thing, there are specific budgetary requirements and conditions of the moment that make APD essential.
We have to consider corporation tax and taxation generally in the round. I congratulate my hon. Friend the Member for Loughborough (Nicky Morgan) on her appointment as Economic Secretary. She cited the fact that our corporation tax rates are extremely competitive. The rate of 20% is among the lowest, if not the lowest, in the OECD. In that context, general taxation on companies and business has been reduced, and we are seeing flickerings of growth—we expect encouraging growth figures at the end of this week. In the round, we can therefore say that the Government’s policy is working. The deficit reduction is happening and growth is beginning to return to Britain. Now is not the time to slacken the deficit reduction plan, so I fully understand why APD is necessary: to further our principal aim of deficit reduction.
Mr Speaker
Order. The time limit will have to be reviewed, probably when the Second Deputy Chairman of Ways and Means takes over from me. I am not changing it at this moment, but contributions that are significantly shorter than eight minutes would enable all colleagues to get in, rather than some being excluded. I know that the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) is a sensitive and considerate fellow who will wish to take account of my strictures on this matter.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Indeed you are right, Mr Speaker. To reciprocate your acknowledgement that I am a sensitive and caring fellow, I shall try to be as quick, brief and short as possible.
At the outset, I want to express a short apology because I might have to leave the Chamber to fulfil a previous engagement. If that happens, it is absolutely no comment on the debate, which has been riveting in the extreme. I am sure that those watching the monitors in their offices, as well as people at home, will be enjoying the debate and waiting for the next gripping instalment after mine.
Air passenger duty is one of the most damaging of the Westminster interventions in the Scottish economy. We should remember that, for the past 30 years, Scotland has on average paid more tax per person than the UK. This year, Scotland will pay 9.9% of all UK taxes, while it has only 8.4% of the total UK population. That is the situation without a tax system that is designed for Scotland’s needs.
Just about all those in Scotland who have been closely associated with the APD issue see the wisdom of devolving APD to Scotland. We know from our internal party points of view that the people who are better informed about the independence process in Scotland are those who are more likely to support it, so the Westminster Government need to understand that this policy supports arguments for independence. Of course, I welcome that, in a way, but the Government should bear in mind the downside: in the meantime, the policy is damaging Scotland’s economy, as well as the economies of other areas under centralised Westminster control. I am sure that an independent Scotland would run an air passenger duty regime if it were more in sympathy with Scotland’s needs.
As I suggested, we do not have taxes that are designed for Scotland, and if ever something crystallised that point, it is the issue of APD. Scotland is being fleeced by APD. It is estimated that, in each of the four years between 2012 and 2016, 2.1 million fewer passengers will go through Scottish airports as a result of it. APD is a demand-management tax. Heathrow and other London airports benefited from preferential treatment by successive UK Governments for decades because bilateral air agreements with a host of other countries stipulated that London airports must be used. That policy has come back to haunt those Governments. There is now a shortage of runways in the south-east of England, because the hub that was put in place cannot cope with the demand that was deliberately created, and the solution has been this congestion tax of the skies to slow traffic into Heathrow and other London airports.
In some ways, the Government’s demand-management tool has indeed been successful. The London airports are nearing full capacity, and APD has succeeded in controlling the pressing demand that has resulted from the lack of runways in London. However, London is losing passengers and commerce to other parts of the current United Kingdom, such as Scotland, Northern Ireland and the north of England. The solution is surely to devolve the policy and leave it in the hands of those who could manage it better because they are closer to the problem. Those who are distant from it advance all sorts of odd arguments, as we have heard today.
It would even benefit the Treasury if APD—the gatekeeper tax—were removed, because an increased number of people visiting the country would be likely to increase commerce. The Prime Minister has said that the UK has a lopsided economy—he is right—but will his Government act? Will they help by taking the one step for which a host of parties across the House have called? Will they right the wrong that was caused by lopsided international bilateral air agreements favouring one area of the UK by devolving APD and giving control of it to other areas? Unfortunately, they will not, but I am sure that those who are listening to the debate will understand why I argue for an independent Scotland, even if other Members in the Chamber may choose not to do so. I should add, in fairness, that there are a few Members here who do choose to, but they are keeping their heads down at the moment.
It need not be like this, however. Friends in Catalonia tell me that while Madrid may be notoriously intransigent and knuckle-headed on many issues—a sentiment that friends in Gibraltar would share—it has shown some sense in one respect, on which London should follow suit, by abolishing APD, or reducing it by 100%, on new routes. Barcelona alone has gained 37 new routes this year: to Islamabad and Karachi in Pakistan, Lebanon, Iceland, Kos in Greece, Bucharest, Kiev, Oslo, Helsinki, Luxembourg, Bergen, Pristina, Kristiansand and Hamburg, to name but a few. Such is the growth of Barcelona as a result of that more intelligent approach. Reductions in APD have been shown to benefit a number of other countries.
The hon. Member for East Antrim (Sammy Wilson) advanced some tremendous arguments, to which the Treasury ought to listen. As a former Treasury Minister, he ran the Treasury in Northern Ireland by balancing the books. The UK Treasury does not balance its books and has not done so since 2001.
Prestwick, the Scottish airport that has been most affected by APD, lost 14% of its traffic in 2012, and just the other week it had to be nationalised by the Scottish Government because the alternatives were unfortunately unthinkable. The Scottish Government feel that Scotland is a high-quality aviation market. It has a record of establishing successive intercontinental air routes with high load factors, including business-class traffic. They believe that there is considerable potential for improving Scotland’s international air connections, but the UK Government’s punitive APD rates are seriously hampering that process. York Aviation has pointed out that APD rates have rocketed since 2007, with short-haul travellers being hit by a rise of about 160%. The price paid by a family of four travelling to Spain has increased from £20 to £52 since 2007, and the price that they would pay to travel to the United States has increased from £80 to £268—a shocking rise.
PricewaterhouseCoopers says that the reduction or abolition of APD could bring about immediate and permanent increases in UK GDP worth around £16 billion in the first three years alone, which backs up the point made by the hon. Member for East Antrim. Increased revenue from other taxes would more than compensate the Exchequer for the revenue forgone by the abolition of APD. Indeed, the dividend in the first year alone would be half a billion pounds.
Passengers are losing out as a result of opaque methods of ticketing. Fully flexible tickets mean that people get back the entire cost of the ticket and the taxes if they do not fly, but there is a question for those travelling on restricted tickets who would lose their ticket price, because they also seem to be losing the taxes they have paid. The penalties imposed by airlines seem exactly to match the amount of APD taxation, so I would like the Government to look into this opaque process.
What do these penal levels of APD mean for Scotland? York Aviation says that by 2016 Edinburgh airport would be losing 1 million passengers due to high APD rates each year for four years, while Glasgow would lose 700,000 a year and Aberdeen about 200,000 a year. That shows the economic damage that is being done to Scotland’s economy.
Disappointingly, we have seen no significant difference between Labour and the Conservatives today, so the message to Scots is, “Business as usual, regardless of who gets into office in Westminster.” That is why, on 18 September next year, we will vote for independence in Scotland.
Mr Speaker
Order. The time limit will have to be reduced with immediate effect to six minutes.
Andrew Percy (Brigg and Goole) (Con)
I am afraid the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) made two incorrect observations at the start of his speech: that he would speak for much less time than the time limit, which was then eight minutes; and, secondly, that he was looking forward to hearing the gripping contribution following his speech. He had obviously not seen the speaking list. I cannot promise that my contribution will be either interesting or gripping, but it will at least be less than eight minutes now.
I congratulate the Economic Secretary to the Treasury, who is not currently in her place, on her contribution. She is new to the role. I was, of course, waiting by my phone at reshuffle time hoping to be offered that post, but it was not to be. She did an excellent job at the Dispatch Box today. I also congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on taking up her new position on the Opposition Front-Bench team, but I will just say that it would be nice if those on the Labour Benches showed a little contrition about how we got into the economic situation we are in when talking about the cost of living, and perhaps took some ownership of the problems they bequeathed to the country in 2010. We are delighted to be dealing with them and we are delighted to go on doing so, but we would sometimes like those who are guilty of having created them in the first place to accept some of the blame.
My view on APD has changed considerably since the fair tax on flying campaign of a few years ago. As there was a lot of terrible economic news at that time, not least to do with our massive deficit, it seemed to me and many other Members that to be asking, effectively, to make holidays less expensive was not the most appropriate thing to do.
My views have changed slightly over time, however. APD can easily be dismissed as a tax that can be avoided, and for some that is true, but for many businesses and individuals—particularly, as we have heard, in certain parts of the country, including Northern Ireland—it is a tax that cannot be avoided.
Since joining the Northern Ireland Affairs Committee, I have been growing concerned about the impact APD is having on our regional airports, especially after a meeting with representatives of Continental Airlines, who explained in great detail and depth the impact that it has had on the company. Heathrow will always be successful, but airports such as mine—Humberside airport—and Leeds Bradford, East Midlands and Doncaster airports have struggled, and continue to struggle, to find new routes as it is a lot cheaper to fly from Schiphol or Dublin.
When I was looking to book a holiday recently, I found it would have been cheaper for me to fly from Leeds or Manchester to Dublin and then connect on to the ongoing flight. That is counter-intuitive and, it would seem, a little perverse. Although I am no economist, it is clear to me that that is not good for our economy. It is time that we looked at the issue.
I accept that there is a take of £3 billion from air passenger duty. I have not had a chance to look through the methodology of the PricewaterhouseCoopers report or to analyse that in any great depth, but there is a solution to the problem of how to find £3 billion: it is called leaving the European Union. That might net us a bit more than £3 billion—[Hon. Members: “Hear, hear.”] I knew I would get a cheer from hon. Members on the Democratic Unionist Benches, who have a sound view on the subject. I do understand that any reduction in APD would have an impact on the Treasury. That is why it is time for a proper review to establish the extent of that impact.
The hon. Member for Ribble Valley (Mr Evans) reminded me that, when people made arguments about beer duty in the past, the response from the Treasury was always “This will cost us money. How will we make up the difference?” That has been turned on its head now, as we seem to have accepted that a cut in beer duty can bring in more money.
I remember air passenger duty being presented as a green tax. I know there has been some discussion about whether it is a green tax, a light green tax or a pale green tax. It certainly was presented as a green tax and many people have argued that it is such a tax, so I hope that it will be in the mix in any review, in line with the Prime Minister’s statements today about wanting to review green taxes and being honest about green taxes. It strikes me that we will not have a particularly honest debate with the public about APD or about energy bills unless we are prepared to open up the whole debate about green taxes and their impact not just on energy bills, but on our whole economy.
I represent an area with many carbon-intensive industries. We are still waiting to hear what is going to happen with the assistance for them. Green taxes are having a massive impact on them and an increasing number of people feel that the country is being hamstrung by those taxes. If we can throw APD into that discussion, all the better. People who use regional airports are most affected and in my area incomes are much lower than in other parts of the country, so APD has a disproportionate impact on the poorest parts of the country.
There is much that I agree with in the motion. I will not vote against it, but I have yet to decide whether I will support it. I call on the Minister to pay heed to the sensible comments that have been made by many Members in all parts of the House, particularly the hon. Member for East Antrim (Sammy Wilson), whom I congratulate on his speech. It is time for a proper assessment of the impact of APD on our economy and on our citizens, and I hope the Minister will respond in those terms.
Siobhain McDonagh (Mitcham and Morden) (Lab)
I shall address the issue on behalf of my Caribbean constituents, and report how angered and disappointed they are about the banding of Caribbean countries. Not only are my Caribbean constituents angry and disappointed, but so are their original home Governments at the way in which the banding impacts upon them and the development of their industries and tourism industries.
The Caribbean community in my constituency came to Mitcham and Morden in the 1960s, the 1970s and the 1980s. They did the jobs that nobody else wanted to do. They drove the buses, built the schools, dug the roads and worked in the hospitals, just as my own family who came from Ireland in the 1940s did. They never earned much but they worked hard. They looked after their families at home and in the Caribbean, and they contributed hugely to our community through youth facilities, churches and clubs for the elderly. They feel they have earned, and they have earned, their right to be here. They are proud of being British, they are proud of being Londoners, but they are also proud of the country that they came from.
Members of the Caribbean community work hard, and they save hard to go home every so often to see how their towns and cities are getting on and how their family and their friends are. Air passenger duty is a tax on their ability to do that. Whatever accounting company came up with whatever report, nobody can argue that for a Caribbean lady or gentleman in my constituency who lives on a pension and an occupational pension, APD does not disproportionately affect them in their efforts to stay close to their ageing families. It clearly does.
I am not arguing that APD should be scrapped; I am asking the Treasury to look at the banding. Nothing is set in stone; these are conversations that I and other Labour Members have had with Ministers of this Government and the previous Government. We are where we are because of the Chicago convention and the ticketing rules that exist for the airline industry. But it does not make sense to people in the Caribbean, or to me, that to go to Kingston, which is closer than Los Angeles, 25% more tax has to be paid. There is a way to look at the banding and to alter it, to recognise the contribution of those people, their families and communities, and to accept and respect the deep and long-standing connection that we have with those individual Caribbean countries and their Governments. They, like us, are going through hard times. They wish to develop their tourism industries in a price-sensitive market. Anything that we can do to help them out of respect for their communities’ work in our country and in our capital city would be gratefully received. It is not beyond the wit of the Government to do precisely that.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
I congratulate my hon. Friend the Member for East Antrim (Sammy Wilson) on securing the debate. As usual, the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), who is no longer in his place, blames everything on the Westminster Government. I noticed that a number of right hon. and hon. Friends found that rather funny. But it is not funny to anyone who lives and breathes amongst the people who want to break up the UK. The people of Scotland want a serious Government with serious politicians, and that is what we are hoping for. I do not share the hon. Gentleman’s view that in September next year people will vote for independence. I sincerely hope not.
Several hon. Members have referred to the devolution of APD, which I will keep an open mind on. If it proves to be to the benefit of the people of Scotland, fine, let us go ahead and devolve APD to the Scottish Parliament. But one question has to be answered, and perhaps the Minister will do so when he replies. If it is devolved, what proportion of money will come out of the block grant to pay for that? Someone, somewhere has to tell us exactly what that will cost. If APD is devolved and it is abolished, that money must come from the health service, education or somewhere else. It would be helpful, when we start blaming the Westminster Government for all our ills, if somebody from the separatist party told us where the money is going.
While I am on the subject of other countries, I have a document here that says clearly that in Malta APD was abolished in 2008, and one of the reason given was that it was
“Removed following legal challenge from the European Commission. Tax described as discriminatory.”
It would be helpful to know the reason for that. One aspect of APD that I find particularly discriminatory is that people in the north are being hammered twice. They have a double whammy if they travel through the London hub airports when going on to continental flights or flights to America. Even if there is no agreement to abolish APD, it would be helpful to abolish the double whammy.
Glasgow airport in my constituency contributes a great deal to the Scottish economy, including 5,000 jobs, but it pays more than £7.9 billion in tax. I am particularly annoyed that this will cost Scotland more than 2 million passengers and 5% of long-haul demand may be lost. Like a number of colleagues, I am finding that people in Scotland, particularly the holidaymakers and their families, are now going through Schiphol, Paris and elsewhere, which means that London and Gatwick are losing out. There is some impact on the London airports and it would be helpful if the Minister said how many people are involved.
APD also has an impact on Scotland’s tourism industry. Scotland has a lot to offer tourists. The Commonwealth games are coming to Glasgow in 2014, which many people from various parts of the world will attend. I am sure that they will not want to be affected by this tax either, and hopefully they will want to visit this country again. York Aviation estimates that 148,000 trips and £77 million in visit expenditure could be lost over the next three years and that by 2016 APD will cost the Scottish economy up to £210 million a year in lost tourism. One of the difficulties with this debate is that there is an awful lot of repetition, so I apologise to those in the Chamber and outside for using all these statistics, but unfortunately they have to be repeated. I take the view that the more we repeat something, the better the chance of achieving it.
This is about the whole United Kingdom, not just Scotland. Frontier Economics estimates that there will be around 3 million fewer trips each year to and from UK airports, that spending by overseas residents in the UK will fall by £475 million a year and that our GDP will be reduced by £2.6 billion a year, with the potential loss of 77,000 jobs. I do not think that this Government, or any Government, should contemplate the loss of such a significant number of jobs. A report by PricewaterhouseCoopers has shown that abolishing APD would boost the UK’s GDP by 0.46% in the first year, provide 60,000 extra jobs in the long term and increase revenues from income tax and VAT, with a net benefit of £500 million in the first year.
I make a plea to the coalition Government—unfortunately, the previous Government did not take appropriate action—to listen to what has been said on both sides of the House on the impact APD is having on the aviation industry and take appropriate steps to help our constituents.
Ms Margaret Ritchie (South Down) (SDLP)
I commend the motion standing in the name of the hon. Member for South Antrim (Dr McCrea) and welcome both the Economic Secretary to the Treasury, who is no longer in her place, and the shadow Minister, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), who is also no longer in her place, to their new roles.
I want to address air passenger duty in the context of the UK Government’s broader tourism and transport strategies. When it comes to tourism policy, it really is a tale of two Governments. Last week the Irish Government announced in their budget that they will be retaining a 9% rate of VAT for the tourism sector and entirely scrapping their air passenger tax. The UK Government, however, have presented us with the highest airport taxes in the world and raised VAT to 20%, with no dispensation for the tourism industry. Although I commend the Irish Government and hope that those measures bring more visitors across the island, this clearly puts businesses in the north of Ireland at a huge disadvantage. The UK Government urgently need to look at introducing similar measures, particularly in Northern Ireland, to enable our businesses to compete on a fair footing with businesses in the rest of Ireland. I hope that this debate will spur them on to do just that.
The rate of APD in the UK is the highest in the world and has risen by over 300% over the past five years. We in Northern Ireland are particularly vulnerable to that excessive duty owing to our reliance on air travel, which is dictated by our location, as has already been referred to in the debate. The rate is choking growth in the sector by having a severe impact on visitor numbers and is hurting our whole economy, especially those businesses that rely on exporting goods.
The motion refers to the recent PricewaterhouseCoopers report, which contends that lowering APD would be, at worst, budget neutral and would almost certainly boost growth and create jobs. Such evidence supports the measures taken by the Irish Government to get rid of their equivalent duty rate, and I find it hard to see why the UK Chancellor cannot respond with similar measures to support the UK economy—or at least, as suggested by the Transport Committee, commission research into the matter. Perhaps the Exchequer Secretary will deal with that issue in his response.
Obviously, the Chancellor would point to the devolution to the Assembly of long-haul APD, which was particularly welcome. However, domestic flights make up the vast bulk of flights out of Belfast International and Belfast City airports. There is also the slightly bizarre situation in which flights to London, Manchester and Glasgow are taxed at a higher rate than those to Newark, New Jersey.
Another point that should be emphasised is that the APD cut for long-haul flights was not some generous Treasury handout, but has to be paid out of the Northern Ireland block grant; as a former Minister for Finance, the hon. Member for East Antrim (Sammy Wilson) will know all about that. It was the decision of the Northern Ireland Executive to prioritise growth and tourist numbers by cutting the tax and we in Northern Ireland should be given a similar dispensation over the short-haul rate. Our geographical location makes us especially vulnerable to the pressures exerted by a high rate of APD, as someone going to or from Europe or further afield will often need to make two journeys.
We cannot ignore the wider context of our tourism industry. I have called here for a similar cut in VAT for businesses. Cutting both would mean much for tourism, which is one of Northern Ireland’s principal economic drivers, along with agriculture and fisheries; our manufacturing sector is now smaller. I have no doubt that the measure will involve assessing transport and infrastructure on a north-south basis in the island. That will require a maturity, on the part of all those who have spoken today, in harnessing the power that an all-island economy will release. For too long, our approach has been dominated by physical and psychological borders that do not exist in the mind of most people.
The Government talk a great deal about boosting the private sector in Northern Ireland and rebalancing the economy. One way to do that would be to lower APD on short-haul flights as well as lowering VAT on tourism.
George Freeman (Mid Norfolk) (Con)
It is a pleasure to follow the hon. Member for South Down (Ms Ritchie) and her colleague the hon. Member for East Antrim (Sammy Wilson). I welcome the new Economic Secretary to the Front Bench; I have no doubt that she will be a huge asset to the Government and the House.
I declare a slight interest, as I have cousins in Northern Ireland and, in my prior career, I spent far too many hours on internal flights, particularly to Scotland. Like many, I have enjoyed city breaks with my family; I shall spare the House the details of our recent trip to Amsterdam.
The democratisation of air travel in recent years has been a force for good, opening up to millions of families opportunities previously denied them. Millions more people are enjoying the thrill and experience of easy air travel and all that it opens up. Air travel does, of course, have a high carbon footprint, but just as the air industry has achieved stunning breakthroughs in safety through the extraordinary application of private sector expertise, investment, innovation and science, I have no doubt that it will be a force in demonstrating potential for energy-efficient air travel as well.
My principal reason for speaking this afternoon is to discuss the business of air travel and the role of air travel in business and in the economic predicament faced by this country. We are rightly—I commend the Government for it—putting an emphasis on the rebalanced economy and unlocking the power of our regions and cities to drive a new model of innovation-led growth, and air travel is an important part of that.
However, let us turn to the charge sheet that the House is presented with this afternoon and the motion, which calls for air passenger duty to be scrapped. The first charge is that it is a green tax, but, as the hon. Member for East Antrim said, it was not introduced and justified on that basis. However, he explained that even if it were, that would be no reason for not getting rid of it. This country, the western world and the whole world face a challenge in increasing energy efficiency and reducing the carbon footprint. Although that would not be a reason for introducing APD, it is worth bearing it in mind that we need to send a signal that rail travel, car-sharing and other forms of energy-efficient transport are to be encouraged.
The second charge is that the tax is regressive. The data in the ONS publication “The Effects of Taxes and Benefits on Household Income, 2011/12”, which I commend to colleagues, make it clear that it is not regressive; in fact, it is no more so than VAT. I think we would all love to get rid of that too—certainly colleagues in the House today would love it; we would like to get rid of most taxes—but we are not in a position where we can afford that luxury.
The third charge, interestingly, is that the tax is disproportionate. In fact, the Government have limited the rise in APD to inflation in the period 2010-11 to 2013-14, and in this year’s Budget they ensured that the rate will remain constant in real terms. This afternoon I looked online and found an air ticket to Berlin for £80, £13 of which is APD. That does not seem to be a prohibitive level of tax that will put people off.
Andrew Bridgen (North West Leicestershire) (Con)
Does my hon. Friend share my sentiment that it is good to be on the Benches of a Government who realise the need for tax competition? We realise the need for competitive corporation tax rates and income tax rates; surely APD is a tax and we need to be competitive on that too. We have the highest APD in Europe. Of the 27 countries in the European Union, only six charge APD, and the Republic of Ireland is going to reduce it to zero in April next year. Should my hon. Friend not bear it in mind that we need to compete?
George Freeman
My hon. Friend makes a good point. He must have spotted my notes, because my very next point is that we need to view this in the wider context of business and tax competitiveness. I hugely welcome the fact that the Government have committed to reduce corporation tax from 28% to 23% and, in due course, to 20%, meaning we are constantly cited as one of the top three in the G8 on tax competitiveness, as stated in the 2012 KPMG global survey. That is a strong signal to global businesses that we are open for business, and it supports my hon. Friend’s point that we need to view this in the context of wider support for businesses and tax competitiveness.
The fourth charge is that the tax is bad for Northern Ireland. In this respect, I have some sympathy with the case made by colleagues from the Province. The fact that the Republic has cut APD creates a particularly difficult situation in Northern Ireland. The Minister said, encouragingly, that the Northern Ireland economy is not showing signs of suffering as a result, with very high growth and new jobs being created. That is a testament to the creativity and entrepreneurialism of the people of Northern Ireland. The changes made to the tax in November 2011, which reduced long-haul rates to the same as those for short-haul, and the devolution of the matter to the Assembly are important and welcome measures. However, I have a lot of sympathy with the argument that locally, given the situation in the Republic, there is a particular problem that the Government will need to look at.
The truth—an inconvenient truth, to borrow a phrase—consists of three points. As a generation, a Parliament and a Government, we face, and have to deal with, the most massive crisis in our public finances. We inherited from the previous Government £1.2 trillion of debt—£5,000 for every man, woman and child in the country. Debt interest alone is now the fourth biggest item of Government expenditure, and it is set to rise, if the coalition has not acted, to £76 billion a year in interest payments. We have a structural crisis in the public finances—in pensions, in welfare, in health and in debt interest.
Despite the very best efforts of the Government to contain the crisis and make sure that they do not trigger a downward spiral in public confidence in the economy, we still face a huge challenge to restore our public finances. We do not have money to spare. There is no such thing as a free tax cut; the closest thing is a tax cut on wealth creation. That is why I support the steps that the Treasury has taken on corporation tax to put in place a competitive tax environment for our businesses and why, in particular, I support a new deal for start-up businesses—the people who are at the coal face of creating new jobs. The truth is that APD is not a tax on business creation; it is a tax on air travel, which is not the same thing.
Finally, this tax raises £2.8 billion a year, and that figure is set to rise to £3.8 billion in 2016. That is a significant amount of money. Interestingly, it is nearly the same amount as that which the Government have given away in a fuel duty cut, which has caused huge reductions in income at the Exchequer and has a relatively low impact on people’s pockets. Abolishing APD would have a small impact on GDP and hard-working families, but it would lead to a major £4 billion cut in our deficit credibility. I hope Ministers resist it.
Jim Shannon (Strangford) (DUP)
I congratulate the Economic Secretary, who is not in her place, and the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on their appointments to their new positions.
I am sure that every Member has been contacted about the issue of air passenger duty. A gentleman who is not from my constituency visits my office because he has no representation. His constituency Member is a Sinn Fein MP who does not contribute at Westminster, but who is part of a team who have drawn £600,000 in expenses from here. The gentleman, therefore, has to ask another MP, who happens to be me, to represent him at Westminster. Every time he books a flight he calls in to see me and asks when the Government are going to change their tactics and do the right thing on APD to the UK mainland.
It is clear that APD is hurting the individual in Northern Ireland, who is somewhat restricted in travelling to the mainland. I believe that we, along with some parts of Scotland, are feeling the pinch of the decision to keep this tax more than others. The Northern Ireland Assembly and my hon. Friend the Member for East Antrim (Sammy Wilson) in particular, who was wearing his other hat as the Finance Minister at the time, abolished APD for long-haul flights out of Northern Ireland in order to secure business, ensure investment opportunities and secure existing flight routes. Clearly, my hon. Friend took some good steps.
There are many opportunities to base businesses in Northern Ireland, but what can be viewed as isolation from the UK is highlighted by the high cost of flights to and from the UK mainland. It is my belief that a reduction or abolition of APD would encourage more businesses to look at the potential for business expansion in many areas of Belfast and, indeed, my own constituency of Strangford, which has a highly educated and skilled work force in most areas and great links to the rest of the UK and Europe. We are asking for this issue to be considered again today not just for the benefit of our constituencies in Northern Ireland, but for the benefit of all constituencies across the whole of the United Kingdom.
When this debate was announced, I was, as always, bombarded with constructive e-mails and briefings from many different companies that have made their case well. British Airways says in its briefing:
“Abolishing APD would pay for itself by increasing revenues from other taxes such as Income Tax, VAT, and Corporation Tax. This benefit would amount to almost £0.5bn in the first year…APD is among the most distortive major taxes in the UK economy—more distortive than VAT, Income Tax, or Corporation Tax, and second only to Fuel Duty.”
That sticks in the craw of many of our constituents.
No matter how the Government try to play it or how deeply entrenched they sit in their revenue-raising mode, the fact is that our APD is much too high compared with those other countries that have it. In fact, the United Kingdom has the second highest air taxes and charges in the world, according to the World Economic Forum’s “The Travel & Tourism Competitiveness Report 2013”, which is right up to date. Only Chad in central Africa is ranked above the UK—imagine being second to Chad—in the list of 140 countries based on their ticket taxes and airport charges. The report states that
“the United Kingdom continues to receive one of the poorest assessments for price competitiveness…in large part because it has the 2nd highest tax rate on tickets and airport charges worldwide.”
We are the silver medallists behind Chad.
European nations are cutting or abolishing their air passenger taxes. Of the 27 European Union nations, just six levy an air passenger tax, with Ireland agreeing to scrap its tax completely in 2014, having dropped it from €10 to €3 in 2011. The German Government froze air passenger tax in 2011 following the publication of a study undertaken on behalf of the German Federal Ministry of Finance that found that the introduction of the tax at the beginning of 2011 had resulted in an estimated 2 million passengers changing their travelling behaviour, including an estimated 750,000 people who opted to fly from a non-German airport to avoid the tax. That demonstrates the very point that we have been trying to make throughout this debate: if we do away with air passenger duty, we will reap the benefits from those who choose to use airports in the United Kingdom as a result. The evidence from Germany and elsewhere proves that. In 2006-07, Denmark phased out its air passenger tax.
We all know that money does not grow on trees. We are realists. If it did grow on trees, I would be very well off because I have 3,000 trees. Unfortunately, it is not like that. No money grows on my trees or on anybody else’s trees. Although we do not need to follow every step that the rest of Europe takes, it is clear that there is a good financial reason why other countries are taking those steps. Our reasoning should follow the same lines.
The BA briefing statement said that the abolition of APD could result in an immediate increase in UK GDP, as my hon. Friend the Member for East Antrim has said. The increase in GDP would be about £16 billion and there would be about 60,000 additional jobs. That would be a win-win for the Government and a net gain for the Exchequer.
As time has beaten me, I plead with the Government to look at the big picture and to consider the big changes that would come from the abolition of APD.
Ian Paisley (North Antrim) (DUP)
It is a huge honour to follow the lumberjack from Strangford.
My hon. Friend the Member for East Antrim (Sammy Wilson) led the charge in putting this important case. He presented a compelling argument to the House. Indeed, he got us so far out in front of the Government that I do not think we will need to have a vote tonight. I congratulate him on the way he presented his case.
I cannot believe that this Government—a Government with whom I have a lot of sympathy in many areas—want to tax people more than any other Government in the world when it comes to air travel. That is astounding. It is sad to see my friends on the Government Benches trying to defend the indefensible. This is a pernicious, nasty little tax that affects transport, ordinary people and jobs, prevents UK businesses from exporting and expanding, and harms growth by stopping inbound tourism.
The tax affects ordinary citizens in the United Kingdom. If mum and dad in Northern Ireland want to take little Billy and Sarah to their nation’s capital, they will go on the internet and look at the cheap flights that they could take from Aldergrove airport or George Best Belfast City airport with easyJet, Aer Lingus, British Airways or any of the other airlines that operate out of Northern Ireland. If they book in advance, they will get tickets for the whole family for less than £100. Unfortunately, they would then have to write a cheque for £104 to the Chancellor of the Exchequer for the privilege of flying from one part of the United Kingdom to their nation’s capital. That is wrong. It is ridiculous. As the hon. Member for Mid Norfolk (George Freeman) argued, it is grossly unfair to the citizens of the United Kingdom. The Government have an opportunity to stop it and they should stop it.
Our competitors recognise that the tax is wrong. As my hon. Friend the Member for Upper Bann (David Simpson) said in an early intervention, in 2009 the Netherlands followed Belgium in abolishing its equivalent of APD because although it raised the equivalent of £266 million in a year, the loss to the wider economy as a result of taxes from which the country did not benefit was almost £1 billion per year. The German Government have said that they will freeze their equivalent tax and the Minister of Transport has stated publicly that they want to abolish it. I believe that they will do so before the next German election.
I draw Members’ attention to the words of the chairman of the Northern Ireland Tourist Board, Howard Hastings, and a speech that he made in London on Monday evening. He is not known for being outspoken or as abrasive as my hon. Friend the Member for East Antrim, but he said:
“It is daft at any level that there is a lower level of APD between Dublin and GB when compared to Belfast and GB”.
He also said it was daft—doubly daft—to create a system in which thousands of visitors who come to Northern Ireland each year are
“financially incentivised to come through Dublin, rather than through Heathrow—”
or Gatwick, and our nation’s capital. He went on:
“Our two airports are fighting to attract new routes, particularly from Continental Europe. Air passenger duty is a major stumbling block. Recently published evidence shows that the cross channel air capacity for Winter 2013 is 2.4% up on a year ago. But drill down a layer, and we see that the increase in capacity to the Republic is up 13,000 seats…or 10%”
per year.
If ever there was a compelling argument to remove something that is doubly daft from our tax system it is the argument that airport passenger duty must be scrapped, and it must be scrapped sooner rather than later.
Dr William McCrea (South Antrim) (DUP)
I congratulate all Members who have taken part in the debate, and in winding-up on behalf of my colleagues I want to say that it has been an interesting discussion. I congratulate my hon. Friend the Member for East Antrim (Sammy Wilson) on the usual skilful and robust way in which he introduced the debate, and I thank him for sparing us his full views about green issues. His thought-provoking speech was certainly worthy of careful consideration, and I trust that those on the Treasury Bench listened to it carefully.
I welcome the Economic Secretary to the Treasury to her post, and as she said, we welcome the good economic news from Northern Ireland. I found it strange, however, that despite representing a party of low tax, she defended the highest APD anywhere in the world. I trust that when the Minister winds up the debate we will hear some different views.
I welcome the shadow Minister, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), to her post, and thank her for her keen interest. I accept her point that APD is an issue that affects the whole country, not simply Northern Ireland. Our motion acknowledges that because we have spread it out, taking in the whole United Kingdom, rather than only Northern Ireland.
The hon. Member for Spelthorne (Kwasi Kwarteng) proclaimed his low-tax conservatism. Having done that, however, he went on to defend why we should have the highest taxation in Europe—it was amazing to have the hon. Gentleman draw that to our attention, because in reality United Kingdom taxpayers are being taxed silly. He mentioned bringing down corporation tax. I acknowledge what the Government have done on that, but perhaps he should also bear in mind that Northern Ireland has a land border with a country that has a corporation tax of 12.5%, which is far below anything that the Government have done. We in Northern Ireland have a double whammy of taxation.
Kwasi Kwarteng
The hon. Gentleman will know that in this House I am absolutely in favour of low taxes, and I have said to the Chancellor that I think we should have corporation tax of 15%. I will always be in favour of lower corporation tax.
Dr McCrea
I thank the hon. Gentleman for that helpful intervention.
I thank the hon. Member for Brigg and Goole (Andrew Percy) for acknowledging the problems faced by regional airports—many hon. Members acknowledged that point in the debate. The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) is right that statistics are worth repetition because they might get through to the Government, who must then answer to them.
The hon. Member for South Down (Ms Ritchie) drew attention to the impact of the Irish Government on Northern Ireland. She was exactly right. It has been said that the UK Government cannot do what the Irish Government have done because of the deficit. However, I draw the House’s attention to the fact that the Irish Government have a greater deficit problem than the UK Government. The Irish Government nevertheless believe that removing APD was of greater value economically. The Minister should bear that in mind when he expounds why we should not abolish APD—he should not say that it is because we are dealing with the deficit. As I have told him, the Irish Government have a greater problem, yet they have announced the measure in their budget.
I am happy that the hon. Member for Mid Norfolk (George Freeman) spared us the details of his trip to Amsterdam. Nevertheless, I hope he has learned something from the debate and will change his mind on any decision he makes later.
I share the experience of my hon. Friend the Member for Strangford (Jim Shannon): a lot of ordinary people come to my constituency office because they have no Sinn Fein representation in the House and we must represent them. That is a disgraceful situation, but it is a fact, and we must accept the reality. The hon. Member for North Antrim (Ian Paisley) gave the House an interesting report of the statement by Mr Hastings. That, too, is worthy of our consideration.
It is clear from the debate that the civil aviation sector is one of the main pillars of economic growth in the UK, driving job creation and growth both at home and overseas, as well as providing air transport for goods and passengers. More than a third of world trade is delivered by air, and about half of international tourism is facilitated by air links. However, as hon. Members commented, UK passengers are taxed more for air travel than passengers anywhere in the world, with APD rates expected to rise again in line with inflation from 1 April 2014.
In March 2013, the UK was ranked by the World Economic Forum as the world’s least-competitive country in terms of taxes and charges levied on air passengers. The TaxPayers Alliance has described APD as
“an unwelcome burden on family holidays, a cost to business and redundant with the EU Emissions Trading System now being applied to aviation”,
and has called for APD to be phased out entirely.
Our vision for a strong and prosperous Britain can be achieved only with healthy and vibrant transport and economic development sectors. Air connectivity is the key to efficient trading and, as the UK economy continues to transform in the face of domestic and global change, it is essential that the aviation industry is given the certainty and incentive necessary to allow it to plan and invest for the long term. Time and again we are presented with the argument that APD has deterred airlines from opening new routes, especially in Northern Ireland, where robust air links are fundamental to underpinning our regional economy, and has compromised the ability of local businesses to attract new foreign direct investment.
The situation is similar in Scotland. Amanda McMillan, managing director of Glasgow airport, has stated:
“Due to the size of the market in Scotland, we will always find it difficult to attain and sustain new routes and this situation is compounded even further by APD which simply serves to artificially depress demand and dissuade airlines from basing aircraft here…Unless APD is reformed, people travelling to and from Scotland…will continue to face some of the highest levels of taxation in Europe which is clearly a disincentive to travel.”
In an evidence session to the Northern Ireland Assembly Finance and Personnel Committee on 18 September, the director of the City of Derry airport, Damien Tierney, described APD as one of the “big factors” influencing airline decision making. Low-cost carriers such as easyJet and Ryanair, which account for most of the Province’s air travel, are particularly influenced by APD.
Mr Nigel Dodds (Belfast North) (DUP)
Does my hon. Friend agree that APD has long since ceased to be an environmental tax, if it ever was, and is now simply a means of revenue generation for the Government?
Dr McCrea
I thank my right hon. Friend for his intervention. Throughout the debate, Government Members have acknowledged that APD is a way to deal with the deficit, so my right hon. Friend is spot on in identifying that this is another form of taxation on the people of the United Kingdom.
Belfast International airport has noted in similar terms that APD has been held up as a barrier to airlines that might otherwise have shown interest in operating services in Northern Ireland, thereby limiting market opportunity and creating competitive disadvantage for operators. A 2011 report by PricewaterhouseCoopers, entitled “Helping Economic Take Off”, looked at Northern Ireland’s geographical location, which makes us unique in both a UK and EU context. We are the most westerly part of the European Union and the only region of the UK separated by water, yet we share a land frontier with another member state. We have to travel and we have to trade, and air connectivity is the essential springboard from which future economic growth will be launched. The report, however, found that the continued imposition of APD would serve as a significant deterrent to further investment by existing or new carriers in existing or new air routes.
Much has already been said in today’s debate about the Netherlands experience. The Dutch Government introduced an aviation tax in 2008 for passengers departing from Dutch airports. The Dutch air passenger duty proved controversial from the outset and decreasing passenger numbers, combined with the global economic crisis, led the Dutch Government to subsequently abolish it on 1 January 2010. Belgian plans for a ticket tax were not implemented for similar reasons and a Danish tax was withdrawn due to adverse economic impact. In January 2013, the German Government announced that they would freeze their air passenger tax, while the German Transport Minister has publicly stated that he would like the tax to be abolished completely. Will our Government not listen to what is happening across the rest of Europe? Surely those decisions are being made in the light of economic circumstances.
The decision announced in last week’s budget by the Irish Government—that air travel tax is to be removed from 1 April 2014—has once again thrown APD into sharp focus, particularly its potential impact on the aviation sector in Northern Ireland. Concern has already been expressed by the Consumer Council of Northern Ireland that demand for air services in Northern Ireland could face decline, as people head south of the border to avoid tariffs. As Belfast International airport, in my constituency, has commented:
“Any tax or regulation prevailing in Northern Ireland which makes our gateway less attractive than those across the border is entirely retrograde with regard to economic development”.
As recognised by the Northern Ireland Affairs Committee in its two previous reports, Northern Ireland suffers greatly from its shared land mass with the Irish Republic, where the abolition of air travel tax, along with low corporation tax, start-up incentives and marketing funds, will now make it even harder for Northern Ireland to compete for cheaper fares and new route development. Belfast International airport, which lies on the shores of Lough Neagh in my constituency, is the main international port of entry for the province and has proved itself to be an essential component of the local economy and regional growth, as well as being a strategic asset nationally.
In conclusion, I realise that time has run out and I want the Minister to have the opportunity to respond to the debate. I thank every right hon. and hon. Member for participating. I trust that the Government have listened to what has been said and will take away the motion and the thoughts of the House, rather than seek to divide it.
The Exchequer Secretary to the Treasury (Mr David Gauke)
We have had an interesting and wide-ranging debate, given that it has focused on one particular tax, and I thank hon. Members for their contributions. We began with the hon. Member for East Antrim (Sammy Wilson), who delivered a wide-ranging speech in which he made it clear that APD did not constitute a green tax but that, even if it did, he would be against it. He was described by various hon. Members as “trenchant”, “outspoken” and even “abrasive”—and those were the comments from his hon. Friends. However, he set out a strong case on behalf of Northern Ireland and, indeed, the UK more widely. Interestingly, the motion applies to APD across the UK; it is not specifically a Northern Irish issue.
We heard from the new Economic Secretary—I add my words of welcome to the many warm words already offered—who has already demonstrated that she will be a formidable Treasury Minister. We then heard from the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), whom I also congratulate on her move to the post of shadow Economic Secretary, although I am saddened that she is no longer the shadow Exchequer Secretary. I am pleased, however, that we have had the opportunity to debate again so soon, and I am sure that we have many happy hours together in Finance Bill Committees ahead of us. She was very critical of Government policy although, as her history of APD pointed out, the regime in place is largely the one that we inherited from the previous Government. Despite her criticisms, she did not give us any examples of what she would change, but we were grateful for her contribution none the less.
My hon. Friend the Member for Spelthorne (Kwasi Kwarteng), who has a strong interest both in aviation and in lower taxes, made the point very strongly that we have to reduce the deficit. His injunction that we should not slacken on deficit reduction was sensible advice.
The hon. Member for Na h-Eileanan an Iar (Mr MacNeil) raised Scottish concerns, citing criticism that APD rates had rocketed since 2007. I should point out that, since 2010, APD has risen in line with inflation—it has been frozen in real terms. That means, for example, that since 2010, the price of an economy ticket for a short-haul flight—such tickets apply to the majority of passenger flights—has risen from £12 to £13. It is worth pointing out that that is an increase of £1. He also raised concerns about the impact of APD on Scotland, but the most recent figures I have—for 2010-11—show that passenger numbers at Scottish airports grew by 5.5%, so they are not being slashed by any means.
Mr MacNeil
I do not need to take the credit for the Scottish Government, because the Minister has already given the credit to them, for which I thank him. Can he discern any real difference between his position and that of the Opposition, because I cannot?
Mr Gauke
Is the implication of the hon. Gentleman’s question that he managed to identify the position of Labour Front Benchers, because I could not particularly?
My hon. Friend the Member for Brigg and Goole (Andrew Percy) delivered a thoughtful speech in which he set out the evolution of his own thinking and made the case for regional airports. The hon. Member for Mitcham and Morden (Siobhain McDonagh) raised a point on behalf of her constituents who originally come from the Caribbean. Such a point was also made in interventions, so let me reiterate that APD must adhere to international rules on aviation tax—a point that she acknowledged—specifically the Chicago convention. The capital city convention in APD ensures that the duty complies with the rules. She asked why we could not reform the bands. We could move to having two bands, and we did examine that as part of the 2011 consultation, but no banding structure can be entirely free of anomalies, and a revenue-neutral move to two bands would require an increase in APD for about 90% of passengers, including those flying to Europe and the United States. We were not attracted to that approach.
The hon. Member for Paisley and Renfrewshire North (Jim Sheridan) raised a point about Scotland, following on from the contribution by the hon. Member for Na h-Eileanan an Iar. He rightly said that there would be an implication if the tax were devolved to Scotland and then abolished, because the cost of that would have to be found from the block grant. We have not estimated what that would be, but such a decision would have consequences to comply with EU state aid rules. It is also worth pointing out that we would need to take into account any market distortions that would be created and that the cost would have to take into account any lost revenue for neighbouring English airports, for example. That is not an insignificant point.
The hon. Member for South Down (Ms Ritchie) spoke about domestic flights. It is worth pointing out that several European countries put VAT on domestic flights, whereas the UK does not—the rate is 19% in Germany, 21% in the Netherlands and 27% in Hungary. My hon. Friend the Member for Mid Norfolk (George Freeman) made the point that we would like to get rid of most taxes, but we are not in a position to do so. He also highlighted the fact that rates have increased with inflation. The hon. Member for Strangford (Jim Shannon) argued that there would be a net gain for the Exchequer if APD were abolished, but we do not agree—I shall set out the reasons why in a moment.
The hon. Member for North Antrim (Ian Paisley) spoke against the tax and also hoped that we could all unite behind the motion. I am terribly sorry to say that I have to disappoint him on both fronts. The hon. Member for South Antrim (Dr McCrea) summed up the debate, arguing that we should perhaps follow the example of the Republic of Ireland, which is not always an argument that I hear from him.
As I have made clear, APD makes a crucial contribution to tackling our fiscal challenges. The tax raises nearly £3 billion in annual revenue. Contrary to the claims of the PricewaterhouseCoopers report, which has been cited frequently, scrapping APD would not be costless; it would result in a significant loss to the Exchequer. Unless we were to give up on our fiscal goals—my hon. Friends have been absolutely right to highlight the need for us to maintain discipline on reducing the deficit—the lost revenue would therefore need to be found elsewhere, either by increasing other taxes or by further reducing our public spending. In the course of the debate, I have heard few realistic proposals as to how that could be done. Not only would scrapping APD create substantial costs to the Exchequer, but the benefits of such a step would be small compared with those of the policies that the Government have already put in place.
We are not persuaded by the case that has been put before us. We cannot take risks with the public finances, so we will not be supporting the motion.
Question put.
The House proceeded to a Division.
Madam Deputy Speaker (Dawn Primarolo)
I ask the Serjeant at Arms to investigate the delay in the No Lobby.
The House having divided: Ayes 13, Noes 284.
Mrs Anne Main (St Albans) (Con)
On a point of order, Madam Deputy Speaker. May I ask through the Chair whether any application has been made for a statement on the recent developments concerning the Arctic 30? I am sure that many of us will be pleased to hear tonight that the charges against them have been downgraded from piracy to hooliganism. Some are related to, or friends of, Members, and one is a constituent of the Prime Minister, as my right hon. Friend has said. Is there any chance of them now being granted bail, and what does the development mean in terms of the possibility of their being repatriated home to this country?
Madam Deputy Speaker (Dawn Primarolo)
As the hon. Lady will know, that is not strictly a point of order. The matter of statements is something the Government themselves determine and I have no knowledge of that, but she has had the opportunity to raise her point in the Chamber and, importantly, to get her views on record. I am sure that those on the Treasury Bench have taken note of what she said.
Jim Shannon (Strangford) (DUP)
Further to that point of order, Madam Deputy Speaker—
Madam Deputy Speaker
Order. There is not a point of order, Mr Shannon. Having just ruled that what we heard was not a point of order, I can hardly allow you to speak further to what is a non-point of order.
petition
(10 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Iain Wright (Hartlepool) (Lab)
I rise to present a petition initiated by the Hartlepool probation service, which is part of the Durham and Tees Valley Probation Trust, and I understand that every single officer, manager and administrator working in the Hartlepool office has agreed with, and signed, the petition.
The petition states:
The Petition of a resident of the UK,
Declares that the Petitioner opposes the Government’s plan to abolish the Probation Service in its current form and to privatise up to 70% of work currently undertaken by it. The Petitioners believe that those convicted by a Criminal Court should be supervised by those employed by a publicly accountable Probation Service such as currently exists; further that the Petitioner opposes the Government’s plan to abolish the 35 public sector Probation Trusts replacing them with one Probation Service that only supervises those deemed to be of a high risk of harm to the public. It is envisaged under the current plan, 70% of probation’s work will be subject to a competitive process which excludes the Probation Service. The Petitioner believes that such a plan is “high risk” in that it could place the public at a greater risk of harm.
The Petitioner therefore requests that the House of Commons urges the Government to stop the planned changes to the Probation Service.
And the Petitioners remain, etc.
[P001232]
In-patient Mental Health Services (Children and Adolescents)
(10 years, 6 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Alan Johnson (Kingston upon Hull West and Hessle) (Lab)
Last week, Dr Martin Baggaley, medical director of the South London and Maudsley NHS Foundation Trust, said that mental health services in England are unsafe and in crisis. At the same time, BBC News and Community Care magazine printed the results of a freedom of information request to mental health trusts around the country, which revealed that 1,500 mental health beds had closed since 2011. The Royal College of Psychiatrists is among the many expert organisations that have expressed concerns about poor in-patient mental health provision, particularly for children and adolescents. In response, the Minister of State, Department of Health, the hon. Member for North Norfolk (Norman Lamb) who I am pleased to see is present, said that he was determined to end the institutional bias against mental health. This debate presents an opportunity for him to do something in pursuit of that noble objective.
There is increasing demand for mental health services, and all the research shows that early intervention is essential to prevent mental health problems developing in later life. One in 10 children aged between five and 16 suffer from a diagnosable mental health disorder, half of which, with the exclusion of dementia, start before the age of 14. Yet, although the Government claim to be increasing expenditure on health, child and adolescent mental health services in England have been grappling with unprecedented cuts to their funding over the past two years.
Many MPs will know that from their experience in their constituencies, where social care and education funding, which is such an important part of CAMHS budgets, is having to be reduced dramatically. The charity YoungMinds found that since 2010 two thirds of local authorities in England have reduced their CAMHS budget. The contrast with physical health budgets is a stark manifestation of the institutional bias against mental health.
The West End unit in my constituency was the only in-patient mental health facility for Hull and the East Riding. It closed in March while a consultation on CAMHS—which, incidentally, gave no opportunity for respondents to voice an opinion on whether the unit should remain open—was still under way. So much for “No decision about me, without me”.
Can the Minister confirm that the guidance to section 244 of the National Health Service Act 2006 concerning consultation states:
“No final decisions—even decisions in principle—must be taken until the public has been consulted and the results of the consultation have been considered by the NHS body”?
When I raised that appalling breach of the Government’s own guidance on consultations, I was told that West End was closed by the unaccountable monolith otherwise known as NHS England. It changed the specification for tier 4 services and the West End in-patient unit that provided high-quality services in Hull and the East Riding for 20 years closed as a result.
I felt sure that Hull could not have been the only area affected, so I submitted a parliamentary question asking how many in-patient mental health units had ceased to operate.
Jim Shannon (Strangford) (DUP)
In my constituency 33% of young people have depression. That rises to 50% among those who are unemployed. Does the right hon. Gentleman’s area have the same concerns as I have in my area? We have taken steps in Northern Ireland to address the issues, and perhaps the Government need to do the same here.
Alan Johnson
This debate is about services in England, but I confirm that part of the problem is the fact that there is a rising need for adolescent and child mental health services and a decreasing capacity to deal with that need.
I asked the Minister in a parliamentary question which other areas had been affected and which units had ceased to operate. I was told by the Minister that no units had ceased to operate as a result of this change and nor were any closures expected when the change was introduced on 1 October. As I said, the unit in Hull closed in March. The change had already happened. Will the Minister take this opportunity to correct that answer?
Not only did West End close in March, but we are beginning to hear of closures across the country, including in Devon and Somerset, where my right hon. Friend the Member for Exeter (Mr Bradshaw) has been pursuing this issue vigorously with the chief executive of NHS England, who confirmed in a letter to him that other units had closed as a result of the change to tier 4 specification well before the spurious 1 October date.
Mr Ben Bradshaw (Exeter) (Lab)
Is my right hon. Friend, a former Health Secretary, aware that, in Devon, that has led to young people being admitted to adult mental health residential units, in clear breach of the Mental Health Act 2007—a scandalous position? I hope that the Minister will have something to say about that when he responds.
Alan Johnson
I am aware that that has happened. I feel sure that, as the debate gathers momentum, Members from other parts of the country will have similar experiences.
Let me be clear. I fully accept that for the majority of young people, a community-based approach to mental health problems will give them the best treatment, but for a number of children and their families, intensive in-patient care is necessary. Those children need an approach that spans the whole network of provision, not just health, but education and social care, which cannot be replicated in a child’s home—if they have a home; many of the children affected are in care.
West End provided such services. Its in-patient facility was judged inadequate because it was available for only five nights a week. But combined with weekends at home, this provided an excellent service, which the parents who experienced it fully supported. Their preference was to extend the unit to a seven-day service, if that was what was necessary to meet the new specification, but that alternative was never offered or discussed.
Alison Seabeck (Plymouth, Moor View) (Lab)
I am sure that my right hon. Friend has seen the note from the Royal College of Psychiatrists flagging up the point that because of the cuts to tier 3 there is increased pressure on and more likely to be admissions to tier 4, yet here we are discussing closures. That is a real problem.
Alan Johnson
My hon. Friend makes an important point. YoungMinds, the charity that deals specifically with child and adolescent mental health, makes exactly the same point. We need early intervention, and if we are cutting back on tier 3 there will be a bigger problem with tier 4. If the problems are not addressed anyway, we are stacking up a host of problems, and costs, never mind the tragedy to the individuals when they reach adulthood.
It is difficult to escape the conclusion that the changes have nothing to do with improving care, and everything to do with saving money. The closure of the West End unit has had a profound effect. I have a constituent who is a single mother, who works for the NHS as a staff nurse, whose 13-year-old daughter suffered a severe mental breakdown two years ago. Her daughter spent nine months at West End, which opened at weekends specifically to accommodate her needs. Her mother believes that the treatment given by the excellent staff at West End saved her little girl’s life.
When my constituent’s daughter needed further treatment this year, after West End had closed its in-patient facility, she was first of all sent to Leeds, 66 miles away, where the inability of her mother and five-year-old brother to spend as much time with her, led to a further deterioration in her health. She was then incarcerated with young offenders in Cheadle, 103 miles from her home. Her mother, coping with a five-year-old son and a job in the NHS, spent nine hours travelling to have just one hour with her daughter. For the rest of the time she was forced to listen to her deeply unhappy daughter sobbing at the other end of a phone. Is this what the NHS has come to? Is this the kind of treatment that any of us would accept for our children?
Andrew Percy (Brigg and Goole) (Con)
I congratulate the right hon. Gentleman on securing the debate. Obviously, this is a matter that affects my constituency too. He is right to raise the issue, but sadly this is nothing new. In 2008, my constituency saw all its in-patient mental health beds go, resulting in patients having to travel much further, often to Hull, and their families struggling to be near them, so I agree with him entirely on this point. Does he agree that it is important that people are treated in the community as much as possible, but where necessary, treated at in-patient units in their localities?
Alan Johnson
The hon. Gentleman makes an important point. He is talking about the closure of adult in-patient services, which had to move from Goole to Hull. The irony is that in-patient mental health facilities for adults exist in Hull. Providing care close to home is important for adults, but surely it is even more important for six, seven and eight-year-old children. The further away they are from their parents, the more their mental health situation is likely to deteriorate.
Diana Johnson (Kingston upon Hull North) (Lab)
I congratulate my right hon. Friend on securing this important debate. I want to raise the case of a constituent of mine whose daughter is having treatment on the other side of Manchester, 115 miles away from their home in Hull. He has not been able to see his daughter for three weeks because of the financial implications of having to travel so far. He is distraught about not being able to give the emotional support that his daughter needs at this time. Does my right hon. Friend share my concern that that is totally unacceptable when we are dealing with the mental health issues of young people?
Alan Johnson
My hon. Friend is absolutely right. She has been fighting a battle about the West End unit. It started with one constituent, but we now know that up to 13 have been affected in that way, one of whom she has mentioned.
In medical care we often talk of the need to concentrate operations in fewer locations in order to maximise expertise, but that is not a relevant argument for child and adolescent mental health. In the case of my constituent’s 13-year-old daughter, for instance, the specialist consultant had to travel from Hull to Cheadle to see his patient. It cost the NHS £1,000 a day to provide that appalling service, but that is without the cost of the consultant having to travel to see his patient.
One case of this nature in Hull would be bad enough, but there have been 13 such cases, and probably more, since we lost in-patient services. Youngsters from Hull and the East Riding have been sent to Manchester, as my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) mentioned, and Northampton as well as to Leeds and Cheadle. That is worsening the condition of the children concerned.
Trying to address the problem in the newly reorganised NHS bequeathed to us by the right hon. Member for South Cambridgeshire (Mr Lansley) is a nightmare. NHS England is responsible for in-patient care, clinical commissioning groups are responsible for out-patient services, local authorities are responsible for public health and the Humber NHS Foundation Trust, the provider, says that it is absolutely powerless in the matter. I have been told by the director of commissioning that, if a proper in-patient service were offered to the mental health trust in Hull and the East Riding, it would have to decline the commission because the tariff is so low. I wonder whether the Minister can comment on that.
The service is removed by NHS England without consultation because it is available for only five nights a week. The CCG then tries retrospectively to justify the closure, saying that it is underused, and we will hear more about that from the Minister—I tell him that there is gaming going on to try retrospectively to justify something that it cannot justify on an intellectual basis. The mental health trust says that it cannot operate it anyway because the tariff is too low.
The public in Hull want the in-patient facility restored. A local business man has even offered the use of Elloughton castle in east Yorkshire as a location for in-patient care, but he can find nobody in the NHS prepared to talk to him—I know how he feels. Only the Department of Health can sort of this mess by ordering the re-provision of in-patient units, including at West End.
The Minister should also reinstate the child and adolescent national psychiatric morbidity survey to begin to address the lack of meaningful data since its cessation. I am pleased that the adult version has been restored, but the child and adolescent version has not. Above all, he needs to address the problem of diminishing funding for mental health.
I hope that the Minister will meet me and my constituent whose daughter has received such appalling treatment in order to begin a proper dialogue about the closures with those who have been genuinely affected. Only then can we begin to say that we are addressing the institutional bias against mental health in this country, which he and I both know exists and both want to eradicate.
The Minister of State, Department of Health (Norman Lamb)
I congratulate the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) on securing the debate. It brings back happy memories of the times when I used to shadow him in his previous job as Secretary of State. He raises an incredibly important issue. Let me say right at the start that I would be very happy to meet him, together with his constituent and NHS England. Having read the brief and listened to him, I am conscious that there is some confusion about the number of children involved, the acuity of their condition and so forth. I want to get to the bottom of that and understand exactly what is going on to ensure that we get the right facilities available for children in his part of the country.
The right hon. Gentleman talked in his introduction about the reduction in the number of in-patient mental health beds. That, of course, is a trend that has been going on for the past two decades, under his Government and this Government, and rightly so. There has been a substantial shift towards early intervention and care in the community, rather than institutional care. However, there is still a long way to go. Too many people with mental health issues stay too long in in-patient beds, which tend not to be a therapeutic environment, much as we would want them to be. On the whole, however, the trend has been in the right direction, as the right hon. Gentleman would probably agree.
The right hon. Gentleman also mentioned the data issue. I completely agree. Mental health issues have been a data-free zone. He talked about the loss of one particular data set, but in the mental health sector we struggle in an absence of data and of understanding of the evidence about what interventions work effectively. That has to be addressed and it is being addressed.
The right hon. Gentleman mentioned what I said about the institutional bias. There is absolutely an institutional bias against mental health issues. One example is the 18-week wait for treatment for physical health conditions, which his Government introduced—rightly so, because people were waiting for far too long. But people with mental health conditions were left out. No one with such conditions has any understanding of when they should be seen; there is no access standard. There is no requirement for someone with an eating disorder, which can kill, to be admitted for care and treatment within a defined period. I am determined to end that because such provisions drive where the money goes in the NHS.
The right hon. Gentleman mentioned that, as a result of decisions of commissioners around the country, funding for mental health conditions has gone down whereas that for physical health conditions has gone up. That is because of how money works in the NHS. We have to end that institutional bias. I suspect that we completely agree about that.
I fully appreciate the right hon. Gentleman’s concerns about child and adolescent in-patient mental health services, and I am aware that this is not the first time he has raised them. We have corresponded about the issue and can consider it further when we meet. Caring for children and young people with mental health problems is incredibly serious and it is a priority for the Government. We want to achieve parity of esteem between physical and mental health, which should be regarded as just as important as each other. Historically, that has not been the case—that is not a party political point, but a fact.
The Health and Social Care Act 2012 sets out the equal status for mental and physical health. Our overarching goal is to ensure that everyone who needs it has timely access to the best care and treatment available. We have made improving and treating mental health conditions a key priority for NHS England. One of the 24 objectives in the mandate, which sets out the Government’s priorities, is to put mental health on a par with physical health and close the health gap between people with mental health problems and the population as a whole.
Why do those with mental health problems die years earlier than those with physical health problems? We will hold the NHS to account for the quality of services and outcomes for mental health patients through the NHS outcomes framework, which at last assesses what results we are achieving for individuals as a result of the money spent. There is a strong desire for change across the health sector—and the justice sector as well.
We are working with a range of agencies and representative organisations to develop a single national crisis care concordat. Crisis care for children and adults is simply not acceptable in too many parts of the country. What we are trying to achieve together is a joint statement of intent and common purpose—an agreement about what each service everywhere should do, and when it should do it. It will help to ensure that people who find themselves in need of immediate support for their poor mental health get the right services when they need them and the help they need to move on from their episodes of personal crisis.
Of course, our aim must be to support our children and young people with mental health problems in the community wherever possible. I absolutely share the right hon. Gentleman’s concern and that of other Members who talk about children being sent long distances from home. As a parent, I would feel exactly the same. The most important thing is that such children should be in the right facility with the right care and treatment. As we are trying to care for more youngsters in the community, the specialist units become more specialist. It is not right for a child with an eating disorder, for example, to be put into an in-patient unit that does not specialise in eating disorders. Getting the right facility is crucial, but that sort of distance causes me great concern, and I accept that we need to address it.
Alan Johnson
I thank the Minister, and I am pleased that he is going to meet me and my constituent. Will he confirm the consultation process set out in the 2006 Act? Will he also say something about the tariff, which I am told by the clinical commissioning group in the East Riding would prevent the provider from accepting in-patient care, even if it were restored, because it means that it loses money?
Norman Lamb
. The right hon. Gentleman raises the tariff, and that is what I want to get to the bottom of. I genuinely want to understand the issue and reach a conclusion on it, and I hope that by meeting we will be able to do that.
We want to ensure excellent child and adolescent mental health services facilities across the country. That is why we are investing £54 million over four years in the children’s and young people’s IAPT—improving access to psychological therapies—programme. That will drive service transformation in CAMHS, giving children and young people improved access to the best mental health care by embedding evidence-based practice which has been absent in these services until now and making sure that they use session-by-session outcome monitoring. The IAPT programme is fundamental to the success of our mental health programme. Our children’s IAPT programme is ambitious in its objectives. Its aim is service transformation with an emphasis on evidence-based practice and a rigorous focus on frequent session-by-session outcome monitoring. It differs from the adult IAPT programme in working across existing community-based CAMHS rather than creating new services.
Mr Bradshaw
I am sorry to have to say this, but the Minister’s speech is just waffle. Will he accept that the Government’s reorganisation of the national health service has led to confusion as to who is responsible for the interface between tier 3 and tier 4 mental health services for young people? Will he look at the cases I have raised with the Secretary of State of young people from my constituency being sent to Newcastle—the north-east of England—and all over the country, and being sent to adult wards, in breach of the law?
Norman Lamb
I do not think it has been waffle at all. I have tried to answer very directly the concerns that have been expressed. I will absolutely look into the cases that the right hon. Gentleman raises. When I hear reference to children being placed in adult services, I find that as unacceptable as he does. I want to understand how it has happened and bring it to an end. NHS England is carrying out a review over a three-month period to assess the facilities for tier 4 services to ensure that sufficient services are available in all parts of the country. Because of the nature of the specialism, they cannot be in every town and city, but they must be within reasonable reach. That is exactly what the review is seeking to undertake.
Alan Johnson
I have just heard in the last 10 minutes that the staff of the West End unit have been told that its day services will close on 20 December. There has been no consultation and it is the first I have heard of it. Will the Minister look into that immediately? This is no longer about in-patient mental health services; it is about all mental services in Hull and the East Riding.
Norman Lamb
Yes, of course I will look into it. It is the first I have heard of it, and I need to understand the full facts. It is important to say that the centre was only occasionally used for overnight stays, as I think the right hon. Gentleman recognises. That was certainly the case in 2012-13. Let us establish the facts. I am very happy to meet him, together with NHS England and his constituents, so that we can get to the bottom of this and provide proper answers on an issue that causes real concern not only to him but to me and to his constituents.
Question put and agreed to.
Petition
National Railway Museum
Westminster Hall
(10 years, 6 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
Greenpeace Activists in the Russian Federation
(10 years, 6 months ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
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
Chris Bryant (Rhondda) (Lab)
I should start by making a slight correction to my own title for the debate, because this incident did not happen “in” the Russian Federation—a point that I shall come on to.
I shall say first what I am not saying in the debate. I am not saying that Greenpeace activists should have immunity from prosecution wherever they engage in their activities in the world. I am not calling for impunity for people when they take on such activities and, indeed, I do not think that Greenpeace would, either. Part of civil disobedience is that people expect that at some point they will face the criminal law, and I do not think that anybody resiles from that or wants to hide from it.
I am also not saying that Greenpeace is right in its assertions on polar drilling or what the Russians should or should not be doing in the Arctic. I personally have a set of concerns about whether it is possible to drill in heavily icy water—whether it would be possible to clear up a spill—but that is not my argument today at all. I am also not saying anything about the criminal justice system in the Russian Federation, respect for human rights in the Russian Federation or its membership of the Council of Europe and its adherence to the European convention on human rights, although I have said many things on all those matters on many other occasions. That is not the issue before us today.
Let me run through the facts. The first is that, on 18 September, several Greenpeace activists attempted to climb a Russian oil rig owned by Gazprom, the state operator—they had also done that the previous year—so as to be able to hang a great big banner proclaiming their views on drilling in the Arctic. The Prirazlomnaya rig has been there for some time, and Greenpeace has been running a campaign against its presence there. Not immediately but 24 hours later, FSB—the federal security service—operatives, presumably on the command of the Russian state, stormed the Greenpeace ship and seized it, along with the captain and all the crew members, the activists and the two journalists who were on board, and took them all off to Murmansk.
The 28 activists and two journalists were subsequently charged with piracy, which in Russian state law carries a term of imprisonment of up to 15 years. Every one of them was refused bail and, as I am sure right hon. and hon. Members—I note that this debate is very well attended—will know, there are six British people involved. They are Phil Ball, who is a Greenpeace activist and a constituent of the Prime Minister; Kieron Bryan, who is a freelance videographer and a constituent of my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman), who is sitting on my right; Frank Hewetson, a Greenpeace activist; Alex Harris; Anthony Perrett; and Iain Rogers, who was the second engineer on the Greenpeace ship.
I think there are some very significant problems with the actions of the Russian authorities. The first is that, as I said, the ship was not seized in the Russian Federation. It was not in Russian Federation state waters. It was in international waters. I know that Russia has sought to declare a 3-nautical mile exclusive economic zone around the rig, but I believe that is not within international law. Quite explicitly, article 60.5 of the United Nations convention on the law of the sea specifies, I believe, that that 3-nautical mile exclusion zone is illegal. But even if it is legal, that does not give the Russian authorities the right to operate in the way that they did, using the level of force that they did, 24 hours after the demonstration on the rig had ended, let alone to seize a ship that is flagged under the Dutch authorities, which is why the Dutch authorities have now made a claim on the ship. Therefore, I think there are significant areas in which, even against their own Russian law, the Russian authorities have not operated correctly.
There is also the matter of the charges that have been brought against the activists. They have been charged with piracy. This country takes piracy extremely seriously. The situation off Somalia has seen the British Navy and British troops engaged in a European effort to root out the significant problems there, and British people have been seized by pirates, so we do not take piracy lightly at all. But even President Putin says that it is completely obvious that the activists are not pirates. I am quoting his direct words. He said that
“it’s completely obvious they aren’t pirates.”
Mikhail Fedotov, the chair of the presidential human rights council, which advises the President on human rights issues in Russia, has also said that they should not be prosecuted for piracy.
I believe there is a very good reason why these people should not be prosecuted for piracy. It is not only that we undermine the law on piracy around the world and the efforts to tackle piracy if we call people pirates when they are not in any sense pirates. It is also that we have only to look at the United Nations convention on the law of the sea, which says specifically in article 101:
“Piracy consists of…any illegal acts of violence or detention, or any act of depredation, committed for private ends by the crew or the passengers of a private ship or a private aircraft”.
The key element in that is “for private ends”. That does not mean prosecuting a campaign. It means “for personal, private, financial or monetary gain”. There is no allegation that that is the situation in this case. For that matter, the article says that there has to be an illegal act “of violence or detention”. Greenpeace engaged in no such act of violence or detention.
Chris Bryant
Of course I will give way. The hon. Gentleman is a lawyer, so I am sure he will be able to help.
Mr Buckland
The article also talks about acts against ships or aircraft. I do not think that the definition of an oil rig falls within that ambit. There are also huge questions about the moral dimension to the use of piracy charges against these protesters.
Chris Bryant
The hon. Gentleman, as so often, foreshadows what I was about to say next, because I was going to move on to the next bit of article 101. He has made the point for me, and I know that many other right hon. and hon. Members want to speak, so I will not bother to labour the point, but even within Russian law—many countries have specific laws in relation to how the United Nations convention should be interpreted into their own law—I cannot see how it could possibly be thought that these people were pirates.
Article 227 of Federal Act No. 162-FZ of 8 December 2003, which was adopted by the state Duma in 1996, says that piracy is an
“Assault against a maritime or other vessel with intent to capture the property of others and with the use of force or the threat of force.”
Nobody thus far, I think, has alleged that Greenpeace was seeking to seize the rig. Nobody has said so. For that matter, nobody has yet maintained that the rig—this goes back to what the hon. Member for South Swindon (Mr Buckland) said—is a maritime or other vessel. I therefore find it inconceivable, either within Russian law or within international law, that they should be prosecuted in this way.
That brings me to what has happened since the activists were seized and taken to Murmansk, which is not a particularly hospitable region for people to be imprisoned in—I think all right hon. and hon. Members understand that—and is a considerable distance from most consular support. That has brought up a series of questions, which I hope the Minister will be able to answer later, but I do have concerns about the conditions in which each of the activists has been held. I think it bizarre that bail has been denied in every single instance. It feels as if proper criminal justice procedures have not been followed. Frequently, if not invariably, the activists have been held in solitary confinement, and I cannot conceive why that would be necessary. It is not because I am a socialist, although perhaps it helps—[Interruption.] I am sorry to have lost all the Conservatives in the room, and half the Liberal Democrats. I believe that the worst thing we can do to a human being is put them in solitary confinement, because we are by nature social beings. To deny someone the opportunity to engage with anybody, even somebody who cannot speak the same language, is a cruel act, which is why I have concerns about how people are being treated.
It is clear to me that consular access has not been as easy as it should have been under all the conventions to which the Russian Federation is a signatory. There has been uncertain access to lawyers and translators of the individuals’ choosing. That access is important in international legal situations, because someone might be given a lawyer, but it might be one who has no intention of prosecuting the case in the interests of the detained person. I hope that the Minister can reply on the issues of consular access and support. Being in a country where one does not speak the language is particularly solitary. When Greenpeace activists engage in such activities elsewhere in the world, nobody expects everything to be roses, but basic levels of treatment are expected in international law.
I hope that the Russian ambassador will be following the debate, and that it will be followed closely in Russia. As we come to the winter Olympics in Sochi, the eyes of the world will be on Russia. People will be deeply troubled, not only in this country, but in many of the other countries concerned, including Argentina, Italy, New Zealand, Poland, Switzerland, Turkey and Ukraine, if a sledgehammer has been used to crack a nut, which is what this situation feels like. An entirely peaceful demonstration was disrupted by armed force—people in balaclavas working in the FSB. Dirigible boats were slashed and sunk, shots were fired, ships were seized and people were charged with offences way in exaggeration of the facts.
Joan Walley (Stoke-on-Trent North) (Lab)
I am in the middle of a Select Committee inquiry, so I hope hon. Members will bear with my intervention. I learnt to speak Russian at school. I revived twinning links between Zamoskvorechye and Lambeth to bring about peaceful dialogue between the two countries. I am also Chair of the Environmental Audit Committee, which recently published the report, “Protecting the Arctic”. Two weeks ago, I was with the hon. Member for North Wiltshire (Mr Gray) at a conference on the Arctic circle, looking at ways to achieve peaceful dialogue over the issues that the Committee identified in the report on the future of the region. I would like to put that on record.
In making the case for the journalists, as well as those on the Greenpeace ship, has my hon. Friend any sense of the Russians engaging with us in peaceful dialogue to address the environmental issues? Does he have any knowledge of whether Shell or BP, which are closely linked with Gazprom, have been involved in seeking a solution to this international situation?
Mr Andrew Turner (in the Chair)
May I draw Members’ attention to the need for brief interventions?
Chris Bryant
The answer to the question by my hon. Friend the Member for Stoke-on-Trent North (Joan Walley) is yes. I hope that the Minister will reply on the issue of how the British Government can work with Russia, because the British Government’s relationship with the Russian Government is not always at its best, and whether it might be possible to work with other countries and some other agents, such as Shell and BP, to ensure a successful outcome. In my view, a successful outcome means that all the activists are out of Murmansk, out of the Russian Federation and home before Christmas, preferably in the next couple of weeks.
Mr Gray
I will speak fast, so I will be extremely brief. I agree with the points that the hon. Member for Stoke-on-Trent North (Joan Walley) made a moment ago. She and I attended the Arctic conference. The point she made was not so much about the consular issues, which the hon. Gentleman is perfectly correct to raise—I strongly agree with every word he has said so far—but that we must find a way for the future of bringing the two sides together in a way that does not involve raiding oil rigs and taking action. It should involve talking and sitting down to discuss the issues among ourselves.
Chris Bryant
I agree. When I was Minister for Europe, I also had responsibility for the Arctic region, and a successful discussion between all the countries that have an interest was one of the things we were trying to prosecute. Incidentally, those countries are not only the ones that abut the Arctic, but all the countries in the world, due to the environmental issues that pertain.
I say to our Russian friends and colleagues that peaceful demonstration is always a challenge. Greenpeace is irritating; in a way, that is the point of Greenpeace. The hon. Member for Cheltenham (Martin Horwood) is irritating. He has been irritating since we were at school together. He probably thinks that I am irritating. How do we deal with extremely irritating people who want to make a point? That is the challenge for the international community, and for every country that seeks to be a democracy and prosper in the modern world. That is why the eyes of the world will be on Russia and why the Nobel laureates have written to say, “Look, you have to honour your treaty obligations and make sure that you are not using a sledgehammer to crack a nut.”
We know people are watching, because there have been demonstrations around the world—in Hong Kong and South Africa—and the Nobel laureates have referred to the situation. I am sure that Greenpeace will engage in many more demonstrations in future, and not only in Russia. Over the past weeks, there have been demonstrations at the pumps in Germany and a massive banner was unveiled by Greenpeace at a football stadium in Switzerland. We all seek to manage such challenging confrontations calmly, and not in the way the Russians have.
I shall end with two quotes. The first is not from a Brit, but a Swiss activist—he apologises for his bad English—Marco Weber:
“I am now for about 12 days alone in a cell, I don’t have books, newspapers, TV, or someone to talk to. At the daily walk I am also isolated. The 4x5 metre ‘walkyard’ is surrounded by concrete walls and covered with iron bars. On top is a roof, which doesn’t allow the sunshine in. The only sky I can see is out of my cell window, which is placed in the northern wall of the building. This means no sun at all. Days are long!”
Alex Harris writes:
“Surely my future isn’t rotting in prison in Murmansk?!...Being in prison is like slowly dying. You literally wish your life away and mark off the days.”
I am not saying that the Russians should declare some kind of legal immunity for Greenpeace activists—no one is saying that. Greenpeace is not saying that. Its activists know the risks they take when they engage in such activities. All I say to the Russians is “Slona iz mukhi,” a short Russian proverb that means, “Don’t make an elephant out of a fly”—a mountain out of a molehill.
Mr Geoffrey Cox (Torridge and West Devon) (Con)
I congratulate the hon. Member for Rhondda (Chris Bryant) on his speech and on securing the debate and I applaud the approach with which he commenced. It does not help those who are currently incarcerated in Murmansk to insult or offend their custodians. What we must do—I apprehend it was the approach intended by the hon. Gentleman—is to appeal to the Russian authorities, to His Excellency the Russian ambassador, who I know is taking an interest in the proceedings this morning, and to the President of Russia. I hope that speakers in the House today will base their appeal not only upon an analysis of what occurred that day and during those days in which the Arctic Sunrise was pursued and seized, but upon the compelling compassionate grounds, which are represented in part by the attendance of the families of some of those who are in custody today.
In my constituency, I have the families of Alexandra Harris and Kieron Bryan. Both families are suffering the inevitable shocking anxiety and anguish of knowing that those whom they love are isolated and segregated in a faraway place and accused of something that they are convinced, as I am, they did not do, and they are anxiously awaiting their return. It is in that spirit that I hope those who are listening, particularly the Russian ambassador, will interpret all the remarks that we make this morning.
Kieron Bryan is 29. He was a videographer on the Arctic Sunrise. He was nominated for an award. He is a talented, young and idealistic man. He was not there to break the law; he was on board the ship merely to record what happened and to keep a record. Alex Harris is 27—my own daughter’s age—and was on board as a digital communications officer, in charge of the Twitter account. She was fresh from joining Greenpeace in Sydney, and has been a volunteer in Vietnamese orphanages. She is, again, an idealistic young person who was not there to break the law—far from it—and to whom the idea of illegal violence would have been anathema, as it would to Kieron Bryan.
We all in this country can be proud of such young people. They were not intending to threaten the Russian state. They were intending to make a point about drilling in the Arctic. We all know, as the hon. Member for Rhondda has said, that drilling in Arctic conditions is a dangerous, arduous task, and it is inevitable that there will be sensitivities among those whose task it is to protect such installations, but those sensitivities should not lead to disproportionate reactions. I agree entirely with the hon. Gentleman, but, on reflection, I hope that the Russian ambassador, the President and the authorities currently conducting the proceedings in Murmansk will reflect that there is an important principle of law: proportionality.
Proportionality must be applied in all circumstances to all the actions of a sovereign state and its court system. The actions currently being taken against Alex Harris, Kieron Bryan and others who are under the custody of the Russian authorities are not proportionate.
As the hon. Member for Rhondda said, article 101 of the UN convention on the law of the sea interdicts illegal acts of violence for private ends on the high seas. The hon. Gentleman is completely right. Even if there was an illegal act of violence, which is doubtful, in the mere ascension of the rig with the intention of placing a banner upon it, it cannot be said that it was for private ends in the ordinary sense in which international lawyers mean it. Private ends must mean some form of deliberate attempt to secure a gain. In such circumstances, I would urge the Russian authorities to reflect on whether the charge of piracy is proportionate.
As the hon. Gentleman has said, to charge those young idealistic people—whose interest is not in violence but in peace, and, while some may think it misguided, is in preservation and creation, not destruction—with piracy is to bring into disrepute the very law that prohibits it. That is why I urge the Russian authorities, His Excellency the ambassador, who is listening to this debate, and those who may be listening in Russia itself to feel that the proportionality of their actions is under severe question.
There is another point that the hon. Gentleman did not mention: the United Nations convention prohibits actions of this type only on the high seas. The fact is that the oil rig was within the territorial waters of Russia, so any act against it would not necessarily be an act under the UN convention, and the action that was taken is not prohibited by the UN convention. The Arctic Sunrise was three nautical miles from the oil rig at the time—plainly, as the hon. Gentleman said, in international waters. In such circumstances, the exercise of power under the convention is questionable at least.
However, I do not wish to dwell upon the steps that were taken by the Russian authorities and whether or not they were lawful. I wish to dwell upon the plight of the individuals themselves. In the grim conditions of the Murmansk jail in which they reside are two young people whose families I represent. Kieron Bryan is a constituent of the right hon. and learned Member for Camberwell and Peckham (Ms Harman), who will speak eloquently on his behalf, but I hope she will forgive me if I say that I feel a powerful connection to the families of both Alexandra Harris and Kieron Bryan. They are Devonshire people from the area of Torridge that I have the privilege to represent. Alexandra Harris was brought up in a farming family of generations. She went to Dolton and then Great Torrington school. She attended that school with a constituent who works for me in my constituency.
Kieron Bryan was brought up in Shebbear, a great village in Torridge that I know well, so I feel particularly close to those two young people at this particular time. I urge the Russian authorities to understand that those two people, as well as all their colleagues at the time, were not there in any destructive, illegal or lawbreaking spirit. It is ironic that they are incarcerated in Murmansk, the port to which many convoys sailed through the Atlantic to bring to the Russians succour in a time of great need. I ask the President of Russia, the Russian ambassador and the Russian authorities to think again. The human reality of Alexandra Harris’s, Kieron Bryan’s and others’ plight is brought home, as the hon. Gentleman said, by the letter that Alexandra’s mother published only recently and which she has asked me to draw to the attention of the House and the Minister. The letter said:
“I’m worried about what’s going to happen. I have moments of feeling panicky, but then I try to tell myself that there’s nothing I can do from in here and what will be will be so it’s pointless worrying. But it’s hard. Surely my future isn’t rotting in prison in Murmansk?! Well, I really hope it isn’t.”
It is our job—the job of the Minister, the Prime Minister and all those who care for justice and for freedom—to see that it is not.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Member for Rhondda (Chris Bryant) on the balanced presentation that he gave to the House and also the hon. and learned Member for Torridge and West Devon (Mr Cox) on his impassioned plea to the House. I want to add my and my party’s support to the joint approach of all the parties here. Although I do not have a constituent involved in the affair, I want to convey my support to the Members of Parliament who represent the people who are in jail at present.
I believe that we need to drill for oil; it is important that we do so. I would like to get away from relying on fossil fuels—we all know that—but when we produce and use oil, there is a tremendous burden on us to ensure that we do so as environmentally safely as possible. It is incumbent on us all to make sure that every possible measure is taken to ensure that oil is drilled safely and that measures are taken to protect the unique and fragile environment of such areas. Greenpeace, as the hon. Member for Rhondda said, might be a pain at times, but it highlights vital issues. That is why its members were on the Russian oil rig, and accusing them of piracy is absurd and wrong.
I understand why Greenpeace was highlighting Russian oil-drilling techniques. The director of Greenpeace, John Sauven, claims that half the world’s oil spills occur in Russia. He estimated that some 30 million barrels of oil a year are spilt there—six times the 4.9 million barrels thought to have been spilled in the gulf of Mexico. Considering the environment and what Greenpeace was highlighting, that is the issue. For me, that is, in a way, also the injustice of what has happened.
Greenpeace’s thought process behind boarding the rig was clearly to highlight the actions in the Arctic, not to carry out an act of piracy, which is an absurd accusation. Certainly, the fact that the entire ship was seized and everyone on board arrested, including two journalists, shows that the response is less to do with their actions and more to do with the Russian Government making a statement—or, as some suspect, trying to hide the truth. I make those comments as well because I think it is important to do so.
That statement has been made and the world is in no doubt as to the current stance of the Russians. It is past time that the people were released. That is why it is right and proper to highlight the issue in Westminster today. The six UK residents who have been arrested and held—not, according to media outlets, in the most pleasant of conditions, as the two previous speakers have mentioned—are an indication of Russia’s stance. The way in which they have been treated in prison demands that a message is sent from this place, making it clear that we want our citizens released along with the other people on that boat. It is absurd to hold off a trial until November. To deny bail to such people and to hold them, on trumped-up charges, far from their families and from access to loved ones is cruel and must be stopped.
Europe as a whole—indeed, the world—has a role to play. Hillary Clinton, the former US Secretary of State, has made a statement. She said last week that there should be a greater international outcry. The issue goes beyond Europe and as far as the United States.
I am aware that the Netherlands has determined to bring the matter to the international maritime court and that others are considering the same course of action. The situation is more than just arresting people and letting them think about what they are going to do for a night or two; it is an infringement of their rights. As upholder of democracy, this place must make it abundantly clear that we will join other nations and demand that Russia releases those innocent people and puts a stop to whatever statement it is trying to make.
Mr Gregory Campbell (East Londonderry) (DUP)
My hon. Friend is following through a train of thought about the sequence of events that needs to happen internationally. Does he agree that urgent action is needed? The Minister present and the Prime Minister need to make immediate contacts, so that whatever needs to be done is done in a matter of days rather than months.
Jim Shannon
My hon. Friend is absolutely right. I hope that the Minister will respond positively. We also need the Prime Minister to action it right away. The statement that will come clearly from Westminster Hall and from all hon. Members present will sincerely say that.
I congratulate the hon. Member for Rhondda on raising the issue. I look forward to hearing other input and even more so to hearing the input and response from the Minister and, ultimately, the Prime Minister. If there is a chance to bring the matter up in Prime Minister’s Question Time today, it should be brought up.
Mr Andrew Turner (in the Chair)
Order. Each hon. Member will have seven minutes.
Martin Horwood (Cheltenham) (LD)
It is a pleasure to serve under your chairmanship, Mr Turner. I congratulate the hon. Member for Rhondda (Chris Bryant) on securing the debate. He was, to some extent, tactful in what he said about Russia, and he did not mention some of the other significant human rights cases, such as those of Mikhail Khodorkovsky, Platon Lebedev and the late Sergei Magnitsky, and the disproportionate treatment meted out to members of Pussy Riot. I understand his reasons for being tactful, but there is an issue for Russia to take notice of: its reputation for human rights abuses, and the damage being done in that regard, is significant and cumulative. It is doing more and more damage to its international reputation through disproportionate responses to events such as those that we are discussing.
Russia’s response is disproportionate, as the hon. Gentleman also, less tactfully, said. There is a level of irritation that comes with politics; he conceded that he is sometimes irritating to me. His ability to remind everyone that we went to school together is one of his more irritating habits, although I suspect that the fact that he went to Cheltenham college does him more political damage in Rhondda than it does me in Cheltenham.
We in this Parliament have been subject to Greenpeace actions. Members of Greenpeace were on our roof in 2009, unfurling banners about climate change. They climbed Big Ben—or the clock tower, in deference to the hon. Gentleman’s reputation for pedantry—in 2004.
Martin Horwood
Indeed, but then it was still the clock tower. Those protests were met, in large part, with good humour, even though they were probably more significant security breaches in one sense than anything that the Arctic 30 have done in the waters close to Russia. However, they were met with good humour and a proportionate response by the authorities. People were arrested, but they were not charged as terrorists. It was understood that they were peaceful political protests. That is what the Arctic 30 were also engaged in.
The hon. Member for Rhondda was absolutely right to draw attention to the United Nations convention on the law of the sea. Article 101 has two fundamental aspects to its definition of piracy. The first is use of violence, and the other is, as he quite rightly pointed out, the fact that it is done for private means. Piracy is a criminally violent act, and that, as even President Putin clearly said, is quite clearly not what the Arctic 30 were involved in.
I will go a little further than some other hon. Members and say that there is an environmental issue in addition to a human rights one. That is, after all, what Greenpeace was seeking to highlight. As we turn to more and more novel means of extracting fossil fuels, and go into more and more extreme environments in our pursuit of them, we are taking higher and higher risks with the environment. The lessons from the gulf of Mexico are clear, and there are lessons to be learned not only by Russia, but by this and other western countries, about novel means of extracting fossil fuels. My comments are therefore not directed solely at Russia. If the Arctic 30—certainly those placed under arrest—have inspired future generations of environmental activists to highlight such issues, and if they have helped to generate a debate about the risks of more extreme extraction of fossil fuels, their action will not have been in vain.
The Minister made a written ministerial statement on 9 October, which was welcome. However, it had the Foreign and Commonwealth Office’s traditional consular emphasis; the FCO is diplomatic, but I think it is occasionally diplomatic to a fault. There seemed to be, in the statement, something of a reluctance to pass judgment on whether it was appropriate to prosecute these people for the act of piracy. There seemed to be great reluctance, as there was in other cases, to contemplate any kind of sanctions against Russia for its actions. There was the rather significant inclusion of the Secretary of State for Foreign and Commonwealth Affairs in lobbying the Russian Government, but not of the Prime Minister. When British citizens are involved, I think it is appropriate for the Prime Minister to have some personal involvement.
The FCO always puts a great premium on discreet persuasion, but there are limits to that. At some point, we need to hear from the Government what further concrete and proactive steps they are taking to make progress on the issue—most obviously in partnership with our European Union friends and other like-minded democracies—and how they will try more strongly to encourage Russia to take a different path.
Many hon. Members and people involved in politics the world over were deeply inspired by Russia’s transition from communist dictatorship in the 1980s and ’90s. It is a matter of immense sadness that Russia’s reputation, particularly in human rights, seems to be slipping backwards towards that era. I hope that, collectively, we and supporting organisations such as Greenpeace can encourage Russia to make this issue a turning point, and not to carry on treading this dangerous path.
Mr Ben Bradshaw (Exeter) (Lab)
My comments—I shall keep them brief, because I know that many Members want to speak—follow on nicely from those of the hon. Member for Cheltenham (Martin Horwood). I want to press the Government on what exactly they have been doing for the past month, and to question the “softly, softly” approach that they appear to have adopted.
I wrote to the Foreign Secretary a month ago, and I still have not received a reply to my questions. It has not escaped my notice that the Governments of other nationals held captive in Murmansk have been much tougher. The Dutch are taking legal action; Hillary Clinton, who has been mentioned, has spoken out very strongly; and Angela Merkel, the German Chancellor, who does not even have any nationals held in Murmansk, has picked up the phone to President Putin and made it clear that what has happened is unacceptable and should be resolved quickly. Yet when the Prime Minister was asked at Prime Minister’s questions last Wednesday what he has been doing, he said that he has simply been asking for updates. I am afraid that that is not good enough.
Alison Seabeck (Plymouth, Moor View) (Lab)
I want to put it on the record that my right hon. Friend’s point is supported by constituents of mine who are friends of Kieron’s. They have written to me to say that our Prime Minister really should get involved. I am sure that my right hon. Friend agrees.
Mr Bradshaw
I absolutely agree, not least because more Britons are being held by the Russians in Murmansk than people from any other country. As has already been said, there are six of them, of whom three are from Devon.
In a letter to me from his jail in Murmansk, the marine engineer from Exeter, Iain Rogers, has complained bitterly about what he sees as the British Government’s lack of action, compared with what is being done by his fellow captives’ Governments. He makes this direct appeal to the Prime Minister:
“I find it hard to believe that you are not outraged that British subjects have been kidnapped at gunpoint, detained and abused and yet so far you have done nothing except sit on your hands. It is time to act Mr Cameron. You have a duty to protect UK citizens and international law.”
Iain’s mum, Sue Turner, visited the Foreign Office last week. I understand that she did not get to see a Minister, which is regrettable, but she did see an official. At a vigil held for the Arctic 30 in Exeter on Sunday, she told me that she and the rest of the relatives share a concern that they are not being given enough information. She said that when they asked why more was not being done and said publicly, she was told by the Foreign Office official that Russia had not responded well to criticism from abroad in the past. We all know that, and it may well be the case, but this has been going on for more than a month.
Many of us do not have a great deal of faith in the Russian judicial system, and other Members have already referred to the prosecution of Pussy Riot and the state- sponsored persecution of gay and lesbian people in Russia. The British Government should make it absolutely clear to the Russians—yes, privately if necessary—that the situation is unacceptable, and that severe damage will be done to our bilateral relations and Russia’s already battered international image unless the hostages are freed forthwith. The Government also need to tell the relatives and the British public what they are doing to help.
My hon. Friend the Member for Rhondda (Chris Bryant) has quite rightly said that it would be inconceivable for the Sochi winter Olympics to go ahead unaffected if these 30 people from all over the world are still held illegally in a Russian jail. Does any hon. Member think that that would be an acceptable backdrop to an international sporting event? I hope that the Minister will reassure us by telling us what the Government are doing, and what representations he, and the Prime Minister personally, have been making. Are they supporting or are they a party to the Dutch legal action, and if not, why not?
Mr Cox
On the Dutch legal action, it is important to remember that only the Dutch have the standing to bring such an action: it was their sovereign-flagged ship, and they therefore have that status under the convention. We could not bring that action. Of course, we can support it morally, but we cannot be a party to it.
Mr Bradshaw
I defer to the hon. and learned Gentleman’s superior legal knowledge, but I hope that the Minister will at least tell us that we are supporting the Dutch legal action politically and morally.
Finally, what conversations have there been between the Prime Minister or the Foreign Secretary and Cathy Ashton? I would have thought that—given her very good reputation in recent months for bringing together parties, including the Russians, over Iran and Syria—the European Union’s foreign policy representative would be well placed to organise a co-ordinated European Union response to this intolerable behaviour by the Russian authorities.
Jessica Morden (Newport East) (Lab)
I thank my hon. Friend the Member for Rhondda (Chris Bryant) for securing the debate. He spoke very eloquently, as have other hon. Members, about the seizure of the boat, the charge of piracy and the issue of proportionality. I very much support those comments, and those made by my right hon. Friend the Member for Exeter (Mr Bradshaw).
I want to say a few words in support of Anthony Perrett from Newport, whom I share with my constituency neighbour, my hon. Friend the Member for Newport West (Paul Flynn). He is one of the Greenpeace activists detained in Russia, and his family live in my constituency. May I say to the Minister that we are grateful for the very helpful and practical meeting with hon. Members the week before last, and the subsequent meeting with the families, although the Minister was not able to be at that one? The family have certainly requested a meeting with the Minister in person as soon as possible. Greenpeace’s constructive engagement in the case is also heartening, not least its steps to give daily updates to the families, including Anthony’s family and partner, about what is happening.
Anthony Perrett is a tree surgeon, a former member of Caldicot town council in my constituency and a volunteer for the Severn Area Rescue Association. He undoubtedly has strong and passionate views about the environment, and campaigns proactively. He would probably have been aware of what the consequences of his actions might be, but being charged with piracy is clearly excessive, given that the maximum sentence is 15 years. More than a month on, the Russian authorities have sent a loud and clear message to Greenpeace—the point has been made—but we all hope that reason prevails, and that Anthony and his fellow protesters can be set free and reunited with their families as soon as possible.
The debate has touched on what is happening to those detained in a Russian prison, and on our not having enough information on the circumstances in which they are detained. I want to speak about the stress placed on the family and Anthony’s partner, Zaharah, who have to watch and wait while events in Russia unfold. They are struggling to cope with the impact of his detention on their lives at home in Newport. Zaharah is obviously unable to talk to Anthony. She is unsure about how the Russian legal process works and how long it will take, and about when this trauma will end. She is obviously concerned about his welfare, and wants to know more about the conditions in which he is detained, so it would be helpful to know more about that.
The speed at which the protesters have been charged with piracy is clearly an immense shock, especially given President Putin’s remark about the Greenpeace protesters on 25 September that
“it’s completely obvious they aren’t pirates.”
On a practical level, Zaharah has told me that she would like to send Anthony some personal items at the jail where he is held, but that has so far proved impossible. Parcel couriers have not been able to get help, and people are still trying to find a way to get parcels through. She is asking the Foreign and Commonwealth Office to look at that practical matter and help to find a resolution, which would be a small comfort for my constituent’s family and friends.
Paul Flynn (Newport West) (Lab)
Does my hon. Friend think that it is worth reminding our Russian friends that Newport is probably unique in commemorating the role of the merchant navy—it lost more of its representatives in warfare than any other service—with a special memorial and a special commemoration every year, and that it is worth saying that many of those who died were on the route to Murmansk, under terrible conditions of weather and danger? Can we build on the solidarity and comradeship that existed during the war to ensure that the Russians respond generously now?
Jessica Morden
I thank my hon. Friend and neighbour for that worthy intervention, which is timely given the commemoration that is about to take place in Newport. His point was well made. It would be helpful if we could look at some of the practical issues, including the provision of more information on visits. Such help would make a really big difference on a day-to-day basis to both those detained and their families.
As we do not have much time and other Members wish to speak, may I thank the Government for the representations that they have made so far? We look forward to hearing from them about what more can be done. I just ask that they do all they can to secure the release of the Greenpeace activists and to urge the Russian authorities to think again.
Caroline Lucas (Brighton, Pavilion) (Green)
It is a pleasure to serve under your chairmanship, Mr Turner. I thank the hon. Member for Rhondda (Chris Bryant) for his contribution and congratulate him on securing the debate. I am grateful for the opportunity to contribute.
I want to set out my concern for the 30 individuals who remain incarcerated in a Russian jail, and add my voice to those calling for the charges of piracy to be dropped and for the activists and journalists to be released. I also want to recall why these brave individuals were prepared to take peaceful direct action at the oil drilling platform operated by Gazprom in Arctic waters. The threat that oil drilling poses to the Arctic region is immense. The current failure of global leaders, both here and elsewhere, to respond with sufficient urgency to the threat of climate change is overwhelming.
It is difficult to imagine what it must be like being detained in a Russian jail for more than a month. The reports in the media of letters from the activists and the concerns and feelings of their families and loved ones pierce through sharply into normal life. Phil Ball is one of those being held. He is a nature photographer and film maker who has been credited on David Attenborough’s films, and a father to sons aged eight and seven and a three-year-old daughter. His brother has spoken of the contact he has had with him. He said:
“While Phil seemed quite ‘down’ in his earlier letters, he seemed stronger in this one to me and is very keen we don’t just get them back and forget why they all went out there—to highlight the damage which is being wreaked on the Arctic.”
1 know that all the UK citizens are being well represented by their own MPs and am told that the FCO is making every effort on their behalf. I am sure that all of us will want to keep up the pressure on the FCO publicly and behind the scenes and to work closely with Greenpeace to secure the release of all those detained.
I want to focus my remaining comments on the concerns that motivated those men and women to board the Arctic Sunrise, and that they continue to want to highlight. The Greenpeace ship, crew, volunteers, campaigners and journalists were there to highlight the Arctic oil rush. Fronted by companies such as Gazprom and Shell, the rush for oil is bringing unprecedented risks to the area and to us all in terms of climate change. The activists are playing a key role in letting the world know about the catastrophic consequences of any potential oil spill for the many people living in the Arctic who rely on their natural environment for prosperity, both directly and through tourism, and for marine wildlife and ecosystems.
The activities of the oil companies do not tend to attract much attention here in the UK. The investigative work and the non-violent direct action of Greenpeace and other organisations are helping to shine a light on what is taking place. Every 18 months, more than 4 million barrels of oil spew into the Arctic ocean, where it becomes everyone’s problem. For decades, Russia’s oil giants have been polluting parts of the country’s once thriving landscape, often in secret, spilling oil on to the land and into the Arctic ocean, poisoning the water and destroying the livelihood of local communities and indigenous peoples.
Greenpeace has investigated and documented the ongoing disaster, revealing how the oil seeps into rivers and farmland and how it spreads and becomes a thick, heavy mire, suffocating plants and animals and forcing people to abandon the area. The oil contaminates food and water supplies, and people live with the knowledge that their once clean rivers, forests and air now pose serious health risks.
Last year, the Environmental Audit Committee, of which I am a member, carried out an inquiry into the risks of drilling in the Arctic, and the future of the region more generally. The inquiry concluded by calling for a moratorium on oil and gas drilling in the Arctic region, at least until we have put in place stronger safeguards, such as a pan-Arctic oil spill response standard and a stricter financial liability regime for oil and gas operations, requiring companies to prove that they can meet the costs of a clean up.
The peaceful activists on the Arctic Sunrise put their freedom on the line to highlight issues not just around oil spills but around climate change. Last week, 11 Nobel peace prize laureates including Archbishop Desmond Tutu wrote to President Putin offering their support for the Arctic 30. Describing the Arctic as a “precious treasure of humanity”, the signatories are all supporting efforts to protect the high north from oil exploration and climate change.
On Friday 27 September, the Arctic 30 woke up in their freezing jail cells after a whole week of incarceration. On the same day, the Intergovernmental Panel on Climate Change released its latest report on the science of climate change. Scientists are more certain than ever that human activity, mainly the burning of fossil fuels, is driving a powerful underlying trend of rising global temperatures. The IPCC report also underlines the need for substantial and sustained reductions of greenhouse gas emissions to limit climate change. For the first time, it talks about the need for a global carbon budget—the amount of carbon that it is safe to release into the atmosphere. That view echoes recent reports from organisations such as Carbon Tracker. There is a stark choice. If we want to avoid catastrophic climate change, we need to leave at least two thirds of existing fossil fuel reserves in the ground, unburned. It does not matter whether we are talking about Arctic oil, tar sands from Canada or Madagascar, or shale gas from Sussex; we just need to leave unconventional fossil fuels in the ground.
One of my constituents wrote to me recently about her concern for the Arctic 30. Summarising the situation, she said:
“I don’t agree with the exploitation big oil companies like Shell are wanting to pursue, drilling in this delicate environment for profit. Climate change is a threat to us all and I strongly believe that a new direction and other alternatives should be considered and more researched.”
She went on to say:
“I tune into BBC Parliament regularly and often find myself disappointed by the lack of interest and low seat count MPs have in debates discussing”—
climate change and—
“similar matters concerning wildlife and the environment.”
Across the world, citizens are increasingly taking non-violent direct action against fossil fuel companies because of the failure of democratically elected representatives to act in the public interest, to stand up to the small number of fossil fuel giants whose business models are fundamentally incompatible with a safe climate and to direct their attention to keeping the vast majority of fossil fuels in the ground instead. The latest IPCC report confirms that the ground is where fossil fuels must remain if we are to keep climate change below the “dangerous” threshold of 2°.
Earlier this year, the UK and other G8 nations reiterated that commitment. They said:
“Action needs to continue and intensify as a matter of urgency. Ministers remain committed to long term efforts with a view to limiting the increase in global average temperature below 2 degrees Celsius.”
That is what they said, but it is “deeds not words” that matter.
Four years ago, climate scientist James Hansen was first arrested when taking part in a protest against coal mining in West Virginia. In Canada and elsewhere, civil society resistance to the Keystone XL pipeline is diverse and growing. That is because the exploitation of tar sands is devastating First Nation communities and the local environment, and spells game over for our climate.
The resolve and courage of the Arctic 30 is truly humbling. Today’s debate is an important opportunity to call for their release, and also to put on the parliamentary record the contribution they are making to the fight to protect the Arctic and to create a safe climate and a better future for our children and grandchildren.
Glenda Jackson (Hampstead and Kilburn) (Lab)
I thank my hon. Friend the Member for Rhondda (Chris Bryant) for securing this debate and for the tone of his contribution. I share with him the view that Greenpeace activists are not innocents abroad. Their position is part and parcel of being Greenpeace activists. That is certainly the case of my constituent, Frank Hewetson. He has been a very active campaigner for many years. It is important that we not only raise our concerns about the treatment of our constituents in the hands of the Russian authorities but point out that Greenpeace is active on behalf of the whole world, and no more so than in its actions in the Arctic. As the hon. Member for Brighton, Pavilion (Caroline Lucas) pointed out, changes to the Arctic could have the most deleterious and terrible effect on the rest of the world.
I share with everyone who has spoken today a sense of disbelief that the Russian authorities have chosen, as someone so aptly said, to take this great hammer to crack a nut. The charge of piracy, as those who have comprehensive backgrounds in international law know, is an absurdity. The Russian authorities are determined to hang on to the charge of piracy, and are obdurate in not granting bail to the Arctic 30. What possible harm can they do if they are given bail?
I am in two minds as to whether to argue that one should put forward the need for a compassionate approach to the prisoners, because of course we are talking about a society that even the slightest contact with its culture and literature—I presume that we have all read “The Gulag Archipelago”, so we know that Russian treatment of prisoners, whether the charges against them were justified or not, is surely one of the blackest stories in the history of humankind. I am amazed that Russia, which seems to want to go back to the old, desperate and surely discredited tradition, seems to want to replicate it yet again, so soon after we have seen it take a major step forward in international affairs by being so central and essential in ensuring that the inspectors were allowed into Syria, and the chemical weapons will be destroyed and brought out. Far from arguing on the level of Russia suddenly discovering a compassionate nature, we should argue with Russia that that is really good public relations for it.
Russia is somewhat paradoxical, in that it is clearly a very proud nation and yet sometimes it feels that it is not given sufficient credit for its standing in the international community. Sometimes it is Russia’s fault, and on many occasions it could be argued that it is the fault of the international community, that this great nation is not given sufficient credit for being great, but actions such as charging these activists with piracy tend to push Russia even further into the background, when it so clearly wants to be at the forefront.
I hope that our diplomatic associations and contacts with the Russian authorities will help. I also have to thank the Minister for being so available to the families of the activists; he has certainly been available to the family of my constituent and to the families of other Members’ constituents. Possibly, the best way forward is diplomacy behind closed doors. Perhaps that will at least achieve the first step that I am sure all of us here in Westminster Hall today wish to see, which is affording the Arctic 30 bail, improving contacts with their families and providing items such as books to read, more time on the phone or at least a clear line when they do have time on the phone.
As I have said, these people are not innocents abroad, but what they are doing on behalf of the entire world is entirely admirable, and Russia is a part of that world. Her people can be destroyed just as easily as anybody else’s if climate change is allowed to run unchallenged.
Ms Harriet Harman (Camberwell and Peckham) (Lab)
I am very grateful to my hon. Friend the Member for Rhondda (Chris Bryant) for securing this debate. I know that he is very involved in relations with Russia through his work in the all-party group on Russia.
I would particularly like to identify myself with the comments of the hon. and learned Member for Torridge and West Devon (Mr Cox), in whose constituency Kieron Bryan’s parents live; Kieron Bryan is my constituent. I want to speak about Kieron Bryan today and to say that he is detained in Murmansk, and that it has been a long time since 19 September; here we are on 23 October. It is a long time to be detained in Murmansk. He is not a criminal, he is not a threat to the Russian state, he is not a pirate and I say very strongly that I hope the Russian authorities will listen to what is being said in this debate and allow Kieron Bryan to come home.
Kieron Bryan was on a contract with Greenpeace as a journalist. He had worked for The Times, the Daily Mirror and in broadcasting; he had really done well in his professional career. Aged 29, he had already made great strides in that career, and had taken up a short-term contract with Greenpeace to be on the Arctic Sunrise to record the crew’s activities. Now he is in solitary confinement in Murmansk.
None of us makes a habit of lightly second-guessing other countries’ criminal justice systems, and I certainly do not do so. There are many British citizens who are in prisons all around the world, but I say to the Russian authorities that Kieron Bryan is not a criminal, much less a pirate, and I hope that they will release him and allow him to return home.
I will also say something about the facilities in which Kieron has been detained. As has been said, to be in solitary confinement for 23 hours a day, having been refused bail, is very hard indeed. Regarding his access to the outside world, I understand that his letters are brought in and he is allowed to read them, but then they are taken away. So he cannot even keep his letters and see what his friends and family are writing to him. He has only been allowed one book and he has now finished that. He was allowed one phone call to his family when he was on the way to detention. Since then, he has only had access to the phone last weekend, which is not acceptable.
I have asked the Russian authorities for Kieron’s brother, Russell, to be able to go out to Murmansk to visit him. A Russian prisoner on remand is allowed a visit from their family, but how much more does someone need a visit from their family if they are detained thousands of miles away from their home in a cell in a prison where they do not speak the language?
I hope that the Russian authorities will listen to what is being said. I thank the Foreign Office for the work that it has already done. I want it to do absolutely everything it can and to leave no stone unturned to get Kieron Bryan back home. I know that the Foreign Secretary is aware of and engaged on this issue, as is the Prime Minister. I thank the Foreign Office Minister who is here in Westminster Hall today for having a meeting with myself and other colleagues, and for the consular team and the team in the Foreign Office here who are working on this issue.
For my part, I will seek a meeting with Baroness Ashton of Upholland. Perhaps she can meet a number of us and can hear from us all how much we are concerned about this issue and how grateful we would be if she could do what she can to help.
I have asked for a meeting with the Russian ambassador, but he has not been prepared to meet me. Perhaps the Minister who is here in Westminster Hall today might encourage him to meet me, and perhaps I could go along with the hon. and learned Member for Torridge and West Devon. If a country has an embassy in this country, it is so that it can hear from people in this country what is going on, and to refuse to hear—as a matter of courtesy—what I have to say about my constituent, who is in detention, is wrong. I hope Russia will allow that meeting to happen.
I want Russia to allow visits; to allow Russell a visa; to allow books and phone calls—
Chris Bryant
The Russian ambassador is here in Parliament this afternoon at 4 o’clock for a meeting with the all-party group on Russia, if my right hon. and learned Friend would like to attend.
Ms Harman
Excellent. I will definitely attend that meeting, and I look forward to seeing the ambassador. I hope that he will take this issue very seriously and will listen to our concerns, particularly regarding the different situation of Kieron Bryan, who is a journalist. It is hard to know how much information Kieron is able to get, so many thousands of miles away as he faces a winter in a prison cell in Murmansk, but I hope he knows that for his family—his parents, Ann and Andy, and his brother, Russell—not a day goes by without their using every effort to help to bring his plight to the attention of the Government and the Russian authorities. His family will leave no stone unturned until he is back with them, and I will certainly do absolutely everything I can to help them too.
Kerry McCarthy (Bristol East) (Lab)
As ever, it is a pleasure to serve under your chairmanship, Mr Turner.
I congratulate my hon. Friend the Member for Rhondda (Chris Bryant) on securing this debate. It is clear from the attendance here in Westminster Hall today, and from the correspondence that I am sure we have all had, that there is considerable concern across the House and among the wider public about the plight of the Arctic 30, as they have become known, and in particular about the six Britons who were arrested: Kieron Bryan, Philip Ball, Frank Hewetson, Anthony Perrett, Alexandra Harris and Iain Rogers.
As we have heard, 28 Greenpeace activists and two freelance journalists were detained last month after armed Russian security forces descended upon the Arctic Sunrise. They have been charged with piracy and are being held in prison in Murmansk, after the courts denied them bail.
I will come later to the issue of opposition to oil drilling in the Arctic, which is, after all, why Greenpeace activists were off the coast of Russia carrying out this action. The immediate priority must, of course, be the safety and welfare of the 30 detainees, who face at least two months’ pre-trial detention and possible prison sentences of up to 15 years. Other speakers have spoken of concern about the conditions in which they are held. Some are held in solitary confinement or are unable to converse with cell mates. They have limited contact with the outside world, they cannot receive telephone calls or have visits from their family, and their letters are confiscated when they have read them.
Alexandra Harris has said that she suffered serious stomach pains and asked both a Russian human rights official and a British diplomat about seeing a doctor, but she was not able to see one. Earlier today, my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) and I met Kieron Bryan’s family and heard some of their concerns about the fact that he is unable to converse with his cell mate, and that if his brother went to Murmansk to visit him he would be questioned at length and would not necessarily have the right to talk to Kieron when he arrived there. I hope very much that the Foreign Office officials in our embassy in Moscow can help to facilitate a trip and ensure that if he goes to Russia he will be allowed access to his brother. That is the least they could do.
I understand that Kieron has had three visits from our diplomats in Russia. Can the Minister assure us that consular staff have unimpeded access to the six British citizens? How satisfied is he about the conditions in which they are held and their access to medical assistance and legal counsel? Whenever our officials in Moscow and elsewhere in Russia want to see those six Britons they should be able to do so, and I am worried that that is not the case. Have the Government been able to secure visas, visitation rights and telephone contact for all the families?
We have heard about the somewhat dubious nature of the charges. Even President Putin has said that the six Britons are obviously not pirates, yet they are being charged with piracy. What representations have been made about the legal situation, the legal basis on which the Russian authorities boarded the Arctic Sunrise and the legality of the charges?
As has been said, the German Chancellor, Angela Merkel, has raised her concerns directly with President Putin, but when the Prime Minister—one of his Witney constituents is among those held in Murmansk—was asked about the matter at Prime Minister’s questions, he merely said:
“We need to follow this case extremely closely, and that is exactly what the Foreign Office is doing…we are daily seeking updates from the Russian Government”.—[Official Report, 16 October 2013; Vol. 568, c. 736.]
That implies that the Prime Minister is not personally involved although one of his constituents is among the detainees. Will the Minister tell us to what extent the Prime Minister is involved, both as Prime Minister and as a constituency MP? The implication of
“daily seeking updates from the Russian Government”
is that not a lot of lobbying is going on. Surely, instead of just waiting to hear what is going on, we should exert pressure and do all we can behind the scenes to ensure that the case for releasing the six Britons and the other activists is made as swiftly as possible.
Oil drilling in the Arctic is deeply contentious and it is right that we discuss not just the plight of the people held in jail in Murmansk but why the Greenpeace activists felt compelled to take the personal risk of protesting at the Prirazlomnaya oil rig in the harsh Arctic climate. The Arctic is warming twice as fast as anywhere else on the planet. Last September, the extent of the ice cap was at a record low and the Environmental Audit Committee advised in its excellent report that we need to re-examine the risk of a summer collapse. It also warned that a number of tipping points are approaching “with potentially disastrous consequences”. The tragic irony is that melting of the ice caps provides greater opportunities for oil and gas exploration, which will then further accelerate climate change.
The Environmental Audit Committee argued that the Arctic is one of the least well understood places on earth and highly sensitive to environmental damage, and that any response to an oil spill would be ineffectual. It called for a moratorium on drilling in the Arctic. As the shadow Minister for the Arctic, I was happy to support that during the debate in February on the Committee’s report. There was common agreement that such issues are not just for the Arctic states and members of the Arctic Council, on which the UK has observer status. In that debate, the Minister of State, Foreign and Commonwealth Office, the right hon. Member for East Devon (Mr Swire), assured us that the UK is
“leading the fight on tackling the underlying cause of the threats facing the Arctic.”
He also said that the possibility of an oil spillage in the Arctic
“is absolutely abhorrent and has terrifying consequences for the environment”.—[Official Report, 7 February 2013; Vol. 558, c. 159WH, 161WH.]
That suggests that the Government would be sympathetic towards the Arctic 30 protest.
What discussions have the Government had with their Russian counterparts about the implications for both the Arctic specifically and the wider environment of Gazprom proceeding with its plans to drill there? During the debate in February, the Minister of State, the right hon. Member for East Devon, assured us that
“It is wrong to say that the UK should not, and does not show leadership on issues affecting the Arctic.”— [Official Report, 7 February 2013; Vol. 558, c. 159WH.]
However, I suggest that the extent of the UK’s leadership is in doubt. Indeed, in July the Environmental Audit Committee concluded that the Government
“failed to grasp the urgency of action needed”
and
“failed to offer a coherent argument for its view that future Arctic oil and gas exploration is compatible with efforts to contain global warming to 2°C.”
The UK accounts for the largest contingent on board the Arctic Sunrise, so does the Minister agree that now is the time for leadership from the Government? What conversations has the Foreign Office had with representatives from the 17 nations represented on the ship? Canada, Brazil, Denmark, Argentina, Australia, Italy, Sweden, the USA, the Netherlands, France, Turkey, New Zealand, Switzerland, Ukraine, Finland and Poland all had citizens detained. Have the Government had conversations with representatives of those Governments, and have they sought to raise the arrests and the reasons for the protest with the Arctic Council?
I understand that today the Russian Foreign Ministry has said it will not accept the international arbitration process in relation to the Netherlands’ application to the UN Tribunal for the Law of the Sea in an attempt to secure the return of the Arctic Sunrise and the release of the activists. What support are the Government giving to the Netherlands’ bid to deal with the matter under the auspices of the UN tribunal?
Last week, the Foreign Office published a policy framework on the Arctic, and the Government have pledged to
“work towards an Arctic that is safe and secure; well-governed in conjunction with indigenous peoples and”
in line with international law and where
“policies…are developed on the basis of sound science”
with
“full regard to the environment.”—[Official Report, House of Lords, 17 October 2013; Vol. 748, c. 77.]
The compatibility of that statement with the Government’s support for Arctic drilling is a matter for another debate, but will the Minister elaborate on the Government’s vision for “well governed”, how he sees international law being enforced, and how they plan to work with other states to achieve a “safe and secure” Arctic? Is that something they plan to discuss with Gazprom and other companies such as Shell or British-based insurers?
I want to give the Minister plenty of time to respond, particularly as I have asked many questions. There are real concerns about the human rights situation in Russia and the deterioration of freedom of expression, which the hon. Member for Cheltenham (Martin Horwood) raised. This is not the time or place to go into the details of that. However, I will check my diary to see if I can make the 4 o’clock meeting with the Russian ambassador. It is important that we go along and express our concerns on those fronts.
The Minister for Europe (Mr David Lidington)
I congratulate the hon. Member for Rhondda (Chris Bryant) on securing this debate. The attendance this morning and the passion with which right hon. and hon. Members on both sides of the Chamber have spoken indicate clearly to anyone studying our proceedings, in this country or Russia, that there are extremely strong feelings in Parliament and among the wider British public about what has happened offshore and in Murmansk.
In the 11 or 12 minutes remaining, I will focus on the British nationals who have been detained. That is not to dismiss the importance of wider issues of Arctic policy that the hon. Members for Bristol East (Kerry McCarthy), and for Brighton, Pavilion (Caroline Lucas), raised. The Government published a new policy framework document on the Arctic last week, and there may be opportunities for a wider debate on those matters in the House.
The arrest of the six British nationals who were on board the Greenpeace vessel Arctic Sunrise was, and remains, of great concern to the British Government. We hope that there will be a resolution to the incident that is acceptable to all parties. The priorities that govern our approach at the moment are, first, to try to do everything we can to ensure the proper welfare of the British citizens and the two New Zealanders detained—the New Zealand Government have asked us to take responsibility for providing consular support—and, secondly, to find an outcome to the affair that is acceptable to all parties concerned.
We learned of the arrest of those aboard the Greenpeace vessel on 19 September, and on the same day we decided to deploy a consular team to Murmansk before the vessel got into port. We contacted the Russian authorities to secure access rights, and on 24 September, consular officials were able to meet the British nationals when they arrived in Murmansk to check their welfare and collect messages to pass back to their families.
Murmansk is some 1,000 miles from Moscow, and we do not have a permanent British consulate there, but because of the seriousness of the incident and the number of people involved, each week we have dispatched a team of officials to Murmansk from our missions in Moscow and St Petersburg. Our consular officials attended the preliminary court hearings for all British nationals between 26 and 29 September. As the House knows, all 30 detainees were remanded for up to two months and transferred to pre-trial detention facilities while the authorities investigated further. Both before and after the hearings, our consular officials were allowed to talk to the British citizens and take messages from them to pass to concerned relatives in the United Kingdom.
Our officials carried out further consular visits to all six British detainees on 3 and 4 October. We were able to check on their welfare and address any concerns; this included helping to ensure that one British national who had earlier collapsed in court received appropriate support. We have since continued to visit the British nationals regularly, and our officials were present during the appeal hearings that concluded this week. As the House knows, the court dismissed all the appeals and upheld detention. Due to our lobbying efforts, at present all the British nationals are being held in the same detention facility, and have had regular access to Greenpeace lawyers.
Briefly, on the points raised by the hon. Member for Rhondda, our understanding is that all the detainees have access to lawyers, who were provided by Greenpeace in the first instance. We have also provided lists of local lawyers who we understand are able to do business in English—clearly, the FCO cannot vouch for the quality of any particular legal representative. We take up with the Russian authorities any concerns about prison conditions and access to appropriate medical treatment, as well as other concerns that detainees may have. Our latest information is that some of the detainees are sharing cells and others are in a cell on their own. We have raised any concerns expressed to us by the detainees with the prison authorities. The detainees are telling us at the moment that the conditions are what they term “broadly acceptable.” I am not saying that the conditions are comfortable in the remotest, but the detainees themselves describe the conditions as “broadly acceptable.”
Our priority is to ensure that we continue to provide consular assistance to the British nationals in Murmansk and to maintain contact with their families here in the UK. I have made it clear to my officials that when it comes to prison conditions and access to visits of any kind, I want to ensure that we hold the Russians to the letter of what they offer under their own prison rules, law and constitution.
On 2 October, the Russian investigative authority charged all 30 detainees with acts of piracy. Bearing in mind the clearly stated view of President Putin, many hon. Members will have been surprised that piracy charges were brought. The UN definition of piracy in the convention on the law of the sea does not appear to uphold the charges. The charges, however, are being brought under a particular provision of the Russian criminal code. I agree with those who have said during this debate that the key issue is the proportionality of the charges. We are in regular touch with Greenpeace lawyers on that issue, but the legal picture is complicated by the Russians arguing that the action comes under their domestic law.
As some hon. Members have commented, the Dutch have taken the ship’s detention to international arbitration. That is a legal matter for the Dutch as flag nation, as my hon. and learned Friend the Member for Torridge and West Devon (Mr Cox) said, but we remain in close contact with the Dutch authorities on that aspect of the case.
Mr Lidington
I will, but I would be grateful if my hon. and learned Friend was brief.
Mr Lidington
With respect to my hon. and learned Friend, I am not here to comment on the Russian legal case. I am certainly not saying that we agree with the case, but the Russian argument is that the Russian domestic criminal code applies to the rig, and that the small boats from the main vessel that approached close to the rig were in breach of that criminal code. That is the Russian argument, and it may be something to take up in more detail with the Russian ambassador when hon. Members meet him.
It is not only in Murmansk that we have taken action. My right hon. Friend the Foreign Secretary raised the issue with the Foreign Minister Sergei Lavrov in New York on 25 September, and he followed that with a letter to him on 6 October. Senior FCO officials raised the case with the Russian ambassador to the United Kingdom on 26 September. Our ambassador in Moscow raised the case with deputy Foreign Minister Ryabkov on 2 October and met deputy Foreign Minister Titov yesterday to discuss the case further. We will maintain that senior-level engagement. We continue to use working-level contacts with the Russian Government, and to explore other options to raise the issue with senior Russian interlocutors.
Mr Bradshaw
Is the Minister saying that the Prime Minister has not picked up the phone to President Putin, as Chancellor Merkel has? That is outrageous.
Mr Lidington
We continue to keep under review at what level and with what sort of approach it is right to make approaches to the Russian Government. Our priority is to try to get the best possible outcome for the British nationals who have been detained. The Prime Minister is taking the very close interest that the House would expect, both as Head of Government and as a constituency Member of Parliament. As the Foreign Office Minister dealing with the case, I can testify that the Prime Minister’s involvement and interest are continuous and intense. He has also been in personal touch with other European Heads of Government—in particular, he has been in touch with Prime Minister Rutte of the Netherlands—and he will continue to be so.
Chris Bryant
It would be a good idea if the Prime Minister were to get in touch directly with Putin. Specifically, the Prime Minister should be saying that using piracy charges undermines the law of piracy across the rest of the world. That is why those charges are like using a sledgehammer to crack a nut.
Mr Lidington
The hon. Gentleman makes his point with the courtesy with which he has addressed the subject throughout the debate. We have been in touch with the Governments whose citizens are being detained, and we have taken a lead at local level in Russia on co-ordinating the efforts of other nations with detained nationals.
I will look further into the question that the right hon. Member for Exeter (Mr Bradshaw) raised about his letter, because I am concerned to hear him say that he has been waiting for more than a month. We will get back to him as quickly as possible.
We have not forgotten the families here in the United Kingdom and what they are obviously going through. On 10 October, I met parliamentarians representing the detained nationals and representatives from the constituency offices of MPs. My officials met the families themselves on 16 October, and I hope to agree a date next month when I can meet the families and hon. Members representing them, so that I can hear directly from the families any concerns that they have, and so that I can talk to them about the work being done on the case by the FCO and the British Government generally. One issue raised by the families is the chance to talk to their relatives by telephone.
I am conscious that time is running out, so I propose to address the issues that I have been unable to address today in writing to the hon. Member for Rhondda, and I will place a copy of that letter in the Library of the House so that it may be circulated to the families concerned.
Policing (Bassetlaw)
(10 years, 6 months ago)
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John Mann (Bassetlaw) (Lab)
It gives me pleasure, or a level of pleasure, to introduce this debate on policing in Bassetlaw. However, that pleasure is tempered by what I have to say about the crisis in policing that is beginning to unveil itself in Bassetlaw. Other parts of the country are suffering a similar crisis, and they will continue to suffer it in the future.
A few years ago, I spent time with the police. I went around on the beat at night, at weekends and in the daytime, and I sampled the work of the local police. One sergeant told me, “The way we police in Nottinghamshire is that we know the criminals.” That approach raises two questions. First, if we know the criminals, why are they at large? Secondly, and more seriously, if “we know the criminals” has been the culture in the Nottinghamshire police over the years, what about the crimes that were not just undetected but unreported, because they were not known to be crimes at the time?
The classic, very real examples are historic sex and child abuse, along with domestic violence. Those problems were not recognised as existing, but in the aftermath of the publicity about Savile and others, case after case was raised in my constituency surgeries. I heard an extraordinary number of historic allegations. It is not for me to judge whether they are true, but, on the balance of probabilities, if a lot of people come forward with entirely unconnected allegations, confident that something will happen, some, if not all, of those allegations must be true. If a constituent comes to me with such allegations or other serious allegations, I take the approach, as I am sure other Members do, that we should take a rational approach and ensure that our constituent’s voice is heard.
If the police claim to know the criminals, there is a problem in the culture. I have challenged the approach of the Nottinghamshire police directly on many issues, including in the House, but that culture did begin to be seriously turned around. However, in turning around culture, working practices, attitudes and approaches, there is a huge imperative to ensure that specialism is built up. Yet, in Nottinghamshire, and specifically in my constituency, the wrong kind of cuts are taking place. This debate is not the place to discuss Government economic policy, so I will not go into that, save to say that I have suggested more than 30 alternative cuts that could be made in different areas, but not in policing, because the cuts to policing are the wrong kind of cuts.
In the past three years, the 999 service has been in crisis. However, those wishing to make cuts in Bassetlaw forget the nature of the people of Bassetlaw. We are not averse to standing up and defending our 999 services. When the fire service proposed closing Retford fire station at nights, there was a huge public campaign in 2011. That resulted in not only the reversal of the decision, but a decision to build a brand-new fire station and the shifting of fire training to Retford. We stood up for our public service.
When the ambulance service decided to close our ambulance stations, we did not stand by and have some intellectual argument; the people of Bassetlaw put in more than 90% of the submissions to the consultation, as we did with the fire service proposals, and the decision was reversed. When the hospital tried to close accident and emergency services, our response was, “No, that will not happen.” Last week, the Secretary of State for Health cited Bassetlaw hospital, with its new, seven-day A and E working, as the model for the rest of the country. Yet, in the past three years, the A and E has been under direct threat of overnight closure and a reduction in emergency services.
The same is true of the proposals for the police: we will not accept the prioritisation of the police being reduced to such a level that we lose a critical service. Let me give two precise reasons why. First—I cannot go into much detail, but I will on another occasion, if I am given the opportunity—disaster management planning is in chaos. Mine is one of the areas most at risk, with motorways, the east coast main line, airports and power stations. Disaster management is no longer properly planned. Should there be a major disaster in my area, there will be problems with ambulances and fire engines, given what we have seen already, and so it is with the police. The police cannot respond to a major disaster if they are not working at the time, and there are many times of the week when whole swathes of Bassetlaw are denuded of police.
The second problem—we have not seen many of these closures yet, but there will be more—is the closing of custody suites and police cells. At some stage, there will doubtless be an attempt to close the courts too. What does that mean? Let me give the bare statistics, because they are astonishing. Every local police officer tells me that the police do not make many arrests, because there is nowhere to put the person who has been arrested. If officers make an arrest, they have to take that person miles to Mansfield, which takes police officers off the job, leaving no police officers in Bassetlaw.
Miraculously, public order offences have collapsed in Bassetlaw—they are going off the scale. Clearly, peace and harmony have broken out overnight on the streets of Bassetlaw! No, they have not. The police simply cannot arrest people, because they have nowhere to put the brawlers, the drunks and the fighters on a Friday and a Saturday night; they have to take them to Mansfield and Nottingham.
Shoplifting, however, is booming, and the figures are going up. Why? Because there are no police on the streets deterring the petty, casual repeat offenders from stealing from shops, but people in the shops still have the integrity to report shoplifting. Frankly, people are not bothering to report shed break-ins and such things, because they never get the police to come. Someone attempted to break into my office last week and I am still waiting for the police to attend. What they say in my area is, “If that happens to the local MP”—and I expect no special privilege—“what on earth will they do for the rest of us?”
Since 2010, Nottinghamshire has lost 314 police full-time equivalents—gone. That is on top of the back office people who have gone; and my area takes the brunt of it. The police must concentrate on Nottingham, where there have been a record number, relative to population, of murders in the past decade. Of course, they need a strong and permanent presence there and I would not deny them that. It is a higher police priority than Bassetlaw, which is right, fair and proper; but we become the poor cousins, so that there are times when there are no police, or when the few who are there are so stretched that they cannot do the job.
I and the police can name the streets in my constituency where they have lost control, and the criminals who run those streets because policing has reached such a low level. Those people are not being arrested for the minor offences that it would be easy to arrest them for, which would nip in the bud their attempts to bully and intimidate the community.
I also see what is happening alongside that, with the specialist police. For example, there is a wholesale failure to investigate historic sex abuse cases properly. There are plenty of examples, and it would be unfair and improper to list them, with the possibility of revealing identities; but that is the other side of the coin, and it affects my constituency dramatically.
Keith Vaz (Leicester East) (Lab)
My hon. Friend makes a strong and passionate case on behalf of his constituents. Does he believe that the establishment of the National Crime Agency will be helpful to Bassetlaw police, or will it take resources away? Alternatively, is the jury still out, because we do not know how things will work in the new landscape?
John Mann
In my view the jury is out. One of the cases that I have told the police about, on six occasions, has never been prosecuted; but I am certain from the detailed evidence that I have given on six separate occasions, with different witnesses and different forms of evidence, that we have plenty of cases that fall between the national and the local. The problem is that if there are not resources and expertise in the local police force they do not produce the evidence for what, in fact—in the case that I have cited six times to them—is, for my area, very major crime with all sorts of criminal add-ons. Again, I cannot give details, because that would probably identify the person or persons involved. That shows, however, the problem that exists, and the dilemma for the Nottinghamshire police force.
There are have been £35 million of cuts so far, and 314 full-time equivalent front-line officers have been lost. If it is then announced that there must be further cuts in the next three years, which is what is being said, at least 100 more will have to go. We have some great police community support officers, but if all that is done is to replace the police officers with PCSOs, that is not the way to provide a police service in my area.
My demand to the Minister is something that is beyond his powers—to change Government priorities, and to fight for the police service with the Treasury and others. What I have been describing are the wrong kind of cuts. As to the things that he does have the power to do, it is his duty as a Minister of the Crown to stop the situation that means my constituency gets a second-class service compared with other places. It is not an acceptable solution to bring in G4S, with some mobile canteen operation to sling people into, and to privatise the making of arrests in Bassetlaw—as if that is appropriate compared with a well funded professional police resource, with police cells in the police station. On the streets they say—they will be singing it in Bassetlaw—“G4S, you’re having a laugh.”
That is not good enough for my constituents. It is not good enough to close our police cells. It is not good enough that the number of public order offences is going down because local police say they cannot arrest people because cells are not available; and that shoplifting rates are rocketing because there are not police on the streets and Nottinghamshire has been denuded of them. Of course, as I have always argued, Nottinghamshire has, relatively speaking, never had a proper police funding formula; but within that situation the good people of Bassetlaw are being let down. We are not prepared to accept that.
I am looking for vision and courage from the Minister. If he can achieve the reopening of the police cells that were arbitrarily closed and keep them going, he will get a warm and friendly welcome from the people of Bassetlaw, just as the hospital and fire chiefs who reversed their plans now do. Do the right thing, and set the right priorities, and we will be happy. At the moment, the Minister and the Government have a major fight on their hands.
The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
I congratulate the hon. Member for Bassetlaw (John Mann) on securing this debate on policing in his constituency. He is always a firm and passionate advocate for his constituents, as he has shown today, even if I may disagree in several respects with the analysis that he has given.
The crime rate remains too high, but the reality is that it is falling, and has fallen. Recorded crime has dropped yet again, by more than 10%, under the present Government, and the recent crime survey reports that crime has more than halved since its peak in 1995. In Bassetlaw recorded crime fell by 4% in the 12 months from June 2012 to June 2013 and it is down 6% in the Nottinghamshire force area over the same period.
That is important, positive news, and shows that police are rising to the challenge of making savings while cutting crime and providing a better service to the public. England and Wales are safer than they have been for decades. However, I agree that the crime rate remains too high. That is why we will continue with measures that keep pace with the changing nature of crime and improve our ability to combat emerging issues. That is why the landscape that we have established is important—to make it possible to respond to those emerging challenges.
On 7 October the National Crime Agency was launched, to deal with the most serious national-level crimes. Just as importantly, it is intended to be a centre of expertise on dealing with specialist crimes such as cybercrime and organised crime, and to use its skills and capabilities to work with the regional organised crime units to provide linkage between the national, the regional and the local. The Government have put that landscape in place to ensure that the right skills are in the right places, and that some of the issues that have been confronted before—the gaps where regional or local criminality meets national capability—are more effectively joined up.
I pay tribute to the work of the Nottinghamshire police, of Chief Constable Chris Eyre and of Paddy Tipping, the police and crime commissioner. Many of the points made by the hon. Member for Bassetlaw this morning can be directed at the PCC and the local police, because we have put in place that direct reform of the landscape, central to which has been giving people a direct say in how their communities are policed. The election of police and crime commissioners represented the most significant democratic reform to policing in decades, giving the public a voice at the highest level, holding forces to account and helping to restore trust.
Importantly, PCCs are best placed to understand the needs of victims in their communities and to work with the police to cut crime. Indeed, the commissioner in Nottinghamshire is working closely with the chief constable to find innovative solutions to deliver better and financially sustainable policing to the people of Nottinghamshire. They are looking at ways to increase police visibility and the number of police constables and PCSOs involved in neighbourhood policing, which can only be good news for the people of Nottinghamshire and of Bassetlaw.
James Brokenshire
As with all parts of the public sector, the police must play their part in helping to tackle the deficit. I understand that this debate is not about economic policy, but the Government are having to take measures to deal with the financial problems that were left by the previous Government.
Unquestionably, the police will still have the resources to do their important work. What matters is how officers are deployed, not necessarily how many there are. All forces need to look at how front-line services are delivered, so that the quality of service provided is maintained and improved. Her Majesty’s inspectorate of constabulary has made it clear that there is no simple link between officer numbers and crime levels, between numbers and the visibility of police in the community, or between numbers and the quality of service provided. Budgets are falling, but forces are prioritising front-line delivery and crime continues to fall.
The police and crime commissioner is looking at ways to increase police visibility in Nottinghamshire; his work has seen an increase in the number of PCSOs, and there are also ambitious plans to do with the recruitment of special constables, which I strongly endorse. Those are examples of how PCCs can work together with their chief constable to deliver real impacts in the communities that they serve. Moreover, PCCs will become stronger as people become more used to their existence and see their effect locally.
The hon. Gentleman made some sweeping comments on the ability to cope with major disasters. There is, however, detailed planning, led by the Cabinet Office, with exercises and other steps escalating from the local and regional all the way up to Cobra and the national-level response that can be triggered. There is just such a detailed approach—the risks are analysed and assessment is made of whether the right capabilities are in the right place to deal with them. Indeed, joint working is taking place between the police, the ambulance service and the fire service to ensure a strong response to serious terrorist incidents, to take one specific example.
Furthermore, it is right for the Government to continue to reflect on the important role that PCCs have in ensuring good, solid emergency response in their local areas. The hon. Gentleman is no doubt aware of the recommendations contained in the Knight review, which looked at whether police and crime commissioners should have a more direct role in the context of the fire service. The Government are considering that—we are examining the recommendation from the Knight report, to see whether it would be appropriate, and we will be providing a formal response in due course.
It is also important to stress that we have scrapped targets for the police and done away with the myriad types of meaningless and counterproductive box-ticking that the police were subject to for far too long. The Government announced a reducing bureaucracy package in 2012, seeking to save up to 4.5 million officer hours nationally—the equivalent of more than 2,100 additional officers on the beat. A programme of work is being developed, with the aim of further freeing up police time in a context of diminishing resources, so it is about how best to use technology and process modernisation.
We are working towards transformational change, which will be recognised on the front line. The approach of scrapping targets, therefore, is important, as is the use of technology and the work to do with better co-ordination and commissioning of services between forces. Rather than wrapping the police up in bureaucracy, we are driving increased transparency and accountability. Our reforms are making the police more responsive to the public. Thus, the police.uk website—of which the hon. Gentleman is no doubt aware—has had more than 600 million hits since its launch in January 2011. On average, the site receives more than 300,000 hits per day. It strengthens accountability, as well as the information available to the public, so that they can hold policing in their area to account.
Another of our reforms is the College of Policing, which is about driving up standards and developing policing as a profession among officers of all ranks. That is central to a new focus on evidence-based policing—distilling and identifying what works in fighting crime and spreading it throughout all 43 forces. The College of Policing will devise a code of ethics to be issued to every officer, which will equip the police with the leadership skills at every level to ensure that it is followed. Good leadership, like anything else, is born of hard work and professionalism. Leadership can and must be taught, in particular when the ramifications of police decision making can mean the difference between life and death.
James Brokenshire
As a Minister, it would be wrong of me to comment on that, because that is precisely the role of the police and crime commissioner. In conjunction with the chief constable, the PCC determines such local priorities and what works well in the context of policing in Nottinghamshire, and that is the right place for a response to be provided on the appropriate way to ensure that front-line policing operates effectively within the hon. Gentleman’s constituency and in Nottinghamshire more generally.
The hon. Gentleman also commented on getting resources in the right place, and Chief Constable Chris Eyre has led in establishing and supporting the east midlands special operations unit, which represents an important way to draw together the strands of expertise and to share and collaborate with other forces so that the specialist capabilities to support neighbourhood and front-line policing are in the right place. The PCC also continues to explore further options for collaboration, including with the other emergency services, to create even more opportunities to provide a better and more cost-effective service.
Neighbourhood policing can and will be preserved through the innovation and ingenuity of forces in changing how they work to deliver the same or better outcomes with less. We will all see and reap the benefits of a well-managed, self-confident, open, transparent and scrupulously honest police force. I welcome the hon. Gentleman’s debate this morning for holding policing to account and for raising the issues that he identified as important to his constituents. It is right and proper that we have had such a debate.
Co-operatives in Education
(10 years, 6 months ago)
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Steve Baker (Wycombe) (Con)
Thank you for your kind words, Mr Hollobone. It is a pleasure to serve again under your chairmanship in this important debate. I thank the Minister for being here. I know that liberating his time has caused his Department some inconvenience, and I am extremely grateful to him for being here willingly when his Department is so busy.
Steve Baker
As the hon. Gentleman says, it is the Minister’s duty, but he has been most generous in the way he has approached the debate.
My reason for calling this debate is to support the Cressex school in my constituency, the young people it serves and the wider community from which they are drawn. It is undoubtedly the most disadvantaged community in my constituency. I want to cover the circumstances and successes of Cressex school, and the wider experience of co-operatives in education, and to ask the Government for action. I hope the Minister will forgive me if I say that although they have said some interesting and good things, they need to follow them through.
In a message of support, Dame Pauline Green, president of the International Co-operative Alliance, has set the definitive context for this debate. She said:
“Co-operatives have been involved in education from the very beginning, and there is an inextricable link between education and co-operative development. That is why we continued to place great emphasis on education when the co-operative principles were last revised in 1995, and why new guidance notes strongly reaffirm the importance of co-operative education.”
When I visited the Rochdale Pioneers museum, I was pleased to discover two things that explained a lot to me: autonomy, which I will return to, and the fact that one of the principles of co-operation has always been to educate, train and inform.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
As something of an historian, I must tell the hon. Gentleman that the co-operative movement started long before the Rochdale co-operatives in Yorkshire and in Huddersfield in my constituency.
Steve Baker
I am grateful to the hon. Gentleman for the information and the way he provided it. When watching some of the films about the pioneers, I noted that although they were not the first, they were perhaps the earliest successful ones.
Steve Baker
They had very good PR. A couple of things struck me. First, they did not trade on credit, so people did not get into debt to consume, which is an interesting lesson for present times. Secondly, they made a surplus. They did not like to call it a profit, but they realised that they had to make a surplus over time, and doing so enabled them to succeed. A lot of interesting language was involved in that conversation, and I am grateful to the hon. Gentleman for his information.
In April 2010, Cressex community school became part of the Cressex Co-operative Learning Trust. I remember my first visit to the school after the election because I encountered a defiant spirit of autonomy and independence. There was a whisper of forced academisation because of its results, but there was fierce determination to remain a co-operative because of the way that the co-operative structure allows all parties to be engaged across the community.
The proper context of the results includes the selective system. As a Conservative in Buckinghamshire, I am expected to support selective education, but a whole tier of students at Cressex has been taken off to another school, which naturally depresses the overall results. There is no denying that Buckinghamshire county council is one of the most affluent in the south-east, but a high proportion of Cressex students and their families experience levels of disadvantage equal to those in northern cities. Nearly half of Cressex students live on estates that are among the most economically disadvantaged in England, with areas of entrenched poverty and low skills. The proportion of families with experience of higher education is below the national average and the proportion of children living in overcrowded households exceeds the national average. More than half of students have been eligible for free school meals in the past six years and are entitled to the pupil premium.
Although Wycombe has an ethnic minority population of around one fifth, 80% of the school’s pupils are from minorities and the school now receives increasing numbers of students from eastern Europe. Crucially, about three quarters of the students do not speak English as their first language. That is the context for Cressex school, and that is the challenge to which it must rise.
Sarah Newton (Truro and Falmouth) (Con)
I congratulate my hon. Friend on securing this debate. Deprivation is found not only in urban areas. There is considerable deprivation in remote rural communities such as Cornwall. In areas such as the Lizard peninsula in Cornwall, we have often found co-operative trusts to be a good way of providing education to deprived remote communities where there are lots of small primary schools that face challenges in delivering high-quality education. Does my hon. Friend agree that the model can work for a broad range of communities throughout the UK?
Steve Baker
My hon. Friend is absolutely right. I will come to the success of the model elsewhere, but I am aware that it has been a rip-roaring success in Cornwall. I originally come from Cornwall, which reminds me that we tend to focus on our own constituencies. There is rural poverty in Wycombe, but the rural part of my constituency is generally the better-off part. We still live in times of considerable inequality throughout the country and in our constituencies, and that focuses the mind.
Andrew Gwynne (Denton and Reddish) (Lab)
Reddish Vale technology college in my constituency was the first co-operative trust school to be established under the Education and Inspections Act 2006. The Reddish part of my constituency is a deprived community and it has used the excellence at that school to engage with the wider community and to spread those co-operative values not just within the school community, but to the wider Reddish community. Is that not an example of co-operation in action?
Steve Baker
Absolutely. I think we are in danger of fierce agreement in the Chamber.
Cressex school is keen to support business and enterprise, and that demonstrates its wider commitment. In particular, it hosts the Wycombe business expo. The principles of co-operation and engagement allow a school to reach out more broadly.
I turn to the challenge to which Cressex must rise. Last year, 36.4% of pupils across England who were known to be entitled to free school meals gained five or more GCSEs at grade A* to C, including English and maths, but Cressex did better. At the time, 39.1% of students were receiving free school meals. Over the last six years, the number achieving those GCSEs has risen to 48%. Of course, the school aims higher than 48%, but it represents a dramatic improvement in results and they are the best in the history of the school.
The head teacher, David Hood, recently provided details. Of the students who left year 11 in 2013, 46.5% gained five or more GCSE passes including English and maths, a rise from 27% in the previous year, and 64.8% gained five or more GCSEs in any subject. The overall results represent a considerable increase over the previous year.
Mr Sheerman
To someone who has chaired a Select Committee for many years, that sounds really good, but when such figures are read out I sometimes insist that we ask how many pupils left with no qualifications or barely one GCSE, as 25% of kids at our schools do. It is important to get the balance right when looking at the figures.
Steve Baker
I am grateful to the hon. Gentleman. He is of course right that we sometimes forget to look at such points. It is crucial that no one should be left behind and the ethos of the school, as he will appreciate, is that the co-operators involved are determined to lift everyone up. I appreciate his point and I apologise that I do not have that information to hand.
Mr Hood made the point that performance in all core subjects rose markedly. In particular, Cressex has risen well above the national average in maths for the first time. He said that that is an exceptional achievement and he is right. Cressex is improving itself, which goes back to the point about defiant spirit. Cressex does not wish to have a model imposed on it; it is improving itself.
I have been on a journey, discovering something of the traditions of the left and the co-operative movement, and to me, that was the essential thing to understand. It is about self-help—a difficult term for a Conservative to use—mutuality, self-responsibility, direct democratic control, equality and solidarity. Such terms are perhaps vexed for Conservatives, but separated from state power, they actually just represent values and ideals that any fully formed human being should support. That, to me, explains the defiant spirit of autonomy that I found. Those values are being used by the Cressex school to engage with the community around it, and they are values transforming the lives and prospects of individuals whom we cannot allow to fall into neglect. Those people must be supported with a degree of delicacy if they are to flourish, which, in the end, is what we want for all the people in our constituencies, irrespective of their voting habits.
I turn to what it means to be a co-operative, and how Cressex has applied some of those principles. In the co-operative statement on identity, we find a definition that I think anyone could support and welcome:
“A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.”
That crucial element of voluntarism surprised me. I hope that Members on the left will forgive me if I say that I have always misunderstood socialism to mean compulsion, and I was amazed to discover that on the left, there is this great tradition of voluntarism. When I look down through the values—
“ethical values of honesty, openness, social responsibility and caring for others”—
who could possibly disagree with them?
I turn to the principles: “Voluntary and Open Membership”—of course, a school should certainly comply with that. When I look at “Democratic Member Control”, I start thinking that the Government need to act, because it seems to me that across the whole suite of policy areas in education, the Government need to ensure that when parents, staff and others in the community are engaged in a school, they have the opportunity for their democratic control to be meaningful. The next principle is “Member Economic Participation”—although I paid £1 to become a member of Cressex co-operative, it does not seem to me, unless an Opposition Member would like to correct me, that anyone is immediately leaping to suggest that there should be economic participation in schools. However, “Autonomy and Independence”—what a marvellous idea, which seems to go directly to the heart of the Government’s policies. We then have “Education, Training and Information”, “Co-operation among Co-operatives”, and “Concern for Community”.
Those are some of the values that the Cressex co-operative trust has implemented, and which I think could allow other schools to follow suit, particularly where they are smaller and need to combine in order to be viable. The partnership with Cressex school has included Buckinghamshire New university, Dr Challoner’s grammar school, Wycombe Abbey school, the local authority and the Co-operative college.
After years of campaigning, the school moved into a new building, which certainly lifted spirits, and I have to say that we are grateful to the previous Government and all those involved locally for giving us those new premises. The community’s values were naturally aligned to those of the co-operative movement, and particularly the notion of being values-driven and faith-neutral, which, in my constituency, is highly relevant. The community engages actively, and as I mentioned in response to an intervention, is a specialist business and enterprise school.
I am particularly pleased that Johnson & Johnson’s Dr Cesar Rodriguez Valdajos, a Spaniard, has engaged with the school and become a governor. At a time when we are challenging how capitalism is working and where it has gone wrong, it is particularly interesting that someone from Johnson & Johnson has engaged with the school. When capitalism previously failed, that company showed, through its credo, how private enterprise could step up. What I find encouraging is that the notion of enterprise being people-centred is actually highly inclusive. Wycombe Abbey school is one of the finest independent girls’ schools in the country, and its engagement with Cressex has been not only crucial but mutual, because it is in those sixth-form pupils’ interests that they engage with the school and help with literacy and numeracy.
Crucially, the pupils share the school’s co-operative vision and values. As a former head boy told the governors recently:
“High achievement for all is certainly our shared responsibility. I can say for a fact that Cressex is a rising star. It’s climbing to the top and I am proud to be head boy.”
I have to say that Cressex has travelled a long way very quickly, since when I first visited the school as a candidate and saw a collection of prefab buildings and some people who were rather long in the face. There were some poor results, but Cressex is transforming itself very rapidly.
I am aware of the time, and that other Members would like to speak, so I shall abridge some of my other remarks on other co-operatives, but I particularly want to point to the experience of Mondragon university from the Library debate pack. Mondragon university is a Spanish institution owned by its staff, and an article, in the course of describing it, interviews a British academic, saying that
“many of the principles on which cooperatives are based are not necessarily that radical in higher education. Cook”—
Dan Cook—
“points out that the University of Cambridge ‘is already configured as a sort of workers’ co-op’ because every academic is part of the governing body…he adds: ‘I don’t think anyone has told them yet.’”
Therefore, it may well be that co-operatives are more advanced in the United Kingdom at all levels than has generally been believed.
Co-operative schools are now the third largest network of schools in the country, following Church of England and Roman Catholic schools. More than a quarter of a million young people attend a co-op school and more than £4 billion of assets have been transferred from local education authorities to co-operative trusts. In September 2011, co-op trusts ran 63 secondary schools. There are now 94 and the figure is predicted to be 102 by December. In the same period, co-op primary schools increased from 76 to a surprising 389, which is predicted to be 444 by December. Overall, co-operative schools have grown from 188 in September 2011 to a predicted 714 in December this year. That is an astonishing vote in support of autonomy and self-governance in relationship with others. To me, it is an enormous endorsement of liberty and civil society, and I believe that the Government should row in behind it.
The first co-op free school will be in Swanage, which demonstrates that co-ops are not incompatible with the Government’s free school programme. However, I look ahead to 2014, and I must say to the Government that at this time there are real imperatives for action, because about half of secondary schools and almost 90% of primaries still need to determine their long-term structure. There is every likelihood that they could choose to be co-operatives. If co-operation is a necessary requirement to enable small schools to flourish, the Government certainly need to act fast to put in place whatever is necessary to allow co-operation to thrive.
The Government ought not to fear co-operatives. I know that the co-operative movement began with figures such as Robert Owen, who was a utopian socialist, but the values and principles, and the place reached by the co-operative movement today, are not to be feared by people on the Government side of the House of Commons. Co-operatives are, above all, people-centred businesses, and it strikes me that co-operatives can resolve a number of conflicts of interest and ideology.
On markets versus collectivism, we have democratic, collective ownership of property, and yet co-operatives participate—and always have participated—in markets. I observe that one of the crucial reasons why state socialism can never work is that it eliminates markets in capital goods. Co-operation does not do that.
On employer versus worker, the Co-operative party’s website recognises that producer interest can effectively be dealt with through co-operation. I would suggest that some problems that the Government are currently experiencing could be ameliorated if more schools were directly controlled by parents, staff and the community, so that not only were industrial relations easier from the outset, but if difficulties did arise, they would be easier to resolve, because it would be clear who was negotiating with whom, and to what end.
It seems to me that today, sometimes co-operative schools are succeeding despite obstacles. That may well be in the spirit of the co-operative movement, but it seems that the Government ought to do more to ensure a crisp, simple and effective legal framework. I do not wish to pre-empt the remarks of the hon. Member for Sheffield, Heeley (Meg Munn), but I would like to ask the Government to look closely at the ten-minute rule Bill that she brought forward. She proposed a measure that would enable schools to register as industrial and provident societies and enable nursery schools to be established as school trusts. That seems an extremely good idea, not only to complete that scale of education from nursery through to—it turns out—university level, but to ensure that things are viable and sustainable. I expect the Government to go down that road because of what has been said, and I would like to provide a little detail on what has gone before.
My right hon. Friend the Secretary of State for Education said:
“First, let me pay tribute to the work of the co-operative movement. Since it started in Rochdale, many of us have been inspired by its achievements. I believe that the academies programme and particularly the free schools programme provide an opportunity for the ideals of the original co-operative movement to be embedded in our schools. The idea that all work together for the good of their community and for the fulfilment of higher ideals is one that Government Members wholeheartedly applaud.”—[Official Report, 16 January 2012; Vol. 538, c. 468.]
Cabinet Office Ministers have been outspoken in support of co-operatives. My right hon. Friend the Minister for the Cabinet Office and Paymaster General said of mutuals and the Government’s policies:
“The right to provide will challenge traditional public service structures and unleash the pent up ideas and innovation that has been stifled by bureaucracy.”
That chimes directly with the Co-operative party’s message that co-operative models offer the best model for the reform of the public services or public service delivery.
In November 2007, my right hon. Friend the Prime Minister spoke of co-operatives in Manchester and developed arguments leading to the tantalising prospect of
“a new generation of co-operative schools in Britain—funded by the taxpayer but owned by parents and the local community.”
In January 2012, he also held out the prospect of a new co-operatives Bill. Without wishing to give succour to Opposition Members, I say gently to the Government that the Prime Minister ought now to find time to bring forward that Bill, encompassing the proposals of the hon. Member for Sheffield, Heeley, if we are to avoid the allegation of mere posturing. I want us to get behind co-operative schools, and more broadly co-operatives in education, in the general interest, to transcend some of the partisan debate that has gone to and fro, because I know that, in Wycombe, co-operative principles are transforming Cressex school. Those principles are proving increasingly popular across the country.
Today, a revolution in autonomy for schools is taking place, but it seems to me that it is taking place despite obstacles, so I ask the Government please to work more closely with the co-operative movement in establishing new free schools and helping academies to become co-op trusts. Will they bring forward the co-operatives Bill and will they look closely at the hon. Lady’s proposals? I am sure that Ministers will be welcome at Cressex school if they wish to see how it works in practice.
The Government ought just to do the right thing. Principles of co-operation entrench liberty and civil society. They produce self-esteem, confidence and resilience. They are evidently popular with the public. The Government should now move heaven and earth to liberate the co-operative spirit in education.
Mr Philip Hollobone (in the Chair)
From the sparkling Steve Baker to the fragrant Meg Munn.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
Thank you, I think, Mr Hollobone. It is a delight to take part in the debate. Of course, I must start by congratulating the hon. Member for Wycombe (Steve Baker) not just on having secured the debate and established such good cross-party support for it, but on his speech. He spoke very eloquently of the reasons why some of us in this room have been co-operators for many a decade, not just many a year. I warmly welcome him to the cause of co-operation. It is everything he says it is and should be spread more widely, not least in our schools. I have always been proud to be a Labour Member of Parliament, but I am more proud to be a Labour and Co-operative Member of Parliament. Some of my colleagues also bear that title. Other Labour Members do not stand as Labour and Co-operative, but are members of the Co-operative party. It is a set of principles and a vision that are widely shared.
I shall not repeat what the values are, as the hon. Gentleman has done justice to that. I shall simply say that I wholeheartedly agree with him that the values of co-operation could not be more appropriate for schools. This is about having all parts of the community—not just the teachers and parents, but people from the community and pupils—involved in the schools. It is about helping them to understand what it means to take on responsibility for themselves, helping them to understand that they have a role in the school and embedding the school firmly where it is—in its local community.
We heard the excellent example from the hon. Gentleman of the school in his constituency that has done so much to persuade him of the values of co-operation, but that is happening up and down our country. We are talking about values such as business and enterprise, and values that are enabling young people to think about going into the world of work, but in a different way—not a competitive way that is unhelpful, but one that focuses on the benefits of co-operation.
Real strength and depth is emerging in parts of the country, including the south-west, my own beloved Yorkshire and Humberside and the north-west, which I am sure we will hear from. Of course, Cornwall, which I am sure the hon. Member for Truro and Falmouth (Sarah Newton) will speak about in due course, is looking to become the first county in the country in which the majority of schools work together mutually to pool resources in co-operative ways. This revolution in structures and governance is gaining momentum, and we should all be supporting it. That is why I want the Government to take more seriously the proposals that I made back in April this year in my ten-minute rule Bill.
I support choice in education, but there are barriers that should be removed to allow more schools to follow the successful model of co-operation. As the hon. Member for Wycombe said, the legal forms currently available are industrial and provident societies and co-operative and community benefit societies. There is no specific provision in relevant Acts for co-operative schools, so although they have done well so far and they exist, they are having to work around the existing structures and legislation. They have been helped enormously in that by the relevant parts of the co-operative movement, Co-operatives UK and the Schools Co-operative Society, but that is not enough. We want this to go further.
I am an optimist: I believe that one clause could deal with the issue. Of course, it would be a powerful clause. I have a draft of the Bill that I put forward, and would be delighted to pass it to the Minister later. It suggests that we allow Education Acts to be amended to include the legal forms that I just mentioned and ensure a level playing field with other school structures. Of course, I know that any legislation has to stand up to proper scrutiny. I would warmly welcome the Government looking at what I have proposed and coming to a view on whether it is the right way forward. I would like to press the Minister on taking that forward.
Mr Sheerman
As greater ammunition, is my hon. Friend aware that a change in the tax structure is coming out of the Treasury imminently and will be very helpful to co-operatives, community interest companies and social enterprise generally? Harnessed to that tax change, a change in regulation might be quite easy and simple to do.
Meg Munn
I thank my hon. Friend. That is a very good point and will, I hope, add strength to what we would like to see. When I put forward my Bill in April, the hon. Member for West Suffolk (Matthew Hancock), who is now the Minister for Skills and Enterprise, was on the ministerial Bench and was kind enough to speak to me afterwards and to indicate that he thought this was something the Government should be looking at. Unfortunately, my letter to him either got lost in his office or disappeared somewhere when there was a transfer of responsibilities, but I should be grateful if the Under-Secretary of State for Education, the hon. Member for Crewe and Nantwich (Mr Timpson), would take back with him a commitment to come back to me and to the hon. Member for Wycombe on the Government’s view on this issue.
I believe that legislation as simple as the measure that I have described—a simple amendment allowing the Education Acts to be amended to recognise these forms of school—could enable us to move forward relatively quickly and, as the hon. Gentleman said, would firmly put action behind the warm words that we have heard about co-operatives from the Prime Minister and other members of the Government.
However, I have not limited myself to just one clause in my ten-minute rule Bill, because that would mean that part of the change that is needed would be missed out. My second clause focuses on nursery schools, to which the hon. Member for Wycombe referred. Labour Members have to hold their hands up; the Education and Inspections Act 2006, passed by the previous Government, did not allow nursery schools to become school trusts, and so prevented them from becoming co-operatives. We need legislation to change that. It is important because co-operatives, by their nature, are based in a geographical area that serves a group of people, otherwise known as the local community. The idea that a co-operative trust could be a school from nursery through to secondary level, and perhaps through to further education—those are other potential areas for the development of co-operatives that I will not deal with today—is powerful. Allowing it to happen is relatively simple, and we should do it.
Kevin Brennan
My hon. Friend makes a strong point. About two years ago, I visited Upper Shirley high school in Southampton, which is part of a co-operative trust with an all-through arrangement that includes a local FE college. There is also a co-operative trust in Tiverton in Devon. If the Government were able to look at the issues with nursery schools, that could be a powerful force to promote such all-through co-operative development trusts.
Meg Munn
I entirely agree and am grateful for the example. The important aspect is that parents obviously first become involved with schools as institutions at nursery. They are often more likely to be present in the building, because they bring their children there, and possibly take part in parents’ groups, so if they were introduced to the values of co-operation at that point, they would see it as a normal way to get involved in their child’s education and schooling throughout the age groups.
One of the most powerful aspects of Sure Start, which the previous Government introduced, was that, in a non-threatening, non-stigmatising way, parents from all parts of society were made to feel welcome entering the building where their children were being supported in their education. I know from my constituency and my experience working in social services that many young parents who have had not good experiences in school do not like to cross the threshold, because doing so brings back bad memories. It is enormously powerful to involve, from that early point, the values of co-operation and support, and to say not only, “Come in, because your child is here,” but “Come in and have your say. We are all equal; all have equal membership.” From the first, it creates a different relationship between the parents and the people providing the education and support for children. The Minister should look closely at that second change.
Mr Sheerman
My hon. Friend and I are both Co-operative Members, and she knows that I have set up a few co-operatives myself. Does she agree that being a co-operative is not a panacea? On this sad day of the demise of the Co-operative bank as an independent co-operative, it would be wrong of us, as Co-operative Members, not to put on the record that sometimes people get into co-operatives for reasons of venality, and that through incompetence things can go wrong. Full involvement in a co-operative is needed to stop that happening. Today is a sad day for many co-operators.
Meg Munn
My hon. Friend has put his concerns on the record and he is absolutely right. There is strength in the co-operative movement; it is not about co-operative schools managing on their own and being separate academies or free schools, but about their being part of a movement that, as the hon. Member for Wycombe indicated, naturally gives support—there is support from Co-operatives UK and co-operative schools organisations —and sets up mutuality with other schools that can be helpful and supportive.
Steve Baker
I want to respond to what the hon. Member for Huddersfield (Mr Sheerman) said about the Co-operative bank—I am glad that is on the record. I would like to offer two points of comfort. First, given the way in which the credit markets were manipulated by central banks over the past few years—Members know that is one of my favourite subjects—no bank was likely to escape, so I am not surprised that the Co-operative bank was one that did not. Secondly, although we may be small in number, our spirit for co-operation is that of tigers. Co-operation’s moment has come. It will be victorious, and in future the co-operative movement will surge away.
Andrew Gwynne
I am grateful to my hon. Friend for giving way. She touches on the power of co-operation outside the schools community. Co-operative schools do not act in isolation. I commend to her the work of Reddish Vale technology college, which has strong co-operative links with its local nurseries and primary schools. It feeds them, as equal members, into the co-operative principles and ideals that apply at the college, and works incredibly closely with them to drive up excellence in standards across all schools, not only those in the co-operative trust.
Jesse Norman (Hereford and South Herefordshire) (Con)
I apologise for missing the beginning of the debate; it was due to a Delegated Legislation Committee. Hon. Members know that I am a keen supporter of co-operatives. I planned to support the hon. Lady’s remarks with examples of co-operatives in Herefordshire, but as I had to sit through all the discussion and hearings about the Co-operative bank on the Treasury Committee, I cannot resist pointing out that there were specific issues with the bank that were not merely to do with the model it adopted, and a series of catastrophic misjudgments by successive managements. The issues with the bank should not be taken as an indictment of the co-operative model or the co-operative movement.
Meg Munn
I thank the hon. Gentleman for that intervention and welcome him to the debate. I welcome his support for co-operatives. I am moved to call him my fellow co-operator, which is the term those of us in the co-operative movement use. Welcome, fellow co-operator.
I am coming to a conclusion, Mr Hollobone. There is wide support for the changes, which the Government now need to action. The NASUWT, a trade union active in many schools, is supportive of the model. It creates, as has been discussed, a basis on which people come together as equal parts to run schools, try to achieve excellence and work in their communities. Everybody should see co-operation as fundamental to education. It should be part of the process, and is what will help all our children and young people to do their best. I thank all the co-operative movement: the Co-operative party, which produced an excellent briefing, and drafted the clauses for, and supported me in introducing, the ten-minute rule Bill; and the Schools Co-operative Society, which has been enormously important in ensuring that the schools that have taken on the model are supported, and that growth is achievable in a way that does not threaten the model.
Gavin Shuker (Luton South) (Lab/Co-op)
It is a pleasure to speak in this important debate. I congratulate the hon. Member for Wycombe (Steve Baker) on securing the debate and on his eloquence in furthering the arguments I support. Despite co-operatives and the co-operative movement having a strong association and history with the Labour party, not least through the 32 Labour and Co-operative MPs in this Parliament, of which I am one, it is praiseworthy that the ideas that power them are not owned by a political party. They are represented by a political party, but they are owned by all of us. It is incumbent on us, in each of our political traditions, to uncover those self-sustaining values for the time we are in now, and the hon. Gentleman has been a powerful advocate today.
I want to start by talking about some of the shifts that we have seen in education in recent years and conclude by talking about some of the ways in which the co-operative movement may be able to contribute to and shape that story, rather than merely being subject to it. We have already discussed several excellent co-operative schools across the country. Cressex, to which the hon. Member for Wycombe (Steve Baker) referred, is a fine and outstanding example of a co-operative school.
In Luton South we do not have a co-operative school, but we are keen to have one. Co-operative schools, and co-operative education in general, empower local people to take responsibility for the education that they best understand. Co-operative education avoids many of the traps inherent in the fragmentation of education that has occurred in recent years, particularly when it comes to the dispersal of power, which is abused in the education system more often than we tend to admit.
In the past 10 or 20 years, under successive Governments, control and responsibility for education has shifted from local authorities to individual schools. As many Opposition Members have argued in recent years, however, I believe that under the coalition Government we have seen an expression not of localism but of centralism. In other words, the Secretary of State has been given direct responsibility over individual schools. In Luton, we have real issues around community cohesion, we are a good size to allow democratic control to be exercised across all our schools, and schools working in partnership are a key part of where we hope to be in future and the kind of community that we seek to shape. Many of the Government’s choices and decisions have, therefore, been unfortunate for our attempts to pursue our ends.
Whatever we feel about the shift, under either of the previous two Governments, towards more individual schools taking responsibility, taking ownership and taking governance, the change has happened. We see that in the statistics on the adoption of the academy and free school models. Co-operative education provides a powerful mechanism for harnessing some of the positives of that shift, such as the exercise of leadership and good teaching quality, which we understand to be most crucial for raising standards in schools and the provision of education.
Mr Sheerman
May I suggest to my hon. Friend that if he wants to be slightly subversive, the best example I have seen of a co-operative is one in which the pupils are empowered to help run the school through Learning to Lead? That combination is liberating and amazing, and it provides a revolutionary structure of governance. It now exists in more than 100 schools.
Gavin Shuker
My hon. Friend does not anticipate my remarks, as is often said when someone makes a good point that we would like to adopt. He does, however, pre-empt my central argument about the distribution of power in the education system. How do we reap the benefits of allowing people to get on and lead in their own context, while sharing the responsibilities and ensuring that abuses of power do not take place, without sidestepping effective governance? That is where I believe that co-operative schools can be truly helpful.
In my own experience of mixed provision of education, public interest units can sometimes run schools autonomously, which can be good for local authorities. In Luton, two of our high schools became academies under the previous Government’s academies programme, which was designed for schools that were struggling to keep up with others. A further education provider came in and ran those schools. There has been, and continues to be, a strand of scepticism and concern in the community when schools are taken over, which we must acknowledge, but the education provider had a trusted relationship with the local authority and was able to step in and improve results.
A free school has opened in the centre of my constituency. It seemed bizarre to me that the only way in which we could get the basic primary school allocation of places was to bar the local authority from running the school, but we had to find a way to get that allocation, because there is a massive push on places. We found an arm’s-length council body to run the free school. It was a good example of how to use the existing system and to link it back into the community, and I believe that it is a really positive development.
In the mix of those different models, I believe that the co-operative model presents one of the best ways in which to harness elements of the co-operative tradition, even now, when the Labour party does not control but seeks to shape education policy in opposition. We should encourage local authorities and others to adopt the co-operative model to ensure that we reap the benefits of choice and autonomy in the education system. I note the comment of Peter Laurence, who is development director in the Brigshaw Federation, one of the first co-operative trusts in Leeds:
“We could all see the direction of travel of Government policy and the rapidly changing role of the LA. To us self-help is a natural solution.”
Is that not exactly the point? From the rich traditions of the co-operative movement, we find mechanisms that are appropriate to us today.
Jesse Norman
I am reluctant to introduce a note of discord into a debate that has been remarkably harmonious and valuable, but does the hon. Gentleman recognise that there is a potential conflict between the co-operative nature of a school and the demands of the unions, which may sometimes find themselves in opposition, as they have been in other areas of public service?
Gavin Shuker
Brilliant as it is. I was going to say that if we look at the record of co-operative schools’ relationships with other partners, such as trade unions, we see that they perform incredibly well. I point to the Schools Co-operative Society, which has been able to establish nationwide a package of terms and conditions with the network of schools to ensure that that kind of strife does not occur.
Andrew Gwynne
I have seen several schools in my constituency convert either to trusts or to academies, and I know some of the fraught discussions that take place with staff at the schools during the conversions. May I highlight to my hon. Friend the fact that by converting first to a co-operative trust and subsequently to a co-operative academy, Reddish Vale technology college helped to ease some of the concerns of the staff because they had buy-in to the co-operative principle?
Gavin Shuker
That makes the point entirely that the best way to harness leadership is not usually to parachute it in from outside—sometimes that has to be done if a school has failed the community consistently over a period of time, which usually comes down to school leadership—but to empower members of the community who, day in and day out, serve young people and families to get on and lead. That goes right to the heart of how the co-operative governance model works. Those are not simply structures; they are values. It is not about looking to see how we could design an over-engineered, so-called democratic arrangement. It is about saying that certain values of the co-operative movement, in particular the fair distribution of power, can be applied in education extremely well.
In the past few weeks questions, at least, have been raised, or investigations carried out, across the country, about the alleged misuse of power in a number of schools—and a DFE investigation is under way into several schools in my constituency that converted to academies and continued rapidly to adopt other schools. In my region the transition into academies or other types of governance, and the results of that, has been questioned. That has happened in Basildon, Thurrock and Luton; but a previous example in Derby at least raised the question of the fair exercise of power.
The advantage of the co-operative movement is not just the structure, but the ethos. However, the structure is a key factor: the idea that all of us with an interest in education locally can shape it locally and question the authority that is exercised, instead of constantly looking up and across to centralised power in Whitehall and Westminster, or to the immediate leadership of the school. In that way, the co-operative model can present a powerful, positive argument for allowing schools and communities to exercise their own power.
I was proud to grow up in a comprehensive system, with local democratic accountability through voting for and selecting councillors, portfolio holders and leaders, because the link with the community was not broken. Co-operative schools go right to the heart of that issue, and they present a different and powerful model for achieving such democratic control, in which the people who care most passionately about education—the parents, children, teachers, school leaders and governors—come together to share responsibility and power.
I want to ask the Minister about the level of capacity building that DFE is engaged in, particularly in local authorities, to encourage them to examine the co-operative model and consider it as an alternative route, alongside the many others that the Department provides. I understand from speaking to people in local authorities that there is still some misunderstanding about what a co-operative is. That should not surprise us, because we sometimes encounter the same degree of misunderstanding in Parliament, and such things may be difficult for people to get their head around. However, if we are to have genuine choice and to move away from one-size-fits-all comprehensive education, which I have talked about already, it is important to put all the options on the table, and not just some of them. If the Government were to do that they would have more supporters from across the House for their reform of education.
Kevin Brennan (Cardiff West) (Lab)
I have been called to speak earlier than I anticipated, and it is great to have this opportunity. I congratulate the hon. Member for Wycombe (Steve Baker) on securing the debate and on his speech, which came across as genuine and sincere. He captured the values of the co-operative movement very well, and I welcomed his remarks, on which hon. Members can build in debate. He was very polite and thanked the Minister for turning up. I said that it was his duty, and I know that he would agree, but the hon. Gentleman should never apologise for making Ministers come to the House of Commons. When I was a Minister, that was a priority, and I know that the Minister who is present today thinks so too. The debate is important, and the hon. Member for Wycombe kicked it off extremely well.
I congratulate, too, someone whom I was going to call my old friend—but she might take that the wrong way, so I will call her my long-standing friend: that is my hon. Friend the Member for Sheffield, Heeley (Meg Munn). We cut our teeth together, when we first came into Parliament, on the Adoption and Children Act 2002 and she has a long—not that long, but longish—history of involvement in the co-operative movement. She spoke with passion, sincerity and knowledge on that subject.
I also want to congratulate my hon. Friend the Member for Luton South (Gavin Shuker), who made the important point about the co-operative movement and co-operative schools that although structures are important it is the values underpinning the movement that make it a suitable model for the education system.
Alison Seabeck (Plymouth, Moor View) (Lab)
I apologise for missing part of the proceedings. Lipson community college in Plymouth is a co-operative academy. It was set up in 2009 and is outstanding. It encourages pupils to follow up and become co-operators. In fact, they are very involved in the young co-operative movement, and the Ruptors street dance co-op is an example of that. Does my hon. Friend agree that there are many offshoots from the education of young people in co-operative schools? I do not think that anyone puts a value on that, and we need a better understanding of what co-op schools can offer. I think many colleagues in this place do not really understand that.
Kevin Brennan
I strongly agree. I should like to talk more later about knowledge and understanding of co-operative schools. I should say at the outset that the Labour Front Bench is strongly supportive of the movement and of the rapid development and spread of co-operative schools that has happened in recent years, since legislation was amended to make it a little easier to form them. There is still work to be done, as my hon. Friend the Member for Sheffield, Heeley pointed out. There is a good quotation on the Schools Co-operative Society website:
“Essentially they are just what schools should be and what people thought they really were about already!”
That is a good way to put it. There is nothing about co-operative schools that would not be familiar to people, as far as values or ideas of what a good school should be are concerned. Yet, as we know, there is sometimes misunderstanding about co-operatives and co-operative schools.
Values in education are one reason why Labour supports the movement. It is time that we had more of a debate about those. There is much debate about structures and the idea that opening a free school or an academy will solve everyone’s problems. However, we all know that what really counts is good teaching, great leadership and the values underpinning a school and education system. It is interesting that the process that has been going on, which is a quiet revolution in the system—and people talked about a revolution in the debate—has received hardly any media coverage. Yes, the Government have a flagship policy for free schools, but there are far more co-operative schools than free schools. No one would think that from reading the papers and following the news. Certainly, a lot more Department for Education staff are devoted to free schools than to co-operatives. There are more than 100, are there not? I did not realise there were that many left in the Department. It is an awful lot of staff, but very little in the way of resources is devoted to helping co-operative schools to develop.
I welcome the remarks of the Secretary of State about the co-operative movement and co-operative schools in general, which the hon. Member for Wycombe quoted. No one would ever accuse him of not talking a good game, but in relation to actual delivery and policy, it would be good to see more resources within the Department being devoted to co-operative schools, since the Secretary of State has made it so clear that he is powerfully in favour of their development. That is important because it provides a bulwark against what some people fear—that the current upheaval in the structure of the schools system could lead to the idea that the Secretary of State has entertained from time to time: a system of taxpayer-funded, profit-making schools. That idea was tried in Sweden under its free school system, but it has not worked out too well.
The Swedish system was a model. The Secretary of State was infatuated with Swedish models, but he does not talk about them much any more. Sweden had profit-making free schools, but what happened was perhaps predictable. There are two ways to make a profit: increase revenue or cut costs. Of course, there are limited opportunities for taxpayer-funded schools to increase revenue. In Sweden, once hedge funds and the like invested in the schools, it led to the cutting of costs.
Since there is no requirement for qualified teachers, an obvious way to cut costs is to employ people who do not have to be paid qualified teacher rates. As a result, some of the schools went bust, with consequences for the education of the children, and also with the consequence ultimately that the legislation was overturned and a requirement was reintroduced for qualified teachers in the schools. There were no real educational or co-operative values underpinning the schools, which left them as the prey of hedge fund managers and the like. [Interruption.] If there are co-operative schools—would the hon. Member for Ipswich (Ben Gummer) like to intervene?
Kevin Brennan
The hon. Gentleman does not want to intervene. He is chuntering away from a sedentary position, but he is not prepared to share his views with us.
If there is a co-operative schools system underpinned by the values described so eloquently by the hon. Member for Wycombe at the start of the debate, we overcome such problems. The schools can have autonomy. They can be run by local people according to a set of values that do not put profit before the education of local children and the views of local people.
I have had the opportunity to visit co-operative schools around the country. I mentioned earlier the visits that I made to Upper Shirley high school in Southampton and the Tiverton co-operative learning development trust in Devon. I talked to the teachers and the leaders in those co-operative schools and I put the hard questions to them. It is not enough simply to have a structure and values in place. It has to be absolutely the case that everybody involved in the school is focused on raising standards and making sure that every child matters and that every child is given an opportunity to fulfil their potential.
I have no doubt that from time to time some co-operative schools will go off the rails, as do other schools, but it is surely right that a model based on co-operative principles, whereby everybody knows the values that they should be working to, stands a better chance of success than one that is based on ultimately making a profit. That is a road down which I understand the Secretary of State is interested in travelling.
Steve Baker
I do not want to break up the spirit of consensus that we have engendered, but I am not against profit. I simply want to draw the hon. Gentleman’s attention back to the third principle of co-operatives, which I am sure he knows better than I do: member economic participation. We know—we discussed it earlier—that one reason why the Rochdale pioneers succeeded is because they made a surplus, and surpluses are paid as dividends to members. I am a little cautious when talking about co-operatives. I would not want the debate to be shut down too far, because there is an honourable tradition, clearly articulated by the co-operative movement, of member economic participation. I would not want to exclude it from the future of co-operative schools.
Kevin Brennan
I welcome the hon. Gentleman’s remarks and the opportunity to make it clear that I am not against profit, either. We live in a mixed economy and the market is a wonderful thing. In the case of education, occasionally it can be a good servant, but it is a very, very poor master. Opposition Members will never support profit-making schools. Yes, there is a role for a profit-making business in education—publishers, for instance—but Opposition Members will not support profit making in taxpayer-funded schools.
Alison Seabeck
The Plymouth Learning Trust is made up of 16 schools that have come together in a not-for-profit company. They are doing a lot of joint working, which is very effective, so pure profit does not always have to be the driver.
Kevin Brennan
Indeed. My hon. Friend makes that point very well and she is absolutely right to do so.
Some people in teachers’ associations and trade unions have been suspicious of co-operative schools, but the partnership that is developing between teachers’ associations and trade unions and some co-operative schools around the country is to be welcomed. The agreement between the NASUWT and the co-operative schools movement is a welcome development. I hope other teachers’ associations and unions will also engage in a positive manner with the co-operative schools movement. As was pointed out earlier in the debate, teachers should very much welcome such a development and the opportunity to be a part of running their schools and playing their role within co-operative schools and co-operative trusts.
On the ten-minute rule Bill introduced by my hon. Friend the Member for Sheffield, Heeley earlier this year, I hope the Minister will encourage the Department—it might have been another Department—to answer the letter that she sent earlier in the year. If it has been lost, perhaps she can provide a further copy. The Minister’s hon. Friends welcomed her remarks on the Bill, and I would welcome an opportunity for us to co-operate in a parliamentary way on the provisions of her Bill, albeit after they have been appropriately stress-tested by the civil service and Parliament and properly scrutinised before we do so. May I make that offer to him?
If the Government feel that that is something they would like to do to make it possible for my hon. Friend’s Bill, or the spirit of her Bill, to become law, the Minister would have our co-operation. I completely understand that he cannot commit to that today in a debate of this kind, but perhaps he will take away that offer and consider my hon. Friend’s remarks. Will he ensure that it is possible for co-operative structures to be incorporated into the legislation, as in clause 1 of her Bill, and also make it possible for nurseries to become co-operatives? Will it be possible for them to form part of a co-operative trust that, as she rightly pointed out, might form an all-through education service for an area, which is an ambition of many co-operative trusts around the country? I hope he will be able to say something positive and take that away and consider it, even if he cannot make a commitment now.
I welcome this debate and the way it was kicked off by the hon. Member for Wycombe. I welcome the Government’s professed support for co-operative schools, and I hope the Minister will talk about that. What counts is what works, and we can see that co-operative schools do work. They work because they can generate the kind of leadership and teaching that we want, where everybody understands the values under which they are working—the values of sharing and of working together in the interests of children and young people. Finally, I once again thank and congratulate the hon. Gentleman on this debate.
The Parliamentary Under-Secretary of State for Education (Mr Edward Timpson)
May I begin by congratulating my hon. Friend the Member for Wycombe (Steve Baker) on securing this important debate, and on his passionate contribution, demonstrating his commitment to raising educational standards in his constituency? As he knows, this Government want to be champions of diversity, of high standards and of closer working-together in the education system.
It is always hugely encouraging to hear examples of where standards are being raised. We are seeing improvement, including in the recent results in the Cressex community school in my hon. Friend’s constituency. Like him, I want to pay tribute to the head teacher—David Hood—the governors, the staff, pupils and the whole community, which has played its part in helping to drive up standards. They are to be commended for their efforts.
I assure hon. Members that the Government are wholeheartedly supportive of the role that school partnerships and co-operation play in achieving our shared goal of a high-performing and self-improving education system. As my hon. Friend said, we are in danger of fierce agreement. Politics is not always as black and white as people think it is. Shared values can surface, and this is one such occasion. There is an underlying cause to which we all want to contribute, which is ensuring that every child, whatever their start in life, gets the best possible chance to reach their full potential, as the hon. Member for Cardiff West (Kevin Brennan) said. The community has a huge role in making that happen.
We have had excellent contributions from the hon. Members for Sheffield, Heeley (Meg Munn), for Luton South (Gavin Shuker) and for Denton and Reddish (Andrew Gwynne), and from my hon. Friends the Members for Hereford and South Herefordshire (Jesse Norman) and for Truro and Falmouth (Sarah Newton). I welcome this opportunity to discuss on behalf of the Government the contribution that diversity partnerships and collaboration are making to improving standards in education, performance and teaching through the co-operative movement and other things in our education system.
The evidence is stark. It shows that schools working together leads to an increase in performance for all schools involved in that partnership, even—this should be noted—for high-performing schools that support weaker schools. As Dr Chris Tomlinson, the phenomenally successful executive principal of the Harris academy Greenwich, Harris academy Chafford Hundred and the primary attached to that in the Harris federation of schools, said:
“Working together improves our knowledge about how to get the best out of pupils and staff. It helps us to fine-tune and understand those occasionally small changes that make a real difference”.
As my hon. Friend the Member for Wycombe has set out, one of the interesting things about the example of Cressex community school is that it is a maintained school in partnership with a successful converter academy and an independent school, among other partners. That is exactly the sort of partnership that we are developing through our academies programme and in other education reforms.
We should, and do, cherish the values of co-operative trust schools, in particular the importance of shared responsibility for problems and for designing solutions, and the importance of those involved in a child’s learning having a stake in that learning. As we have heard, since the Education and Inspections Act 2006, which introduced trust school status—the hon. Member for Denton and Reddish reminded us that the first was in his constituency—we have seen a steady and increased pace of such schools being set up. Their number is up from 188 in September 2011, as we have heard, to more than 700 by the end of this year. That in itself demonstrates that the permissive nature of the establishment of such schools is doing nothing to prevent schools from starting to form trusts and relationships. Cornwall is perhaps the most acute example of where that is happening right across a county.
The co-operative trust model is one of many that can facilitate effective partnership working. In an increasingly diverse education system, many different models are emerging, which is increasing choice for parents, which we want to see more of, as well as increasing support for schools. We now have academy chains, where schools formally work together, often sharing governance and leadership while benefiting from the autonomy of academy status.
We also have sponsored academies, with more and more outstanding schools now formally sponsoring weaker schools so as to bring about improvement. Six such sponsored academies are co-operative trust academies. We also have federations, where maintained schools formally share governance and expertise. There is also the sharing of head teachers and senior leadership teams; teaching schools; national or local leaders of education; the independent and state schools partnership; and other formal partnerships, such as the Bradford partnership, a not-for-profit organisation consisting of schools from that city working together to improve outcomes for young people.
In that eclectic mix of different models, it will come as no surprise to hon. Members that the Government’s view is that academy status is effective in driving improvement and collaboration. That status is now enjoyed by close to 3,400 schools in England. We believe that teachers and head teachers, not politicians and bureaucrats, should control schools and have more power over how they are run in the best interests of students. With well over half of secondary schools now being academies, and primary schools joining the programme at an increasing rate, research has found that more than a quarter of academies have seen their relationship with other schools improve since they became academies.
The evidence is clear that the freedom that academies have has led to an increase in standards, and that the highest-performing institutions are helping to improve the weakest. As Mary Speakman, head teacher of Altrincham grammar school for girls, one of the lead schools in the Bright Futures educational trust, said:
“The pupils at AGGS get a really privileged education. They do well and our standards are high. We want to share that experience and develop other schools, so that every young person has those chances”.
I am pleased to see that, so far, 173 converter academies are sponsoring 192 academies, and a further 106 projects are approved to open. In the spirit of this debate, I am also pleased to note, as has been said, that the role of the co-operative movement as a sponsor of schools that need extra support is increasing, and to note the increasing number of co-operative schools choosing academy status and becoming co-operative academies. I do not think that the schools have to live in isolation from one another. They share many of the values that, as has been rightly pointed out, exist in the co-operative movement.
It is worth noting what David Wootton, chair of the Independent Academies Association, has said on the issue:
“The academy movement, and sponsored academies in particular, have a strong commitment to social justice and moral purpose. This means a dedication to the communities they serve and a deep desire to improve outcomes and ‘close the gap’ for students in some of the most challenged communities. Many academies have very strong community routes…We in the academy movement welcome the support of the Co-operative movement, who are now actively involved supporting academies, and believe there is room for a diversity of providers.”
Gavin Shuker
I thank the Minister for his warm words about co-operatives. Will he say a few words about the Department’s approach to making the benefits of co-operative governance known to schools that are looking to change their governance arrangements? Is there any literature that goes out? Does he have any officials working on the project? What discussions has he had with the co-operative movement on that?
Mr Timpson
I will talk about that in relation to some of the proposals regarding the ten-minute rule Bill and other measures to try to open that up to a wider aspect of the education system. As I have set out, there has been a huge increase in the number of co-operatives over the past two years alone, which shows that they are not being prevented from doing so.
On the matters raised by the hon. Member for Sheffield, Heeley, I am happy to take back the issue of the messages that the Department and other parts of Government are sending out about the benefit that the movement brings to communities around the country. Our having this debate, and my sending out a strong message of support on behalf of the Government, demonstrates our desire to see diversity in the education system that meets the needs of individual communities.
Andrew Gwynne
Is it not one of the benefits of co-operative education that there is no one-size-fits-all approach? Every co-operative school is different in its make-up and outlook, but the one thing that bridges all co-operative schools, whether they are academies, trusts or free schools, is the values that underpin the co-operative principle.
Mr Timpson
The hon. Gentleman is absolutely right. No one size fits all and, as we know from schools in our constituencies, there is no blueprint that will make every school successful. My hon. Friend the Member for Wycombe reminded us earlier that the first co-operative free school will open next year in Swanage, and the first co-operative alternative provision free school will open in Harlow in 2014. Those are two examples of how different types of model can be nurtured to meet the needs of particular areas.
Collaboration, which is a feature of the values we have been discussing, manifests itself in several different ways, one of which is the academies programme. Other formal partnership arrangements may work for different communities in relation to both academies and maintained schools, so long as they provide a framework for joint working, with clear lines of accountability, and preserve the intrinsic values of autonomy and liberty that my hon. Friend spoke about.
Steve Baker
May I correct an error that I made earlier? I should have paid tribute to Katy Simmons, the chair of the governors of Cressex community school, and Mervyn Wilson, the principal of the Co-operative College, who have helped me to understand that the co-operative movement is striving for autonomy and self-government. While I do not wish to argue about party, it seems to me that the Government are trying to drive people to make the most of their in-built, inherent talents and to exercise freedom and responsibility in relationships, which is all moving in the direction of co-operatives. I am grateful to the Minister for his approach to the subject, but I hope that he will go back to the Department and ask it to produce the Bills that will make that a reality.
Mr Timpson
I am grateful to my hon. Friend. At this juncture, I should perhaps talk about the ten-minute rule Bill introduced back in April by the hon. Member for Sheffield, Heeley. Some of its provisions related to the status of industrial provident societies and the existing legal barriers that she has identified, as well as to the role that nurseries may play in the co-operative movement.
As the hon. Lady will know, by virtue of having brought in the Bill, some elements of the 2006 Act preclude nurseries from inclusion in such co-operative trust arrangements. We are currently consulting on measures to make it easier for schools to extend their age range downwards—for example, from five to 11 for primary schools, to three to 11—so nursery classes in those schools would be able to adopt co-operative ideals. I anticipate that she will understand that some nurseries will therefore still exist outside the extended school system and that it is not possible for them to be trusts.
I will undertake, first, to ensure that the hon. Lady receives a full and proper reply from my Department and, I assume, the Department for Business, Innovation and Skills—the Minister for Skills and Enterprise, my hon. Friend the Member for West Suffolk (Matthew Hancock) is a Minister in both Departments—to her inquiry in relation to her Bill. Secondly, I will consider whether it would be of assistance to have a meeting with her and my hon. Friend the Member for Wycombe to discuss both how we measure the success of the co-operative movement as it has begun to grow over the past few years, and where it fits into the jigsaw of educational provision that is now available. I am happy to take that back and ensure that it is given full attention.
Meg Munn
I am grateful to the Minister for that offer, which saves my having to press him for exactly that. It would be most effective to have a meeting—I would certainly want it to be a cross-party one, with hon. Members from both sides of the House who have spoken in this debate—to see how we can take forward both the need for legislation and, as my hon. Friend the Member for Luton South (Gavin Shuker) has said, the need to publicise more widely to schools the benefits of co-operation, of which they may be unaware.
Mr Timpson
I am glad that we have managed to come to another co-operative consensus in this debate. Given the steep rise in the number of co-operative trusts in England, it is important to look seriously at their impact and where they fit into our attempts to establish the most effective education for all our children. As the hon. Lady rightly points out, much of that involves good joint working relationships that should provide incentives for schools to develop higher educational standards.
Doing so has several other advantages. The biggest contribution to school leadership development lies in providing the rich and varied opportunities that will lead to the innovation and responsibility that we want schools to show. Collaborative working can, therefore, provide a broader base for developing leaders, and a greater opportunity for leaders to learn from one another. As I have seen in my constituency, it gives such leaders a greater experience of what is going on not only in their schools, but in surrounding ones and at different levels or key stages.
Working more closely together increases the scope for shared learning and continuous professional development, and helps to improve the capacity of small schools—another important point made by my hon. Friend the Member for Wycombe—by creating a greater pool of resources and expertise that can be shared more flexibly between schools. School leaders tell us that they can recruit and retain the best staff by providing them with professional challenge and support in working with other schools.
One major advantage of shared arrangements has been the improvement in the governance of weaker schools. It is typical for governing bodies of sponsored chains to be supported in their monitoring role not only by training, but by receiving data that are collated and presented to main boards and local governors in a standard format. The format will normally report on progress against targets and previous performance, comparisons with national benchmarks and the performance of other academies in the chain.
Another advantage is that central costs can be shared across more schools, giving them greater purchasing power in partnership than they would have as stand-alone schools. They can also benefit from economies of scale and from the pooling of resources. The use of shared business management as a resource across schools has been shown to lead to improved efficiencies and the more effective use of resources across schools. Collaborative working also opens up new opportunities to adapt the primary and secondary curriculums to meet local needs, and it allows schools to put in place stronger academic transition procedures between different phases of school.
The hon. Member for Huddersfield (Mr Sheerman) raised the issue of the Treasury’s proposed tax changes. Obviously I need to look carefully at that to establish exactly whether they will play out as he suggested. On ensuring that we have a crisper, clearer legislative framework, that builds on the matters raised by the hon. Member for Sheffield, Heeley. Whatever we do in education, we must ensure that it raises standards and that it is sustainable, which is another reason it is important to look at the impact of co-operative trusts on our educational system.
We have managed to transcend a partisan debate, mainly because, as I said at the outset, we have many shared values that do not always have an opportunity to rise to the surface in political debate or in our efforts to make our wider political points as we think is most effective. We do not, however, have anything to fear from co-operatives. Whatever side of the political spectrum we are on, we should embrace the values they offer.
The debate has been an opportunity to celebrate the success and the growing involvement of the co-operative movement in our schools, and to acknowledge that at its core are values that we all hold dear, wherever we sit on the political spectrum—a commitment to social justice and moral purpose, a combined spirit of autonomy, a deep desire to help ensure that children and young people across our communities, but especially in the most challenging areas, get every opportunity to make the most of their education and, wrapping around those values, strong community roots that bind in a joint sense of responsibility and, perhaps most importantly, of caring for others. We all have some compassionate bones in our body, and such values have risen to the surface today, which is a testament to the fact that the co-operative movement does much to enrich our communities, as it does more and more within our schools.
I hope that I have given a forceful indication that this Government hugely value the co-operative movement’s work in our schools. We want to learn more about the effect that it is having, what it is achieving and how it can do more in the future. As my hon. Friend the Member for Wycombe said, many schools are still deciding and choosing, as are parents, what sort of schools they want their children to be in. This excellent and informative debate will have encouraged us all to continue to push for higher educational standards in whatever form, and I am grateful to my hon. Friend for bringing this subject to the House.
Mr Philip Hollobone (in the Chair)
I thank all those who co-operated so effectively in the debate.
Royal British Legion (Norwich)
(10 years, 6 months ago)
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Miss Chloe Smith (Norwich North) (Con)
I thank you, Mr Hollobone, for chairing this debate. This is an important topic, even though we have not yet been joined by too many other colleagues. I have had the pleasure of working with constituents in Norwich for the Royal British Legion since I was first elected. On Saturday, I will be doing what I have done for many years: joining Roy and Val Hill of the Sprowston Royal British Legion branch in their well-regimented but good-natured poppy appeal at the largest local branch of Tesco. I am sure that other hon. Members will have similar engagements in their constituency.
On Remembrance Sunday, I usually join hundreds of my constituents at Norwich city hall for wreath-laying and the “Last Post”, and then in Norwich cathedral. In the afternoon, I usually take part in a parade down Yarmouth road with the Thorpe St Andrew branch, led by the indefatigable Roy Robson and the town mayor. However, this year I unwisely chose the day before Remembrance Sunday on which to get married. I hope my constituents will forgive my absence this time.
In Norwich, the work of the legion is coming to the fore in an unfortunate way, which is poor timing, as this is the month before November. I want to use this debate to discuss the ways that we can best support this long-lived and courageous organisation. The Royal British Legion is of course the UK’s leading armed forces charity. It provides practical, emotional and financial support to all members of the British armed forces, past and present, and their families. Secondly, it actively campaigns to improve lives, and it safeguards the military covenant between the nation and its armed forces. By the bye, I am pleased that the Government have published that covenant, setting out the relationship between the nation, the state and the armed forces. It recognises that the whole nation has a moral obligation to members of the armed forces and to their families, and it establishes how they can expect to be treated. Community covenants are also being signed across the country, bringing military and civilian communities together.
Armed forces have long been based in Norfolk. RAF Marham, for example, has recently been the focus of an enormous community campaign, orchestrated by the Under-Secretary of State for Education, my hon. Friend the Member for South West Norfolk (Elizabeth Truss). The Norfolk covenant builds on those relationships and local support and rightly aims to provide a more consistent approach.
Mr Lee Scott (Ilford North) (Con)
I congratulate my hon. Friend on securing this debate. The Royal British Legion operates in Ilford North as well as Norwich North. Does she agree that the work it does for the people who have served our country so well, and who should always be remembered, is irreplaceable, and that we should cherish such a great organisation and help it in every way we can?
Miss Smith
I certainly do. I am confident that my hon. Friend, like me and many other Members, wants to see the Royal British Legion succeed in Ilford, Norwich and across the country. I will come on to that, as well as how we might mark the centenary of world war one next year. Perhaps my hon. Friend will tell us how his region will mark that event.
Let me return to the legion’s purposes. It also organises the poppy appeal. It runs one of the UK’s largest membership organisations, and it is recognised as the nation’s custodian of remembrance. In summary, its mission is to provide welfare, comradeship, representation and remembrance for the armed forces community. We all pay tribute to this impressive and durable organisation. We are talking about a crucial cause, and it is given voice and action by many members and volunteers who have shown the highest courage in their service to this country.
We all want the Royal British Legion to be a strong organisation. As I have mentioned, next year sees the beginning of the world war one centenary commemoration. Another important event is the Normandy Veterans Association’s 70 years commemoration, which is championed in my constituency by some most wonderful veterans who are passionate about seeing it done well. All that is important work that we want the legion to sustain for today’s and tomorrow’s service people and their friends.
It is clear, however, that the legion faces challenges. Its accounts suggest that it runs at a deficit, and it has embarked on a major programme of modernisation and change called the “pathway for growth”. Its aim is to make the legion more visible, more relevant and more accessible to those members of the armed forces community who may require help, advice and support at any stage of their lives. I suspect that this is where the rubber hits the road. The Jubilee hall, which serves the Norwich branch and is a fine community hall, faces closure. The head of clubs and trusts at the headquarters says:
“The primary duty of the trustees in this case is to ensure that the best value is obtained from the assets placed in their trust in order that they can provide the maximum support to the objects of their trust. It was accordingly decided that the better option was to seek to sell the property for the best value which can be obtained from the open market.”
The local branch heard that news in August, and I sombrely noted that in one of their first phone calls afterwards, they contacted me as the local Member of Parliament. After two months, several public meetings, a local newspaper campaign by the Norwich Evening News, a generous underwriting offer from a local businessman, and some initial commercial negotiations, I am raising the story in Parliament, and I also have a petition from 617 local residents, which I shall present next week to the director-general of the Royal British Legion. I will explain to him the love that we in Norwich have for our Jubilee hall. First, it is the most visible base of the legion in the area. It is the size of a sports hall and it is emblazoned with the wording “the Royal British Legion” in brass letters a foot high. It is terrible to lose such an emblem.
Secondly, it is more terrible to lose a supportive and friendly establishment for many legion members who depend on it. It provides a warm drop-in for those who want it. Every table is neatly decorated with tinsel or flowers, depending on the season, and it provides a fuller space when that is wanted as well. Thirdly, it is the kind of community hall that already has 500 bookings for next year. I would be interested to know of any community venue that can rival that. In fact, now I know where all the zumba classes in this country are taking place; they are taking place in the Jubilee hall in Norwich, if not in Ilford.
That wide spectrum of activities taking place in the hall is something of which we can be proud. The acting chairman and his team of volunteers at the Norwich city Royal British Legion branch are doing their utmost to achieve a sustainable business after some instability in recent years.
Last Thursday, a “save Jubilee hall” public meeting passed a unanimous vote to keep the hall open, supporting the setting up of a charitable organisation to take on the building. Members and non-members alike of all generations expressed great anxiety about the danger of closure, and wanted to bring back the building to its former glory. Local man Martin Wyatt has offered to underwrite the finances required for such work, and deserves thanks for his generosity. He and the legion committee are working hard to make the transformation a reality. They have secured free legal advice through a local law firm, so they plan to lodge charitable status as soon as possible.
I am pleased—I am sure that the Minister will join me in my pleasure—that the local Labour councillors see the value in the Localism Act 2011, and we all encourage the local authority to list the hall as an asset of community value; that could give us six months’ grace before any sale. Volunteers are delighted to have received a kind letter from the secretary of Her Majesty the Queen, who is of course the patron of the Royal British Legion.
Naturally, the next step is more commercial negotiations, which are not the business of Parliament. However, the hall was built with local funds, and the committee intends to maintain it for its original purpose, though it will broaden its remit to encompass fully the local community. As Mr Wyatt has said,
“we look forward to a completion of this transfer, whether by lease or sale, as soon as possible, and for a stress-free and happy running of Jubilee Hall for years to come”.
It is my hope that by raising this issue today, I have done a little bit to remind us in this great institution of Parliament about the work and the standing of that other great institution, the Royal British Legion.
Here comes the crunch, however. The legion must not leave its members behind; it must not neglect the people who make it a great institution. Now is the time for the legion to listen to its members and to its friends in the wider community. If its aim is to make the legion more visible, more relevant and more accessible, then it should listen and be visible in the Norwich community, and work constructively with local volunteers. We are all behind the legion and its wonderful volunteers, and we do not want the legion to waste that good will.
I said earlier that I would return to the topic of the year ahead. As you know, Mr Hollobone, 2014 will mark a momentous milestone in British history—100 years since the outbreak of world war one. The centenary offers a special opportunity to commemorate not the war and the bloodshed, but the dedicated men and women who sacrificed so much to protect the United Kingdom. It also presents a very important chance to educate a new generation of young people about the war, to ensure that the lessons of that extraordinary time are not lost.
As the Minister will no doubt remind us, the Prime Minister has laid out the Government’s plans to mark the centenary. He has announced that support will be available for projects and initiatives, large and small, in local communities across the UK, in the form of Heritage Lottery Fund grants. I hope to work with councils, heritage groups and charities such as the Royal British Legion to mark the centenary locally. It is a matter of shame, I am afraid to say, that the Labour administration at Norfolk county council has rejected that idea, telling me that it has a rather full diary at the moment. It would be a matter of sadness, and downright discourteous to veterans and serving members of the armed forces, if the Labour administration at county hall did not have the time, inclination or gumption to do this job properly.
I turn back to the matter at hand. I will leave time today for colleagues to express, perhaps, their interest in the work of the legion, and for the Minister perhaps to tell us a little more not only about the commemoration plans but about the way that he works incredibly hard in his brief to support charities. Perhaps he can suggest further ways in which the Royal British Legion can do its job and be supported strongly from inside this great Parliament.
In conclusion, I support the Royal British Legion in Norwich. I passionately want it to succeed for those whom the charity serves: veterans of past campaigns; those yet to fight; and, of course, those whom we remember as fallen, and of whom we will say again in November,
“Age shall not weary them, nor the years condemn.”
We all are friends and supporters of the Royal British Legion. My final message today is to those at the legion’s headquarters, if they are listening. I say to them, “Please remember your local members and friends, and save the Jubilee hall in Norwich.”
Mr Lee Scott (Ilford North) (Con)
Thank you, Mr Hollobone, for calling me to speak. At the start of my few words, I ask you for a little latitude, as I would like to congratulate my hon. Friend the Member for Norwich North (Miss Smith), on behalf of all parties in the House of Commons, on her forthcoming marriage, whatever date it may be on. I am sure that she will be fully occupied over the Remembrance Sunday weekend.
The work of the Royal British Legion takes place not only in my area of Redbridge but across our great country. If we forget our past, we risk repeating the mistakes of the past. If we do not honour the people who have given their lives, and who are no longer with us because of the passing of time, we risk history repeating itself.
Throughout many conflicts, members of our great Army, Air Force and Navy have given up their lives so that we can enjoy our freedom, and so that we can debate, as a democracy, in this Parliament. I think that members of all parties in this House will agree that the work that the Royal British Legion has done, is doing, and I am sure will continue to do benefits many veterans of many campaigns.
Sadly, it will not surprise you to know, Mr Hollobone, that I have never been in the armed services, but I am a member of the Royal British Legion, because I think that it is important. It is important that when we lay our wreaths, as most colleagues from all parties in this House will, on Remembrance day—in my area, we lay one on the Saturday and one on the Sunday; I will also lay one at a former Air Force base on the Monday—we genuinely remember, respect and honour the people who have given their lives for us. My only point today is that whether we are talking about Norwich North, Ilford North or any other “north” in this great country, we should honour all those people. May God bless the Royal British Legion.
The Minister of State, Cabinet Office (Mr Nick Hurd)
It is a great pleasure to serve under your chairmanship, Mr Hollobone; I think it is for the first time.
I miss my former ministerial colleague, my hon. Friend the Member for Norwich North (Miss Smith), so I am absolutely delighted to be in a position to respond to her debate, which brings home very clearly just why she is so respected and loved as a champion of Norwich North and of the things that the people there hold dear. I warmly congratulate her on securing this debate and on drawing the attention of the House to the incredibly important work of the Royal British Legion, as well as to concerns about the closure of the Jubilee hall in Norwich.
Just as my hon. Friend the Member for Ilford North (Mr Scott) skilfully intervened to place on record his huge admiration for the work of the Royal British Legion in his constituency, I must also take the opportunity to place on record my recognition of the incredible work done in the “third North”, which is my constituency of Ruislip, Northwood and Pinner, in particular the work of the legion’s branch at Eastcote, which managed to get a cheque out of me and which looks after me incredibly well during the remembrance services there.
This debate has opened my eyes to some other work that the Royal British Legion is doing that I was not aware of—work that is frankly magnificent. For example, there was the recent opening of its centre for blast injury studies at Imperial college London, which is the first collaboration of its kind in the United Kingdom and where civilian engineers and scientists work alongside military doctors to reduce the effect of roadside bombs and improvised explosive devices. The legion has also teamed up with Help for Heroes to officially open the Phoenix House recovery centre in Yorkshire, where injured and sick service personnel from across north England and Scotland can recover and access key services. The legion is an enormously important institution, and I am sure, Mr Hollobone, that it does wonderful work in Kettering too.
Regarding the specific issue of the Jubilee hall in Norwich, I quite understand the passion underpinning that project; I have similar situations in my constituency. My hon. Friend the Member for Norwich North will know that it is not for the Government to intervene in a charity’s decisions, however unpopular they are, but I am absolutely sure that the Royal British Legion will listen very carefully to this debate and will have heard her message about the community’s desire to save Jubilee hall.
My hon. Friend will also know that the Government are very keen to support this kind of community-led response. She mentioned the Localism Act 2011. That Act introduced the community right to bid, which, as she said, allows communities and parish councils to nominate buildings or land for listing by the local authority as an asset of community value. Exploring this option—asking the local authority to list the hall as an asset of community value, in line with the Act—seems eminently sensible.
What my hon. Friend may or may not be aware of is that, at a time when there is not a lot of money around, significant funding is being made available to support communities that want to take over buildings and assets. In June, I was proud to hear the Prime Minister announce a quarter of a billion pounds of funding at an event at the G8, which will be dedicated over the next 10 years by Big Society Capital and the Big Lottery Fund, to help communities own local assets, such as pubs, shops, community centres and sports facilities. More details of that programme will be announced shortly.
My hon. Friend may also be aware that the My Community Rights support programme provides advice and help to eligible community groups to develop business cases and get “investment-ready” to seek support from other sources. Information is readily available on the programme’s website.
I genuinely wish my hon. Friend and her local campaigning group every success and I hope that the Royal British Legion will go the extra mile in helping the community to safeguard what is clearly a very valuable asset.
My hon. Friend also asked me to talk a little about the commemoration plans to mark the centenary of the outbreak of the first world war, which all the speakers today have talked passionately about. They will know that the first world war was a period of almost unparalleled importance in our country’s history. I am proud to say that the Government are taking a strong lead in commemorating the centenary in a way that I hope is appropriate. The centenary will not only focus on military history but on the social and cultural changes that the war brought about, telling not just soldiers’ stories but those of men and women on the home front. We should remember that there were almost 900,000 deaths of British service personnel during the first world war, so it is entirely appropriate that remembrance lies at the heart of the commemoration.
We are working hard to encourage public interest and engagement, showing why the first world war still matters in the 21st century and is relevant to people today—including myself—through their family histories. My hon. Friend will know that the Department for Culture, Media and Sport is the co-ordinating Department, but several Departments are working together to deliver what I hope will be a strong, diverse and inclusive programme. There is strong support from bodies such as the Imperial War museum, the Commonwealth War Graves Commission, the BBC and the Heritage Lottery Fund, all of which have a big role to play in securing public engagement and all of which are represented in the programme’s governance structure.
There will be £53 million of funded activity across a range of undertakings, including a major capital project at the Imperial War museum, Heritage Lottery Fund grants for community projects and moneys for other cultural activity. For example, the first world war centenary battlefield tours project is offering students and teachers from every state-funded secondary school in England the opportunity to visit battlefields and other notable sites and to take part in remembrance ceremonies on the western front. That will be an enormously powerful experience for them. The tours start in spring next year and will run until 2019. Schools, including those in Norfolk, have been piloting the scheme, with pupils visiting battlefields at Ypres and the Somme. More than 1,000 schools have already registered for the tours from next spring, which is well ahead of the planned target. As my hon. Friend the Member for Ilford North said so powerfully, the bravery and suffering of the heroic men and women who gave their lives so selflessly in the great war—including my great uncle—must never be forgotten.
To conclude, the Government recognise the massive contribution that is made by our servicemen and women. The words trip easily enough, but it is important to convey what underlies them with sincerity. The armed forces covenant ensures that we are doing all we can for our armed forces in return for asking them to do dangerous jobs in places such as Afghanistan and Iraq, and the Government take it extremely seriously.
I am proud that the Chancellor was in a position to announce that the LIBOR fines collected from banks for their shockingly bad behaviour and their distortion of British values are being used to provide permanent funding of £10 million per annum to charities working to support military personnel. That money was taken in fines on the worst of values to support organisations working with the best of British values.
On that note, I congratulate my hon. Friend the Member for Norwich North on her championing of her constituents, the campaign to safeguard the hall and this opportunity for us all to place on record our recognition of the enormously valuable work that the Royal British Legion does. It would be wrong of me to conclude my remarks without congratulating my hon. Friend on her forthcoming marriage to Sandy, who is, I believe, a former paratroop officer. I am sure that her constituents will forgive her for her absence from Remembrance day services and for getting married, even if there are many colleagues in this place who never will.
UK-Colombia Bilateral Investment Treaty
(10 years, 6 months ago)
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Stephen Timms (East Ham) (Lab)
I am grateful to Mr Speaker for selecting this debate.
Bilateral investment treaties are a long-standing mechanism to protect foreign firms and investors undertaking risky overseas investment from the danger of expropriation or policy changes in the destination country that could reduce the financial return from those investments. Bilateral investment treaties have generally been seen as benign, technical instruments, but developments in their use in the past 10 years or so have raised doubts about their benign character. Those doubts certainly arise in the case of the UK-Colombia bilateral investment treaty, which I understand is due to be ratified in the next few weeks. I will air some of those doubts in this debate and press the Minister to clarify the Government’s thinking in response to some of the concerns that are being raised.
Bilateral investment treaties allow investors to sue elected Governments if policy changes adversely affect their profits, but neither the host Government nor the communities affected by the investment have reciprocal rights. There is at least a question on whether that balance is correct.
Last October, under a bilateral investment treaty, a tribunal established by the International Centre for Settlement of Investment Disputes, which is part of the World Bank, fined Ecuador $1.8 billion—a sum equal to Ecuador’s entire annual education budget—for terminating a contract with Occidental Petroleum Corporation after reaching the view that Occidental broke Ecuadorian law when selling its production rights. I notice that on 30 September 2013, the tribunal decided to stay the enforcement of that fine for the time being, but it is not clear that handing a technocratic tribunal the power to impose fines in that way is necessarily the right thing to do.
By the end of 2012, corporations had launched more than 500 cases under bilateral investment treaties against 95 Governments. Compared with the preceding three decades, the number of disputes since the year 2000 has risen two-and-a-half-fold. The treaties seem to be evolving into something rather different from what they were originally intended to be. We need to reflect on how we want the treaties to be used, on what is appropriate to put into them and, indeed, on when it is appropriate to enter into such a treaty.
Governments across the world are now reviewing their policy on bilateral investment treaties. I understand that Norway and South Africa are terminating their treaty, and Australia and the US have decided to restrict the scope of their treaty. I am delighted to see the Minister in his place this afternoon as I know he has other pressing business, and I hope he will use this debate to set out the British Government’s thinking. I would welcome a review in the UK along the same lines as we are seeing elsewhere.
The UK-Colombia bilateral investment treaty will be laid before Parliament shortly and will provide far-reaching rights to foreign investors in Colombia. I am worried that the treaty might not take into account the potential risks it poses to securing human rights in Colombia. The Minister knows very well the human rights position in that country. In the first six months of this year, 11 trade unionists and 37 human rights activists were killed—nobody has been charged in relation to any of those killings. Over the summer there were strikes and protests across Colombia, and 16 demonstrators were killed by the police and the army, with more than 90 people imprisoned. Paramilitary groups continue to operate widely. There is already substantial opposition on human rights grounds to the ratification of the EU-Colombia free trade agreement.
I ask the Minister to take the opportunity presented by the forthcoming ratification, and indeed by other negotiations for new investment treaties at EU level, to consider whether it is appropriate to have a general review of UK policy towards bilateral investment treaties.
I have three areas of concern about the current use of bilateral investment treaties that I think make a review necessary. First, it is not clear that the human rights impact of such treaties is in line with the UK Government’s policy. That is a particularly pressing concern in the case of Colombia, where the human rights situation is so precarious, particularly in relation to workers’ rights and land rights.
According to the United Nations High Commissioner for Human Rights, Colombia has the largest number of internally displaced people in the world after Sudan—there were 5.7 million internally displaced people in Colombia by the end of the 2012—largely due to land-grabbing around mineral and resource-rich sites. Colombia has enacted a land restitution law to restore more than 2 million hectares of land to people from whom it had been wrongly taken, but that restoration has not yet taken place. Human Rights Watch reported last month that only one family have to date had their land returned.
There is serious concern that a bilateral investment treaty could make the implementation of land reform even more difficult; it could trigger demands from foreign investors for compensation if, for example, cases were brought forward in which land occupied by an investor that had previously been appropriated from someone else and then sold to the investor was restored to its original and rightful owners. Such processes could potentially scupper the prospects for land restitution, which is widely recognised as key to Colombia’s future stability.
Lisa Nandy (Wigan) (Lab)
I am grateful to my right hon. Friend for giving way, for the powerful case he is making and for bringing this debate to the House. The recent UK action plan on business and human rights was strongly welcomed because of some of the difficulties that he raises, but it is unfortunately silent on remedy and redress for victims of such abuses. Indeed, recent legislation has restricted the ability of victims of actions by UK companies overseas to access justice through the UK courts. Does he agree that it is essential that we build on the momentum that the Government and others have created to ensure adequate redress when bilateral investment treaties are breached, and that otherwise we risk undermining the host country’s ability to meet its international human rights obligations? Would he also welcome a response from the Minister on that, either today or at a later date?
Stephen Timms
I will address the action plan on business and human rights in a couple of moments. My hon. Friend is absolutely right on the need for people to be able to obtain redress, and I would certainly welcome a comment from the Minister on that topic.
ABColombia, the consortium comprising Christian Aid, the Catholic Fund for Overseas Development, Oxfam and others, is particularly worried about the potential threat to land restitution. The UK-Colombia treaty risks making it impossible for Colombia to restore land that has been stolen from its previous owners, thereby potentially restricting the implementation of future peace agreements with the guerrillas and limiting reparations to victims of human rights violations. Land injustices have been at the centre of the long-running conflict in Colombia, as the Minister knows. I gather that a treaty with Ethiopia is likely to come up next, which raises a similar set of issues on land and rights, so there is a pressing case for carrying out a policy review.
My hon. Friend the Member for Wigan (Lisa Nandy) has reminded the Chamber of the action plan on business and human rights, which the Government published last month and which, as she says, has been widely welcomed. The action plan makes the point that investment agreements should,
“incorporate the business responsibility to respect human rights, and…not undermine the host country’s ability to…meet its international human rights obligations or to impose the same environmental and social regulation on foreign investors as it does on domestic firms.”
That is welcome reassurance. The review that I am suggesting would enable the Government to make good on that commitment in the specific context of bilateral investment treaties.
Secondly, there is a worry that investment rules in bilateral investment treaties could restrict the ability of Governments to set policies in the interests of their public. The investor-state dispute settlement mechanism allows foreign firms to sue Governments when and if they feel that their interests have been violated by a new law or policy. That is a pretty big limitation on the right of citizens to elect a Government to change the policy of the preceding Government.
I am chair of the trustees of Traidcraft, the fair trade organisation, which has drawn the issue to my attention—I declare that interest, although the role is unpaid. I share that concern about the restriction on the ability of developing country Governments to pursue policies that have worked elsewhere—such as land reform or requiring investors to give preference to local suppliers.
The concern, however, does not apply only in developing countries. The US tobacco firm, Philip Morris, is suing Uruguay and Australia over their anti-smoking laws. The company argues that warning labels on cigarette packs or plain packaging prevent it from displaying its trade mark effectively, causing a loss in market share. The threat of legal action against the UK under a bilateral investment treaty might be a factor in thinking about the introduction of plain packaging proposals here, so developing countries are certainly not the only ones in the frame. The US company Lone Pine Resources Inc. is demanding US $250 million in compensation from Canada for introducing a moratorium on fracking, because of environmental risk concerns. Corporations have used investor-state settlement provisions to challenge environmental, land use, energy and other laws.
Thirdly, I am worried that such claims bypass domestic courts and are heard in private—behind closed doors—in tribunals made up of three arbitrators, behind closed doors at the International Centre for Settlement of Investor Disputes. My hon. Friend the Member for Wigan reminded the House that any such decision is extremely difficult to change. In some instances, the existence of the cases is barely known at all; even when they are known, the reasons for decisions or the level of awards by a tribunal are not always disclosed.
There is concern that the system has led to bad decisions, which is particularly important given that an arbitration tribunal can make unlimited monetary awards. In 2012, dispute settlement compensations awarded to corporations ranged from US $2 million to, in the Ecuadorean case that I mentioned, nearly $1.8 billion; lots of pending claims total billions of US dollars. Disputes between multinational companies and Colombia under the UK-Colombia treaty would be confidential and heard by the international tribunal, despite the growing recognition worldwide, not least on the part of the UK Government, that transparency is vital to democratic processes, good governance and the rule of law.
Finally, there is at least a question mark about whether the treaties do, in fact, succeed in attracting additional foreign investment into signatory countries. A number of studies suggest no significant correlation between a country’s level of foreign direct investment—we all want to increase such levels in developing countries—and the decision to adopt treaties that include those broad investor protections.
I hope, therefore, that the Government will review their policy on bilateral investment treaties, in view of the lack of transparency, the use of the investor-state dispute settlement mechanism, the imbalance of rights and responsibilities, and the potential to undermine human rights in countries where investment is taking place. I am grateful to the Minister for his readiness to respond. I accept that part of the responsibility on the subject rests with the Department for Business, Innovation and Skills, but the Foreign and Commonwealth Office clearly has a key role as well. I look forward to what he has to say in response.
Mr Philip Hollobone (in the Chair)
The right hon. Gentleman timed that to the second!
The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)
It is a great pleasure to serve under your chairmanship this afternoon, Mr Hollobone, and I congratulate the right hon. Member for East Ham (Stephen Timms) on securing the debate. The right hon. Gentleman has a long-standing interest in such issues, as evidenced in his declaration in the Register of Members’ Financial Interests about his activities with Traidcraft, to which he alluded.
The Government’s aim in developing bilateral investment treaties is to provide a high level of protection for companies from one country that invest in the other country. In particular, we aim to ensure that British investors in a country with which we have a bilateral investment treaty will receive equal treatment compared with other foreign and domestic investors.
In general, the UK Government believe that such treaties have a positive impact, protecting investors against unfair expropriation and mistreatment, and encouraging investment. As the right hon. Gentleman said, however, bilateral investment treaties need to strike the right balance between providing protection for investors and giving Governments the space that they need to regulate in the public interest. The UK aims to achieve that balance in its treaties and, now that competence for foreign direct investment has transferred to the European Union, in treaties concluded by the EU.
To begin addressing some of the comments and questions of the right hon. Gentleman, increasing transparency in governance at home and internationally is a priority for the Government. Next week, I am pleased to say, we will be hosting the Open Government Partnership summit here in London, and that will be a key theme. We have also pushed for greater openness in investment arbitration, and I am pleased that new UN rules on transparency will enter into force next year. The hon. Member for Wigan (Lisa Nandy) made an intervention about redress in particular, but we will write to her with a fuller answer.
In response to the related concern about giving away privileges to distant tribunals, while the system is clearly not perfect—hence, for example, our work on transparency—overall we see such tribunals as positive. They have long been a feature of the international system and are considered generally to provide a dependable way for investors to achieve justice, where it cannot be achieved through the domestic legal system of the country in which they have invested. The tribunals are, therefore, important to guaranteeing investors’ rights and to preserving stable investment climates, which, in turn, help to encourage economic development. Without access to an international tribunal, such benefits would be lost. Furthermore, if we did not have tribunals, what should replace them? The right hon. Gentleman did not answer that question in his speech—I am happy to accept an intervention, should he wish to make one.
The right hon. Gentleman asked whether the Government intend to review their policy on investment protection. As I have mentioned, competence for foreign direct investment has now transferred to the EU. Since that transfer in 2009, the UK has not negotiated any new treaties. It retains the right to do so, but it has no immediate plans to negotiate new treaties. It does not, therefore, make sense for the UK to launch a full-scale review of our policy on such matters at present. That said, I reassure him that, in ongoing EU negotiations, we are pushing hard to achieve that important balance—guaranteeing fair treatment for investors, without an adverse impact on Governments’ rights to regulate in the public interest. That is also a principle that we will apply in any new treaties that the UK negotiates.
Our intention is to place before Parliament shortly a ratification instrument that will bring the UK-Colombia bilateral investment treaty into force. We believe that the treaty broadly achieves the right balance. Indeed, it includes specific provisions designed to preserve the right of the UK and Colombia to regulate for “reasons of public purpose”.
Stephen Timms
I am grateful for the way in which the Minister is responding to the debate. Will he explain the significance of the timing, given that he said that competence has moved to the European Union? I am told that the Colombia treaty was drafted almost 20 years ago. What is the significance of the timing, given that ratification will take place shortly?
Mr Swire
The right hon. Gentleman has more confidence in these matters than me. He referred to the next few weeks. I am reliably informed that it will be shortly, which is not necessarily in the next few weeks, but no doubt my colleagues in the Department for Business, Innovation and Skills will bring the matter to the House at the appropriate time and will be able to explain exactly, if I cannot. It is worth saying that the UK received authorisation from the European Commission to enter the Colombia treaty into force, as the right hon. Gentleman said, in spring 2013 and the Colombian note confirming its ratification in the summer.
The treaty is an important symbol of the close relationship that the UK has enjoyed with Colombia in recent years. To answer the right hon. Gentleman’s point about the importance of such treaties to the countries with which they are contracted, it is worth saying that the Government of Colombia is actively looking forward to the treaty being ratified. I believe that it is a positive move. It will cover all existing British investments in Colombia, which currently total £2.5 billion. The Government hope that when the treaty enters into force it will provide a further incentive for additional investment in Colombia by increasing the level of legal protection.
The right hon. Gentleman rightly raised a concern about the human rights situation in Colombia, including land rights. I assure him, as I have the House on a number of occasions when we debated the matter, that progress has been made, as noted in our 2012 human rights report. Around 170,000 victims have been provided with reparations under its victims and land restitution law and the Colombian Government are taking steps to reform the judicial system. We continue to press them to speed up the processing of cases and to eliminate impunity.
In 2012, experts from the Land Registry provided technical advice to the agriculture Ministry on land registration issues. Security for claimants and those returning to their land is a key concern, and our embassy in Bogota has funded a security risk analysis in potential restitution zones. However, almost five decades of conflict have caused many people to be displaced, as the right hon. Gentleman said. We welcome the significant progress made to date in the peace negotiations, in which provisional agreement on land reform has been reached.
I am grateful to the right hon. Gentleman for raising the concerns. The Government want bilateral investment treaties to provide a high level of protection for British companies investing in Colombia, but we also want to strike the right balance between providing protection for investors and giving Governments the space they need to regulate in the public interest. We are committed to supporting international efforts to increase transparency. We recognise that the current system of tribunals is not perfect, but it generally provides a dependable way for investors to achieve justice.
Competence for foreign direct investment has now transferred to the EU and the UK has not negotiated any new treaties since 2009, so we have no plans to review our policy on investment protection. However, in ongoing EU negotiations and any new treaties the UK negotiates, we will push for the right balance between investors and the public interest.
Question put and agreed to.
Written Statements
(10 years, 6 months ago)
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Double Taxation (Republic of Panama)
(10 years, 6 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
A new double taxation convention with the Republic of Panama was signed on 29 July 2013. The text of the convention has been deposited in the Libraries of both Houses and made available on HM Revenue and Customs’ website. The text has been scheduled to a draft Order in Council laid before the House of Commons on 12 September 2013.
ECOFIN
(10 years, 6 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
A meeting of the Economic and Financial Affairs Council was held in Luxembourg on 15 October 2013. Council discussed the following items.
Current legislative proposals
The presidency provided an update on the following financial services dossiers: central securities depositories regulation (CSDR); omnibus II; markets in financial instruments directive (MiFID); the Commission noted the formal adoption of the single supervisory mechanism (SSM); single resolution mechanism (SRM); bank recovery and resolution directive (BRRD); and deposit guarantee scheme directive (DGSD).
Preparation of the European Council on 24-25 October 2013
a) Indicators and policy areas for strengthened economic policy co-ordination:
ECOFIN held an exchange of views on indicators and policy areas for strengthened economic policy co-ordination. The Government consider that, consistent with the June European Council conclusions, participation in any new measures for economic and monetary union should be voluntary for those outside the single currency and be fully compatible with the single market.
b) Commission-EIB SME initiative:
ECOFIN considered Commission-EIB designs for financing instruments aimed at leveraging finance for SMEs, of which participation in any scheme should be voluntary for member states.
European semester: Lessons from 2013 and way forward
ECOFIN held an exchange of views on lessons to be learned from the 2013 European semester.
Follow-up to G20 Finance Ministers and governors’ meeting on 10-11 October and annual meetings of the IMF and World Bank Group on 11-13 October in Washington
The Commission and presidency provided a short update on the outcomes of the G20 ministerial and IMF meetings in October.
Preparation of the 19th conference of parties to the United Nations framework convention on climate change (UNFCCC) in Warsaw from 11-22 November 2013
ECOFIN endorsed conclusions on climate finance ahead of the UNFCCC conference in Warsaw on 11-22 November.
Counter-Terrorist Asset-Freezing Regime
(10 years, 6 months ago)
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The Financial Secretary to the Treasury (Sajid Javid)
My noble friend the Commercial Secretary to the Treasury, Lord Deighton, has today made the following written ministerial statement:
Under the Terrorist Asset-Freezing etc. Act 2010 (“TAFA 2010”), the Treasury is required to report to Parliament, quarterly, on its operation of the UK’s asset-freezing regime mandated by UN Security Council Resolution 1373.
This is the 11th report under the Act and it covers the period from 1 July 2013 to 30 September 2013. This report also covers the UK implementation of the UN al-Qaeda asset-freezing regime and the operation of the EU asset-freezing regime in the UK under EU regulation (EC) 2580/2001 which implements UNSCR 1373 against external terrorist threats to the EU. Under the UN al-Qaeda asset-freezing regime, the UN has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under the Al-Qaeda (Asset-freezing) Regulations 2011. Under EU Regulation 2580/2001, the EU has responsibility for designations and the Treasury has responsibility for licensing and compliance with the regime in the UK under part 1 of TAFA 2010.
Annexes A and B to this statement provide a breakdown, by name, of all those designated by the UK and the EU in pursuance of UN Security Council Resolution 1373.
The following table sets out the key asset-freezing activity in the UK during the quarter ending 30 September 2013:
TAFA 2010 | EU Reg (EC) 2580/2001 | Al-Qaeda Regime UNSCR 1989 | |
|---|---|---|---|
Assets frozen (as at 30/09/2013) | £91,000 | £11,0001 | £70,0002 |
Number of accounts frozen in UK(at 30/09/13) | 61 | 10 | 29 |
New accounts frozen | 0 | 0 | 1 |
Accounts unfrozen | 0 | 0 | 0 |
Number of designations (at 30/09/2013) | 39 | 373 | 284 |
(i) New designations (during Q3 2013) | 0 | 1 | 1 |
(ii) Delistings | 0 | 0 | 7 |
(iii) Individuals in custody in UK (at 30/09/2013) | 15 | 0 | 0 |
(iv) Individuals in UK, not in custody (at 30/09/2013) | 3 | 0 | 4 |
(v) Individuals overseas (at 30/09/2013) | 13 | 11 | 217 |
(vi) Groups | 8 (0 in UK) | 26 (1 in UK) | 63 (1 in UK) |
Individuals by Nationality | |||
(i) UK Nationals4 | 14 | n/a | n/a |
(ii) Non UK Nationals | 17 | ||
Renewal of designation | 0 | n/a | n/a |
General Licences | |||
(i) Issued in Q3 | (i) 0 | ||
(ii) Amended | (ii) 5 | ||
(iii) Revoked | (iii) 0 | ||
Specific Licences | |||
(i) Issued in Q3 | (i) 9 | (i) 0 | (i) 2 |
(ii) Amended | (ii) 0 | (ii) 0 | (ii) 0 |
(iii) Revoked/Expired | (iii) 1 | (iii) 0 | (iii) 0 |
1This does not duplicate funds frozen under TAFA. 2This figure reflects the most up-to-date account balances available and includes approximately $64,000 of funds frozen in the UK. This has been converted using exchange rates as of 30/09/2013. | |||
3This figure is based on ex-designations where the UK freeze forms the prior competent authority decision for the EU freeze. 4Based on information held by the Treasury, some of these individuals hold dual nationality. |
Legal Proceedings
Appeals against designations made under the Terrorism (United Nations Measures) Order 2009 and TAFA 2010 were ongoing in the quarter covered by this report, brought by Zana Abdul Rahim. Two civil claims relating to designations are also ongoing, one brought by Gulam Mastafa against the Treasury and other Government Departments, and another brought by an individual, known as “M”, against the Treasury. The challenge under s63(2) of the Counter-Terrorism Act 2008 brought by Mohammed Al Ghabra against the Treasury and joined to be heard with his claim for Judicial Review against the Foreign and Commonwealth Office, is also ongoing.
In the quarter to 30 September 2013, no criminal proceedings were initiated in respect of breaches of asset-freezes made under TAFA 2010 or under the Al-Qaeda (Asset-Freezing) Regulations 2011.
Annex A: Designated persons under TAFA 2010 by name5
Individuals
1. Hamed Abdollahi
2. Bilal Talal Abdullah
3. Imad Khalil Al-Alami
4. Abdula Ahmed Ali
5. Abdelkarim Hussein Al-Nasser
6. Ibrahim Salih Al-Yacoub
7. Manssor Arbabsiar
8. Usama Hamdan
9. Nabeel Hussain
10. Tanvir Hussain
11. Zahoor Iqbal
12. Umar Islam
13. Hasan Izz-Al-Din
14. Mohammed Khaled
15. Parviz Khan
16. Waheed Arafat Khan
17. Osman Adam Khatib
18. Musa Abu Marzouk
19. Khalid Mishaal
20. Khalid Shaikh Mohammed
21. Ramzi Mohammed
22. Sultan Muhammad
23. Yassin Omar
24. Hussein Osman
25. Muktar Mohammed Said
26. Assad Sarwar
27. Ibrahim Savant
28. Abdul Reza Shahlai
29. Ali Gholam Shakuri
30. Qasem Soleimani
31. Waheed Zaman
Entities
1. Basque Fatherland and Liberty (ETA)
2. Ejercito de Liberacion Nacional (ELN)
3. Fuerzas Armadas Revolucionarias de Colombia (FARC)
4. Hizballah Military Wing, including External Security Organisation
5. Holy Land Foundation for Relief and Development
6. Popular Front for the Liberation of Palestine—General Command (PFLP-GC)
7. Popular Front for the Liberation of Palestine (PFLP)
8. Sendero Luminoso (SL)
Annex B: Persons designated by the EU under Council Regulation (EC)2580/20016
Persons
1. Hamed Abdollahi*
2. Abdelkarim Hussein Al-Nasser*
3. Ibrahim Salih Al Yacoub*
4. Manssor Arbabsiar*
5. Mohammed Bouyeri
6. Sofiane Yacine Fahas
7. Hasan Izz-Al-Din*
8. Khalid Shaikh Mohammed*
9. Abdul Reza Shahlai*
10. Ali Gholam Shakuri*
11. Qasem Soleimani*
Groups and Entities
1. Abu Nidal Organisation (ANO)
2. Al-Aqsa Martyrs’ Brigade
3. Al-Aqsa e.V.
4. Al-Takfir and Al-Hijra
5. Babbar Khalsa
6. Communist Party of the Philippines, including New People’s Army (NPA), Philippines
7. Gama’a al-lslamiyya (a.k.a. Al-Gama’a al-Islamiyya) (Islamic Group—IG)
8. Islami Büyük Dogu Akincilar Cephesi (IBDA-C) (Great Islamic Eastern Warriors Front)
9. Hamas, including Hamas-Izz al-Din al-Qassem
10. Hizbul Mujahideen (HM)
11. Hizballah Military wing, including external security organisation
12. Hofstadgroep
13. Holy Land Foundation for Relief and Development*
14. International Sikh Youth Federation (ISYF)
15. Khalistan Zindabad Force (KZF)
16. Kurdistan Workers Party (PKK) (a.k.a. KONGRA-GEL)
17. Liberation Tigers of Tamil Eelam (LTTE)
18. Ejército de Liberación Nacional (National Liberation Army)*
19. Palestinian Islamic Jihad (PIJ)
20. Popular Front for the Liberation of Palestine (PFLP)*
21. Popular Front for the Liberation of Palestine—General Command (PFLP-GC)*
22. Fuerzas armadas revolucionarias de Colombia (FARC)*
23. Devrimci Halk Kurtulu Partisi-Cephesi—DHKP/C (Revolutionary People’s Liberation Army/Front/Party)
24. Sendero Luminoso (SL) (Shining Path)*
25. Stichting Al Aqsa
26. Teyrbazen Azadiya Kurdistan (TAK)
5For full listing details please refer to: http://www.hm-treasury .gov.uk/d/terrorism.htm.
6For full listing details please refer to: www.gov.uk
*EU listing rests on UK designation under TAFA 2010.
Tax Information Agreements (Guernsey and Jersey)
(10 years, 6 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
Exchange of letters amending the 2009 tax information exchange agreements (TIEAs) with Guernsey and Jersey were signed on 22 October 2013 to permit automatic and spontaneous exchanges of information. At the same time agreements were also signed to improve international tax compliance which set out the precise details of the information which will be automatically exchanged. The texts of the agreements to improve international tax compliance have been deposited in the Libraries of both Houses and will be made available on HM Revenue and Customs’ website. The texts amending the tax information exchange agreements will be scheduled to draft Orders in Council and laid before the House of Commons in due course.
Grangemouth (Update)
(10 years, 6 months ago)
Written StatementsRead Full debate Read Hansard Text
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Following developments on this issue I will today provide an oral update to the House outlining the current position.
Cost of Motoring
(10 years, 6 months ago)
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The Lord Chancellor and Secretary of State for Justice (Chris Grayling)
I am today announcing the publication of the Government’s response to their consultation “Reducing the number and costs of whiplash claims”, which closed on 8 March 2013, alongside further measures this Government are taking in order to help drive down the costs of motoring and put money back in the pocket of the driver.
The publication also provides our response to the House of Commons Transport Committee’s “Cost of motor insurance: whiplash” report and recommendations, published on 31 July 2013. I am grateful to the Committee for their valuable and thoughtful findings, which we have taken into account.
For too long honest drivers have been bearing the cost—through higher insurance premiums—of fraudulent and exaggerated whiplash claims. The Association of British Insurers indicates that 7% of all motor claims were fraudulent, and that dishonest personal motor insurance frauds worth £441 million were detected by the industry in 2011. The Government want to tackle that abuse to help drive down the cost of living and deliver a system that hard-working, law-abiding people can have confidence in.
The reforms I announce today form part of a series of changes to the justice system introduced by the Ministry of Justice, such as the reform of “no win, no fee” arrangements and a ban on referral fees paid between lawyers, insurers, claims firms, garages and others, which are removing incentives for excessive litigation and tackling the culture of claims. New figures from the Ministry of Justice’s claims management regulation unit also published today, show that the number of claims firms in the personal injury market has gone down by more than 1,000 following the law changes, from a peak of 2,553 in December 2011 to 1,485 last month.
We now propose to implement our consultation proposal to introduce an independent medical panel scheme, to establish a new and more robust system of medical reporting and scrutiny of whiplash claims. These measures received a good degree of support from those who responded to the consultation. Our reforms will mean that exaggerated and fraudulent whiplash claims are deterred and challenged while the genuinely injured, backed up by good-quality medical evidence, get the help and compensation they deserve.
We are currently working on the detail of the independent medical panel scheme. We will have further discussions with all sides, including insurers and claimant representatives, and within Government, before we bring forward our final proposals. I am grateful to representatives from all sides of the industry for their constructive proposals in this area, which we are considering. I am clear that the final scheme will need to be not only effective but proportionate and sustainable, with any costs not falling on the public purse.
We also want to work with all sides to tackle those practices which can contribute to the inflated number of whiplash claims. For example, we want insurers to end the practice of making offers to settle claims without requiring medical evidence. We also want insurers to share more of their data on suspected fraudulent or exaggerated claims with claimant lawyers, and we want claimant lawyers to carry out more effective checks on their potential clients before taking on claims.
On the consultation option to increase the small claims track threshold for personal injury claims, the Government have carefully considered all responses. We believe that there are good arguments for increasing this threshold to £5,000 for all road traffic accidents to raise incentives to challenge fraudulent or exaggerated insurance claims. At the same time, we have listened to the views of the Transport Committee and others that now may not be the right time to raise the small claims limit because of the risks that it may deter access to justice for the genuinely injured and encourage the growth of those disreputable claims firms which so damage the industry. At this stage, we have decided to defer any increase to the small claims threshold until we can determine the impact of our wider reforms on motor insurance premiums and better safeguard against the risks identified above. We believe that this is the right thing to do for all interests.
Our consultation also generated a number of further proposals to reduce fraudulent and exaggerated whiplash claims which we are currently considering.
The reforms I am announcing today and those which we have already made to the civil justice system should contribute to lower motor insurance premiums. Indeed we are already seeing these beginning to fall. Figures published by the AA’s British insurance premium index today show that quoted shop-around premiums have reduced by 12% over the previous year.
The Government expect the insurance companies to act on the commitment they made at the Prime Minister’s summit in February 2012 to pass on to consumers and businesses industry estimated savings of approximately £1.5 billion to £2 billion that could come from the reforms on both legal fees and future changes on whiplash claims.
I believe that taken together the measures I set out today will provide an effective response to support hard-working motorists and families, deterring fraudulent and exaggerated whiplash claims and helping to reduce the cost to premiums of dealing with such claims.
In addition to these reforms and in order to help further the hard-working people of this country we have decided to launch a range of measures to help drive down the costs of owning and running a car.
The fee charged for the MOT test for a car is £54.85, and has been frozen at that price since 2010. I can inform the House that the Government will freeze the price for an MOT test for the rest of this Parliament. While competition in many areas introduces discounts to this fee, some 12 million drivers are estimated to pay this fee in full. This announcement will save them from a price rise that would cost them around £50 million a year.
This Government are also determined to help the motorist at the pump. I can announce today that the Government will launch a trial of motorway signs that will display the cost of fuel along the route, helping the driver make the informed choice about where to fill up, and importantly, boosting competition along British motorways.
Finally, the Government want to make it cheaper for those who want to drive for the first time. The Department for Transport will launch a review of the fees charged to obtain driving licences and the fees for taking a test.
Copies of the Government response to the consultation and to the Transport Committee report are available in the Vote Office and the Printed Paper Office. The document is also available online at http://www.justice.gov.uk.
Grand Committee
(10 years, 6 months ago)
Grand CommitteeRead Full debate Read Hansard Text
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
My Lords, as your Lordships will know, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Children and Families Bill
(10 years, 6 months ago)
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Baroness Northover (LD)
With the leave of the Deputy Chairman of Committees, I hope it might be helpful to everyone taking part in this Grand Committee if I draw attention to the revised calendar for this Bill, published with today’s edition of forthcoming business. The calendar shows that the usual channels now hope that we will complete the Committee stage of the Bill in 11 sessions in total—that is, seven more sessions including today. It also sets out the clauses that we hope to cover each day so that people who want to take part in a particular part of the Bill can plan their diaries. The calendar is not binding but it has support across this Committee. We hope we can complete our work here on 18 November. Can I encourage everyone here to try to reach the target today, the group led by Amendment 81, so that we can complete the stage in good order?
Baroness Butler-Sloss (CB)
My Lords, perhaps I might make a point, as a Cross-Bencher, about the amount of time that may be allowed on Report. It is a matter of some concern that this Bill has been committed to a Grand Committee when a number of people who are concerned about the Care Bill would have liked to be here. Those people may well wish to speak on Report when they would otherwise have spoken in Grand Committee. Consequently, we may find that Report lasts a bit longer than the Government would choose. Therefore, it would be helpful if the usual channels took that on board in arranging the number of days appropriate for Report.
Baroness Northover
I thank the noble and learned Baroness for that comment. I will of course take it back to the usual channels.
Clause 15: Care plans
Amendment 65
Baroness Hughes of Stretford (Lab)
My Lords, I will not dwell on this because it rehearses a theme that we spent a great length of time on in discussing Part 1 of the Bill—that is, the importance for children, when their families break up or they are taken into care, of keeping in contact with their birth family as appropriate, particularly with their siblings. The Minister was not the Minister discussing the Bill with us when we talked about Part 1. Therefore, he did not hear the strength of feeling across the Committee on this issue, which was such that the Minister—the noble Lord, Lord Nash—acknowledged it and agreed to take the issue of sibling contact back and look at it. So I hope, when the Minister sums up, that I will not need to rehearse the arguments; I hope he will take that on trust and, similarly, look at it with his colleague, the Minister in the Department for Education, and come back on Report.
The amendment is, however, different from the amendment that we talked about in relation to Part 1. It would require the court, at the stage of considering permanence for a child, to pay particular attention to any siblings and where they are, and to continued contact between siblings when making or approving the permanence plan for a child through a care order. Amendment 65 would therefore insert “and sibling placement arrangements” after “provisions”. It is very important that this issue is considered not only by social workers and professionals, as we discussed when we looked at the amendment to Part 1, but particularly at the court stage. Clause 15, as it is worded, does not include arrangements for siblings to be placed together where possible. It does not include anything that requires the court specifically to consider the arrangements for brothers and sisters.
It is essential that this is considered at the court stage because after that, while there are a number of possible opportunities for detailed arrangements in permanence plans to be considered, there are none really to go back and address this issue. Independent reviewing officers, for example, do not have the same authority as the courts to scrutinise care plans and they cannot take the matter back to court directly if they consider that the care plan is deficient in one way or another. They can only refer the matter to a CAFCASS officer who can then maybe bring a claim on behalf of the child if they consider that there are grounds for judicial review or a free-standing claim under the Human Rights Act. In practice, as I am sure Members can appreciate, that power is rarely used. Therefore, it is very important to get these issues about continued sibling contact right in at the front end when the courts are asked to scrutinise the arrangements for permanence when thinking about a care plan.
I will not rehearse all the arguments as to why that is important. I suspect the Minister may appreciate them. I will, though, rehearse one statistic that we used in the previous debate. I hope that the Minister will not say that the courts will do this anyway. The figures that we looked at then suggested that some 63% of children who go into care and have siblings who go into care lose contact with those siblings. Clearly, at various points in the process—in court, through social workers, through the placements—contact is being broken for the vast majority of children who go into care as part of a sibling group. I hope that the Minister will be prepared to look at this and respond positively to it. I beg to move.
Baroness Butler-Sloss
My Lords, I support the noble Baroness in this amendment. At his request, I will also speak to the amendment of the noble and learned Lord, Lord Mackay of Clashfern. Is that separate? It is separate, so I will speak entirely to this amendment.
At the adoption stage, Part 1 of the Bill, a number of us spoke about the importance of sibling contact. I made the point—I make no apology for making it again to a different Minister—that the Select Committee on Adoption Legislation took informal evidence from a considerable number of children. One of the points made both by the group who were adopted and the group in care concerned the enormous sorrow they felt at losing contact with the siblings they knew. Very sensibly, one girl said, “I am not concerned about the siblings born after I left the family but I am very worried about my brothers and sisters”. Another child was almost in tears as he was so worried about his younger brother, not knowing what was happening to him and nobody being able to tell him. He said he woke up at night worrying about his brother. That is not acceptable. Therefore, it is important at each stage that those in charge of children or in charge of making arrangements and connections with children have the siblings in mind. The judge may well say that the social workers have given him all sorts of good reasons why they are not going to meet, but it is important that the judge asks. There is no requirement on the judge, or indeed the magistrates in the family proceedings court, to ask that question unless it is in legislation.
Baroness Howarth of Breckland (CB)
My Lords, I know that David Norgrove was very concerned that judges spent quite a considerable time reviewing care plans and that might well delay looking at the future of children. However, I cannot see why this aspect should not be looked at. When the judge is looking at the placement of the child before him, he must look at the whole family, the parental position and what is going to happen to the siblings. Although I understand absolutely why David Norgrove felt that the local authority should be the one looking sensibly at the care plans, I do not at all see why the court should not look at the sibling placement.
The Minister of State, Ministry of Justice (Lord McNally) (LD)
My Lords, I am very grateful to all noble Lords who have contributed to this debate. The noble Baroness, in introducing the amendment, referred to the strength of feeling expressed when Part 1 of the Bill was discussed and how important it is that the court is able, where appropriate, to consider the arrangements that the local authority might make for a child to live with his or her siblings. My noble friend and I will consider the points made both today and earlier in the Bill.
As was discussed in the other place, the purpose of Clause 15 is to focus the court, in its consideration of the local authority care plan, on those provisions which set out the long-term planning for the upbringing of the child; for example, whether the child is to live with a parent or other family member, to be placed in foster care or to be adopted—the permanence provisions. The court is not required to consider the remainder of the plan. The clause is based on the findings in the family justice review that, driven partly by concerns over the quality of local authority social work, courts can spend a long time scrutinising the details of local authority care plans for children before making care orders. In many cases, court scrutiny goes beyond what is needed to determine whether a care order is in the best interests of a child. This can lead to unnecessary delays and contribute to the lengthy duration of care cases.
As was also highlighted in the other place, details of care plans are not set in stone and often change over time in response to a child’s changing needs and circumstances. In 62% of cases in a recent study, the care plan scrutinised by the court was not carried out, due to changing circumstances. Given this likelihood of change, the local authority, rather than the court, is better placed to consider the detail of the care plan.
I appreciate the concerns expressed by noble Lords about sibling placement, following the debate in the other place. I want to clarify that if the permanence provisions of a particular plan deal with arrangements relating to a child’s sibling—for example, if the plan is for the child to be adopted along with his sibling—the court will be required to consider those arrangements as part of the permanence provision. I will look at the statistics cited by the noble Baroness, Lady Hughes, about loss of contact and, in addition, I make the point that she anticipated: there is nothing in the clause that prevents the court looking at any other aspect of the plan it considers necessary to make the order.
I understand the point made by the noble and learned Baroness, Lady Butler-Sloss, with her vast experience and from the evidence heard by her committee, about the grief and stress that can be caused to siblings by being parted. It is a matter that needs to be looked at. I re-emphasise that nothing in the clause affects the duty of the local authority, when deciding the most appropriate placement for the child, to ensure, as far as reasonably practicable in each case, that the placement enables the child to live with any sibling who is also being looked after by the local authority.
As has been pointed out, concern has been expressed and some statistics have been advanced for us to ponder. We will look at this again in those terms and in the context in which David Norgrove made these recommendations. There is a danger that if we have too many belts and braces in the process, we will lose the very advantages of speed that we are trying to bring in and which are also in the best interests of the child. I hear what the Committee has said and my colleague and I will consider that between now and Report. In those circumstances, I would be grateful if the noble Lady would withdraw her amendment.
Baroness Hughes of Stretford
I thank the noble and learned Baroness, Lady Butler-Sloss, and the noble Baroness, Lady Howarth, for their important contributions. I thank the Minister for that response; I am grateful that he will look at this issue again. However, I have a couple of comments that I hope he will take with him.
The Minister said that Clause 15 is about the court looking at the permanence provisions. Many people would argue that such is the importance to young people of continued contact between siblings—not necessarily joint placements, which may not be possible, but particularly if they are not possible, then arrangements for them to keep in contact with each other—that when it comes to permanence provisions it has a unique relevance to the stability of the placement, the well-being of the child and the security that the child feels. It means that the child in that placement, as the noble and learned Baroness graphically conveyed from her conversations with young people, does not have that placement clouded by anxiety and concern about where brothers and sisters are. This is a unique detail in the whole panoply of details that have to be considered in permanence placements.
I say this with great respect for the Minister but, frankly, I do not accept the argument that to include the provision to require judges to ask the question—that is all that is being asked here—would delay proceedings. That sounds like a very official argument, and it is a weak one. In the amendment we simply suggest, as the noble and learned Baroness, Lady Butler-Sloss, and the noble Baroness, Lady Howarth, said, that the judge should ask, “Does this child have any siblings? If so, where are they, what are the plans, are they going to be placed together and, if not, what contact is being arranged for them?”. If the judge started the consideration with those simple questions, I do not think that that would precipitate any delay at all but it would elevate the issue to an importance that would require the professionals dealing with the detail then to have to consider the detail and, if necessary, reply to the court about what arrangements they had made for sibling conduct. With that clarification of what we are seeking here, I beg leave to withdraw the amendment.
Baroness Butler-Sloss
My Lords, with the leave of the Committee, I shall speak in place of the noble and learned Lord, Lord Mackay of Clashfern, at his specific request. He was here on Monday, but he was just not reached and is unable to be here today. The noble and learned Lord is making a plea for the Family Law Act 1996. As Lord Chancellor then, he was responsible for its introduction in the House of Lords. A considerable part of that Act has not been commenced, but Governments since then have left it on the statute book.
Clause 18 of the present Bill repeals the whole of that which remains of the 1996 Act. The noble and learned Lord has said that since he was involved he felt diffident about raising the issue, but then he learnt that at least some of those concerned with family law did not know that the Act was to be repealed. He felt that he had a responsibility towards those who had supported him to point to this development. Perhaps the Committee will forgive me if I read the noble and learned Lord’s principal concern. He has written that,
“with no-fault divorce which I advanced on the basis that to require a spouse seeking divorce to make allegations about the other spouse which would not require to be proved was not conducive to the vital task of promoting good relations between them for the sake of the children”.
In other words, “no-fault divorce” means that the parties do not rake up unpleasant things about each other which can only be bad for the children. He adds:
“So far as I know its retention on the statute book has done no harm”.
I would add that Part 1 of the Family Law Act 1996 sets out what I do not believe we get anywhere else; that is, the principles of Parts 2 and 3 of that Act. It states that,
“the institution of marriage is to be supported … that the parties to a marriage which may have broken down are to be encouraged to take all practicable steps, whether by marriage counselling or otherwise, to save the marriage”—
which is admirable—
“that a marriage which has irretrievably broken down and is being brought to an end should be brought to an end … with minimum distress to the parties and to the children affected”.
It goes on like that. It sets out in about one page the general principles of good behaviour between parties to a marriage that has broken down. It is sad that there are issues of reflection and consideration before the divorce.
One might say that all that is old hat. Marriages go on, thank goodness. The majority of people who live together do not get married but a lot do. To have these good principles on the statute book has done no harm and will do no harm. It will at least make available to people the desirable end to those marriages that have broken down, and make some effort to remind them that they should try to minimise distress to everyone, particularly their children. I might add grandparents to that. It is sad that it is apparently necessary, under Clause 18, for this Act to be repealed, which is the purpose behind the noble and learned Lord, Lord Mackay of Clashfern, opposing that it should stand part of the Bill.
Lord McNally
My Lords, one of the perils of being a Minister in this House is that the continuity that is one of its merits means that changes to decades-old legislation may mean that we find the author still with us, alive and kicking. We saw something similar on Monday when noble and learned Lords wanted a rematch of decisions made by Law Lords some decades ago. However, that does not mean I take lightly the point made by the noble and learned Lord, Lord Mackay. After our Monday sitting, I had a long conversation with Sir James Munby on Tuesday. I mentioned the point raised by the noble and learned Lord. Sir James was somewhat wistful about the ambitions of the noble and learned Lord to bring in the concept of “no-fault divorce”, which had not progressed as much as the authors of the Bill at that time had intended.
I have listened with great care to the points made on behalf of the noble and learned Lord, Lord Mackay, by the noble and learned Baroness, Lady Butler-Sloss. As I have said, I have the utmost respect for the position of supporting the principle of “no-fault divorce”. I acknowledge the expertise of the noble and learned Lord in this area and I know that when he introduced the Family Law Bill in this House in 1995, it was a Bill very close to his heart.
I fully understand that the provisions of Part 2 were intended to save saveable marriages and reduce distress and conflict when it was inevitable that a marriage would need to be brought to an end. While Part 2 retained as the ground for divorce the irretrievable breakdown of the marriage, it would, if implemented, have removed the need to establish irretrievable breakdown through one or more facts. I understand why proponents of no-fault divorce believe that the approach in Part 2 would have helped to reduce conflict and acrimony.
However, there are two separate issues here. The first concerns the principle of no-fault divorce in Part 2, and the second concerns the information meeting and other provisions of Part 2 which were an integral part of that policy. The Government in 2001 concluded that the provisions were unworkable, would not achieve the objectives of saving saveable marriages and reducing distress and conflict, and should be repealed. It is that second issue that led us to include Clause 18 in the Bill.
The decision to repeal Part 2 was made in principle long ago on the basis of extensive academic research by the University of Newcastle. The research looked at six models of information meeting that a party to a marriage would have been required to attend as the key first step in initiating a divorce. Part 2 is built around that initial mandatory information meeting. The research concluded that none of the six models of information meeting tested was good enough for implementation nationally. For most people, the meetings came too late to save marriages and tended to cause parties who were uncertain about their marriages to be more inclined towards divorce. While people valued the provision of information, the meetings were too inflexible, providing general information about both marriage-saving and the divorce process. People wanted information tailored to their individual circumstances and needs. In addition, in the majority of cases, only the person petitioning for divorce attended the meeting. Marriage counselling and conciliatory divorce all depend on the willing involvement of both parties.
Repeal of Part 2 has been awaiting a suitable legislative opportunity. The Children and Families Bill now provides that opportunity. Repeal was part of the draft Bill published for pre-legislative scrutiny in September 2012. None of the written responses opposed repeal of Part 2.
The Government have introduced separate measures in Clause 10 to make it compulsory for an applicant in certain family proceedings first to attend a family mediation, information and assessment meeting—I realise we will be having further debates about that on Report. That provision has some similarities with the information meeting provision for divorce in Part 2 and will, we intend, address disputes about children and finances.
Mediators who conduct the MIAM will check with the parties whether they wish to save their relationship, as well as discuss ways to resolve a relevant family dispute with the minimum of distress, including, in particular, arrangements for any children. However, Clause 10 addresses disputes between both cohabiting and divorcing couples.
Repeal of Part 2 is a long-standing commitment to Parliament. There is no prospect of Part 2 being implemented. Therefore Clause 18 should stand part of the Bill.
Baroness Butler-Sloss
My Lords, the noble and learned Lord, Lord Mackay of Clashfern, wanted this matter raised, but he does not wish it to be pursued any further.
Lord Low of Dalston
“( ) whether the child is a disabled person for the purposes of the Equality Act 2010 and, if so, the obligations falling on the local authority as a result including any obligations under section 20 of that Act (namely the duty to make reasonable adjustments).”
Lord Low of Dalston (CB)
My Lords, having laboured, not without difficulty, up the lower slopes of this major and compendious piece of legislation, we come at last to a major plateau where we can either take our rest or chafe at the impediment it still constitutes on the way to the summit.
I refer to Part 3, on special educational needs. I describe it as a major plateau because more than 200 amendments to Part 3 have been tabled for debate in 35 groups. I fear that I am responsible for more than 20 of them. At the current rate of progress, that should take us a good five days. Perhaps that is not so bad; four were allowed for in the Committee calendar. I certainly do not intend to hold up progress any more than necessary. I just observe, however, that the fact that there are so many amendments testifies to concern that the Bill is not yet in a fit state to go on to the statute book if it is properly to serve the needs of the children and young people whose lives and futures it deals with; to disappointment that the Government have not been more responsive to concerns raised so far; and to the hope that we will see more movement as the Bill passes through this House, so that its passage into law does not need to be delayed beyond the timescale that the Government have in mind.
Let us see whether we can get four amendments out of the way without more ado. I am moving Amendment 65B and speaking to Amendments 87, 90A and 105. Amendments 65B, 67 and 105 would ensure that the Bill covered children and young people who have a disability under the Equality Act 2010 but do not have a special educational need. The language varies slightly, and this is just a random selection of places in the Bill where children and young people with a disability but not a special educational need could be inserted. Clause 19 deals with local authorities’ role in supporting and involving children and young people, Clause 26 deals with joint commissioning arrangements and Clause 30 concerns the local offer. In that sense, they are probing amendments to gain more understanding of the Government’s reasons for introducing a Bill that deals with children with special educational needs but not with children and young people with a disability who do not have special educational needs. Amendments 65B and 90A also ensure that the principal obligation owed by local authorities by virtue of the Equality Act to children and young people with disabilities but not a special educational need—the duty to make reasonable adjustments —is covered. Amendment 90A, in particular, is designed to ensure that the reasonable adjustment duty is firmly integrated into the planning of education, health and social care services.
Part 3 applies to children and young people with special educational needs. Children and young people with special educational needs are defined in the Bill as those who have a significantly greater difficulty in learning than the majority of others of the same age or a disability which prevents them from making use of the educational facilities usually available in that area. Although many disabled children and young people are covered by that definition of SEN, some are not. For example, the following children would be disabled but have no special educational need: a child with a physical disability whose school was completely accessible to them or a child with a serious health condition that does not impact on their learning or ability to access the school premises. That group could include those with epilepsy, asthma, diabetes or a motor or musculoskeletal disorder, all of which might require medical treatment or therapies to be administered in school, possibly alongside a social care package at home, but would not require any educational interventions.
Research from the universities of Bath and Bristol, commissioned by the DfE itself, estimated that around 25% of disabled children do not also have special educational needs. The impact of this omission is that the Bill will require local authorities and clinical commissioning groups to plan jointly under Clause 26 and review under Clause 27 provision for the 75% of disabled children and young people with SEN but not for the 25% of disabled children without SEN. Under Clause 30, local authorities must set out a local offer of services available for the 75% of disabled children and young people with SEN but not for the 25% without SEN. The Bill thus creates a dividing line between children with SEN and disabled children without SEN and, as a result, certain things must be done for one group and not the other.
As well as being unfair, leaving disability out of Clauses 26, 27 and 30 does not make sense on a practical level. The label SEN is simply not used by social care or health commissioners. For example, under the Children Act 1989, social care services are delivered to disabled children, not children with SEN. Locally, the Bill as currently drafted will lead to confusing arguments about whether a service is for children with SEN or only for disabled children. There would be no additional cost to including disabled children without SEN in the duty to review services or jointly commission services. It could even end up saving money by creating a more streamlined system.
There are three things wrong with leaving disability out. First, as we have seen, in the new world of integrated education, health and social care, it will lead to confusion and unnecessary boundary disputes. Secondly, it misses a golden opportunity to rationalise the legislation on SEN and disability. SEN legislation is a river fed by two tributaries—SEN legislation itself and disability discrimination legislation. These overlap to a significant extent—some 75% as the universities of Bath and Bristol have shown—but not entirely. This Bill would be a perfect opportunity to bring the two streams together into a single, more coherent framework. Thirdly, leaving disability out goes back on what was promised in the Green Paper on SEN and disability.
This promised a new deal for children with SEN and disabled children. Local authorities would be required to set out a local offer of services available to support children who have SEN or who are disabled. There would be stronger strategic planning and commissioning duties to support children who have SEN or who are disabled. The Bill sets out stronger strategic planning and commissioning duties but, importantly, it does not include disabled children in these clauses, as was promised. I understand that the Government believe that disability is adequately covered in the Bill as a result of Clause 20 but the references to disability there are all to a disability that calls for special educational provision to be made. I fear that does not really bring in those with disabilities but without SEN.
Finally, to hammer the last nail in, it should be noted that the Education Select Committee, in its pre-legislative scrutiny, was in favour of including disabled children without SEN. It said:
“The evidence makes a strong case to include disabled children, with or without SEN, in the scope of entitlement to integrated provision … We recommend this”.
I hope very much that the Minister will review the legislation with a view to bringing in this important category of children and young people. and thereby making the legislative framework a lot more coherent and practical. I beg to move.
Lord Storey (LD)
My Lords, I shall speak to Amendments 67 and 68. The current test in the Bill for whether someone has special educational needs is whether they have a learning difficulty or a disability that would require special educational provision, defined in Clause 21 as,
“educational or training provision that is additional to, or different from, that made generally for others of the same age”.
Amendment 68 would mean that the test of whether someone has a special educational need would be based not on whether they need special educational provision but, instead, on whether provision has to be made for them to access education. What is the difference? Someone could have barriers to their accessing education which do not require,
“educational or training provision that is additional to, or different from, that made generally”.
For example, simply being unable to access a class, due to stairs, for a wheelchair user, is nothing to do with education or training provision but instead about their ability to access education.
Why do I think that this amendment is important? When the Government originally published their proposals for the Bill, when Sarah Teather was the Children’s Minister, the focus was very much on special education and disability needs. The Government have said that this does not prevent the provisions being applied to disabled children when there are barriers to them accessing education. Clause 20 includes disabled children as people who have special educational needs. However, clarity is needed about what might constitute a barrier to education. Are we just talking about things such as additional support—Braille, and so on—or do we include the simple ability to get to a class or get through a lesson due to a spinal problem? This amendment is a probing one to clarify that educational or training provision includes the ability to access education and does not apply only to the actual classroom or teaching session.
I move on to Amendments 220, 221 and 222. Your Lordships all get letters, briefings and, in some cases, speaking notes from a whole host of organisations. I am always amazed at the fortitude of those organisations in campaigning, rightly, for what they really believe in. But sometimes, in the barrage of the correspondence, we get personal letters or comments from individuals who are not part of a gigantic campaign—they are individual snapshots of how that person feels. One such letter came to me some time ago, about allergies. I remember in my own school children with nut allergies. Knowing nothing about it, I did a bit of exploration and realised that this was very serious. If they had an allergy, we needed to make sure that their photographs were pinned up by the canteen and that the Epipen that they needed to save their lives was readily available.
I want to read you this letter from a child, whose name I shall not mention, because it shows how important it is that no child with a medical condition should be prevented from having full-time school provision. The letter says:
“Since the age of 9 months I have had to use the EPI-PEN 13 times. Regardless of all my allergies I have always had a positive attitude to life, and that’s how my mum has always taught me to help me learn how to live in the bigger wider world and my dad has always taught me to smile. Because of this I have been able to live my life to the fullest and we have travelled and had fun whilst doing many exciting things. Nursery, primary and my first year of high school were great and memorable years and the schools have always managed with my allergies.
Now we zoom into 2013 and let’s see what’s going on now. We’ve moved in a new area and my mum applied for schools in our area as they were more nearer to home, we didn’t get the schools we applied for but in the meantime I was offered a place in another school straight away. But all the staff in my new school are worried about my allergies and they aren’t giving me a starting date, it’s been 8 weeks I’ve been out of school and still don’t know when I’m starting!”.
I read that letter as an example of how a medical condition, which the school should cater for, is preventing that poor little girl being able to get to school.
Baroness Howe of Idlicote (CB)
My Lords, I applaud what has just been said, as this pins down carefully and cleverly just what you are covered for or not covered for, about which there is clearly a good deal of confusion. I have a lot of sympathy with almost all the amendments in this considerable group. I will particularly address two and refer to more as we go along. I want to stress the role of the Equality and Human Rights Commission. I will bring forward a number of amendments about this, although a number of noble Lords have already used these arguments—and rightly so.
Amendment 144ZA is also about equality. It would require education, health and care plans to specify what disabilities a child has and what reasonable adjustments are needed for the school to make to enable the disabled pupil to participate fully in the education provided by the school and to take part in the other benefits, facilities and services that the school provides for pupils. In practice, many disabled pupils who also have an education, health and care plan will receive all the support that they need through the special educational needs framework and there will be nothing extra that the school has to do.
Although a child has an education, health and care plan, that does not mean that the school’s duty to make reasonable adjustments for them no longer applies. Hence, some disabled pupils with special needs will still need reasonable adjustments to be made for them in addition to any support they receive through the education, health and care plan. For example, an infant school disabled pupil with attention deficit hyperactivity disorder receives some individual teaching assistant support through the special educational needs framework. He is diagnosed with severe asthma and needs assistance with his nebuliser. Although this is not a special educational need, his asthma is likely to be a disability for the purpose of the Equality Act. A failure to provide a reasonable adjustment would place him at a substantial disadvantage. The school trains his teaching assistant and she provides him with the assistance that he needs. That would be a reasonable adjustment for a school to make.
Amendment 205A to Clause 65, headed “SEN information report”, is also put forward by the Dyslexia Association. The amendment proposes inserting the words,
“the reasonable adjustments that are in place for disabled persons, as required by section 20 of the Equality Act 2010”.
Clause 65 places a duty on governing bodies of maintained schools and proprietors of academies to prepare an information report on special educational needs and disability provision.
This report must include: arrangements for SEN needs and the admission of disabled pupils; the steps taken to prevent less favourable treatment of disabled pupils; the facilities provided to assist access to the school by disabled pupils; and the accessibility plan that schools must publish under the Equality Act 2010. Schedule 13 to the Equality Act 2010 specifies that a school’s duty to make reasonable adjustments is an anticipatory one owed to disabled pupils generally and therefore schools need to think in advance about what disabled pupils might require and what adjustments might need to be made for them. My amendment will require the information report to include an additional requirement on schools when compiling their special educational needs information report regarding information about the anticipatory reasonable adjustments that are in place for disabled persons generally.
Amendment 205B to Clause 67, headed “Code of practice”, states:
“Page 47, line 32, after “Part” insert “, and the duties imposed by section 20 of the Equality Act 2010 (duty to make adjustments for disabled persons)”.
This amendment ensures that the code of practice includes comprehensive details about the requirements placed on a school by the reasonable adjustments duty, as per the Equality Act. This duty applies to all disabled children regardless of whether they have an education, health and care plan, or whether they have been assessed for special educational needs. This is in line with the expressed intentions of Schools Minister Edward Timpson at the All-Party Parliamentary Disability Group in April this year, when he stated:
“One of the things I am keen to do through the Children and Families Bill, and particularly through the Code of Practice, which is a statutory document, so schools have to take regard to it, is to marry up that code with the Equality Act, so that schools, teachers in schools, are clear where they are responsible, and what the rights are of young people who are in their schools. So, we are looking at referring closely in the Code of Practice to the Equality Act and everything that pertains to it that should reflect on better provision of special educational needs and disability provision within schools and the guidance that the EHRC, Equality and Human Rights Commission, has produced, a very helpful guidance around reasonable adjustments duty”.
This amendment would lead to the inclusion of information as set out in the Equality and Human Rights Commission’s reasonable adjustments technical guidance, explaining the duties a school has towards a child who has a disability, whether or not they have a special education need. In particular, this would cover all reasonable adjustments needed to address any substantial disadvantage, and how the reasonable adjustment duty works in conjunction with requirements to provide SEN provision.
I recognise that the draft code of practice on SEN issued in the last few weeks includes a number of references to the Equality Act 2010 and the reasonable adjustment duty as it applies to schools. The Equality and Human Rights Commission has had a number of very productive discussions with officials in the Department for Education, where it is clearly recognised that the reasonable adjustments duty is a very important part of the considerations schools make when looking at the needs of disabled pupils and pupils with special educational needs. With this amendment, I am asking Parliament to consider formalising the current statutory definition of the code of practice such that it is stated in the Bill that it applies to both the SEN framework and the reasonable adjustment duty under the Equality Act 2010. Given that there is a recognition in relation to pupils with disabilities or SEN, it really would be helpful if the status of government guidance on reasonable adjustments is of equivalent status to that on SEN.
There are a number of other things I should like to say within this group of amendments. I would particularly like to mention Amendment 223 from Diabetes UK. The Health Conditions in Schools Alliance is made up of more than 30 organisations representing more than a million children. They support Amendments 220 and 223, which call for duties to be placed on schools to properly support children with health conditions. The Government have now tabled Amendment 241A, which places a duty on schools to support children with health conditions and to follow the statutory guidance. This amendment in the name of the noble Lord, Lord Nash, is, as has already been said, very welcome, but it is also clear from those who have looked at it that we will require further assurance from the Government that children and parents will not have to face the problems they currently do. It would be very helpful indeed if the Minister could give us that assurance, so there will be no doubt in the future.
At the moment, as noble Lords know, too many children with health conditions are not getting the support they need. Their health is put at risk and they can be excluded from lessons, from school trips and even from school entirely. It can mean that some parents have to go into school to provide care for their child at the expense of their own job. It can also mean that children with health conditions are simply not given the opportunity to reach their potential in school, which is a major disaster for them. If a child is not getting the support it needs, there is very little a parent can do. They can, of course, take legal action, but how many, frankly, are in a position to do that or could afford it, particularly with the conditions that now have to be fulfilled?
Although the Government are to be applauded for recognising and dealing with this problem, it requires a duty on schools. We know that some schools will not meet the needs of children with health conditions. What sanctions will schools face if they do not implement the duty and follow the new statutory guidance? If children do not get the support they need, what avenues will parents have to hold the school to account? We would welcome assurance from the Government that their statutory guidance will make clear what schools are required to do and how they should do it. Placing clear duties on schools so they have policies and plans in place to support children with health conditions will mean that school staff will know what is expected of them, which is crucial, and parents will know what schools should be doing. Most importantly, it will mean children with health conditions will get the support they need and get the most out of their education. I beg to move.
Lord Kennedy of Southwark (Lab)
My Lords, earlier in this debate, I referred the Grand Committee to my declaration in respect of Diabetes UK. I shall speak to my Amendment 223—I am very grateful to the noble Lords who have supported it—and Amendment 241A, which was tabled by the noble Lord, Lord Nash. I am very grateful to him for tabling his amendment. He has clearly listened to representations made to him. The amendment goes a long way to address the issues raised in my amendment.
I reinforce the comments made by the noble Baroness, Lady Howe. The Health Conditions in Schools Alliance supports this amendment. The alliance is made up of 30 organisations representing more than 1 million children. It called for a duty to be placed on schools to support children with health conditions. Children with conditions such as asthma or diabetes are often left on their own or unsupervised and are vulnerable to an attack or a hypo. Some children are prevented from treating their condition as soon as they recognise the symptoms, often meaning that the situation ends up worse than it should be.
A lack of understanding from teachers and staff can make the situation worse by making a child anxious and stressed about their condition, which can make it worse than ever. A lack of understanding and training sometimes means that teachers and staff are not able to recognise that certain conditions or medications can affect learning and behaviour. Poor management of conditions often means that children miss lessons. Sometimes schools do not even have policies for absence and for whether a lesson has been learnt or not.
Good management of conditions means that children are better able to concentrate and get the most out of their time in school. Exclusion from school, whether from a trip, a lesson or for months at a time, is one of the most common problems for children who face long-term health conditions. In the past few days alone, Diabetes UK has had a number of calls to explain the problems of children. I shall not mention the children by name, but one 10 year-old girl who uses a pump has been told that she cannot go on a residential trip unless her mother attends as well. The dad was not considered appropriate. It is an activity holiday, so the girl would exercise far more than usual. A staff member would not be able to look after the child unless the mother attended, so she cannot take part in activities. This is quite common. Unless parents attend residential trips and deal with the medication, children are excluded from them.
The Anaphylaxis Campaign is aware of a 12 year-old girl in year 8 who has not been able to attend school for a single day this term because the school and the local authority have not properly prepared for her arrival.
Cases where parents are left to provide care in school are known. Some parents have to give up their jobs or reduce their working hours to make sure their child attends school.
The GMB, my union, and Unison support this amendment. Their members are often left to deliver the care, such as injecting insulin for children with diabetes or giving children with epilepsy their medication. This is a major issue for trade union members. They often feel they are not properly trained or that the training is never refreshed. They are anxious about responsibility for supporting children with health conditions and are not helped to fulfil that properly. This is deeply worrying for children with health conditions and their families, and is also grossly unfair on members of staff who are required to look after children but are not given the proper training or support to do the job properly.
My amendment places a duty on schools to work with local health services to offer training and refresher training to staff. It would require schools to have a proper policy in place to support children with health conditions. That would mean that schools are prepared for things such as staff leaving or being absent for school trips, and would know what training their staff can expect. All children with a health condition should have individual healthcare plans agreed between the school, the child, the parents and specialist nurses, tailored to meet the needs in various situations. Looking after children with health conditions is not impossible, and many schools do it incredibly well. A combination of good leadership, planning, communication and training shows how it can be done. It is not burdensome. Schools that achieve that in the end spend far less time looking after those children, who manage successfully themselves. Along with healthier children, well managed conditions mean fewer missed lessons, fewer incidents in classes, fewer meetings with worried parents, happier children and more confident staff.
We know that the Department for Education wants to reduce bureaucracy in schools, but at the moment, the only option that parents have if their complaints are ignored is the costly and time-consuming process of going to tribunals. One local authority was found to have discriminated against a boy with diabetes. It is now appealing the decision. It has already cost tens of thousands of pounds. In addition to financial costs, it takes at least six months before a tribunal meets to make a decision. That is six months of meetings, compiling evidence, filling in forms and anxiety and stress for all parties concerned.
A clear duty on schools will mean that staff are given the support and training they need to offer, with confidence, the care that children need and make the lives of parents, children and schools much easier. A duty will end the current outrageous situation whereby some children’s health is made worse or put at risk simply by attending school. All children should be given the best possible opportunity to reach their full potential at school. At the moment, far too many children with health conditions are denied the right. A duty will help them to reach their potential and allow them to play a full part in school life.
As I said at the start of my remarks, I am grateful to the Government and the noble Lord, Lord Nash, but I will probably push a little further on Report. I think that the amendment does not go quite far enough. I hope we can address the whole issue of relevant NHS bodies being fully engaged in the care plans of individual children. The amendment does not quite address that.
Baroness Howarth of Breckland
My Lords, I will be brief—I am sure that the Minister will be grateful for that—but I want to say two things at the beginning. First, the Minister needs to know that many organisations think that a great deal in the Bill is extremely welcome. The tone of the debate seems critical. I think that we have the number of amendments that we have simply because people care about the issue and have discussed it at length. I have met several organisations which have said how valuable a great deal of what is in the Bill is taking forward work with disabled children. I thought that we needed to have that on record while we are all complaining bitterly about the things that the Government have not done.
I shall speak to Amendment 220. Most of the points have been made, and I will not make a long, heartfelt tirade about the group that I care about. I just say that I work closely with children with congenital heart disease, children born with half a heart, many of them with hypoplastic left heart syndrome. They usually look like perfectly ordinary children but they are in serious difficulty when they get to school. I am therefore immensely grateful to see the Minister’s amendment but I ask that we see the regulations, because the devil will be in the detail as to whether it really meets the requirements. If we can see the regulations early, it might relieve the pain on Report, when people will otherwise want to speak at length again.
My other question is: once we have the regulation and the detail, how will families be able to complain without taking themselves through massive tribunal cases, as we know has happened? It might be worth the Government looking at how parents raise issues under the regulations when they feel that their needs have not been met, because that would save everybody pain. It is no use saying to ourselves that Ofsted will deal with that, because we know that it visits only every four years. Some children have been right through school and never seen an Ofsted inspection. If we could have some clarity on that, it would certainly speed things up.
Lord Patel (CB)
My Lords, I speak in support of Amendment 223, to which my name is attached. I will be brief, because most of what I would have said has already been said well by the noble Lord, Lord Kennedy of Southwark.
I particularly support the emphasis that he put on the need for teachers to have the right training to deal with children with medical conditions. Without that training, it is likely that any guidance issued will be completely defunct. The NHS, local authorities and schools need to work co-operatively to ensure that training is provided and accessible to teachers.
I welcome the government amendment most sincerely. I am glad that the Minister has tabled it at this stage. My only problem is that, without seeing the draft guidance, we have no way to comment on whether its breadth and depth will be adequate to meet the needs of children with medical conditions. I therefore hope that the Minister can make a commitment to bring forward the draft guidance before Report, so that we can improve it—not criticise it, but help to improve it.
I also want to ensure the inclusion of medical conditions not already mentioned—the list is exhaustive— such as diabetes, epilepsy, asthma and allergies, but also cancers. It is often thought that children with cancers have short lives. Some, unfortunately, do, but most childhood cancers are now long-term conditions and should be treated more as chronic diseases, not short-term ones. I hope that the Minister will include dealing with cancers in the guidance.
The guidance must recognise both the social and emotional needs of young people with long-term medical conditions, and the fact that a health condition can impact on a child or young person’s ability to learn. Another important point made by the noble Lord, Lord Kennedy of Southwark, was the need to involve the parents and children to ensure that the school understands their condition and its emergency needs. A child having a hypoglycaemic attack requires immediate treatment. A child having an allergic attack requires immediate treatment. A child with a migraine needs to be treated with compassion, because they may lose their vision and hearing. Putting them in a corner or a quiet room does not solve the problem. Those are some of the things that children with a medical condition suffer on a daily basis in schools. If we cannot get things right for children in the Bill, we fail them.
Baroness Brinton (LD)
My Lords, with the permission of the Grand Committee, I would like to speak sitting down. I have added my name to Amendments 67 and 68, and I will not repeat the points that my noble friend Lord Storey has already covered, although I completely agree with them.
I, too, want to focus on children with medical conditions. We have had a lot of information, but I have met three or four children with differing conditions. The problem is when schools do not recognise a medical condition. A young man aged 18 with ME had a statement, but it was for his behaviour, not for his medical condition. Even after the consultant wrote to the school, the school refused to believe that the condition existed. A girl with a congenital heart condition was taking an exam. The invigilator had not been informed about the technical equipment she had to wear, and she was pulled out of the exam. Cancer has already been mentioned. There have certainly been some serious educational support issues. I met one young lady who, in the year she had off from formal schooling, had one supportive teacher who kept in touch academically and socially. None of the others did. Home tuition via the local authority was extremely patchy and had not linked up with the school, and nor had the hospital school. As a result, the year was, in her phrase, “entirely haphazard”.
Baroness Grey-Thompson (CB)
My Lords, I rise to speak in support of my noble friend Lord Low. I have looked to my experience in school—admittedly a few years ago—and thought about how the Bill might have affected me. I do not have special educational needs, and nor does my noble friend Lady Campbell of Surbiton, who is not in her place, but we both have access needs. My noble friend was considered to have considerable needs, and I was considered to have lesser needs. I was sent to a school miles away from where I lived. At the time it was the only school in South Glamorgan that was allowed to take wheelchair users. One might imagine that it was an accessible school. However, access was appalling and nothing in particular was done to improve it. There was an occasional ramp in the wrong place, and six people were employed to carry wheelchair users up and down the stairs. I hope that it is better today. I guess it was a product of its time.
Physical access would be better, but we have to take into account other interruptions for things such as physiotherapy in my noble friend Lady Campbell’s case or missing school. I missed a period of school to have metal rods inserted in my spine to stop it collapsing. I had to wear a plaster cast jacket from my chin to my hips for six months, which left me with very restricted movement, but nothing was done to make sure that I could stay in school. I just had to make do. I then missed a year of university because I snapped my metal rods—admittedly I was training to be a Paralympian, but that is an aside. However, it was such a major procedure that the only option for me was to write 12 essays and sit my exams within two weeks of university or to drop out of the whole year. There was nothing in place to think about how my impairment affected my ability to study. My noble friend Lady Campbell told me that because of physiotherapy and missing classes she was considered and classified as a “slow learner”. Accessibility and these other issues have a massive impact on the ability to learn and the opportunities that might arise out it.
I also wish to speak at the request of the noble Baroness, Lady Wilkins, who cannot be here today because she is at a family funeral. She strongly supports Amendments 87 and 105. She says the government Green Paper, Support and Aspiration, outlined a vision of support for disabled children and young people and those with special educational needs. It provided a vision of a more coherent and joined-up approach to meeting the needs of these children and young people. However, the Children and Families Bill concentrates on children with special educational needs only, to the detriment of disabled children. Despite calls from the Education Select Committee following pre-legislative scrutiny, and Members of the House of Commons during debates on the Bill, the Government have refused to include disabled children and young people without SEN within the scope of the reforms.
Research has estimated that around 25% of disabled children may not have SEN. Yet it is just as vital that these children and young people have access to the improved services and better co-ordinated provision that should be the outcome of the draft provisions. By making the changes proposed in Amendments 87 and 105, the Government would ensure that they keep their promise to make the new system better for all disabled children and young people and their families. In addition, the Government will also ensure that all local authorities work in the most streamlined and efficient way to provide services to disabled children and young people, and those with SEN.
Baroness Benjamin (LD)
My Lords, I, too, thank the Minister for his amendment because it is a great way of starting the debate. I have put my name to Amendments 220 to 222 because, as we have already heard, too many children with health conditions are not getting the support they need in schools and this problem needs to be addressed. They include, as we have heard, children with diabetes, epilepsy and incontinence and many others who all need greater consideration. However, I want to concentrate on children who suffer from sickle cell disorder, an invisible illness.
There is a strong feeling among doctors, medical practitioners and those working with children who suffer from sickle cell that provision of community nurses who deal with sickle cell sufferers should be expanded and more resources made available in schools. According to a British Educational Research Journal article, many young people who suffer from sickle cell disorder report extensive negative experiences at school. Around half have been prevented drinking water in class and going to the toilet. These are simple, basic needs of sickle cell sufferers. More than one-third were made to do unsuitable exercises and were called lazy when they got tired because of their sickle cell condition. Awareness needs to be raised by nurses visiting schools whenever and wherever necessary to support and educate staff, particularly sports teachers, about simple practices such as children getting dried off quickly after swimming, cooling down after vigorous exercise and being allowed to drink freely in class. Staff also need to be aware of the brain problems, such as silent stroke, that can occur at any time to those suffering from sickle cell.
Young people were reluctant to disclose that they had sickle cell, as they found many teachers were not knowledgeable about the disorder and felt it might be seen as a disadvantage. In some cases it can be, because if they have an attack or a crisis they have to miss lessons at school and therefore do not reach their full potential. It is all about equality, about educating schools and about training. The provision of specialist nurses in the community is also patchy and not well resourced. This needs to change.
The Sickle Cell Society believes that there needs to be a specific guide for schools on sickle cell disorder, rather than relying on generic guidance. Managing Medicines in Schools is limited because it refers only to medication and what to do in an emergency. It misses out the whole area of prevention and preventive measures, which is vital to keep those with sickle cell disorder safe and well. Also, it is no good having advice on managing medicines if school staff can simply refuse to administer them. Research shows that only a quarter of schools would agree to give children with sickle cell disorder mild painkillers, which is a problem for those suffering sickle cell, who need such medication if they have a crisis or an attack. We need to rewrite the guidance Managing Medicines in Schools to include sickle cell, which is the most common single genetic condition in England, affecting one in 1,850 of all births in England.
I know that the Government’s view is that the local school is best placed to know the needs of its children, but research has shown that schools are clearly not well placed to do this with sickle cell disorder and need considerable help and guidance to respond adequately. All children with medical conditions are supposed to have an individual healthcare plan, but research shows that only 43% of schools with children with sickle cell disorder even claimed to have such a plan. Checking that all schools have such plans in place for children with sickle cell disorder is essential. If such a policy is implemented it will reduce admissions of sufferers to hospital, which is an added, unnecessary strain on the NHS. Unfortunately, children suffering from sickle cell disorder do not have any provision under special educational needs; therefore I believe that a statement of special educational needs is necessary to help protect these children’s well-being at school and I look forward to hearing the Minister’s views. I hope that these children will be brought into the fold and given greater consideration.
Baroness Young of Old Scone (Non-Afl)
My Lords, I shall speak to Amendments 220, 221 and 222, tabled by the noble Lord, Lord Storey, and Amendment 223, tabled by the noble Lord, Lord Kennedy. I join other noble Lords in welcoming the government Amendments 241A and 274. I declare an interest as chief executive of Diabetes UK. We have been delighted and I thank the Minister and his department for the way they responded to the very real case for improved support for children in schools with health conditions, a case that was made not only by the Health Conditions in Schools Alliance but by some parents and children whom the Minister very kindly agreed to see during the summer. These laid out their personal cases in rather heart-rending fashion and demonstrated just how fundamentally the support given in school can influence not only children’s health but also their self-esteem, their educational attainment and their family’s economic circumstances if a parent has to stop working to meet the shortfalls in support that the school is failing to provide.
This is not a small-scale problem: we have heard from many noble Lords this afternoon and there are many more than a million children involved. I shall not go through all the statistics—noble Lords have heard many of them already—or even the heart-rending stories, because I think the Minister got that in bucketloads during the summer. I do, however, want to raise some practical issues that go with the Government’s amendment to lay a statutory duty on schools to provide support. We are very pleased that the amendment includes academies—that is very welcome—but the statutory duty is not enough on its own and we are very pleased that the Government are committed to backing this up with statutory guidance.
Lord Northbourne (CB)
My Lords, I have not put my name to an amendment, and I shall speak only for a brief moment to make one point. I have been disappointed that no noble Lords have mentioned the other children in these schools, because the attitude of the other children is exceedingly important, both for the children who are suffering from disability and SEN and for those who are not. I remember having an all-party group in this Room, where a head teacher had brought four or five of her girls. It was a school for children with mobility problems. It became apparent as one listened to them that the whole school was committed to caring about these children, and this self-evidently makes a huge difference. Would the Minister consider putting something in his guidelines to address this problem?
Lord Ramsbotham (CB)
My Lords, I, too, have not tabled any particular amendment, but I was minded to contribute by the tone of the Minister’s Amendment 241A, and what has been said about that. I entirely endorse all the positive things that have been said about what is happening, and the remarks about the noble Lord, Lord Storey, and my noble friend Lord Northbourne. I want to concentrate on the other children, as well, because this is all concentrating on one very small part of the population of the school.
I refer the Committee to Clause 19, on which the initial contribution by my noble friend Lord Low was made. It is headed, “Local authority functions: general principles”, and the next line says, “Local authority functions: supporting and involving children and young people”. Paragraph (d) refers to,
“the need to support the child and his or her parent, or the young person, in order to facilitate the development of the child or young person and to help him or her achieve the best possible educational and other outcomes”.
It does not differentiate between any of the children; we are talking about all our children.
When we are considering this Bill, special educational needs are mentioned—but if you look at the numbers with those needs, you can see that it comes to about 2.8% of our children. Another 16% are subject to school action and school action plus, which means that 81.2% of our population are not being considered by what we are doing. That worries me.
I declare two interests, one as chairman of the All-Party Parliamentary Group on Speech and Language Difficulties. We have just done a report on the link between social disadvantage and speech, language and communication needs. That follows work that I did as Chief Inspector of Prisons and, later, on the number of people in young offender institutions who were found to have speech, language and communication needs. Clause 19(d) seems to require a duty for every child to be prepared to be able to engage with education so that they can get their best possible educational and other outcomes. That of course includes all those who have problems in gaining that entry into education. It may be that there is a physical or a mental problem. Later, I want to introduce something that has come up in my second context, as chairman of the Criminal Justice and Acquired Brain Injury Group, which is doing a huge amount of work on neurodisability. That is different from learning disability, which tends to be associated with congenital conditions, whereas a neurodisability can result from all sorts of other things, including acquired brain injury and the neurodevelopment of a child.
I come to my second question for the Minister. Surely what we are talking about here comes under the overall umbrella of child development. We are talking about the problems of child development for a particular group at this moment, in this group of amendments. However, when I look at the overall conduct of child development, I am mightily confused about where the Government stand on this. Who is the Minister for Child Development? If you look at what comes later in the Bill, on the 0 to 25 pathways, you can see that only one organisation is responsible for someone from 0 to 25. That is a local health and well-being board, which has nothing to do with the Department for Education or the Department for Business, Innovation and Skills, or whatever it is called, and nothing to do with the Home Office, the Ministry of Justice or the Department for Communities and Local Government. It is a healthcare organisation.
If you look at the start of the journey for child development, the early years foundation stage, that, too, is the responsibility of the NHS, which is responsible for doing the assessment on which the judgment is made as to whether a child has a learning difficulty, a learning disability or whatever. I therefore endorse entirely what the noble Baroness, Lady Brinton, said about oversight and what my noble friend Lady Howarth said about the need to have the details here. We are talking about things that concern us greatly, not just today but for tomorrow.
We must be concerned about what the Government’s plan is for the oversight and the conduct of all these things that we are talking about. I do not know whether everyone has read in detail the code of practice that came out. It is full of sentences that start, “Local authorities must…”, but there is no indication of how that “must” is to be overseen, who is to do it, who is to fund it or what the “must” is—there are just lots of “musts”. My experience as a soldier is that unless someone is actually responsible and accountable for making things happen, nothing will happen.
Judging by the content of the amendments, we are going to hear masses of good sense and good advice, all based on experience, which will make our children better. What worries me is that all that will go nowhere unless the Government have an overall construct for the oversight and introduction of all the things that we are going to talk about. I would be very grateful to hear from the Minister exactly where the Government stand on delivering that.
Baroness Sharp of Guildford (LD)
My Lords, my name is attached to Amendment 87 along with that of the noble Lord, Lord Low. It relates to Clause 25, which is about the integration of local authority services with health services and care services. It comes back to the whole issue of disability as well as medical conditions and so forth. This was the subject of the noble Lord’s initial presentation on Amendment 65B, which led this whole group, and it is an important issue. The problem is that Clause 25 says firmly:
“A local authority in England must”—
just as the noble Lord, Lord Ramsbotham, was saying—
“exercise its functions under this Part with a view to ensuring the integration of special educational provision with health care provision and social care provision, where it thinks that this would … promote the well-being of children or young people in its area who have special educational needs”.
Again, disability is not mentioned there. I do not want us to lose, amid the other things, the need to cater for those with disabilities, as the noble Baroness, Lady Grey-Thompson, made clear. There are features here that are very important but are not covered. They are covered better in the code of practice but the Bill itself does not mention them, and it is very important that we do not forget them.
Baroness Jones of Whitchurch (Lab)
My Lords, we have tabled Amendments 69, 70, 90 and 91, and we have added our names to Amendment 223 in this group. We have had a very long debate and I hope that I am not going to repeat too much of what colleagues have said. I start by echoing the points that the noble Lord, Lord Low, made in his contribution. The first batch of our amendments very much dwells on that issue. It is important and it picks up the point that the noble Baroness, Lady Sharp has just made: it goes to our concerns about the heart of Part 3 of the Bill. We believe that, despite the very good intentions in the Bill to be inclusive, it appears that it still intends to exclude those with a recognised disability or chronic illness from a whole swathe of its provisions, and we believe that that is essentially still divisive.
We also feel that it is important that this issue is addressed and resolved now, at the outset, because it is a flaw that runs through the heart of Part 3. It needs to be tackled at this stage, not least because when we talked to the clerks about future amendments, they identified another 40 areas where we would have to table amendments to achieve a similar effect if we are not able to resolve it at the outset in the original definitions. So it is important that we come to a proper understanding and agreement with the Minister at this point about what is intended.
Our amendments, in common with those of a number of noble Lords, have sought to tackle whether the definition of SEN includes disability by amending the definition. Our intention and the way we have gone about it—a number of noble Lords have attempted to do the same thing—is to extend the scope of the Bill to refer to the definitions in the Equality Act 2010, to which the noble Baroness, Lady Howe, and others have referred. Our aim is to provide an overriding, inclusive definition which will apply throughout Part 3. We think that this is important and we feel that the arguments are overwhelming and compelling on this count.
The noble Lord, Lord Low, referred to research that we already have from the universities of Bath and Bristol, which was commissioned by the department and estimated at that time that in the region of 25% of disabled children may not have special educational needs. Indeed, that evidence was quoted by the Minister, Edward Timpson, in the Commons, when he said that,
“it is estimated that 75% of disabled children will also have special educational needs and so will be covered by the reforms”.—[Official Report, Commons, Children and Families Bill Committee, 19/3/13; col. 356.]
By definition, then, 25% are not. He also made it clear that the definition of SEN in the Bill mirrors the current definition, which, as we know, excludes many children. Again, noble Lords have cited statistics in that respect. The Minister himself took a similar line in his letter after Second Reading, in which he said that 75% of disabled children would be classed as having special educational needs. We have heard some examples this afternoon of the problems that this causes.
The noble Baroness, Lady Grey-Thompson, made the point very eloquently and we have heard other examples of children with a physical disability who, because the school was completely accessible, were not categorised as having SEN, or a child with serious health conditions that do not impact on their learning also not being classified as having SEN. We really need to bottom out whether it is the Government’s intention that such children would continue to be excluded from the provision in the Bill. This matters enormously because the truth is that assessment of SEN is the gateway in the Bill to all the other support provisions. As it stands, the joint commissioning provision and the local offer would be available to those defined as having SEN but not to the 25% who are not defined in that way. It would exclude the non-SEN children from health and social care provision to which some of them may already be entitled—we might be going backwards. This cannot be right and it goes against the whole ethos of the Government’s original proposals.
We know from this debate and from the level of correspondence and meetings that we have had that this remains a key ask of the sector; its frustration with the current proposals in understandable and urgently in need of resolution. The principles of the Green Paper were to make a system that would be simpler for parents, children and young people. At that stage, it was understood that education, care and health plans and the local offer would bring together current entitlements for disabled children and young people, regardless of what combination of education, health and social provision they require. That seems to us to a good principle, but we seem to have moved a long way from that excellent aspiration in the Green Paper.
Despite attending various meetings and briefings with the Minister, as well as looking back over the Commons debate, I have yet to hear a coherent argument as to why the Government are now insisting on this narrow definition of SEN, which appears profoundly to limit access to services. More recently we have heard that they do not feel that there is enough evidence that some groups of young people would be excluded from that provision but their own research seems to disprove that. Again, today we have heard examples of people which help to prove the point being raised.
Another argument seems to be that the code of practice will address some of those issues. Having looked at the draft code, it does not seem to shed sufficient further light on those key concerns. Anyway, reference to the code of practice is not good enough. We want this Bill to bring together all the different types of support that children need, which was promised in the Green Paper. That is key to ensuring that the needs of those children and young people are taken into account in joint strategic planning and commissioning, and that their educational progress is tracked.
I hope that the Minister will recognise the strength of feeling on this issue and put the sector’s mind at rest by agreeing to take this issue away to find a more acceptable, fully inclusive definition of SEN. If the Government intend the Bill to cover all children with a recognised disability or chronic illness, will he agree to work with us on a wording that would definitely and genuinely achieve that?
I now turn to the amendments tabled by the Government which address children with longer-term medical conditions. Again, we have added our name to Amendment 223 which addresses this issue. Obviously, we very much welcome the progress that has been made. It seems that the amendment remains quite general in its current form. I know that several other noble Lords have already posed questions to the Minister but I should like to add some of my own. How will a medical condition be defined and who will be covered by it? What is meant by the requirement for schools to “make arrangements” for support? Is that the same as a duty to secure the support? Where is the role of health authorities in working with schools on this? Why are requirements to consult parents and to provide appropriate staff training not set out more clearly? Perhaps more fundamentally—again, this challenge has been raised today—when will the draft guidelines be available and will we see them before Report?
We have had a good debate today. I am sorry to have held up the debate further but there are important questions that need to be answered. I very much look forward to hearing the Minister’s response. I hope that on all these issues he will continue dialogue to find forms of wording that will provide the necessary assurance to the sector on these issues.
Lord Nash (Con)
My Lords, this is our first debate on Part 3, and it has been excellent and extensive. I should particularly like to thank the noble Baroness, Lady Howarth, for her opening remarks. I thank all noble Lords who have contributed and shared their great experience and expertise. I am also grateful to those who have taken time over the summer to help me, as the new boy, to understand the issues and the history in this area, particularly the noble Lords, Lord Low, Lord Rix and Lord Ramsbotham, the noble Baroness, Lady Warnock, and my noble friends Lady Cumberlege, Lady Eaton and Lord Storey.
Before moving my Amendments 241A and 274 and respond to specific points in the debate, I hope that the Committee will find it helpful if I set out the context of our reform programme. Part 3 will deliver the biggest change to the system since the reforms that flowed from the report of the noble Baroness, Lady Warnock, in 1978. Her work transformed the lives of many children and young people, allowing them to enjoy the benefits that a high quality education can bring. We have seen other changes in law and society that have shaped this country’s view of disabled children, including such important legislation as the Disability Discrimination Act 1995 and the Equality Act 2010 and, of course, the great success of the Paralympics last year.
The changes we have seen for this group of children in our lifetimes and the challenges ahead were brought home strongly to me when I visited Chailey Heritage School with my noble friend Lady Cumberlege at the start of the school year. There I saw an institution that was founded out of charity to provide training in crafts to children born “crippled”, as it was termed then in the East End of London. Now it offers outstanding education, care and support to children and young people with the most profound and complex needs who, with excellent teaching, care and the aid of modern technology, are being supported to learn and to fulfil their great potential. Disabled children and children with special educational needs must all be treated first as individuals. They all have different needs. It is the Government’s concern, as I know it is of everyone in this room, to ensure that our services are supporting each of them and their families in the best way they possibly can.
I pay tribute to the work and legacy of the noble Baroness, Lady Warnock, and to the tireless work of many of your Lordships in championing the rights of children with SEN and disabled children. I also know that I do not need to tell you that, despite all the successes of the past 30 years, the current system is not working as it should. Fundamentally, successful reform will be about a change of culture. As we all know, it is tempting to think that by legislating a word here and a new duty there we can solve complex issues. However, what matters is how professionals work with children and families. Many noble Lords here have direct experience of the struggles that families can face. All of us know people who have had to fight to get the support that their child needs, grappling a faceless and apparently endless bureaucracy in a system that seems set up not to help but to frustrate.
This reform aims to change that. Its simple but ambitious aim is to unite services around the needs of the family, putting children, young people and parents at its heart. Legislation cannot do that alone but the Bill sets the framework to support the right ways of working. The detail is in the code of practice, which I hope noble Lords have now had the opportunity to read. It has been informed by the experience of the pathfinders. They are showing how services can come together and how families can help share the available support. I hope that those noble Lords who were able to hear from some of the pathfinders last week found their experiences both helpful and encouraging. I was struck then, and on my visits to pathfinders in Greenwich and Hertfordshire, how they were working with families to develop support that meets their needs and the impact that that support and the new ways of working were having in a much more co-operative environment.
Turning to the definition of SEN, this group of amendments reflects concerns that some children and young people might miss out on the benefits of the new system. A great many noble Lords have spoken about this and I apologise if I do not mention them all by name. It is not the Government’s intention to prevent any group of disabled children from receiving the support they need. We must ensure that all children who need support to access education because of disability or a special educational need can do so. The definition of SEN is deliberately broad:
“A child or young person has special educational needs if he or she has a learning difficulty or disability which calls for special educational provision to be made for him or her”.
The Bill defines a learning difficulty or disability as,
“a significantly greater difficulty in learning than the majority of others of the same age, or … a disability which prevents or hinders”—
a child or young person—
“from making use of facilities”.
Baroness Hughes of Stretford
On that point, I wonder if the Minister will accept—as we talked about when we met him this week, and based on the contributions from others today—that there is a degree of circularity in language and in practice around this definition. As we heard from the noble Baroness, Lady Grey-Thompson, and others, very often the access to education and learning implications of a disability are not recognised by schools or local authorities as a special educational need and, under the definition of this Bill, if they are not recognised as a special educational need then they will not fall into the scope of the Bill. This is a big problem that everyone has been trying to clarify. I realise that it is very complex but we need to get to the hub of this. I would be grateful if the Minister could explain, outside the circularity of this language, why the Government are excluding the kind of young people that the noble Baroness, Lady Grey-Thompson, and others were referring to.
Lord Nash
I am grateful for the noble Baroness’s intervention. I shall take away all the points that have been made today and consider them further, including, I hope, understanding more clearly the point that the noble Baroness made. The Bill defines a learning difficulty or disability as significantly greater difficulty in learning than the majority of others of the same age, or a disability that prevents or hinders a child or young person from making use of facilities. This means that the majority of disabled children also have special educational needs, and we have seen from the pathfinders that they have taken a broad view of the definition in shaping their local offers and joint commissioning arrangements.
In addition to the SEN framework, there is other important legislation that protects disabled children and young people. The Equality Act 2010 makes it clear that all education providers and commissioners must make sure that reasonable adjustments are made for those with disabilities, including providing auxiliary aids and services such as specialised computer programmes, hoists and sign language interpreters. Parents can legitimately complain if education providers fail to deliver those adjustments.
Equally, in the health system there are legal protections. Section 3 of the NHS Act 2006 gives CCGs a statutory duty to provide health services to meet the reasonable needs of a child with a complex health need. Section 17 of the Children Act 1989 gives local authorities a general duty to safeguard and promote the welfare of children in need in their area. Together, therefore, the provisions in the Bill and existing legislative arrangements provide important protections and support for disabled children and their families.
Before amending the Bill, we need to understand which children might not be supported by these provisions and how changing the Bill would help them. I turn to health conditions and my amendment. A number of the amendments in this group—those tabled by the noble Lords, Lord Low, Lord Storey and Lord Kennedy, and the noble Baroness, Lady Howarth—concern children with long-term health conditions. I agree that children and young people with medical needs should not miss out on a full education simply because they have a medical condition. They should not be prevented from active participation in wider school activities that are so vital to their academic attainment and social well-being.
I have heard the evidence that suggests that current arrangements do not always work as they should. That evidence included a meeting with the noble Baroness, Lady Young, and the case made very powerfully by two young people, Beth and Max, whom she brought to see me. I find it appalling that some schools fail their pupils in such a fundamental way. While it remains the case that most schools manage this issue well, and it is important to acknowledge that, it would be wrong to ignore the instances of poor practice. Where there is poor practice, pupils can be placed at disadvantage or risk simply because they are not receiving the right support for their health needs.
Noble Lords will have heard me say on many occasions that this Government trust teachers and head teachers to run their schools and to adjust their provisions for the particular circumstances of their pupils. We believe that this applies to provisions such as PSHE and careers; all good schools should have an active programme on these matters, but they must be free to adjust to the local needs of their particular pupils. However, in the case of medical conditions, this is not a question of subjectivity. When a pupil has an epileptic seizure, there is a clear procedure that needs to be followed; it is not a question of interpretation. At certain times, a diabetic child will need more insulin or more glucose—it is as simple as that, and there is no scope for subjectivity. The same will apply to asthmatic pupils.
That is why I have tabled an amendment giving schools a new duty to make arrangements for supporting pupils with medical conditions and to have regard to statutory guidance when meeting the duty. I do not do that lightly; I am aware that many other duties could be placed on schools. However, ensuring that children who already have medical issues are not placed at further risk seems to me to be extremely important and obvious. This builds on the commitment made in the other place by my honourable friend the Minister for Children and Families to revise and reissue the managing medicines guidance for schools later this year, and I thank all noble Lords who have spoken in support of this amendment.
Baroness Benjamin
My Lords, will children with sickle cell disorder also be included? The Minister did not mention them in the list that he just gave.
Lord Nash
I reassure the noble Baroness that the amendment is not just about managing medicines but is about supporting pupils with medical conditions. We do not plan to set out a long list of particular medical conditions but I believe that we intend to cover her concerns in the regulations. I shall go on to explain how we might do that.
I am pleased to hear that news of the new duty has been warmly received by stakeholders. Unison has welcomed the guidance and what it will mean for its members. The Council for Disabled Children has said that this should ensure that the,
“needs of children with medical conditions … are fully met in school, enabling them to achieve the best possible health and education outcomes”.
Diabetes UK has described the duty as a “major step” to help to ensure that children with long-term medical conditions receive the support that they need at school. Those are just three among many stakeholders who have offered their assistance with developing the guidance, and signals strong commitment and determination to deliver guidance that will make a real difference.
The noble Baroness, Lady Howe, and others asked for assurance that we will really make this work. I have therefore asked officials to work with noble Lords who are interested, the Health Conditions in Schools Alliance and other partners, including unions, the Council for Disabled Children and the Department of Health, on the content of that guidance. I hope to be able to report on progress before Report. I note the point that the noble Lord, Lord Northbourne, made in this regard.
Early discussions have already taken place with members of the alliance and other stakeholders, focused specifically on the content of the guidance. We are fully aware of the need for the guidance to cover issues such as the role of school policies and the appropriate use of individual healthcare plans. Other key issues that we would expect to see covered in the guidance include staff training, co-operative working with healthcare and other professionals, and working with parents in the best interests of their children. In addition, we would expect that the guidance will signpost to good-practice case studies and other useful information relevant to specific medical conditions.
I assure the Committee that, in my view, advice from our stakeholders will be invaluable in ensuring that we get the content of the guidance right. Their help will be critical in enabling us to produce guidance that is accepted by schools and that is effective in helping them to support pupils with medical conditions.
Lord Storey
Can my noble friend clarify that the schools in Part 4 also include free schools and early-years settings?
Lord Nash
The answer is yes.
In developing the guidance, we would welcome discussions either bilaterally or by hosting a round table discussion, whichever is more helpful. Once the draft guidance is prepared, we intend to consult publicly before publishing a final version next year. This will give schools one term’s notice of when the new duty comes into force.
I have listened with interest to the debate on the other grouped amendments. I hope the Committee will agree that the amendment I have tabled will help to support a significant group of children, many of whom meet the Equality Act definition of disability, who previously may not have been explicitly covered by the provisions of the Bill. I would like to reflect further on the other points raised in debate today in relation to the other amendments before us and consider them further. In doing so, I would be grateful for the Committee’s help in providing specific examples of other conditions or other groups of children who are having their educational opportunities restricted, and who are not supported by either existing legislation or the provisions of the Bill as they currently stand.
The noble Lord, Lord Low, gave some specific examples, most of which would be covered by the amendment that I have tabled, but other examples would be helpful. It is always a pleasure to reply to the noble Baroness, Lady Grey-Thompson, who is one of our country’s greatest athletes—
Baroness Butler-Sloss
I have listened to this debate with great interest, very much as a novice in this area, although I have been governor of two schools where we had disabled children. I got the impression from what various speakers have said in this debate that there are problems for all disabled children, not just individual groups. The Minister should take away the problems of all disabled children in all sorts of schools.
Lord Nash
I thank the noble and learned Baroness for that intervention. Clearly, we all got that impression, but we would like help on precisely what category of children are not covered by the existing legislation. I will take away all the points made today and we will reflect further.
Baroness Jones of Whitchurch
Perhaps I may also push the Minister on a point of clarification? I have a quote from the Minister in the Commons, who said that the SEN provision was in line with the current SEN provision which, as we have heard, excludes a whole series of categories of children. Does the Minister endorse the view that the SEN definition has not substantially changed, and that whole swathes of children will fall outside that definition?
Lord Nash
The noble Baroness is right that the definition has not substantially changed. Our position is that most disabled children—75%, according to one study—have a special educational need, and the others are covered by other legislation, particularly after the amendment that we tabled today. I would be grateful for guidance on those categories of children that we may have missed and how we could help them further.
Baroness Hughes of Stretford
On that point, I think that it would be helpful, if we are to help the Minister, if he could first tell us which other legislation he thinks covers the other 25%, and then we can think about which other groups might not be covered. Is it not anyway the case that what the Government are attempting to introduce here is a new integrated system with a local offer attached? That would still mean that 25% of children could not be avail themselves of the integrated provision in the new integrated system proposed under the Bill.
Lord Nash
The Equality Act, the Children Act and the NHS Act are the relevant legislation, but I will provide further details and more granularity on that. I repeat that the Bill is about educational needs—but we will go away to consider this further.
On categories of children who are not covered by existing legislation, the noble Baroness, Lady Grey-Thompson, made the point about physiotherapy and missing school, among others. I would like to understand more about whether, in the modern day, children to which she referred would be covered by the Bill or existing legislation. In response to the concerns expressed by my noble friend Lord Storey about whether special educational provision includes provision to enable children to access education, the answer is yes. I will write to him with more details.
The noble Baroness, Lady Howe, asked whether the code of practice is intended to marry up with the Equality Act. The answer is that it does. We believe that it does—and we are clear that we must make appropriate links between SEN and the Equality Act duties in the code of practice, and are happy to look again at the scope for improving the draft code of practice on this.
Lord Kennedy of Southwark
Looking at my Amendment 223 and the government amendment—I am very pleased with it—an omission is the NHS. My amendment places a duty on NHS bodies to co-operate with school governing bodies; the government amendment does not. I want to avoid coming back on this on Report. We are now so close to getting this. I do not want to find that the guidance is great and it all works fine, but that it all falls over because there are problems between the NHS and schools. Is the Minister prepared to facilitate a discussion between the NHS, the Department of Health and representatives here and elsewhere before Report to close that point? It would be wonderful.
Lord Low of Dalston
My Lords, this has been quite a long debate. We have been going for nearly a couple of hours. It has been a very wide-ranging debate. I have not totted up the number of amendments that have been spoken to, but it seems to be 10 or a dozen. I am sure that at this advanced stage in the Committee’s deliberations this afternoon, your Lordships would not want me to make a full response on all the amendments that have been spoken to and to which the Minister has responded. I am not quite sure whether that is my role or whether I should simply respond to my own amendment, although I will not do even that in any detail. A lot of observations have been made and the Minister has responded. I believe that we all will want to read what everyone has said and what the Minister said in his response to this wide-ranging debate. Then we will know to what extent we want to focus on issues on Report. Certainly, a great many issues have been raised and I am sure that we will wish to return to some of them after having read and reflected on this debate. Having said that, I beg leave to withdraw my amendment.
Lord Low of Dalston
“( ) the distinction between children for whom parents have some legal responsibility and young adults who must be supported to participate as fully as possible in their own right, in decisions relating to the exercise of the function concerned.”
Lord Low of Dalston
It is me again so soon. Amendment 65C is the only amendment in this group, which means that I should be able to speak to it somewhat more briefly. The amendment is about the rights of disabled young adults. In using the term “disabled people”, I include those with SEN. Referring to disabled people will help to anchor the notion that the Bill, as we discussed as regards the previous group, should be about disabled people without SEN as well as those with SEN.
The Bill does not clearly distinguish between the rights of children and those of young adults. As the age range covered by the Bill goes from birth to 25, the rights of young adults need to be clearly differentiated. Parental responsibility for decision-making is in place until the age of 18. While that is subject to some flexibility in certain areas, such as consent to medical treatment and Gillick competency, the position is different from that relating to those aged more than 18 who have their own rights and responsibilities, and where parents do not have a specific legal role unless the young person lacks competency.
I am concerned that the Bill does not make this distinction clearly enough. Therefore, it has the potential to blur the right of young, disabled adults aged more than 18 to be involved in decisions about their own education. Amendment 65C makes clear that disabled young people must be consulted and involved in their own right, and supported to participate as fully as possible in the process. Other young people would not expect decisions about their future to be made for them, so nor should this be the case for disabled young people. I beg to move.
Baroness Northover
My Lords, I am grateful to the noble Lord, Lord Low, for tabling this amendment. The SEN provisions bestow important new rights on young people—that is, those over compulsory school age—for the first time and the noble Lord is right to draw our attention to the distinction that we are making here.
I assure the noble Lord that the Bill already makes the distinction between children in relation to whom decisions are made by their parents and young people who make those decisions themselves. A local authority would be in breach of its duties if it failed to make such a distinction. Clause 27 requires local authorities to consult young people when it reviews its special educational provision and social care provision. Regulation 4 of the local offer regulations is very clear that local authorities must consult with young people directly over the local offer. That may be an implementation challenge for many local authorities but it does not require a change to legislation. For young people with education, health and care plans, which may be particularly relevant to what the noble Lord has just raised, it is they, not their parents, who must be consulted about their assessment and plans.
It would be impossible for a local authority to fulfil its statutory duties under these clauses without having due regard to the distinction between children and young people. The draft code is also very clear on this point: paragraph 3.2 says:
“Where there is a conflict of interests between the young person and the parent, it is the view of the young person that prevails”.
Parents are not ruled out, of course; they can still support and help a young person in whatever way the young person wants them to. Chapter 3.2 of the draft code acknowledges that,
“some young people will need support from a skilled advocate to ensure that their views are heard and acknowledged”,
and Chapter 3.3 says it is clear that,
“staff working directly with young people should be trained to support them and work in partnership with them, enabling them to participate fully in decisions about the outcomes they wish to achieve”.
I hope that this reassures the noble Lord, and I urge him to withdraw his amendment.
Lord Low of Dalston
My Lords, there seems to be a good deal in the Minister’s response that should potentially provide quite a bit of reassurance. I want to read it, but I certainly do not intend to argue the toss about it or prolong the debate at this stage. I am happy to beg leave to withdraw my amendment.
Lord Low of Dalston
“( ) the need to continue to develop an inclusive system where parents of disabled children have increasing access to mainstream schools and staff and which have the capacity to meet the needs of disabled children.”
Lord Low of Dalston
My Lords, I shall also speak in support of Amendment 157B, which was tabled by the noble Baroness, Lady Howe, and is a slightly rejigged version of Amendment 157A, which is somewhat improved, at the suggestion of the DfE, by putting the inserted words at the end of Clause 39(4) rather than at the beginning. I also added my name to the noble Baroness’s Amendment 219, but I shall not say anything about that, except to signify my support because there will not really be time, and in any case I have to leave her something to talk about.
Amendment 65D enshrines a recommendation of the Joint Committee on Human Rights. Under the UN Convention on the Rights of Persons with Disabilities, states undertake to,
“ensure an inclusive education system at all levels”,
and are required to ensure that:
“Persons with disabilities can access an inclusive … primary … and secondary education on an equal basis with others in the communities in which they live”.
One of the principal obligations undertaken by states under the convention is:
“To adopt all appropriate legislative, administrative and other measures for the implementation of the rights recognized in the … Convention”.
In relation to the right to education, states are also under an obligation to,
“take measures … with a view to achieving progressively the full realization of these rights”.
When the UK ratified the convention—in 2009, I think it was—it entered a reservation and interpretive declaration to the right to inclusive education, but the terms of its declaration made clear that the UK accepted the obligation of progressive realisation of the right to inclusive education. Clause 33 retains the current statutory presumption in favour of education in a mainstream setting, but this has been the subject of continued debate and considerable litigation. The frequency of such litigation about the presumption in favour of mainstream education suggests that the current state of the law and guidance leaves considerable scope for uncertainty. If scope for such uncertainty exists, the UK’s obligation under the UN convention to take steps to increase access to mainstream education for people with disabilities might require the Government to remove the uncertainty by clarifying the law and/or the relevant guidance.
Baroness Eaton (Con)
My Lords, I rise to speak in support of Amendment 219, in the names of the noble Baronesses, Lady Howe and Lady Wilkins, and the noble Lord, Lord Low. The noble Baroness, Lady Howe, has already said that this amendment would ensure that local authorities and their partner NHS commissioning bodies promote and secure inclusive and accessible education, health and social care provision and that they consider disability at every stage, be it the planning, design, commissioning, funding, delivery or evaluation of such services.
I am very pleased to say that some of this is already in process. Suffolk County Council is already leading the way in this area and is working with the disability charity Scope to provide Activities Unlimited, a brokerage service which works closely with parents and other agencies to encourage mainstream services to be more inclusive and accessible. Activities Unlimited has recognised that there is significant demand for services from families with disabled children who have personal budgets to spend which is not currently being tapped into. Activities Unlimited works closely with parents and other agencies, not only in commissioning services and identifying new high quality service providers, but involving them in the evaluation process as well, using feedback from families to support improvements to services and signposting families towards the most appropriate support. When local services are inadequate or where uptake is low, Activities Unlimited signals a need for improvement, shifts resources towards more effective services and eventually withdraws public support from underperforming services.
Through forcing services to work in a more competitive economy, a better quality of mainstream provision is ensured whereby consumer demand supports the best quality providers. Through increasing provision for disabled children and young people, families have a genuine choice between providers. This has produced real outcomes for both families and the local authority. By increasing the availability of local inclusive and accessible services, such as youth clubs, swimming pools and play centres for families across Suffolk, the council has not had to provide any expensive emergency respite care for disabled children. Indeed, this is such a successful service that Scope is going to be working with Blackpool and Leeds to set up a comparable brokerage service.
Baroness Lister of Burtersett (Lab)
I rise to speak in support of Amendments 65D and 219. As the noble Lord, Lord Low, said, Amendment 65D was a recommendation of the Joint Committee on Human Rights. I am very grateful to him for moving it so ably. There are really no more arguments to put, because he put all the key arguments. Does the Minister accept that the amendment avoids the crude binary distinction between inclusion and specialism that the Government understandably wish to avoid? If he does, will he accept the recommendation? If he does not accept it, is there some other wording that he would accept that would enable the principle of inclusion to be put in the Bill? As the noble Lord, Lord Low, said, it is an important principle.
The Joint Committee on Human Rights also gave its support to Amendment 219. It is a broader amendment than the amendment recommended by the Joint Committee. UNICEF’s The State of the World’s Children 2013: Children with Disabilities report emphasises that an accessible environment is essential if children with disabilities are to enjoy their right to participate in the community. The right to participate in the community is fundamental to citizenship. I am sure every noble Lord in this Room believes in the equal and full citizenship of disabled children. Therefore, I hope the Government will be able to accept this amendment.
Baroness Brinton
My Lords, I declare an interest as a trustee of UNICEF. I, too, am delighted to be speaking in favour of Amendment 219, which can bring about the transformation of education—much of our emphasis today has been on education—and, importantly, health and social care services, which is needed to make them truly inclusive for families with disabled children.
I strongly believe that the starting point for looking at the reforms to SEN in this Bill should be that a disabled child has just as much right as every other child to be involved in their community, to be visible in their own community and to have the same opportunities as their non-disabled peers. Despite some very welcome reforms to support for disabled children and children with SEN in the Bill, I fear that the right of disabled children to participate in their community will not be sufficiently realised through the Bill. This concern is shared by UNICEF and the Joint Committee on Human Rights, as the noble Baroness, Lady Lister, noted.
There is compelling evidence that families with disabled children currently encounter huge difficulties in accessing support in their community. Indeed, Scope’s recent Keep Us Close report found that a mere 14% of families with disabled children said they could get all the support they needed in their local community. Therefore families which already face immense challenges on a daily basis more often than not encounter a closed door when it comes to ensuring that their children enjoy the same opportunities as other children.
The Government previously stated in Committee on the Bill in the other place that there are already duties in place to ensure that appropriate provision is made for children and young people with special educational needs and disabled children and their families. However, such duties are clearly failing to achieve their intended purpose. Although the Equality Act 2010 requires organisations to be proactive and responsive in ensuring that the public services that they provide are inclusive and accessible, the reality is that services for disabled children are often developed, planned and commissioned separately from other community services, and consequently miss more strategic opportunities to create joined-up support and a more inclusive society. Parents are confronted with local activities and services that are inaccessible or a lack of support services to enable disabled children to join in with local activities such as youth groups or even simply playing in the park with their peers.
The Government need to set out a clear strategic direction and create a strong imperative for local authorities to focus on accessibility of local services, and that is exactly what the amendment would do. Although a number of local authorities undertake excellent work alongside families with disabled children to ensure that their needs are met by mainstream services—notably Suffolk, Leeds and Blackpool—not all local authorities are as progressive. Many local authorities and voluntary organisations want to provide more inclusive and accessible services, and the amendment would help to give them a chance to do that.
Such a duty on local authorities and NHS bodies would not have to be burdensome. Disabled children and those with SEN more often than not do not need hugely different or specialist services. With small changes to an existing service, we can make them accessible and inclusive for disabled children. It is not about providing more and separate services, but, rather, targeting current provision in the most effective way.
Indeed, making services accessible and inclusive for disabled children is just as much about changing attitudes as it is about making physical adjustments. It is about breaking down many of the fears and misconceptions about what inclusion means and ensuring that services see children simply as the individuals who they are—forcing services to think more creatively about how they can meet the needs of families with disabled children and allow the 1.7 million disabled children and children with SEN to reach their potential.
Lord Ramsbotham
Briefly, I support my noble friends Lady Howe and Lord Low on Amendment 219. I commend to the Minister, in forming the regulations, an enormous number of examples of good practice around the country which should be taken note of, as the noble Baroness, Lady Brinton, said. Some of them were drawn to attention in the report of my committee on the links between social disadvantage and speech, language and communication needs. We were fascinated that, for example, in Walsall, assessments were made of children in secondary schools. Nowhere else in the country could we find that being done in the same way. In Stoke, they were training lollipop men and dinner ladies to identify conditions in children which they might bring to the attention of the authorities so that they could be followed up, based on the fact that no longer is child development a requirement in teacher education, which I find an extraordinary state of affairs.
I speak here on behalf of a coalition called the Communication Trust, which would be more than happy to share all that it has learnt with the Minister and the officials responsible for drawing up the regulations to make certain that they incorporate as much as possible of what is already known.
Lord Nash
I thank the noble Lord, Lord Low, and the noble Baronesses, Lady Howe and Lady Wilkins, for tabling their amendments on inclusive provision. I had the great pleasure of meeting the noble Lord, Lord Low, recently. I was grateful for his time and singularly impressed by his breadth of knowledge and wisdom in this area. As I said before, I am indebted to noble Lords for their help in developing my understanding.
Thankfully, we have come a long way since 1970, when some children were written off as uneducable. It was in the 1970s that the noble Baroness, Lady Warnock, and her committee of inquiry published their report. As I have already said, we owe a huge debt of gratitude to the noble Baroness and her committee, as their work led to the Education Act 1981 and the special educational needs framework, which did so much to improve the identification of and support for children and young people with SEN, particularly in the mainstream. Subsequent changes were made to that framework through the Special Education Needs and Disability Act 2001, which applied disability discrimination law to education and strengthened the right to a mainstream education where parents want it.
In 2012 this Government included the provision of auxiliary aids and services, such as specialised computer programmes, sign language interpreters and hoists, within the reasonable adjustments duty for schools under the Equality Act 2010. With the Bill, the Government are seeking to build on what has gone before and create a new framework to improve support for children and young people and increase choice for parents and young people. All the amendments in this group are concerned in some way with the principle of inclusion. The debate today has demonstrated that while we all share a common desire to improve provision for children and young people, we may differ on how that objective is best achieved. I hope that we can make much of our common ground and shared objectives as the Bill progresses.
I shall speak first to Amendment 65D, in the name of the noble Lord, Lord Low. I know that this is an area that was raised by the Joint Commission on Human Rights in its consideration of the Bill. This Government have taken action in a number of ways to support the objective sought by this amendment and to meet our obligations under the UN convention, which we take very seriously. I welcome the opportunity to set these out. In doing so, I hope to be able to persuade your Lordships of the case for giving effect to this principle in a range of ways other than by amending Clause 19. The Bill maintains the general principle of inclusion in a number of its key provisions. It places duties on schools and colleges to use their best endeavours to ensure that those with SEN get the support they need. It also recognises that children and young people have different needs and different preferences for where they wish to be educated, including specialist settings such as special schools and independent specialist colleges, and seeks to improve the options available to them.
Beyond the Bill, as I have mentioned, schools and colleges have important duties under the Equality Act 2010 to prevent discrimination against disabled people; to promote equality of opportunity; to plan to increase access over time; and to make reasonable adjustments to their policy and practice. I want to make it clear that nothing in the Bill replaces or overrides those provisions. Indeed, we have drawn attention to those duties and set out examples of the reasonable steps schools and colleges can take to include children and young people in mainstream settings in Section 7(11) of the draft SEN code of practice. Chapter 6 of the draft code provides strong guidance to all mainstream early years settings, schools and colleges to ensure they have high expectations for all their pupils and students, provide high-quality teaching and have clear systems for identifying those who need additional support and providing that support as quickly as possible.
We make it clear that schools are responsible for setting their own priorities for the continuous professional development of their staff and recognise the key role played by the SENCO in this and other ways. A number of steps are being taken to support schools and colleges in developing their staff. The teaching schools programme is supporting the development of expertise in supporting children with SEN. We are also providing bursaries of up to £9,000 to high-quality graduates undertaking training programmes with a focus on teaching learners with SEN and £1 million in bursaries to support existing further education teachers in undertaking training to develop their specialist skills and knowledge to support those with SEN.
Following recommendations from the Rose review 3,200 teachers have obtained specialist qualifications in dyslexia and since 2009 10,000 new SENCOs have been funded through the master’s-level National Award for SEN Co-ordination with a further 800 places on this award in 2013-14. We worked with the Training and Development Agency—now the National College for Teaching and Learning—to develop specialist resources for initial teacher training and new advanced-level online modules on areas including dyslexia, autism and speech and language needs, to enhance teachers’ knowledge, understanding and skills. We have also funded the National Association for Special Educational Needs to deliver additional training in SEN for established SENCOs; this has now offered training to around 5,000 SENCOs.
We have also awarded contracts to a number of sector specialists including the Autism Trust, Communications Trust—to which the noble Lord, Lord Ramsbotham referred—Dyslexia-SpLD Trust and National Sensory Impairment Partnership to provide information and advice to schools and teachers. We have also provided resources in a number of other areas and I will be very happy to write to the noble Lord, Lord Low, and the noble Baronesses, Lady Howe and Lady Wilkins, with further details. Taken together, I believe these measures help mainstream schools to develop an effective approach to inclusion and help to equip teaching staff with the skills to support a broad range of pupils and students.
Baroness Lister of Burtersett
Before the Minister moves on, I would be grateful if he could answer my question whether he accepts that the recommendation from the JCHR, as encapsulated in Amendment 65D, avoids the false binary between inclusion and specialism. To be honest, I am still not really clear why there is so much resistance to putting the principle of exclusion explicitly in the Bill.
Lord Nash
We do not accept it. We feel that we deal with it in the provisions that I have mentioned. I will be happy to discuss this further.
Inclusive and accessible provision is clearly an issue that many noble Lords feel strongly about and have genuine concerns. I hope that I have explained how the Government are approaching the issue and the steps that we are taking. As I said at the beginning of my response, I welcome the opportunity to meet noble Lords and will be happy to do so further on this point. In view of what I have said, though, I would be grateful if the noble Lord could withdraw his amendments.
Lord Low of Dalston
I am grateful to all those who have spoken unanimously in support of these amendments. I am particularly grateful to the Minister for his painstaking and comprehensive response. However, I am slightly reminded of a meeting that we had with DfE officials, before the Minister’s time, when after the meeting I said to someone, “How do you think that went?”, and he said, “Well, I think they agreed with everything we said provided it didn’t mean they had to change the Bill”.
I acknowledge straight away that we are in the same place, including the Minister and those on this side of the Table, in our support for the principle of inclusion, and that is a good thing. The Minister ran through a large number of measures that the Government are taking in support of the principle of inclusion, some of them legal and some of them other forms of support. I am inclined to regard them as what you might call “soft” measures—soft support for inclusion. However, the Minister wanted to steer away from anchoring the principle too firmly in hard law in the Bill. We were not seeking law that was too hard; the JCHR’s amendment is couched in terms of general principle and is not very coercive.
Amendment 157B simply seeks to achieve a common approach between the unsuitability limbs and the incompatibility limb by applying the “reasonable steps” obligation in relation to both of them. It is incontestable that both ought to be approached in the same way; it does not make sense to have a “reasonable steps” operation in relation to one but not the other. That is the position at the moment and we have an opportunity to put it right. There cannot be an objection to having a “reasonable steps” obligation at all in the legislation because it is there at the moment. What is wrong with the legislation is it is there in relation to one ground of objection but not the other; it seems only sensible to apply it to both. Then there is Amendment 219, which, as we have heard, is more wide-ranging.
I should not overlook the fact that the Minister made some reference to anchoring the principle of inclusion in legal form in the legislation, but it took the form of schools using their best endeavours. My heart sank a bit at that point, because it seemed to take us back to the Education Act 1981, which made the first tentative steps in legislation towards enshrining the principle of inclusion in legislation. There it was enshrined in terms of schools and authorities using their best endeavours. As the Minister made clear, we have moved on a bit since then, so to offer a best endeavours provision as a consolation prize for us in tabling these amendments is a bit disappointing.
However, I am grateful to the Minister for his offer to meet us to have discussions on these issues before Report. I am sure that we are all in the same place in wanting some clear recognition of inclusion in the legislation, and I hope that by a process of discussion we can come to agreement on a form in which to enshrine that in the legislation. On that basis, I am happy to beg leave to withdraw the amendment this evening.
Lord Storey
“( ) The functions to which this section relates include the functions under sections 32, 36, 38 and 44.”
Lord Storey
Clause 19 sets out the principles for involving children and young people with special educational needs in decision-making. That is very welcome. However, I am concerned that the Government’s intentions are not reflected consistently throughout Part 3. Clauses 32, 36, 38 and 44 in particular exclude children under the age of 16 from participating in decisions. I seek assurance from the Minister that Clause 19 applies to all of Part 3, including these clauses. If the Government’s intention is to involve children under 16 in decision-making about their own lives, I see no reason why children should not be included in those clauses.
In another place, the Minister stressed the importance of Clauses 32, 36, 38 and 44, referring only to decision-makers—that is, young people over 16 or parents. However, these amendments would not give under-16s decision-making responsibilities; they would simply enable children to receive information and participate in processes.
The Government acknowledge, in Clause 19, the importance of providing information and support to children to ensure that they can participate as fully in decisions about their own education and care. Furthermore, this approach prepares children for when they turn 16 and the primary responsibility for decision-making rests with them. The Government’s reasoning regarding decision-making is also inconsistent, as other provisions in Part 3 explicitly refer to the involvement of children as well as young people and parents—for example, in Clause 30. I am concerned that the legislation as it stands will cause confusion for local authorities regarding whether and how they should inform and involve under-16s in decisions about their education, health and care needs. These amendments would provide clarity.
Under the UN Convention on the Rights of the Child, all children have the right to have a say in decisions that affect them and have their views given due weight in accordance with their age and maturity. The UN Convention on the Rights of Persons with Disabilities also states that disabled children should be provided with disability and age-appropriate assistance to realise the right to be involved in decisions that affect them—Article 7. Evidence shows that, despite these rights, disabled children are often excluded from decision-making processes or face barriers to having their voices heard. Research from the Government’s own pathfinder programme shows extremely low levels of children’s participation in decision-making.
I hope that the Minister will accept these amendments, which would ensure that all children could participate fully and effectively in decisions regarding their education, health and care needs. I beg to move.
Baroness Massey of Darwen (Lab)
My Lords, I support the amendments of the noble Lord, Lord Storey, in this group. They follow the original theme of the noble Lord, Lord Low. The amendment is intended simply to ensure that children are consulted about issues that affect them—in other words, the importance of listening to the voice of the child. I cannot help feeling that the amendments should be unnecessary, given the Government's stated position on the rights of the child. The coalition Government stated in December 2010 that they would give due consideration to the Convention on the Rights of the Child when developing new legislation and policy, while the Government's policy for youth supports the importance of involving children and young people, including those under 16, in decision-making processes. As the noble Lord, Lord Storey, said, the UN Convention on the Rights of Persons with Disabilities states that disabled children should be provided with assistance to help them participate in decision-making.
I turn briefly to an interesting global strategy on children’s commissioners published recently by UNICEF. I should declare an interest as a trustee of UNICEF. There are two pithy quotations. The first is:
“Children’s participation in decisions that affect them is beneficial to both children and society. It helps strengthen children’s self-esteem and builds their capacity to contribute”.
The second quotation is:
“Participation is also a critical channel for accountability of decision makers at the local and national level”.
How much does that apply to children with special needs?
Successive Governments have become much better at seeking to involve children and young people in decisions that affect them. I am concerned about clauses, mentioned a moment ago by the noble Lord, Lord Storey, that seem to exclude younger children from participating in decisions about special educational needs. We cannot make legislation involving children unless it is child-proofed. I shall not go through all the clauses where younger children are excluded from consultation—the noble Lord, Lord Storey, has already done that—but I want to make a few supplementary points. In a recent inquiry by the All-Party Parliamentary Group on Children, which I chair, children were very vocal about their wish to be consulted, whether in education, social care, medical care or the legal system.
Professionals involved in that inquiry who worked with children recognised the value of contributions from children and young people, including those with special educational needs. I have heard people say that children under 16, because of a lack of maturity or disability, cannot be capable of having a say in decisions. I cannot agree. As parents, grandparents or relatives of children, we have probably all experienced insights from children that have enabled us to make better decisions about their well-being. Children do not have to talk or write to contribute their views. I know of several initiatives that, in order to gain the views of children, have involved drawing, role-play or other non-verbal methods. Again, I think that the Government have not applied their commitment to listening to children in some clauses of the Bill. I hope that they will think again and remedy that.
Baroness Hughes of Stretford
I, too, support the amendments tabled by the noble Lord, Lord Storey, and supported by my noble friend Lady Massey. I shall also speak to our Amendments 120 to 122. Amendments 120 and 122 are similar to the amendments tabled by the noble Lord, Lord Storey: they insert the word “child” or “children” into Clause 32 but, as noble Lords have said, there are other clauses where children seem to be expressly excluded. Amendment 121 would extend the scope of the clause to ensure that information was provided to young people and their parents in a wide variety of ways, as listed in the amendment.
The Minister in the other place said that there was no need specifically to refer to children because the term “young people” includes children. The main issue here, which the Minister has to address in his or her reply, is that the Bill is completely inconsistent on this point. Clauses 32, 36 and 38 refer only to parents and young people. Clause 33 talks about children and young people in its title and throughout. The Minister may say, “Ah yes, but that’s not intentional and the code of practice makes it clear”. Unfortunately, the code of practice does not make it clear because the code is also inconsistent. It is a bit more consistent than the Bill because it talks more often about children and young people than the Bill, which chops and changes. Still, though, certain sections, which are not specifically related to people over the age of 16, talk about the engagement of young people, not children and young people.
So there is complete inconsistency throughout the wording of the Bill and the code of practice. If that is not intended, it should be corrected. If the Bill is enacted as it is, a local authority provider reading that legislation could reasonably assume that it was an intended distinction—a distinction that we have all said we would not support.
A number of people, including my noble friend Lady Massey and myself, have had a lot of experience in engaging quite young children and in producing child-friendly material that young children, including those with a learning disability, can engage with. You can get views and experiences from them that are very meaningful to service providers, and they should be captured. The Bill and the code of practice should be very clear that throughout its provisions it is children, young people and parents whose engagement we want to seek in the provisions, the review of the provisions, the experience of the provisions, the monitoring and so on.
Baroness Howarth of Breckland
My Lords, I support the noble Baroness, Lady Hughes, and those who have spoken to these amendments about the inclusion of children. I simply hope that it is a mistake, a slip of the pen, and that “children and young people” was intended and can be put in. We now have a great deal of experience of engaging young people. Certainly, CAFCASS has done a huge amount of work in working with very young children and understanding their wishes and feelings. The Children’s Rights Director spent a long time talking to young people and young children about how decisions were made about them. It is amazing how very young children feel very deprived of having a part to play in their own lives when they have not been included.
A lot of research shows that not including children in decisions has harmful effects. We know from similar research into divorce that young children who are taken along and understand what is happening have less trauma later than those who suddenly find out that it is happening. There is similar research into the effect of understanding on children. I hope that this is a slip of the pen and that we will find that both are included.
Baroness Howe of Idlicote
I will not keep the Committee for long. As my name is attached to a number of amendments in this group, I want to emphasise what the noble Baroness, Lady Howarth, has said so ably. It is crucial that from the moment at which a child can speak, their views are sought. To an extent, that may depend on how much value can be given to what they say and on their age. Nevertheless, it is important to hear what they have to say. As you get older and have great-grandchildren as well as grandchildren, the more you are aware of exactly what you are learning from their experiences, which can change your views quite considerably. I very much support the noble Baroness, Lady Massey.
Baroness Northover
My Lords, I thank my noble friend Lord Storey for his welcome of Clause 19, which was echoed by other Members of the Committee in this mini-debate. We fully understand the intention behind the amendments—the desire to ensure that the views of the child and his or her parent or carer, or the young person, are fully taken into account; that they are informed and can participate in making decisions, with the information and support that they need to make those decisions; and that the child or young person is supported to achieve the best possible outcomes.
I assure noble Lords, particularly my noble friend, that Clause 19 enshrines the principle that children and young people should be involved in decisions about their lives. I hope it reassures him and other noble Lords that this applies throughout Part 3, including to the clauses on assessment and planning. This is reflected in the draft code of practice, which sets out in Chapter 7.3 that in determining whether an assessment is necessary, the views, wishes and feelings of the child should be taken into account.
I point my noble friend Lord Storey and the noble Baroness, Lady Massey, to Chapter 7.4 of the code of practice, where we are explicit in setting out that:
“Children, young people and their parents are key partners in the process, and their views on how, when and to what extent they would like to engage must be taken into account. They should feel confident that they will be listened to and their opinions will be valued”.
However, I hear what noble Lords have said and I heard what the noble Baroness, Lady Hughes, said, about any inconsistencies. I am sure that we can double-check to ensure that what was intended runs through both the Bill and the code of practice.
One would normally expect parents to make decisions on behalf of their children where those children are too young or otherwise unable to make decisions, but we would also expect parents to be discussing these issues with their children and explaining to them what was going on. As I have already said, we wish to engage children, as well as young persons, as fully as we can.
We think it is right that local authorities are formally required to consult the parents of children of compulsory school age while at the same time seeking the views of the child wherever possible. For young people over compulsory school age, the Bill is clear—I hope—that it is the young person to whom consultation and notification should be directed, rather than their parents. This is an important step forward to ensure that young people can take control of the support that they receive. Of course, we recognise that parents and other family members are also likely to continue to be involved in the care of young people with SEN.
I shall briefly address Amendment 121 in the name of the noble Baroness, Lady Hughes, which would place specific requirements on the format of the advice provided to parents and young people. We agree that materials should be in a range of accessible formats but we do not think putting this level of detail in the Bill is the best way to go about it. We take her point that local authorities should have the discretion to produce materials in any format that they deem necessary but our worry would be that if there were a list, as it were, local authorities might focus on that. We understand fully what she is aiming at but nevertheless do not feel that it is something to put in the Bill. We believe that the code of practice is the place where we should set out what is expected in terms of formats. I also assure the noble Baroness—this is built into her amendment, although she did not flag it up—that such information, advice and support must be provided free of charge.
I assure the noble Baroness, Lady Massey, who is a trustee of UNICEF, as was I, that we are interested in looking further at how children can be directly involved, hence we are piloting a right to appeal for children. The pilot will enable us to find out whether we can take further steps towards empowering children in future.
Lord Storey
I thank my noble friend for her clear and concise reply. It reassures me. I agree with the noble Baroness, Lady Hughes, that where there are inconsistencies we should make sure that they are clarified and cleared up because where there is confusion, there is sometimes doubt. I beg leave to withdraw the amendment.
Lord Lucas (Con)
My Lords, I give my noble friend brief warning that I am totally delighted by Clause 19, particularly by Clause 19(a). He will find that I will drop in a couple of amendments at a later stage to make sure that it will allow parents who wish to home educate their children to specify home education as an alternative to school education and will allow a local authority to provide support in that way rather than support having to be delivered by a school or other institution. I take it that this expansion of parental choice will include home educators, not exclude them. I will table an amendment on that in due course.
Lord Ramsbotham
“( ) A child of compulsory school age who is excluded for a fixed term from school on two occasions within a single school year shall receive an assessment to identify possible learning difficulties within one month of the second fixed-term exclusion.”
Lord Ramsbotham
My Lords, looking at the clock, I am a little alarmed. Will we rise at 7.45 pm or will we go on until this group is finished? I am already on borrowed time.
Baroness Northover
We plan to rise as close as we can to 7.45 pm, having completed the group. I trust that acts as a focus for what we may be able to cover. We have to bear in mind the various rules and Hansard.
Lord Ramsbotham
I am very grateful to the Minister, but I am extremely concerned about that because this group introduces very serious issues to do with speech, language and communication needs. I cannot promise to be short over this because there is a number of things to say, and I know that a number of noble Lords wish to speak. I am concerned that we should rise and continue when we resume because, as I say, I have serious timing problems.
The Deputy Chairman of Committees (Baroness Morris of Bolton) (Con)
My Lords, it may help the Committee if I say that it is possible under certain circumstances to finish part way though a group and then resume on the next Committee day. I hope that will not happen, but should we get to 7.45 pm, that may assist.
Lord Ramsbotham
My Lords, slightly unusually, I shall speak to Amendments 76 and 78 before I speak to Amendment 70A, because Amendment 70A, as it were, is an issue connected with some of the things that I am going to say. I have already mentioned my concern that we are looking at all children and not just the 2.8% who have special educational needs. In saying that, though, I presume that the Government’s aim is to continue the Education Act 1996 and what was said in it. After all, that is where the statements stem from that are now being turned into EHC plans. The Education Act 1996 says:
“A child has ‘special educational needs’ for the purposes of this Act if he has a learning difficulty which calls for special educational provision to be made for him”.
In recent years, a number of us have set out to raise the profile of speech, language and communication needs as a 21st-century scourge. They have crept up on us increasingly because of the lifestyle that is lived in the 21st century—the electronic lifestyle, the parental neglect lifestyle, the lack of communication in families lifestyle, the lack of communication between people lifestyle—and the fact that there are simply appalling figures about people who are identified as having speech, language and communication needs when they start school. I found, for example, when going to do an experiment with speech and language therapists in two young offender institutions, funded by the Helen Hamlyn Trust, that 67% of the young offenders had some form of identifiable speech, language and communication need. They had reached the age of 15 before this was discovered, hence the fact that the conclusion from our studies was that if only that had been identified early, they might not have been in the young offender institution because they would have been able to complete their education. Think of the waste of the numbers who had been excluded or evicted, quite apart from those who had truanted, because of their inability to connect with the education system.
In recent years, we have learnt that successive Governments have made considerable movement on this. I am particularly glad about the early years foundation stage scheme, which has every child assessed at the age of two to see whether there are difficulties and disabilities. During the study that I have already mentioned to the Committee, we were very pleased to take evidence from Northern Ireland, where speech and language therapists are involved in the training of health visitors before they go to carry out that assessment to make certain that those particular needs are identified.
The purpose of Amendments 76 and 78 is to draw attention to the need for such early intervention. If the general intent that I mentioned earlier is what I saw behind Clause 19, particularly Clause 19(d)—namely, that every child should be enabled to be educated to the best of their ability—while early identification is the key to improving the educational outcomes for children and young people with speech, language and communication needs, some of whom will also have other needs, such as physical needs, I would have thought that the educational need to involve themselves in and engage with education should be at the heart of an education Bill, which is what this is.
The speech, language and communication needs can be easily missed or misinterpreted. In fact, it is said that almost 90% of the children who have them also have some degree of literacy difficulty; a high proportion of them end up being excluded. The trouble is that this has gone unidentified, very often for far too long. You even find people getting to secondary school who cannot communicate there, having failed to communicate during primary school. If we are talking about 0 to 25 pathways, we are presumably thinking about the transition from education into employment. I have been very interested to see the identification by employers and others of the problems of speech, language and communication needs with potential employees. So I am very keen to see that speech, language and communication needs are included in the Bill as special educational needs, because without the language and communication you will not have the education anyway.
On the subject of special educational needs, we have been talking a lot about disabilities and other things that impact on people’s educational abilities, but we are talking about education abilities. It was said in the other place that 33% of children arrive at school without the requisite communication and language skills to take part in education. That is a terrible figure, and I suspect that it could be an underestimate. There are factors such as learning delays, and so on, to be taken into account; 1 million, or 10% of all the children in the country, have identified speech, language and communication problems that are not caused by neglect, having English as an additional language or other external factors. In other words, it is an endemic problem. As I say, it is the scourge of the 21st century.
Amendments 76 and 78 would seek to strengthen the words in the legislation. I was horrified to hear my noble friend Lord Low question the term,
“to use its best endeavours to identify”,
which was given to me by the Communication Trust. I am more than happy, after we have had this discussion in Committee, to consider other words that might be more appropriate, but I do not think that it is good enough to have a Bill of this magnitude, and the opportunity that it presents to do something of real significance, and put at risk the opportunity to put speech, language and communication needs at the very heart of everything that is done with all our young people. That means spelling out in detail what local authorities’ responsibilities must be; it is not good enough to leave it with a phrase such as “with a view to”. I do not think that that is nearly strong enough.
That covers Amendments 76 and 78. I now come back to Amendment 70A, which refers to a very particular condition—attention deficit disorder. It is phrased as it is because, at present, ADHD is picked up only when a child has been excluded for the second time. People have quite rightly mentioned the marvellous report that my noble friend Lady Warnock produced all those years ago in which she listed some of the conditions that were to be examined. ADHD was not on the horizon at that time. I contend that a large number of conditions have developed since then which ought to be looked at and included. I mentioned earlier the definition of neurodisability. We talk about learning disability and learning difficulty, but let me describe what neurodisability means in childhood terms. Childhood neurodisability is,
“occasioned when there is a compromise of the central or peripheral nervous system due to genetic, pre-birth, birth trauma, and/or injury or illness in childhood. Such a disability may therefore affect the brain, spinal cord, cranial or peripheral nerves, or muscles, with common symptoms”,
including learning difficulties, specific learning difficulties, lack of inhibition regarding inappropriate behaviour, difficulties related to speech, language and auditory processing, and cognitive delays. It is said that they incorporate autistic spectrum disorders, acquired traumatic brain injuries, epilepsy, learning difficulties, specific learning difficulties, communication disorders and ADHD.
Lord Touhig (Lab)
My Lords, I shall speak to Amendment 77 in my name and that of my noble friend Lady Hughes of Stretford and to Amendments 82, 83, 84 and 85 in my name. Before doing so, I add my support to Amendment 70A in the name of the noble Lord, Lord Ramsbotham. For me, this amendment represents an important first step in reforming the exclusion policy in schools so far as people with special educational needs are concerned. Some 70% of children excluded from school in England are SEN. That is telling us something: it is a real challenge for us to tackle, and the noble Lord’s amendment at least goes some way to start looking at that. I know from family support workers in south Wales that in some of our cities they are concerned about what they call “soft exclusions”, whereby a child is told, “We don’t want to see you for the next 10 days”, or, “It’s half term next week; we don’t want to see you till we come back after half term”. There is no record kept. This is illegal but it happens, and I fear that young people with learning difficulties are much involved.
In evidence given to the All-Party Group on Autism’s commission on special educational needs, one mother said that she had not been called into school about the behaviour of her autistic son for some considerable time because his teacher was someone who had an autistic child herself and understood the problem. I fear that youngsters with special educational needs are, probably unintentionally, the victims of school exclusion policies, and that is not what we want. I hope that the Minister is minded to welcome this amendment.
I now turn to Amendment 77, which seeks to address the issue of early identification. I know that I am not alone in the Committee in believing that identifying and supporting children with special educational needs as early as possible is the most important factor in improving outcomes. Clause 22 requires local authorities to seek to identify children and young people in their areas who may have special educational needs. Amendment 77 would insert the words “as early as possible”, which most people would believe is common sense—after all, why would we not do that? Why would we not seek this information as early as possible?
The professionals who work with children have a crucial role to play: they are the first educators that the children come into contact with. A number of issues, such as speech and communication problems, developmental delays and behavioural and literacy issues can be better addressed by a good quality early years provider. This means that children start school in a much better position than they would otherwise, and fewer resources are required in later years.
There is evidence, though, to show that the early years workforce is typically the least qualified in the education sector. Reductions in local council budgets have meant that they have cut their training spend for early years staff by 40% in the past three years. This has resulted in many cutting back on early years area SENCOs that they have previously employed to provide advice and training in early years settings. However, the support that they provide is needed now more than ever. A recent Communications Trust project, Talk of the Town, evidenced that across a federation of schools, children and young people’s speech, language and communication needs were under-identified by an average of 40%. The Communications Trust said it,
“remains concerned over how the Bill will ensure that the mechanisms for identification will work in practice across all educational phases and also on local authorities’ ability to identify needs as early as possible, and to respond to these needs”.
The National Deaf Children’s Society, RNIB and Sense are also concerned that overall proposals do not place sufficient emphasis on the importance of early years support for children with sensory impairments and their families.
The Opposition tabled this amendment in the Commons and in response the Minister said:
“One of the things we will consider is whether, and if so how, some of the good practice on the area SENCO role can be reflected in the code of practice”.—[Official Report, Commons, Children and Families Bill, 19/3/13; col. 369.]
I have had a look at the redrafted code of practice, and I cannot see where this is taken forward. Perhaps the Minister, who has considered this in much more detail than I have, can update us on this issue.
I have added my name to Amendment 80, which was tabled by the noble Baronesses, Lady Brinton, Lady Walmsley and Lady Howarth of Breckland, but, in view of the time, I do not propose to speak to it.
Amendments 82, 83, 84 and 85 would ensure that Clause 24 placed a duty on health services to inform the relevant local authority if a child under compulsory school age may have SEN. These amendments would extend this duty to apply to all children or young people who may have special educational needs, regardless of age. It is important that children do not fall through the net and go unidentified early simply because they do not fall within the specific age group set out in the Bill. Having spent 20 years as a councillor, I remember taking up problems on behalf of constituents, often only to be told, “Sorry, councillor, he or she falls through the net”. Who created the net? We did. We, the legislators, the makers of the rules, want to make sure that in this case the net helps and protects people.
In the other place, the Minister referred to single integrated checks and sought to assure Members that the provisions in the Bill would support the identification of children’s SEN and make the these amendments unnecessary. If that remains the Government’s view, will the Minister rehearse for our benefit the argument that the four amendments are not needed and set out clearly where in the Bill the objectives that these amendments are seeking to realise are covered and catered for?
Lord Addington (LD)
My Lords, I support the amendments tabled by the noble Lord, Lord Ramsbotham. For anyone who knows anything about the system, even in passing, it is brilliantly obvious that we should have had something like Amendment 70A in the Bill. If a child has been excluded twice, it is statistically almost inevitable that there will be a problem, and he or she should be assessed so that the problem can be identified accurately.
We all carry a degree of history with us in this Room. Mine is of dyslexia. The standard way you identify dyslexia is by the difference between spoken and written language. If you cannot speak correctly, the chances of identifying that person as dyslexic go down. We know there is comorbidity. You have to get into the system and look in the round. It is very important.
I have interests to declare. I have used voice recognition technology for years. It requires a degree of use of language verbally to have a way of dealing with that problem. We should thank the noble Lord for bringing to our attention the fact that everything about communication levels starts to come together in the spoken word or the written word. The way these things hang together is always complicated and difficult. It gets more difficult to deal with them the later they are identified.
To say thank you to the Government, I think that Clause 22 is the most radical and brave thing I have seen in a Bill for a while—saying that we will go out and identify those with special educational needs. Most of the special educational needs lobby has been about saying to the educational establishment, “Oi! There’s a problem. Come over here and give us a hand”. I have lost track of the number of times I have had conversations with Members of both Houses of Parliament about dyslexic children and grandchildren: “How do you get the help?”, “Who do you go through?”, “What’s the matter?” and “Do we tell them they have a problem or not?”. Identification here is very important. Making that a stronger duty, despite the fact that it might be difficult, will make the rest of it easier. You cannot help someone if you do not know what the problem is. I very much support this amendment and the sentiment behind it.
Baroness Whitaker
My Lords, I record my support for all these amendments and declare an interest as the patron of the British Stammering Association. In particular, I urge the Minister to take on board Amendments 70A and 77. I shall cite three pieces of research. The first is from his own department, almost a year ago. It found that speech, language and communication needs were significantly under-identified among children. The other research is from the organisations that form the Communication Trust. Language development at the age of two is shown not only strongly to predict children’s performance on entry to primary school but to link to outcomes into adulthood. That means employment prospects as well as education. Tied to that is the fact that language development in the early years has a significant impact on the behaviour and emotional development of children. We are talking, of course, of an adverse impact—anti-social behaviour. The final fact is that too many children enter school without their speech, language and communication needs being addressed or even identified. These deficits are already known and it is imperative that the Bill should take more account of them.
Lord Storey
My Lords, I will speak to Amendment 80. Clause 22 requires local authorities to identify whether children have special educational needs. This amendment would require local authorities to publish data on children identified as having that need or disability and provide a breakdown of this data by type of need. Accurate data on the number of children in their area are vital for local authorities to plan and deliver services effectively. The draft SEN code of practice, particularly in the section on joint commissioning, outlines the importance of local data sets to identify the needs of children with SEN and inform decision-making. Currently, data from different sources for the same area can vary wildly. Inaccurate data can disproportionately impact on the planning for and delivery of services for children and young people with low-instance conditions such as visual, hearing or multisensory impairments. To give one example, figures on the number of deaf children vary by as much as 30,000.
It is frustrating that a huge amount of energy goes into collecting data for different data sets but none is effective in bringing together a single set that gives reliable figures. Consideration should be given to a simplified, joined-up and less bureaucratic approach, starting within central government. There are three different ways in which data collection could be improved. First, schools and local authorities could be asked to record in the school census whether a child has a disability, as well as formally identified special educational needs. Secondly, a child’s unique health identifier could be used in education and social care as well. This could capture whether a child has a sensory impairment. Thirdly, disability registers could be improved and have greater ongoing oversight. The department needs to review how data on children with sensory impairments more widely are collected to a reliable standard and used to reform the planning and commissioning of SEN services. A welcome commitment from the Government to exploring this further would be of real benefit.
Baroness Howarth of Breckland
My Lords, my name is attached to this amendment. Clause 32, “Advice and information for parents and young people”, says that we should give advice and information, but how can we give advice and information if we do not know how many people we are going to give it to, what the needs of the children are and what range we will have to plan for in terms of strategy?
Sometimes I mourn the chronically sick and disabled persons legislation, which may be from before the Minister’s time. As a director of social services, I found myself trying to implement that. We were to collect information about the needs of the disabled and sick in our areas in order to create a strategic plan. That was in the 1960s, but here we are now and during all that time we have never got this together.
I know that we do not want to add a huge bureaucratic layer to anyone’s workload. Collecting statistics is always difficult if you are going to get some commonality between the criteria. As the noble Lord, Lord Storey, has pointed out, they vary at the moment across the country. I did a report a few years ago to try to prepare a strategic plan for a voluntary organisation—John Grooms Association for Disabled People—so that it could plan its services. When we tried to get data from across the country, they simply did not exist; hospitals, local authorities and schools all seem to collect them differently.
I hope that the Government will look at this extremely carefully. It is a crucial issue. You cannot have a strategy without data, and data are not that difficult to collect, particularly as the Government are hoping to ensure that all the parents and children in an area will get advice, so they need to know where they are.
Lord Lucas
My Lords, may I ask the noble Lord, Lord Ramsbotham, whether he has addressed Amendment 76, or is it postponed to a later group?
Lord Lucas
Then I shall add them to what I am going to say. I very much support what the noble Lord says about Amendment 70A. It is very important to create a system for identification and picking up kids when you start to see symptoms that might be symptoms of a special need. A lot of the time, there is no sensible way in which a classroom teacher can tell; the difference between ADHD and bad behaviour is not obvious. The motivations behind that behaviour can come from all sorts of things. You need a specialist. You need someone to look, in a one-to-one situation where they are not trying to deal with 30 other children at the same time. You need a decent length of time just to concentrate, and to really know your stuff. It needs to be a proper process of finding out what the problem is.
I have happy memories of going into my child’s school in his second week, by which time he had been given 15 detentions, five of them for having too many detentions. That ought to be saying something to a school, but they need to have the resources available to pick up on what the problem is and settle down and identify it, rather than just having to react to the symptoms. Amendment 70A would put in a backstop—a long way back from where good practice should be, but at least it would be there. That second exclusion really should trigger a proper analysis of what the underlying cause is of the symptoms that the school and the child are suffering from.
I also very much support Amendment 80. There is a lot to be said for having a decent data set for what is going on, not least because it would enable us to spot patterns across the country of differences in diagnosis and in how children were being assessed and treated, which is very important with a process that is essentially local but conditions that are not. The conditions are national, and you want to know what is going on so that you can inquire whether a particular pattern is the result of good or bad practice and either deal with it or spread it, depending on what is right. The base for that has to be data, something at local authority level that can be quite detailed without giving away any personal information and can be a useful and comparable source of information. That should be one of the foundations of our policy.
However, I do not support Amendments 76 and 78. I do not like the idea of the local authority having to scour the country looking under every stone for people with special educational needs. That would be particularly objected to, quite rightly, by the home education community. A lot of those children have been brought out of education because of how badly their special needs have been dealt with by schools, and the last thing that they want is the local authority lording it over them and saying that it has to be in every three months diagnosing their child and telling them what to do. That relationship does not succeed in those cases.
We should not try to create something that intrusive by a local authority. Yes, as was said, the local authority should have its ears open, be a point of contact and have a duty to respond when someone thinks that their child has special needs and wants something done about it. Coupled with the other duties, I think that the Bill will achieve a responsive local authority—a body that will pick up on problems that come to its notice and which has to have its eyes open in ordinary ways, so that it knows what is going on in schools, but which does not have to scour the highways and byways for people with special educational needs. To my mind, that is the right balance.
Lord Ramsbotham
The noble Lord has completely misunderstood what I was saying about Amendments 76 and 78. I suggest that the best thing is probably for me to talk to him and explain what I was trying to say, because that was certainly not my intention at all; it could not be further from it.
Lord Nash
My Lords, Clause 22 extends the current requirement on local authorities to exercise their powers with a view to identifying special needs to all children and young people aged from nought to 25. I am grateful to my noble friend Lord Addington for his support for that. Amendments 76 and 78 from the noble Lord, Lord Ramsbotham, would strengthen the local authority duty to identify SEN. There are many ways in which a local authority will identify children and young people, and each authority will know the most effective way to do so. Paragraph 2.2 of the draft code of practice makes clear that local authorities must carry out all their functions with a view to identifying where children and young people aged nought to 25 have SEN. The duty applies to all of a local authority's functions, not just those under the Bill. Paragraph 5.2 of the code further sets out the requirements for the local offer. It must cover the arrangements for identifying the special educational needs of children and young people across all the providers covered by the offer. That will for the first time bring together information on how SEN is identified across the area and give families and young people a chance to comment on its effectiveness.
On the points raised by the noble Lord, Lord Ramsbotham, about speech, language and communication needs, they are included in the definition of SEN. The code of practice refers specifically to speech, language and communication needs as an SEN, and data are collected annually on that. We recognise that identification may not always be what it should, and our new guidance in chapter 6 of the code of practice gives much stronger guidance on that.
Amendment 70A, moved by the noble Lord, Lord Ramsbotham, would ensure that pupils who receive more than one fixed-term exclusion did not fall through the net. There are already extensive protections in that respect. As a result of his representations and those of other noble Lords during debates on the Education Act 2011, statutory guidance to schools on exclusion reinforces the point that early intervention for poor behaviour should include an assessment of whether appropriate provision is in place to support any SEN or disability that a pupil may have. It also sets out that head teachers should consider the use of a multi-agency assessment for pupils who demonstrate persistent disruptive behaviour. Chapter 6 of the draft code reflects that approach in providing guidance on identifying different types of SEN. However, schools need the flexibility to identify the most appropriate trigger for such assessments.
While I support the principle underlying this amendment, the steps that we are taking through the Bill and the revised code of practice already reinforce the importance of early intervention. Introducing an automatic trigger for an assessment of pupils’ learning difficulties could have the unintended consequence of creating a box-ticking exercise or lead to schools that are not certain delaying assessments until a second exclusion has occurred.
Concerning the point made by the noble Lord, Lord Touhig, about unlawful exclusion, the department’s statutory exclusion guidance sets out the responsibilities of schools and states explicitly that excluding pupils simply because they have additional needs or sending pupils home to cool off is unlawful. Any evidence of unlawful exclusion is taken seriously by the department and Ofsted.
Amendment 77, tabled by the noble Lord, Lord Touhig, and the noble Baroness, Lady Hughes, emphasises that the identification of SEN should happen as early as possible. Clause 24 reproduces an existing provision that is designed to ensure that action is taken as soon as special educational needs are identified, rather than waiting until the start of compulsory education. For children under school age, health services are often the main point of contact, so it is important that they take action where they identify an issue. The draft code of practice sets out a number of practical steps that will support early identification, including early health assessments such as the hearing screening test, the progress check at the age of two, and an assessment at the end of the early years foundation stage profile at the age of five.
In addition, provisions in this Bill mean that in future anyone will be able to bring a child or young person who they believe has or may have SEN to the attention of a local authority. That includes parents, relatives, professionals, social workers and health visitors. Young people also may refer themselves. That is a significant improvement to the existing position that will help to avoid delays in identifying children and young people with SEN.
Amendment 80, tabled by my noble friends Lady Brinton and Lady Walmsley, raises the important issue of publishing data. We agree that that is important. The department already publishes local authority level data each summer on the number of schoolchildren with SEN and the prevalence of different types of need. Those data are contained in a publication called Special Educational Needs in England. We will continue to publish those data. The department also collects data on children in the early years through the Early Years Census. For post-16, the Educational Funding Agency and the Skills Funding Agency, through the individualised learner record, also collect data on young people in the further education sector on a range of types of need.
Amendments 82 to 85 in the name of the noble Lord, Lord Touhig, together seek to ensure that health bodies take action and notify parents and local authorities where they believe that any child or young person has special educational needs. The Clause 24 duty that I have already mentioned does not extend to children of compulsory school age because they will be enrolled with an educational institution responsible for ensuring that their educational needs are being met. It ensures that health professionals tell the local authority of young children not yet in education who may have SEN. That helps in the planning of support for when they enter education.
The responsibilities of early education settings in schools and post-16 providers for identifying and meeting special educational needs are clearly set out in the draft code of practice. On the point made by the noble Lord, Lord Touhig, about the role of area SENCOs in earlier years, page 70 of the new code of practice states that local authorities,
“should ensure that there is sufficient expertise and experience amongst local early years providers to support children with SEN”.
He goes on to outline the role of area SENCOs in the early years. This is the first time that this role has been included in statutory guidance.
I have set out how the Bill and code of practice together make extensive provision to increase requirements that pupils with SEN are identified as early as possible by whatever services they come into contact with, and that data are published on those identified needs. I hope that noble Lords will therefore not press their amendments.
Lord Ramsbotham
I am very grateful to all those who have spoken, including the Minister for his summing up. When I was Chief Inspector of Prisons I used to report on what I found, sometimes finding that Ministers had been given what we used to call the virtual prison, which was a description by other people of what they thought the prison ought to be or what they felt it was, which was not in agreement with fact. I must say to the Minister that I heard what he said, but I do not think that it agrees with the briefing that we have been given by practitioners on the ground. We may want a lot of that to happen, but it is not actually happening now. Far from wanting to have a tick-box approach, I would like to make certain that practitioners come together with officials—because the Bill is far too important to be let to go by default—to make absolutely certain that the things that the Minister said are put to the people who are saying that that is not happening. Then we can work out what the actual position is. In that case, I am very willing to withdraw my amendment.
House of Lords
(10 years, 6 months ago)
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Introduction: The Lord Bishop of Carlisle
(10 years, 6 months ago)
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Employment: Zero-hour Contracts
(10 years, 6 months ago)
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Baroness Royall of Blaisdon
To ask Her Majesty’s Government how they will deal with the abuse of zero-hour contracts.
Baroness Donaghy (Lab)
On behalf of my noble friend Lady Royall, I beg leave to ask the Question standing in her name on the Order Paper.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)
Zero-hours contracts are not new, but since 2005 there has been an increase in their use. More recently, government has been made aware of anecdotal evidence that has highlighted instances of abuse. As a result, the Business Secretary of State announced that his officials would undertake a fact-finding exercise to explore how these contracts work and what the issues are. This was undertaken over the summer. On 16 September, the Business Secretary said that he would publish a consultation seeking views on zero-hours contracts and on how to address the concerns raised in the summer fact-finding exercise. The consultation will be published in mid-November.
Baroness Donaghy
I thank the Minister for his reply. He has confirmed the very belated inquiry into this subject. Will he confirm that it will cover cases where employees work regular hours but have zero-hours contracts, their pay levels and a code of conduct? How wide will the scope of the inquiry be?
Viscount Younger of Leckie
Certainly, the noble Baroness has hit on a number of the issues that will be covered. They will include exclusivity; a lack of transparency within the contracts; a lack of information, advice and guidance; and a lack of certainty of earnings. However, any response that comes through as a result of the consultation needs to be proportionate and well considered.
Lord Hodgson of Astley Abbotts (Con)
My Lords, while I am sure that there have been some abuses of zero-hours contracts, perhaps I may ask my noble friend to keep the matter in perspective. The register of interests of your Lordships’ House reveals that I am the director of a brewery and a pub company. Our pub company staff find most welcome indeed the economic flexibility and freedom that zero-hours contracts give them.
Viscount Younger of Leckie
My noble friend makes a valuable point. Opportunities for zero-hours contracts allow, for example, students to enter the labour market. I have heard about instances of workers who used to work on the Tornado project using their legacy engineering skills in just such a way. They were particularly happy to do that. Also, zero-hours contracts particularly help the partially retired, who can work in a scaled-back manner.
Lord Howarth of Newport (Lab)
Does the Minister think that zero-hours contracts are reconcilable with the responsibility that employers have in all circumstances to respect the dignity of the people they employ?
Viscount Younger of Leckie
Certainly, the bottom line for zero-hour contracts—this is one thing that the consultation will look at—is how employers and employees enter into them. Although there is nothing wrong per se with the contracts, you get opaqueness where there are differences of opinion or a lack of transparency in the contracts between the employer and the employee.
Lord Razzall (LD)
My Lords, perhaps I may follow up on the supplementary question of the noble Lord, Lord Hodgson of Astley Abbotts. I am sure that the Government recognise that zero-hours contracts are absolutely essential in the pub and restaurant business, and often suit young people who want to work only certain hours. Does the Minister accept that this makes it even more important that the Government get the balance right between the use of these contracts and the abuse of the system?
Viscount Younger of Leckie
I certainly accept that. The consultation is designed to be wide-ranging. We do not have a closure date for it because it is important that we go into all the issues surrounding zero-hours contracts, including who is involved in them and the numbers of people. There is definitely opaqueness there; my noble friend makes a good point.
Baroness Morgan of Ely (Lab)
My Lords, Wales has a higher proportion of people working on low pay than the rest of the UK, including many who are in insecure jobs. About 50,000 of them are on zero-hour contracts. Will the Minister explain how, if these people do not know from one day to the next whether they have work, they are benefiting from the great recovery that we are supposedly seeing at the moment?
Viscount Younger of Leckie
First, I should alert the noble Baroness to the fact that there is a recovery going on. Indeed, the employment rate was 71.7% and the unemployment rate was 7.7%, so progress is definitely being made, but there is more work to do. In terms of the contracts in Wales to which the noble Baroness referred, again, this is one of the issues we will be looking at as part of the consultation. It is not a good thing if contracts are entered into with both parties being unhappy with the contract.
Lord Christopher (Lab)
My Lords, there is an issue that goes beyond that of zero hours. It was revealed today that the Revenue is investigating around 120 care homes and care-worker firms where the contract is not really one of zero hours—although that is technically what they are calling it—but zero minutes. They are not paying the full basic wage or for travelling time. The implication there goes beyond the issue of zero hours, which I think is disgraceful; there are also the possible consequences in care firms if they go out of business.
Viscount Younger of Leckie
The noble Lord raises an important point; we are aware that low pay is an issue for workers in the care sector. HMRC, which enforces the minimum wage on behalf of the Department for Business, Innovation and Skills, has been actively conducting enforcement activity in this area. Some investigations are very much ongoing and HMRC has identified relatively high levels of non-compliance, particularly with the national minimum wage. A full project evaluation is being carried out by HMRC and will be completed later this year.
Lord Stoddart of Swindon (Ind Lab)
Does the House of Lords employ any people on zero-hour contracts? If so, how many are they and in what grades?
Viscount Younger of Leckie
The noble Lord raises some very specific questions. I can confirm that zero-hours contracts are a legitimate form of employment and they were introduced in both Hansard and the catering departments to replace existing casual contracts, so there is an improvement there. The zero-hours contracts, when compared to the previous contracts, give staff the same employment rights as those enjoyed by full-time staff.
Lord Roberts of Llandudno (LD)
My Lords, when the Minister brings his report to the House, will he include those working in Parliament itself, especially catering department workers on zero-hour contracts?
Viscount Younger of Leckie
I believe that I have already given that reassurance and some examples to the House.
Lord Hunt of Kings Heath (Lab)
My Lords, perhaps we can come back to the issue raised about care workers. It is widely reported that thousands of care workers are employed under zero-based contracts—often, as my noble friend Lord Christopher said, delivering care visits of no more than 15 minutes while not being paid for transport or time costs between visits to different care settings. Much of that arises from the commissioning policies of local authorities. Is the Minister as surprised as I was that two days ago, the Government tabled an amendment to the Care Bill which stopped the Care Quality Commission from investigating the commissioning duties of local authorities in relation to care homes?
Viscount Younger of Leckie
There is opaqueness between the zero-hours contracts and the payment of travel time relating to care workers. The noble Lord brings up an important point. I have already said how much importance we attach to the care sector. As the noble Lord will know, the payment for time spent on travelling is complex. I do not wish to go into the Care Bill at this stage.
Schools: Careers Service
(10 years, 6 months ago)
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Baroness Jones of Whitchurch
To ask Her Majesty’s Government how they address concerns about the schools career service highlighted in the Barnardo’s report Helping the Inbetweeners.
The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)
My Lords, we want all schools to follow the example of the best and provide inspiring careers advice for young people. The new statutory duty is an important step towards this. However, evidence from Barnardo’s and Ofsted’s review of careers guidance confirms that there is considerably more to do to bring all schools up to the standard of the best. On 10 September, the Government announced further support for schools in this regard. Proposals include publishing revised statutory guidance and improving national careers service resources.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the Minister very much for that reply. Clearly, the best is regular individual face-to-face sessions with all young people from key stage 3 when they enter school. Unfortunately, that is the very thing that Ofsted and Barnardo’s say is lacking in many schools, particularly for the middle-attaining inbetweeners who are still expected to get their career advice from computers. How much longer will the Government stand by and let this poor practice continue when what is needed is a very simple guarantee of face-to-face careers guidance for all young people who would like it?
Lord Nash
I think that the noble Baroness’s ambitions and objectives for careers guidance are the same as mine. However, I disagree that the gold standard is a face-to-face interview with a careers adviser. The gold standard is what all good schools do, which is to seek to identify their pupils’ passions, interests, aptitudes, strengths and weaknesses at an early stage and to work with them throughout their time at school to provide a direct line of sight and contact with the workplace. That is what a good education is all about. A few interviews at the end of your time in school is a poor substitute for that.
Baroness Brinton (LD)
My Lords, given that the Ofsted report said that three out of four schools were not working well with the new arrangement, despite a handful of excellent examples, this is a devastating indictment. The Barnardo’s research shows that pupils from disadvantaged backgrounds need that face-to-face quality, independent advice. In the recent Education Act, the new code of practice said that vulnerable pupils need this face-to-face advice. Will the Government tell us whether this is happening and, if they do not have the figures, should they not be asking for them?
Lord Nash
My Lords, the noble Baroness uses the expression “a devastating indictment”. The previous Connexions regime did not work and hardly anyone, from Ofsted to Alan Milburn, had a good word to say about it. That is pretty devastating. There is clear guidance on pupils who will specifically benefit from face-to-face advice—disadvantaged pupils and those with learning difficulties or disabilities. I think that I have made my position clear. What we regard as a really first-class education is what I outlined rather than last-minute careers advice.
Baroness Nye (Lab)
Since the Government gave sole responsibility to schools for careers advice we have seen eight in 10 schools dramatically cut the careers advice they provide, according to a survey by Careers England. Even the director of the CBI has questioned the laissez-faire approach of this Government, so will the Minister explain why the Government are against benchmarking careers guidance to national standards which can be assessed within Ofsted inspections, as recommended by the Barnardo’s report?
Lord Cormack (Con)
My Lords, in a debate in this House in the summer, my noble friend responded positively to the suggestion that each secondary school would be well served by having a panel of local businessmen and women and professionals to advise on careers. Has he made any progress on that front?
Lord Nash
My noble friend’s example of a careers panel is an excellent example of good practice. I have seen other such examples. I recently visited Stoke Newington school and sixth form college—not an academy—where they follow excellent practice in offering careers advice. They have a speed dating careers day, which is very useful. There is a wide range of good practice that schools can use and a wide range of organisations such as Business in the Community, Business Class and the Education and Employers Taskforce with which schools can engage.
Lord Martin of Springburn (CB)
My Lords, when most students go to university, there is a hall of residence available to them and that is quite right and fitting. However, when young people are offered apprenticeships far away from home they have to look out for lodgings or digs in the vicinity of their workplace. Could the noble Lord look at this problem?
Lord Wills (Lab)
My Lords, the Minister will be aware that Barnardo’s has estimated that 65% of the children of prisoners end up in prisons themselves. What specific measures are the Government taking to support this particularly at-risk group in making the difficult transition from education into the workplace?
Lord Willis of Knaresborough (LD)
My Lords, an investigation by the Engineering Employers Federation and SEMTA, looking at careers in science and technology, showed that more than 80% of careers advisers in schools come from an arts and humanities background. How likely is it that students who aspire to careers in science and technology will get good advice from people who have no experience of that at all?
Lord Nash
I agree entirely with my noble friend that we do not expect teachers to be careers experts. That is unrealistic, which is why we expect all schools to engage with their local business and professional communities. I was recently in Leeds and Sheffield, where the Glass Academy has been formed by glass manufacturers specifically to engage with their local schools extremely effectively.
Economic Inequality
(10 years, 6 months ago)
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Lord Greaves
To ask Her Majesty’s Government what proposals they have to reduce the level of economic inequality.
Lord Newby (LD)
My Lords, income inequality in the UK is now at its lowest level since 1986. The Government are committed to ensuring that all families benefit from the return of growth to the economy and maintain that the best route out of poverty and the best way of reducing inequality is for households to move into work.
Lord Greaves (LD)
My Lords, last week we had the report of the Social Mobility and Child Poverty Commission, State of the Nation 2013, under the leadership of Mr Alan Milburn and the noble Baroness, Lady Shephard. It concludes that:
“Britain remains a deeply divided country. Disadvantage still strongly shapes life chances. A balanced economic recovery, between different parts of Britain, is not currently within reach”.
Do the Government agree with the broad conclusions of the report that, if we want more social mobility, that has to go hand in hand with a more equal society?
Lord Newby
My Lords, the Government agree with the broad conclusions of the report. As the noble Lord says, there are major problems of deep-seated, regional inequalities and imbalances. However, the Government are committed to tackling these, which explains why we have committed more than £2.6 billion to the regional growth fund, why we are committed to High Speed 2 and why apprenticeships, which now stand at 850,000 in the last academic year—some 370,000 more than in the last year of the Labour Government—are taking place largely outside London and the south-east.
Lord Morgan (Lab)
My Lords, the Minister replied about income inequality. Is not the main thrust of the question about inequality of wealth? That has not really been tackled by any Chancellor since David Lloyd George. Should we not deal, particularly, with the question of inheritance and the way in which taxes on inheritance are systematically emasculated or evaded by rich capitalists?
Lord Newby
My Lords, there has been a very long-term increase in inequalities in wealth. This is largely based on inequality in housing, which is where the vast bulk of personal wealth belongs. In terms of getting a more balanced economy, whatever we do about wealth and inheritance, which has proved very difficult—and proved very difficult for Lloyd George—the key is to get more people into better paid jobs.
Lord Monks (Lab)
My Lords, does the Minister agree that generally the more equal the society, the better the outcomes in a whole range of economic and social indicators, from health and education through to teenage pregnancy and so on? With that in mind, and the fact that real wages have declined by £1,500 since the general election, what practical steps are the Government taking—for example, by increasing the national minimum wage as a matter of urgency?
Lord Newby
My Lords, as the commission found, there is a growing problem of in-work poverty. That is why my colleague, Vince Cable, asked the Low Pay Commission last month to look at the possibility of raising the minimum wage without damaging overall levels of employment.
Lord Berkeley of Knighton (CB)
My Lords, do the Government agree that the recent hike in energy prices is going to increase inequality in our society, and, if so, what do they propose to do about it?
Lord Newby
My Lords, the key is to have a sustainable and secure energy policy for the medium to long term. That is why the Government are investing so much in the energy sector and why the news about the agreement to build a new-generation nuclear power station was important. In the short term, all consumers should see whether they can save money—because many can—by switching their source of energy supply.
The Lord Bishop of Ripon and Leeds
My Lords, bearing in mind the way in which wealthy pensioners, such as many in this House, are protected against the austerity cuts that other welfare recipients face, will the Government consider how to enable us to begin to bear our share of the burden, whether by taxing or means-testing the winter fuel allowance or otherwise?
Lord Newby
My Lords, one of the commission’s recommendations was that intergenerational equity could be improved if pensioners paid a higher share. That has not been the view that the Government have taken. Particularly given the very high levels of pensioner poverty, against which many noble Lords have campaigned over many years, we have taken the view that the real value of pensions should be protected during this period of fiscal consolidation. However, we accept that there may be more to be done. Indeed, for people who receive payments such as the winter fuel allowance, there are now a number of voluntary schemes under which they can make that payment available via charities so that it can be used for people on low incomes.
Lord Davies of Oldham (Lab)
My Lords, why did the Minister not respond to his Liberal Democrat colleague who asked the initial Question with total honesty by saying that he is a junior member of the junior party in a coalition, of which the majority party has in its DNA the promotion and preservation of inequality?
Lord Newby
My Lords, the biggest task in reducing inequality, as the commission points out, is to get more people into work, and this Government are doing that. For example, the number of NEETs has fallen consecutively over many quarters, the number of people in work increased by 155,000 in the last quarter and the proportion of the population in work is at a record level. We on this side of the House will take no lessons from him about getting people into work and earning good money.
Baroness Farrington of Ribbleton (Lab)
My Lords, will the Minister undertake to work with his colleagues to ensure that, when we are given figures for employment, they include a breakdown which tells the public how many people are earning a living wage, how many are in part-time work and how many are on zero-hours contracts? HS2 will not help my friends and colleagues from Wales. The Government keep trumpeting that the issue is getting people into employment, but tell that to people for whom getting into employment is getting into poverty.
Lord Newby
My Lords, of the three categories of figures that the noble Baroness referred to, those for part-time work are already available. For zero-hours, however, I think that the figures have been made available, have been challenged and are being looked at. If we want a rebalancing towards the regions, we are not going to achieve that overnight. We need long-term transformational projects, of which High Speed 2 is one. It is vitally important for the long-term well-being of the regions.
Armed Forces: Human Rights Legislation
(10 years, 6 months ago)
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Lord Craig of Radley
To ask Her Majesty’s Government what steps they are taking to review and clarify the application of human rights legislation to members of the Armed Forces when they are based or engaged in operations overseas.
Baroness Anelay of St Johns (Con)
My Lords, the clock has stopped. I say to colleagues who are trying to leave the Chamber that, on this occasion, we shall maintain dignity by remaining in our seats while the Minister responsible for defence makes an announcement about our armed services.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)
My Lords, I am sure that the whole House will wish to join me in offering sincere condolences to the family and friends of Lance Corporal James Brynin, Intelligence Corps, of 14 Signal Regiment (Electronic Warfare), who was killed on operations in Afghanistan recently. My thoughts are also with the wounded, and I pay tribute to the courage and fortitude with which they face their rehabilitation.
Turning to the Question, although the Government have already expressed their disappointment with recent judgments in this area, both in the domestic courts and at Strasbourg, many aspects of the relevant law continue to be uncertain. In view of the importance of the principles at stake, the Government will defend their position vigorously in the key cases still before the courts.
Lord Craig of Radley (CB)
My Lords, why wait? Is there not now sufficient experience of the impact of legal hindsight when passing judgment on the activities of personnel engaged in operations or based overseas? Should not the Secretary of State revive, by order, Crown immunity, as the Crown Proceedings (Armed Forces) Act 1987 allows, to cover warlike operations in any part of the world outside the United Kingdom? Alternatively, will Her Majesty’s Government consider new legislation to define combat immunity, in order to clarify the current position? Could this be incorporated in the Defence Reform Bill now in passage through Parliament?
Lord Astor of Hever
My Lords, I share the noble and gallant Lord’s concerns. He is absolutely right to emphasise the relevance of the 1987 Act. Our Armed Forces should not have to put ECHR considerations ahead of vital operational decisions in the national interest. That is why we are not ruling out any options. An amendment to the Defence Reform Bill would probably be regarded as outside its scope, but we hope that the Court will provide clarification of combat immunity. For that reason we shall defend this litigation with vigour.
Lord Rosser (Lab)
My Lords, I too offer sincere condolences to the family and friends of Lance Corporal James Brynin. These sombre moments have, fortunately, become less frequent in your Lordships’ House, but this moment is a reminder, first, that the courageous members of our Armed Forces continue to risk their lives on behalf of us all, and, secondly, that on occasions the risk becomes reality, with all the heartbreak that that brings.
On 25 June in this House the Minister said, in response to a question, that “urgent cross-government discussions” were taking place to consider the options in the light of the 4:3 majority Supreme Court judgment of 19 June on human rights and our Armed Forces. He also said that advice would be provided to members of the Armed Forces “as soon as possible”. What has been the outcome of those urgent cross-government discussions, and what is the thrust of the promised advice, which has presumably now been provided to members of our Armed Forces?
Lord Astor of Hever
My Lords, we continue to be grateful to Her Majesty’s Official Opposition for their support on Afghanistan. I can assure the noble Lord that my department is exercised about this issue and Ministers are working closely on it with the service chiefs. A number of cases are still before the courts and the legal position is not yet clear. We will continue to monitor developments closely, but I can reassure the House that, even when the ECHR does not apply, UK Armed Forces are at all times required to comply with all applicable domestic and international law. Customary international law and UK criminal law explicitly forbid torture and abuse, and our domestic law applies to members of UK forces at all times, wherever in the world they are serving.
Lord Palmer of Childs Hill (LD)
My Lords, I add from these Benches our sincere condolences on the loss so eloquently expressed by my noble friend the Minister. In his and the ministry’s view, will the actions of the Supreme Court lead to further substantial claims on the Government? What evidence is there of commanders in the field being inhibited because of the comments that have been made in these human rights cases?
Lord Astor of Hever
My Lords, we are concerned that the Supreme Court judgment creates uncertainties in the law that could well impair the ability of the Armed Forces to make robust and timely decisions which are necessary to our national defence. We intend to defend these combat-related claims rigorously.
Lord West of Spithead (Lab)
My Lords, does the Minister not think that this is another example of a number of cases where people are looking at combat through the prism of peacetime? We have seen some extraordinary decisions made in coroners’ courts. We have seen some extraordinary things come out about Bloody Sunday, and we are seeing an extraordinary position as regards the issue being discussed today; I agree totally with the noble and gallant Lord, Lord Craig of Radley, on the subject. Is it not important that we should get the message across that combat is different? A number of us in this Chamber have been in combat and we know that decisions are made in a matter of minutes, if not seconds. People around you are either dying or are in fear of dying and sometimes information is very scant, whereas those with all of the information are taking hours and hours on a warm and balmy afternoon to come to decisions about our military. When we talk about the military covenant, in the end the most important for our military is to be given the ability and the tools to actually fight and win. All of these things are negating that ability.
Lord Astor of Hever
My Lords, I agree with every word that the noble Lord has said and welcome the opportunity to discuss the issue in much greater detail on 7 November during the debate tabled by my noble friend Lord Faulks.
Grangemouth Refinery
(10 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, with the permission of the House, I should like to repeat in the form of a Statement the Answer to an Urgent Question asked in the other place.
“I wish to inform the House of the latest situation regarding the disruption at the Grangemouth refinery and petrochemicals complex in Scotland. I recognise the concern of many Members of the House, in particular the active involvement of the honourable Member for Linlithgow and East Falkirk. The Government have and continue to be in regular contact with both sides involved in the dispute. We are working closely with the Scottish Government and this morning I spoke to John Swinney, the Cabinet Secretary for Finance.
Earlier today, Ineos made a statement confirming the decision of its shareholders to place the Grangemouth petrochemicals plant into liquidation, which puts 800 jobs at risk. The Government are saddened by this move, particularly because of the uncertainty it will bring for the workforce and all those who indirectly owe their livelihood to the Grangemouth plant. The Government do not underestimate the plant’s importance to the local community. While respecting the right of Ineos to make this decision, it is regrettable that both parties have not managed to negotiate a fair and equitable settlement that delivers a viable business model for the plant. Even at this late stage, the Government urge them to continue a dialogue, and we will offer all possible help and support on that. We want this petrochemicals plant to stay open if at all possible, but if redundancies are made, support will be available from the Partnership Action for Continuing Employment, which includes the Scottish Government, Skills Development Scotland, Business Gateway and Jobcentre Plus.
The owners of the refinery, who are Ineos and PetroChina, have announced their intention to keep their refinery open and their wish to restart full operations as soon as possible. Government stand ready to help with the discussions between the management and the union to ensure that this can happen. The Secretary of State is speaking to both parties today.
Throughout this disruption, fuel supplies are continuing to be delivered as usual. My department has been working closely with industry and the Scottish Government to put robust contingency plans in place to ensure that supplies of road fuels, aviation fuels and heating oils will continue to be available to Scottish consumers and continue to fuel the Scottish economy.
I will be giving a briefing at 4.15 pm today in Dover House for Members with Scottish constituencies and other interested honourable Members and noble Lords who wish to discuss the situation in more detail”.
Lord McAvoy (Lab)
My Lords, with permission I will repeat the response made by the Official Opposition’s spokesperson in the other place.
“The closure of the petrochemical plant at Grangemouth means that 800 people employed there and more employed as sub-contractors will lose their jobs. Ineos chairman, Jim Ratcliffe, had said at the weekend that if the petrochemical plant closed, it was likely that the refinery would go too.
There are reports this morning that Grangemouth might have fallen between the cracks, with neither the devolved Scottish Government nor UK Government Ministers getting to grips with the issue.
John Swinney, the Scottish Finance Minister, claimed yesterday that he was in discussion with potential buyers for Grangemouth. Can the Secretary of State tell the House whether he is aware of these discussions and what involvement he or his Ministers have had?
The Unite union had committed not to strike, with no preconditions, while negotiations over pay and conditions were undertaken. PetroChina, the 50% shareholder in Ineos’s refinery business, made a statement calling for all parties to get back round the table and reach a consensus. But today, rather than coming back to the negotiating table, Ineos has announced that it will close the profitable petrochemical plant. There were reports on the BBC this morning that management delivered the news with smiles on their faces.
Does the Secretary of State agree with me that Ineos should have got round the table to negotiate rather than delivering ultimatums? And can he tell the House what discussions he has had with Ineos management and the union in the past 24 hours and what support the Government are providing for those who have lost their jobs today?
In its report on UK oil refining in July 2013, the Energy and Climate Change Select Committee found a mismatch between refinery supply of petroleum products and demand, but the Government are still yet to respond. Can the Secretary of State be confident that the Grangemouth refinery will stay open? What contingency plans are in place to secure fuel supplies for Scotland, Northern Ireland and the north of England? And given the current shut down and uncertainty over the closure of Grangemouth, will the Secretary of State now commit to undertake the review of UK refining capacity which the right honourable Member for Wealden promised in June 2012 in response to the closure of Coryton refinery?”.
Baroness Verma
My Lords, the noble Lord raises a great number of questions. Of course we recognise that this is an incredibly unsettling time for workers at Grangemouth and for the wider community, but we need to try to work towards getting a resolution and therefore we stand ready to assist both sides to come to the table to discuss matters. We are also ready to engage with any potential purchaser that may make the case for the ongoing commitment to the UK if it were to take over Grangemouth petrochemicals. We are working very closely with the Scottish Government.
The noble Lord asked about contingency plans. We are working very closely with suppliers and retailers to ensure that Scottish forecourts increase their stock levels well above normal levels as a precaution. We have been working with airports to ensure that they have contingency plans in place to ensure the supply of jet fuel, and with heating oil distributors to encourage them to stock up early. A number of plans are already in place and we are working on them. Ultimately, the best solution would be to get both parties back talking to each other.
Lord Forsyth of Drumlean (Con)
My Lords, first, I thank my noble friend for organising the meeting this afternoon. This is a vital national resource of great strategic importance in an area where jobs are in short supply. Will my noble friend encourage my right honourable friend the Prime Minister to knock some heads together and get agreement on the way forward? Quite frankly, the idea of finding a purchaser is a complete red herring. This plant is losing money on a substantial scale and it will be necessary for both sides to give way. It really is important to the United Kingdom as a whole, and to Scotland in particular, that the Government use their highest authority to get a resolution as speedily as possible and that these redundancy notices are withdrawn.
Baroness Verma
My noble friend is absolutely right that it is an incredibly important issue. That is why my starting point is that we need to get both parties back around the table. We in the Government here are doing our level best to ensure that happens and are working very closely with the Scottish Government.
Baroness Liddell of Coatdyke (Lab)
My Lords, is the Minister aware that a further 141 jobs have been lost today at the BASF plant at Hawkhead Road in Paisley? It is hard to overestimate just how critical the situation now is in Scotland. I echo the request of the noble Lord, Lord Forsyth, for the engagement of the Prime Minister. We need a little more detail about the nature of the assistance that can be given to try to get these redundancy notices withdrawn with a view to saving these jobs, which are critical to the infrastructure of Scotland and to Scotland’s economic future.
Baroness Verma
The noble Baroness raises a very important point. This is not just about one area but affects the whole country. This debate will be watched very closely and I will of course take back the requests of my noble friend and the noble Baroness that this is taken to the highest levels to ensure that we get proper engagement. What we want to see of course, at the end of it all, is the two parties around the table to resolve their differences.
Lord Martin of Springburn (CB)
The plant is on the east coast of Scotland. I live on the west coast and some of my neighbours and some of my former constituents travel on a daily basis to the plant. The impact therefore goes across the central belt of Scotland. For many reasons, I echo the case that has been put by noble Lords on both sides of the House. It is important to deal with this at prime ministerial level and that is where the negotiation should come from.
Baroness Verma
My Lords, I can only reassure noble Lords that we take this issue incredibly seriously. We are doing our utmost to ensure that there is engagement from both parties and are working very closely with the Scottish Government on this as well. As I have already said, this debate will be watched very closely and I am sure that everyone will take this debate seriously and encourage discussion.
Lord Foulkes of Cumnock (Lab)
My Lords, does the Minister share my concern that this Government, the Scottish Government and the workforce have been blackmailed by a billionaire sitting on a £130 million yacht in the Mediterranean? Is that not awful? Will the Minister confirm that the UK Government will consider, along with the Scottish Government, all options for keeping this plant open, including bringing it into public ownership?
Baroness Verma
My Lords, we need to be very careful about the language we use and how we progress this debate. It would be wiser for all of us to try to work very carefully and closely with the parties and get them to come together around the table for discussions.
Lord Steel of Aikwood (LD)
My Lords, is it not the case that this dispute has been going on for some weeks? Those of us who have been watching it from a distance have been concerned at the lack of high-level intervention to try to get it resolved. There appears to be an intransigent union on one side and a rather distant operator on the other. I simply want to add my voice to those who are saying that we really must try at the highest level to get this sorted out.
Baroness Verma
My Lords, I have noted my noble friend’s comments, as I have noted those of all noble Lords around the Chamber. So that noble Lords are reassured, I will again repeat that we take this matter seriously and we want to get the parties around the table. That means that we all have to work together very closely at every level.
Baroness Smith of Basildon (Lab)
My Lords, as the noble Baroness will be aware, I raised the issue of refinery capacity in the UK previously, when the highly efficient refinery at Coryton in Essex had to close down. The Government refused even short-term financial support to keep it open, unlike the French and German Governments with their refineries. We must not make the same mistake again. How sure and confident is the Minister that the UK has adequate refinery capacity?
Baroness Verma
My Lords, we feel confident that we do have adequate capacity. On the broader point about support for the Grangemouth complex, we are happy to work to support it as long as there is a good business case there. Before we go to that stage, let us do the most important thing and get both parties to start talking to each other.
Energy Bill
(10 years, 6 months ago)
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Baroness Verma
That the amendments for the Report stage be marshalled and considered in the following order:
Clauses 1 to 7, Schedule 1, Clauses 8 to 38, Schedule 2, Clauses 39 to 41, Schedule 3, Clauses 42 to 50, Schedule 4, Clauses 51 and 52, Schedule 5, Clauses 53 to 66, Schedule 6, Clauses 67 to 69, Schedule 7, Clauses 70 to 74, Schedule 8, Clauses 75 to 91, Schedule 9, Clauses 92 to 97, Schedule 10, Clauses 98 to 106, Schedule 11, Clause 107, Schedule 12, Clauses 108 to 120, Schedule 13, Clauses 121 to 135, Schedule 14, Clauses 136 to 147.
Inheritance and Trustees’ Powers Bill [HL]
(10 years, 6 months ago)
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Alan Turing (Statutory Pardon) Bill [HL]
(10 years, 6 months ago)
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Lord Sharkey (LD)
My Lords, I understand that no amendments have been set down to this Bill, and that no noble Lord has indicated a wish a move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.
Financial Services (Banking Reform) Bill
(10 years, 6 months ago)
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Lord Lawson of Blaby
“Meetings between regulators and bank auditors
(1) The FCA and the PRA must make arrangements to meet the auditors of each bank at least twice in each calendar year.
(2) The FCA and the PRA may conduct meetings under subsection (1) jointly or separately (but each bank’s auditors must be met separately).
(3) The purpose of each meeting is to discuss matters about which the FCA or the PRA believe that the auditors may have views or information.
(4) A bank has a duty to ensure that its auditors attend meetings in accordance with this section (and compliance with that duty may be considered for purposes of the exercise of functions under FSMA 2000).”
Lord Lawson of Blaby (Con)
My Lords, Amendment 92 is in my name and those of the noble Lords, Lord Turnbull and Lord McFall. Grouped with it is Amendment 104D, which I will also speak to, although it has to be said that these two amendments have nothing whatever to do with each other. I will speak first to one and then to the other.
If I may be forgiven, I will go back a little bit in time to when I was Chancellor in the 1980s. As a result of what came to light with the collapse of the Johnson Matthey bank, and the total failure of supervision exercised by the Bank of England, which at that time had that responsibility, I became concerned about the quality of banking supervision in this country. I therefore introduced what became the Banking Act 1987 in order to greatly enhance the quality of bank supervision and bank regulation in the United Kingdom. If I may say, it was not helpful that the Labour Government tore that system up in 1997, but that is another story.
Lord McFall of Alcluith (Lab)
My Lords, I support the noble Lord’s amendment enthusiastically because the auditors were the weak link in the financial crisis. In terms of profits, the banks booked expected profits and then found out they were not there. So the question is: where were the auditors in that situation?
I was chair in 2007 when the Treasury Committee looked at Northern Rock. There were no meetings between the regulators and the auditors. The auditors of Northern Rock received more income from consultancy for Northern Rock than they did from audits. If I remember correctly, the auditors wrote 10 letters on behalf of Northern Rock, from which they gained £800,000. That is £80,000 a letter: not bad for a day’s work. Again, if I remember correctly, there were about seven meetings between the regulators and Northern Rock. At the time the mentality in the Financial Services Authority was the bigger the bank, the bigger the risk; the smaller the bank, the smaller the risk. Of these seven meetings, four were conducted by phone. Three were face-to-face, with no minutes taken. If you were the secretary of your local community council or your golf club and came up with such practice, you probably would not be the secretary at the end of the year. The regulator, however, kept on swanning along. That practice was a terrible practice—the voice of the auditor was missing.
The Treasury Committee report was clear. We said that within the limits of what they are required to do, perhaps the auditors did an adequate job. However, if they did an adequate job in terms of what they were required to do, the question remains: what is the point of an audit? That question continues to haunt the audit profession and it has not started to answer it.
The Government say there is talk about a code of practice, but in 2011 in a letter to the Economic Affairs Committee, Andrew Bailey of the Bank of England was very clear that,
“the working relationship between external auditor and the prudential supervisors had broken down in the period prior to the financial crises”.
So the code of practice does not work. The aim of this amendment is to ensure that there is a statutory basis so that no one can come along in future and say “That aspect was overlooked”. There has to be a serious duty on individuals to look at that.
From an accounting and disclosure perspective, RBS, Halifax and Northern Rock went down because of factors such as huge wholesale funding and property exposures. It was clear from the accounts two to three years previously exactly what the risks were, but nobody took heed. That is why the voice of the auditors has to be that much stronger. At the time, RBS shareholders approved the ABN AMRO deal by 95% to 5%, but that was just months before it collapsed.
When he was on the Economic Affairs Committee the noble Lord, Lord Lawson, asked John Connolly of Deloitte a pertinent question about auditing. The answer was that perhaps Deloitte would have had a different interpretation of “going concern” if it had realised that the Government were not standing behind the banks at the time. How flexible and flimsy is this focus on auditing from the auditors themselves?
There is a long way to go on audit, not just with regard to a statutory basis. There has to be a look at what auditing uncovers and what information it gives. I suggest that the Government look at three key features of an early warning system, having said that the auditors knew what the risks were before. First, there has to be a duty on auditors to raise these issues early with the supervisor. They knew what lay ahead if the reckless approach continued. Secondly, and very importantly, the auditors need to become more professional and sift large numbers of high-impact, low-probability events so that the regulator can understand what the risks are. Remember that the regulator was operating on the basis of business models—the profit and loss accounts of companies—which had nothing to do with the regulator, so they never looked at that. That is why we ended up with such huge scandals as PPI, interest rate swaps and whatever else. Business models are crucial to the regulator, as they should be to the auditors, so it is crucial to sift that large number of high-impact, low-probability events.
Given the point I made earlier about nobody taking heed, there needs to be an increase in credibility to ensure that all stakeholders pay attention to what auditors are saying. In terms of auditors and auditing and the link between auditors and the regulator, there has to be a less compliance-driven and more comprehensive approach. There has to be an enhanced role for the auditor as an independent expert to check and challenge all the trivial and complex issues that banks present. There has to be clear and unequivocal communication from the auditor to the company, and it is important that the regulator is aware of that information. From the auditors there has to be an insight into the company’s risk management system. More than anything, there has to be a universally consistent interpretation and application of standards. Given that we have to increase the confidence of the stakeholders by auditors, financial reporting needs to ensure that investors understand what is happening in a company.
The Government’s response to the commission’s report is totally inadequate. They said that they are,
“not convinced of the need to define the frequency of this dialogue in statute”.
The Bank of England has also said:
“The PRA has published a code of practice on the relationship between an external auditor and the supervisor”.
That code of practice, by the way, was ignored and jettisoned in the past. The FSA, given its culpability in Northern Rock, Halifax and the Royal Bank of Scotland, has the cheek to say that it supports an open dialogue with external auditors.
Andrew Bailey’s letter states quite clearly that the code of practice does not work. The empirical evidence states quite clearly that the auditors and regulators did not do their job in the past. If all we have is an exhortation to the financial community, auditors and regulators, to do things better, we will be back here in a few years. I therefore ask the Minister and the Government to look at this issue very seriously, and if they cannot give us a full answer today, to ensure that when we come back on Report and have had adequate time to look and present our amendments on that, at least we can have a positive way forward.
Lord Flight (Con)
My Lords, I strongly support these two amendments and the points made by the noble Lords, Lord Lawson and Lord McFall. I will add only the point that IFRS renders accounts virtually impenetrable, and fund managers have to convert them into a more understandable form of accounting to understand what on earth is going on within the organisation. I have been critical of IFRS for more than 10 years. The point was made to me initially that this was not a matter for Parliament but for the profession. It is of crucial importance to Parliament, because if it leads to things such as the banking mess, the nation at large is responsible. Secondly, as the noble Lord, Lord Lawson, pointed out, not only did it exaggerate profits in good times and create fictitious profits on the back of which excessive bonuses were paid, but it also exaggerates the other way in bad times, and therefore arguably can lead to an underappreciation of a bank’s strength. I had thought that France and Germany had some sympathy with this view and, notwithstanding other criticisms, I had been hopeful that the EU was looking to address this issue. I am disappointed that, to date, nothing seems to have happened.
I also make the point that, going back 20 years, Switzerland actually put a legal obligation on the auditors to do the compliance regulatory checking. The auditors were then liable if they had not done their job properly. I think it is a pity that Switzerland changed from that practice because I thought that it worked extremely well. I am not necessarily recommending it for this country but it was a novel idea, and the auditors ought to know what is going on within a bank if they have done their duty in auditing that bank properly. Switzerland has since changed its approach. Indeed, it was after it did so that Switzerland, too, encountered problems.
When the crisis broke in 2007-08, I asked myself: where were the auditors? Since then, candidly, there has been justified criticism of the regulators, but the issue of what the auditors were doing and why, and why bank accounts were so unsatisfactory, has not been adequately examined. I believe that the Treasury Select Committee has looked at this, but I am not sure whether it has done so in any detail. It is still quite an important issue and I believe that this Government should exercise pressure to effect reform of IFRS. In addition to the havoc it caused in the banking industry, it has also been significantly responsible for massive damage to our pension systems by overestimating the liabilities, especially when bond interest rates are artificially low. That has led to massive closure of justifiable defined benefit schemes. It really is a problem and it needs addressing.
Lord Barnett (Lab)
My Lords, I strongly support the amendment moved by the noble Lord, Lord Lawson. I declare what I suppose is a former interest, as many years ago I was a senior partner in an accountancy firm of modest size—I say “modest size” by comparison with the three or four firms that audit banks or, indeed, any of the FTSE 100 companies. That firm became bigger since I retired, because it merged with a fairly large international group, but at the moment it is not one of the likely auditors of any bank, whether small or large.
The noble Lord who just spoke asked where the auditors were. That question arose constantly, and understandably. If a bank gets into that kind of trouble, what were the auditors doing over the years? Never mind dialogue with the regulators; what about a dialogue with themselves or with the banks? Something serious will have to be done by the Government or by the profession about there being only three or four firms which audit all banks or, as I said, any FTSE 100 company. It is a serious matter and will obviously have to be addressed. It has been broadly spoken about for years, but nothing has ever been done about it.
Amendments 92 and 104D relate to some extent to leverage, which is what Amendment 93 concerns, and to whether banks have adequate capital to do the job of being a normal bank. This clearly is a serious issue, which nobody has properly addressed. How do we get to the situation where other major banks can be called on to have some kind of competition for who does that auditing job? When a firm knows that it will have that job permanently, the likelihood is that it does not do the job as well as it could or should. That has been happening all the time.
I hope that the Government will listen very carefully to what the noble Lord, Lord Lawson, my noble friend Lord McFall and others said, and what previous Select Committees said. This is an all-party issue, as the noble Lord, Lord Deighton, knows. I hope that he will be able to tell us that the Government will seriously consider what has been said today. If they cannot accept the amendment because the drafting is not quite as it should be—which I would understand—I hope that they broadly agree with it and will come back on Report with an amendment that does the job. We cannot just leave this; something will need to be done. I hope that the Government will listen very carefully today.
Baroness Noakes (Con)
My Lords, I will say a few words, as a director of a bank and a member of an audit committee, to give a current perspective on these issues. We have heard interesting speeches from my noble friend Lord Lawson and from other noble Lords that were not directly relevant to the amendments in this group.
One of the amendments before us concerns whether there should be a statutory requirement to make arrangements to meet auditors twice a year. As a consequence of last year’s Financial Services Act, there is already a requirement on the PRA and the FCA to make arrangements for relationships with auditors, and indeed actuaries. That has led to the revision of the code of practice developed under the FSA into the ones that have recently been produced by the PRA and the FCA.
The noble Lord, Lord McFall, referred to Andrew Bailey and the previous existence of relationships between auditors and the FSA. It may well have been true that that did not work well in practice. However, I assure noble Lords that in my experience, both the PRA and the FCA are wholly resolved to make the arrangements for working closely with auditors work extremely well. That is the nature of what they have done in producing their codes of practice. If the noble Lord, Lord Lawson, or any other noble Lord looks at the codes of practice, they will see a very different intensity of engagement from any previous code. In particular, for category 1 firms—which, I am sure, are the firms about which noble Lords are concerned—not only are two formal meetings scheduled but the guidance makes it absolutely clear that it is expected that there will be additional meetings and informal contacts with the auditors throughout the process.
We have to accept that the world has moved on. There is now a statutory underpinning of the arrangements that are made for relationships with auditors. From my perspective, both the new regulators have taken to heart any lessons to be learnt from the past and are very focused on ensuring that the arrangements work well, going forward.
Lord Hollick (Lab)
My Lords, I support the two amendments in this group. They address real flaws in the current arrangements. The comments of the noble Baroness, Lady Noakes, were interesting on whether the flaws are now covered by the codes of practice. The concern in the committee report to which the noble Lord, Lord Lawson, referred—I was part of that committee—was that there was no active and effective dialogue between the auditors and the regulators. Regulation requires as much light as possible to be shone on what is going on in the organisation being regulated. In part, that is to do with the provision of information and data—of which there are tonnes in banks. At another level, it is very important to give a perspective and a judgment. This goes to the heart of some of the problems.
First, and bluntly put, the auditors—as has been pointed out—are appointed, paid and retained because they work with the management of the bank. Their duty is to shareholders, of course. However, the reality is exemplified by Barclays, which had the same auditor for, I think, 240 years. It is very important that we underwrite the independence of the auditor. The statutory requirement to talk to regulators helps auditors have the necessary degree of independence so that they can inform the regulators of what they are concerned about.
The second issue is that of the accounts. As the noble Lord, Lord Flight, made clear, investors have a completely different set of accounts. They put IFRS to one side because it is incomprehensible and meaningless. It is completely pro-cyclical in banking, which is the most dangerous thing to be. The fund managers look at their own accounts, but of course if you sit on the board of a bank—as a number of Members of this House do—you see a different set of accounts as well. You see the management accounts about how the bank is trading. You look at the bankbook and try to assess the risks. Before IFRS came along, when times were good it was a practice for prudent bankers to say that some of the loans might turn bad and that it was necessary to put some provisions to one side. IFRS has stopped that practice, although we were told in our committee that IFRS is reconsidering the rules; its rules committee has recognised the shortcomings of IFRS. A Member of this House has also written a very good report which tries to get accounting back from being totally rules-based to being principles-based and asking: “Is this a going concern? Is it a true and fair view of accounts?”.
The audit firm that signed off Northern Rock to say that it was a going concern—when it was funded entirely by overnight money—made a clear misjudgment, shall we say. The bank’s own management accounts—and indeed the auditor’s own judgment—would have helped the regulator to look at that much more closely. It is therefore important that the Government think again on this. The argument about cost is not a real one; that is a bit of nonsense, to be blunt, because these sorts of accounts are published and provided to board members to review the performance of the organisation.
As for relying on expectation, we owe it to the taxpayers in this country to have rather clearer rules. Expectations and codes of conduct are all very well, and one would wish to have them clearly set out and published. However, in a matter as serious as this, it is very important that there is a legal requirement to do this. The noble Lord, Lord Lawson, wishes that he had put one into the 1987 Act. The Government owe it to the taxpayers to think again on these issues.
Lord Phillips of Sudbury (LD)
My Lords, I am going to build on what has been said by the noble Lords, Lord McFall, Lord Barnett and Lord Hollick. Then I will make one suggestion in respect of Amendment 92, which I support. Comment has been made about the fact that the accountancy profession has got too concentrated for public benefit. It is altogether too cosily placed vis-à-vis the very largest banks and companies. The noble Lord, Lord Hollick, referred to Barclays using the same auditors for more than 100 years; it that is not a recipe for slack auditing, I do not know what is.
The noble Lord, Lord McFall, noted that many accountancy firms provide both auditing and consultancy services. Sometimes, the non-auditing services are more valuable than the auditing services, which is a crazy situation. It is a pity that the Bill does not address that because if, as auditor, you ought to be saying some things with “rigour”—the word quoted by the noble Lord, Lord Lawson, from an article by Mr Woolf—how can you avoid a deep conflict of interest? I suggest, and experience bears me out, that you cannot bring to the very difficult task of auditing the rigour that is on occasions necessary to bring a bank or a large company to heel and to ensure, as far as any audit can, that some of the disasters we have seen are thereby avoided.
As I say, I am sorry that we are not addressing that issue in this Bill. Perhaps it is not too late to table such a provision on Report. However, I fear that a great deal is lacking. I think I am right in saying that all the big four accountancy firms have been penalised or fined many millions of pounds in the past few years. I remember that in America, KPMG was fined more than $450 million for running fraudulent tax schemes for years on end. What happens to these firms’ reputation and business? Very little does, as far as I can see. I suggest to my noble friend Lord Lawson and his co-proposers of Amendment 92 that it is not clear beyond peradventure that the bank under consideration should not be present at these statutory meetings. It may seem an obvious common-sense point that you cannot have such a statutory meeting with somebody from the relevant bank being present. However, given the cynicism of our world, we should make that clear. Given that we are at a flexible stage of our consideration of the Bill, if Amendment 92 goes forward, I recommend that that provision be included in it.
Lord Blackwell (Con)
My Lords, I do not think anyone can disagree with the arguments put forward by my noble friend Lord Lawson that the regulators should have access to the best available information from the auditors and should be able to request the information relating to the accounts that they want. What I am less clear about from this discussion is whether there is a need for that to be built into this legislation. I should be very grateful to my noble friend the Minister if he would clarify whether there is anything in the current law that prevents regulators doing exactly what these amendments suggest.
Like my noble friend Lady Noakes, I sit on the board of a bank and on its audit committee. Things have moved on considerably since 2008. It is clear to me that as regards the major banks, the PRA has frequent confidential discussions with the auditors; and those are perfectly proper. It is also clear to me that the PRA can, and does, request information from the relevant bank in any form that it feels it needs to have to perform its duties. Therefore, the question is whether there is anything in the current legislation that would allow an auditor to refuse to meet the PRA or to refuse to provide information on the grounds of commercial confidentiality or conflict. Are those powers extant in existing legislation? Is there anything that allows a bank to withhold financial information if it is requested by the PRA? If those powers are already available, I am less clear what these amendments would add.
Lord Eatwell (Lab)
My Lords, it is clear from remarks made around the House that noble Lords support the intention of these amendments—that there should be regular dialogue between the regulators and auditors, and that accounts submitted to the regulators should be fit for purpose and provide the relevant information to inform their decision-making. I understand that the contested issue is whether these meetings take place at the moment, and whether there are sufficient codes of practice—or simply what is regarded as normal practice—to enable these meetings to take place. However, I do not think that that is enough. As my noble friend Lord Hollick said, we have a responsibility to the taxpayer to ensure that these meetings take place and that the appropriate accounts are provided to the regulators.
When he replies to this debate, the noble Lord, Lord Deighton, will have to tell us that he can guarantee that these meetings will take place and that accounts will be provided in appropriate form: not simply relying on codes of practice, but on the force of statute.
The Commercial Secretary to the Treasury (Lord Deighton) (Con)
My Lords, these two amendments concern the role of auditing in banks. Many excellent points have been made about the historical challenges and weaknesses and to some of the problems they have created. However, not all of these have specifically addressed the amendments themselves.
Amendment 92 seeks to strengthen quality engagement between auditors and supervisors. We agree we want to accomplish that and the noble Lord, Lord Eatwell, made the same point. The question is about the most effective way to ensure it is consistently brought about and the difference between us is about how we accomplish that. It may appear attractive to require greater engagement in statute as a guard against complacency in the future, but the clause risks weakening the auditor dialogue and perpetuating the tick-box approach that was found wanting in the last financial crisis. That was one of the most important lessons about regulation we learnt from that crisis. The FSA was widely criticised for measuring adherence to its rules—like how many times you met the auditor—but not coming to an informed judgment about the risks in individual companies and the wider market. That is where the focus of our regulation needs to be.
I may have been in the private sector too long, but solving a major problem by legislating for a number of meetings has never been the best way to get quality outcomes to serious problems. The FSA was criticised, beforehand, for not engaging enough with the auditors of the banks they supervised. The then statutory requirement for regulators to meet with auditors at least once per year simply became another process and the wider purpose of the meetings was not properly developed. The whole point of the Financial Services Act 2012 was to make sure such failing was addressed and that the regulators follow a judgment-led approach to supervision. This means that all enforcement activities must enhance the regulators’ understanding of the business and the wider market to better enable them to detect risks before problems become serious.
FSMA now includes a new Section 339A—which deals with the powers to which my noble friend referred—requiring the PRA to have arrangements for sharing information and opinions with auditors of PRA-authorised persons, and to publish a code of practice setting out the way in which it will comply with this obligation. This code of practice, which we have talked about, sets out the principles governing the relationship between the regulators and bank auditors. The code has been laid before Parliament, so provision has already been made, both in and under FSMA, for a regular dialogue between the regulator and the auditor. These requirements mark a change in focus away from process—stipulating the number of meetings—to actual outcomes: getting them to do the job properly. This requires regulators to consider serious engagement with auditors and subjects their stated approach to scrutiny so we can see if they are complying with the code of conduct: it does not just fall away. This process is not only more rigorous in the short term, but gives the opportunity for parliamentary scrutiny when the codes of practice are laid before Parliament and provides a check on potential complacency in the future.
My noble friend Lord Lawson referred to the need to make sure the dialogue was at least quarterly: the PRA code says that it should be. Most noble Lords will not be familiar with the details of the code of practice, but for the major firms—the ones that are perceived to represent the greatest risk to the stability of the financial system—at least three or four meetings per year are encouraged. This is a risk-based approach and the meetings are: at least one routine bilateral meeting between the lead audit partner and the supervisor; one routine trilateral meeting between the lead audit partner, supervisor and the chair of the firm’s audit committee; and one bilateral meeting between the lead audit partner and supervisor in the lead-up to and during the annual audit of accounts.
Conversely, the amendment’s legal requirement for more regulator meetings with auditors would just follow in the footsteps of the tick-box policy from before the crisis. I am really talking about the smaller, much lower-risk firms, where the guidance is, generally speaking, for at least one meeting a year. Having two meetings a year would simply increase the workload of regulators and take them away from exercising judgment and away from prioritising the most concerning engagements. They would simply be setting up meetings, irrespective of individual circumstances, just because they needed to fulfil a rigid requirement. In our view, such rigidity would weaken engagement and impair the regulators’ ability to adapt their approach as circumstances change.
Because of all that, the Government remain unconvinced of the need to define the frequency of this dialogue in statute, as the PRA code already specifies this and invites scrutiny. My noble friend Lady Noakes put it very well when she spoke about how the world has moved on and how this now operates.
In relation to the second amendment, the Government have been clear that the crisis highlighted deficiencies in accounting standards and the fact that there was room for improvement. We all agree with that, and that is what we said in our response to the final banking standards report. The regulators must have the information they need to do the job of safeguarding financial stability, and in some instances that may require disclosure of financial information on a basis different from that used by other audited bodies. In response to the noble Lord, Lord Hollick, the PRA will have access to management accounts, for example.
In response to the banking standards report, the Government asked the PRA, working with other authorities and the FPC, to undertake a broad-based review of this subject. That review will take account of the nature and scope of information required to create a separate set of accounts, the costs and benefits of the initiative, and international requirements. From 2014, the new Capital Requirements Directive IV will require banks to disclose supplementary information which goes beyond the international financial reporting standards. Therefore, it is not yet clear whether we need an additional, separate set of accounts in the light of the extensive prudential and other regulatory reporting requirements that are being imposed through the CRD IV framework.
However, I can assure noble Lords that, whatever the outcome of this review, the powers that have been given to the regulators under the Financial Services and Markets Act, as amended in 2012—this, again, goes back to my noble friend asking about the existing powers—are already sufficient to permit the regulators to do everything that this amendment gives them the power to do. Their current powers would permit the regulators to make rules requiring banks to prepare additional accounts, to the extent that this is permissible under EU law, to specify the principles that should govern the preparation of such information and to make it public. To the extent that the amendment merely gives the regulators the powers they already have and does not require anything else of them, it is unnecessary. I therefore ask the noble Lord to withdraw the amendment.
Lord Lawson of Blaby
My Lords, I have listened to what the Minister has said. On the second of his two points, I think that he is very close to the position that I and other noble Lords who have spoken are in concerning the IFRS accounts and their defects. He is very much closer than he is on the first one, and he is very close to what I was trying to say. He said that the Government are going to see whether they can get an improvement. He referred to CRD IV, which goes some of the way but is not entirely satisfactory. The only way that we will get accounts in a form that is satisfactory for the regulators and the supervisory requirements is if they ask for that. He is absolutely right that they can do that now. In practice, they could have done it before the 2008 crash, but they did not. That is the problem. Those of us who support the amendments are saying: once bitten, twice shy. It could have been done before; it can be done now. But it was not done before. Therefore there should be a statutory duty, which would make it more likely that it will be done. How can that be objectionable?
On the first issue the principle is the same: once bitten, twice shy. The idea that this is simply a bit of box-ticking is an insult to the intelligence of this House. As we say in the amendment, the meetings should take place more than once a year—and they will be nothing to do with box-ticking. They will be meetings of the kind that the supervisor and the regulator find most useful. Those people will use their discretion; there is no box to be ticked at all. That idea is—if I may say so, with great respect to my noble friend the Minister—a total absurdity.
It is perfectly true that under the code of practice and so on, such meetings could take place anyway. But that was also the case before: not only could such meetings have taken place, but the Banking Act 1987, which was then in force—that part was not repealed— encouraged them to do so. However, although meetings did take place to begin with, towards the end they did not happen. That is why it makes sense to make it a statutory duty for those meetings to happen. They will not take the form of box-ticking; they will take the form that the regulators and the supervisors find most useful. We leave that to their discretion, but we do not wish to leave to their discretion—this is, in effect, the Government’s position—whether the meetings take place at all. We may wish to discuss this further, but for the present I beg leave to withdraw the amendment.
Lord Lawson of Blaby
“Leverage ratio
(1) The Treasury must make an order under section 9L of the Bank of England Act 1998 (macro-prudential measures) enabling the Financial Policy Committee to give a direction under section 9H in respect of a leverage ratio for banks.
(2) The direction above may specify the leverage ratio to be used.
(3) For the purposes of this section “leverage ratio” has the meaning which the Financial Policy Committee considers that it has in European Union law or procedure from time to time.
(4) The order under subsection (1) must be made within the period of 6 months beginning with the date on which this Act receives Royal Assent.”
Lord Lawson of Blaby
My Lords, the amendment concerns an issue of critical importance. As was said in the previous debate, the regulatory and supervisory system clearly failed badly. The regulators were not primarily responsible; the bankers were primarily responsible—but the regulatory and supervisory system performed badly, as did the auditors. We are all of us seeking to prevent that sort of problem from occurring again, and part of that endeavour is to have a supervisory regime that requires the banks to be more prudent than they were in the years leading up to the disaster of 2008.
This subject was considered by the Independent Commission on Banking—the Vickers commission—and one of its conclusions was that basing the regulatory requirement on what are known as risk-weighted assets was unsatisfactory. That is, incidentally, also the considered view of the Bank of England and the PRA. One of the reasons why that is unsatisfactory is that the amount of risk with which one weights particular assets is to a large extent subjective. It is done by the banks, using their own models. The Basel people set a test for a whole lot of different banks. They gave them all the same portfolio of assets and asked the banks to risk-weight them. The difference between the risk weighting of the overall package in one bank was getting on for three times that of another. Indeed, for particular classes of assets, the difference between the risk weighting of the banks was eight times. To a large extent, the banks were able to use whatever risk weighting they chose.
Lord Eatwell
My Lords, this amendment, which I hope will become a new clause in the Bill, is probably the most important in the Bill. It defines whether we are really serious. If we are not serious, we will reject the idea of having a leverage ratio as one of the armaments of the FPC. If we are serious, the Financial Policy Committee must have this tool.
As the noble Lord, Lord Lawson, has argued, risk-weighted assets have been discredited as a measure of risk within the banking system. It is regrettable that so much legislation both here and in some of the discussions in Basel and in the European Union still use this discredited measure as a means of devising appropriate regulatory measures.
The leverage ratio is simple, it is clear and it provides a protection to the overall stability of the financial system; it provides protection for a resolution regime; and it provides protection for depositors because, with the regulatory determination of the amount of capital relative to the asset base of the bank, that regulatory determination pursuing those goals will have the effect of reducing an important component of systemic risk. It is not me who makes that argument; the Government did so in the Financial Services Act 2012. In defining systemic risk, that Act defines one of the characteristics of systemic risk as “unsustainable levels of leverage”.
If the Financial Policy Committee is supposed to be managing systemic risk and a component of systemic risk is unsustainable levels of leverage, why cannot the Financial Policy Committee have the tools to do anything about it? At the moment the Government are telling us that they will review whether the FPC should be given this particular tool in 2017. They will review it: we are not even sure that the Financial Policy Committee will receive the ability to manage the leverage ratio in 2017-18.
By the way, even if it does appear in 2018, the Financial Policy Committee and the Governor of the Bank of England will be given this tool just as Mr Carney gets on the plane back to Canada. We have managed to secure someone who the Government tell us—and I think is generally acknowledged—is a highly skilled central banker and we are not giving him the tools to do the job which he is asked to do in the 2015 legislation. I notice that it was said in the Commons Public Bill Committee that:
“The Financial Policy Committee cannot be expected to work with one hand tied behind its back”.—[Official Report, Commons, Financial Services (Banking Reform) Bill, 26/3/13; col. 207.]
Not giving the Financial Policy Committee this particular power ties both its hands behind its back because it is, as I have already said, required to take account of unacceptable levels of leverage and yet it has no tool to do anything about it. The amendment of the noble Lords, Lord Lawson and Lord Turnbull, and of my noble friend Lord McFall, achieves that goal. Surely this is what is necessary if we are serious and are not overwhelmed by the lobbying of the banks.
Lord Turnbull (CB)
My Lords, I support the amendment and the account given by the noble Lord, Lord Lawson. I shall add a bit of background to this matter. For probably two decades, up to about 2004, the leverage ratio of the British banking system fluctuated between 20 and 25. It then rose, reaching a peak in 2008 of somewhere over 40. The Government’s wish that the number of the leverage ratio should not be greater than three implies that the limit of their ambitions is to get this leverage ratio back to 33, which is still, by historical standards, a very high ratio.
A very interesting chart in the Vickers commission report shows how risky people thought assets were. It shows that they fell—this is the assessment that banks put into their own models—between 2004 and 2008. How can anyone believe that 2008 was a year of greater financial stability? I believe the way this came about was as follows. You said in 2004, “I have a portfolio of commercial property and have not lost a penny on it in the past 10 years, so I will give it a weight of X”. You come to 2008, four or five years later, and say, “I have still not lost any money on this, which tells me that this portfolio is not as risky as I thought it was in 2004, so I will give it a lower risk rating”. What is happening all the time when you have an upswing is that, as the upswing gets riper and riper, the risk weights go down and down, until there is a crash. The whole purpose of having a leverage ratio is to provide a backstop to that. One or two people argue that we should run on basic leverage ratios alone but, in my view, both the leverage ratios—unweighted and risk-weighted—should run in tandem. Each provides a check on the other. Relying solely on risk-weighted assets leads you into the farce of banks marking their own homework and doing the opposite of what they should be doing by marking things as less likely at precisely the moment in the cycle where they become more likely.
Another argument that has come up in relation to 3% and 4% is that we must not get out of step with regulation abroad. However, when it comes to risk-weighted assets, the Government have accepted that they want to impose a higher figure—partly because we have more systemically important banks and it is important for a medium-sized economy running a very large banking sector for that sector to be safe. When you say, “Does that not mean that what we thought was a 3% figure should move pari passu”, the answer is, “Oh no, we can’t do that because we will get out of line with what everyone else is doing”. But if you can do it for one of these measures, why can you not do it for the other? I find that argument completely unconvincing.
There was a view in the commission that higher leverage ratios were a good thing. However, that is not what this amendment is about. Although we thought that, the amendment says that it should be the FPC that makes the judgment. As my noble friend Lord Eatwell has pointed out, the absurdity of hiring this super-duper, global-standard central banker and then not giving him this essential tool until the very point at which his contract ends is beyond belief. It seems an absolutely simple point that the FPC should start this. Elsewhere in the world, other people will be thinking about this and it seems very strange indeed to leave the Bank and the FPC unable to start deploying this measure.
There is an argument that certain kinds of banks, particularly those with low-risk assets, will find that this 4%, or the leverage ratio, becomes the binding ratio. People making that argument cite, principally, various former building societies. You have to look around and ask where the biggest failure in Britain was. It was former building societies thinking that they had a portfolio that was a good deal safer than it really was. Some of them also got into quite a lot of commercial real estate. Northern Rock, for example, would have been well advised to have followed a leverage ratio of this kind. If it turns out that the supply of mortgages is not adequate—although we are doing lots of other things to promote it—you might want to differentiate between one kind of organisation and another. That should be done by the regulator as a derogation from a world in which we are working with higher leverage ratios than the Government currently envisage.
Lord Blackwell
My Lords, from the discussion, I am once again not clear on whether this needs to be built into the legislation in the way that is being suggested. As the noble Lord, Lord Turnbull, has said, I do not think that anyone would now dispute that it is a useful backstop to have a leverage ratio alongside the risk-weighted assets calculation of capital. However, that is built into CRD 4, and the PRA and FPC have recently demonstrated that they are perfectly capable of anticipating that in terms of the capital guidance that they give to institutions on the capital that they are required to hold.
There is an argument about whether 3% is the right level or not. I can assure my noble friend Lord Lawson that in the UK at least, whatever banks may have done in the past, they would not get away with applying whatever risk weighting they chose to devise against their own risk assets. All the risk weightings applied in the risk-weighting process are reviewed intensely by the PRA. It has to approve the internal model in order for it to be used to assess your own risk capital, and that process is now extremely well scrutinised by the regulator.
Nevertheless, there is a good argument that, because the process is bound to be imprecise, having a backstop of an overall leverage ratio makes sense. I think that is generally agreed. However, if you make that leverage ratio too restrictive, you may distort behaviour in a way that you do not desire by encouraging banks and other financial institutions to put too many of their assets into risky assets. If you have only a leverage ratio that does not discriminate by risk, and you are allowed only to hold that amount of assets, then you will stop risk weighting them and simply go for the riskiest assets you can get within that overall leverage ratio. The two have to work together. We should be careful about believing that having too hard a biting overall leverage ratio will reduce banks’ risks as it may work in the other direction.
Lord Lawson of Blaby
The issue here is not whether you should have a leverage ratio; it is not whether it should be statutory or not. The issue is who should determine it: the Chancellor of the Exchequer or the Financial Policy Committee of the Bank of England. That is the issue. Although I speak as a former Chancellor of the Exchequer, I still think it would be better left to the FPC. That is the issue; not whether it should be statutory or whether it should be alone without any consideration of risk-weighted assets. The issue is simply who should determine it.
Lord Blackwell
I thank my noble friend for that clarification, but I was responding to the points that were made by him and other noble Lords in advancing their arguments. If you come down to the question of “Does the PRA need more powers in order to enforce a higher or more restrictive leverage ratio?” then it can, under its existing powers, require capital add-ons to banks if it is not satisfied with the risk weightings. That is the way it would deal with it. It seems a slightly tangential point as to whether it is setting the overall leverage ratio or whether it is setting the capital ratio by other means. I should like to hear the Minister’s response on whether he thinks there is a case for this being built into the legislation.
Lord Hollick
I, too, strongly support this amendment. This is a serious matter. It is not a backstop, or at least I do not see capital as a backstop; I see it as the foundation upon which safer financial institutions can be built. We debated in great detail, quite properly, the regulatory process and all of the regulatory initiatives, but at the end of the day there is nothing that can protect the public and the depositors other than a strong capital foundation.
In a characteristically robust article in today’s Financial Times—which of course I will replace in the Library—John Kay said:
“It is hard enough to find people capable of running financial conglomerates—the fading reputation of Jamie Dimon, JPMorgan Chase chief executive, confirms my suspicion that managing these businesses is beyond the capacity of anyone. The search for a cadre of people employed on public-sector salaries to second guess executive decisions is a dream that could not survive even the briefest acquaintance with those who actually perform day-to-day supervisory tasks in regulatory agencies. They tick boxes because that is what they can do, and regulatory structures that are likely to be successful are structures that can be implemented by box tickers”.
He goes on to say:
“Financial stability is best promoted by designing a system that is robust and resilient in the face of failure”.
That is what a strong capital base does.
It is very important that the Financial Policy Committee has the power to do this. Of course, politicians can always be relied on to make the right decisions but, as we know, when political priorities are to encourage Chinese banks to come to London, for instance, they are allowed to open branches. I am sure that China is a better credit risk than Iceland but it gives you an insight into how decisions can be made by politicians. It is very important that the Financial Policy Committee is given the power to make these decisions, and to make them independently, just as the Bank of England does over interest rates.
Baroness Noakes (Con)
My Lords, I agree with much of what my noble friend Lord Blackwell said—in fact, I probably agree with all that my noble friend Lord Blackwell said—but I would like to pick up something that my noble friend Lord Lawson said when he intervened on my noble friend Lord Blackwell, that the issue was who was to decide on the leverage ratio.
The amendment before us says that the direction, which is the Treasury’s direction,
“may specify the leverage ratio to be used”.
The key issue with this amendment is not who potentially decides on the amount of the leverage ratio but the timing of the leverage ratio. People have been clear, and it is going to be a requirement of CRD IV, that there will be a leverage ratio, and the current international timing is to be 1 January 2018. As I understood it, that timing was going to drive the Government’s decision on what leverage ratio to introduce, given that they have the power to include it within the macroprudential toolkit under the legislation that has already been passed. We should not rush into a leverage ratio because there is still much work to be done on understanding how these leverage ratios, which have not been used much recently, actually work in practice.
My noble friend Lord Lawson also pooh-poohed the idea that the difference in practice between the US and the UK was significant. Some analysis done by the British Bankers’ Association has identified that on any given balance sheet the difference can be 3% under CRD IV and 5.3% under the current US rules. So we potentially have quite a significant difference, and the BBA talks about different leverage ratios as well. We also need to understand the impact of any given level of leverage ratio once the definitions are sorted out.
Mark Carney, who is chairman of the Financial Stability Board as well as Governor of our own Bank of England, has been clear that this is to be a backstop measure and that it is important to calibrate it so that the risk-weighted asset calculation of capital bites before the backstop method. Unless we are very clear when we introduce the leverage ratio about what the impacts will be, we potentially lay ourselves open to the unintended consequences of positively driving the capital requirements of the banks or, more likely, their lending capacity.
It is important that we let the current timetable for the development of the leverage ratio proceed and let the calculations be done properly. Banks are already disclosing leverage ratios to the regulators and will be disclosing considerably more information as time goes on, so there can be much more of a public debate about the impact of different leverage ratios on banks and other financial institutions.
Lord McFall of Alcluith
I support the amendment moved by the noble Lord, Lawson, which stands in my name as well. As the noble Lord said, the amendment is, quite simply, about who is doing it. Whatever they do at some future stage, we will let them get on with it, because it is about authority. There are two issues here: learning the lesson, and the authority.
On learning the lesson, I noted the comments of Adair Turner, former chairman of the FSA, when he said:
“We allowed the banking system to run with much too high levels of leverage, inadequate levels of capital, and we ignored the development of leverage in the financial system … That was a huge mistake”.
I had never gone back to basics and asked, “Why do we allow banks to run with 30, 40, 50 times leverage?” Neither had anyone else, funnily enough; so it is about time that somebody asks that question and keeps it in their mind on a daily basis. My point is that politicians—Chancellors, Prime Ministers or whoever—will not keep that in their mind on a daily basis. We learnt that from the financial crisis before. If we set up a new organisation we should give it the authority. I noted the comments made by Lawrence Tomlinson, who was brought in to BIS recently as an “entrepreneur in residence”. He questioned why the British Bankers’ Association needed,
“60 people working full-time lobbying”,
when the Government owned majority stakes in two of the banks, Lloyds and the Royal Bank of Scotland. As he said:
“We already own the banks. Why are Lloyds and RBS paying the BBA to lobby us? They can just get lost! … It’s amazing we let RBS spend tens of millions advertising its services with 80% of our money”.
I mention that because the banking sector is the best sector in the country for lobbying. The banking sector, unlike any others, gets direct access to No. 10 and No. 11 Downing Street. That happened with the previous Government and it is happening with this one. If you do not allow the proper authority—the FPC—to have this leverage ratio, you are weakening its authority in an instant. I suggest that the institutional memory of a Chancellor or a Prime Minister is much less than the institutional memory of the Financial Policy Committee.
In terms of the leverage requirements, we have had the Vickers commission, the Parliamentary Commission on Banking Standards, and the interim Financial Policy Committee asking for that leverage to be handed over. The Government have refused. If the Government do not want to be accused of playing politics, it is important that that is put to the Financial Policy Committee.
Let us look at leverage even today. I looked at Barclays, which has been,
“the poster child for excess leverage. Its balance sheet is roughly the size of the UK’s GDP. It funds 1.5 trillion pounds of risk-taking with 97.5 per cent debt and 2.5 per cent loss-absorbing equity … The average hedge fund trades with less than 3 times leverage … Barclays has chosen to operate with 45 times leverage … So Barclays deploys gearing 15 times that of most hedge funds. If the bank’s assets eroded in value by a mere 1.5 per cent, it would be 100 times leveraged. How confidence inspiring is that?”.
If we do not allow the FPC to look at these issues on a daily basis, when No. 10 and No. 11 Downing Street will not be looking at them, we will find ourselves in trouble in the future. As mentioned by the noble Baroness, Lady Noakes, Dr Carney said that it is,
“essential to have a leverage ratio as a backstop to a risk-based capital regime”.
We are saying that, if we have appointed Dr Carney with all the thrills and frills of a Chancellor’s appointment, we should give him that authority so that he can get on with the job straightaway and we can keep it away from the hands of the politicians.
Lord Flight
My Lords, as the noble Lord, Lord Eatwell, pointed out, this is crucially important territory. However, I am not certain that the amendment gives the right answer.
I recollect that when I was studying economics at Cambridge 40-something years ago, a capital base of 8% and a gearing ratio of 12.5% was viewed as the prudent formula for a bank. Things have changed a great deal since then. Who was it that allowed banking ratios to get to such ludicrously low levels in this country? It was the regulator. Although we have a change of regulator organisation, there are still, to some extent, the same people and I am not sure that I necessarily trust the regulator in its new name as being sound in overseeing such things.
Look what has happened, I repeat, in the past 10 or 15 years. I think it was the noble Lord, Lord Lawson, who made the point that risk-weighted asset formulae are somewhat discredited. Again I agree and, having had some recent experience of it, I have little confidence going forward.
I also note in terms of ratios permitted that the regulator for some extraordinary reason—at least until the recent present—had ridiculous differences between the capital ratios required for large, too-big-to-fail banks and smaller and new banks. The ratio for mortgage lending was something like 20 times as much for a small bank as for a large bank. So, again, how come the regulator allowed crackpot different capital ratio requirements to creep in in a way that was thoroughly anti-competitive?
I am not sure that the Treasury may not be the safer party to ultimately have the power to determine capital ratios. As has been pointed out, the amendment states:
“The direction above may specify the leverage ratio to be used”.
The direction is given by the Treasury and so the amendment ultimately gives the last-call power to the Treasury and not to the PRA.
So where are we? I do not think the issue is resolved. It certainly needs addressing.
Viscount Trenchard (Con)
My Lords, I agree with much of what my noble friend Lord Flight has said. I also agree with a great deal or all of what my noble friends Lord Blackwell and Lady Noakes have said. I was also impressed by the way in which the noble Lord, Lord Turnbull, stated that he believed that the straightforward, unweighted leverage ratios should operate in tandem with a risk-weighted ratio.
I noticed that noble Lords opposite smiled when my noble friend Lord Blackwell pointed out that if the absolute ratio bites first and becomes effectively a frontstop rather than a backstop, it will lead banks to concentrate more heavily on risky assets, on lending on assets which they think will give them higher returns. I am convinced that that is correct. It is therefore important that the absolute ratio should be a backstop rather than a frontstop.
I am confused by the difference in responsibility between the FPC and the PRA. The amendment suggests that the Treasury should enable the FPC of the Bank of England to determine what the leverage ratio should be. However, as noble Lords have pointed out, the FSA had already become more involved in interfering with and providing advice, exercising influence over banks’ lending policies and questioning their formula and the basis on which they applied certain leverage to certain categories of asset class.
I am not sure where the writ of the FPC stops and where that of the PRA starts. I know that they are both part of the Bank of England and this is confusing. I would welcome clarification from the Minister.
Lord Brennan (Lab)
My Lords, Mr Andrew Tyrie, the chairman of the Parliamentary Commission on Banking Standards, described leverage ratio as,
“the single most important tool to deliver a safer and more secure banking system”.
In their reply last July, the Government accepted this importance. Indeed at paragraph 5.50, they plainly stated that in the future the FPC should determine the ratio, provided that it was not allowed to fall below the international standards reflected in Basel III. However, at paragraph 5.51, that commitment having been repeated, it is then said that it is,
“subject to a review in 2017”.
The question therefore arises, if the Government are committed in principle to the FPC determining the ratio, what in this review in 2017 might affect that principle? Questions of amount or the approach to ratio in the light of Basel III go to the process rather than the principle of who determines the ratio. I presume that over the next four years, the Treasury will determine the leverage ratio and will place such requirements about it as it thinks fit on the banking industry.
At page 68 of the response, the Minister will recall that under the heading “leverage ratio”, it is stated that the Treasury is presently reviewing with the FPC the balance between backstop and frontstop considerations. The intention is to publish the results before the end of the year. Given the six weeks or so of parliamentary time that we have left until Christmas and assuming that Report is, for example, in December, will the Minister undertake to ensure that that review is published before Report? It will affect the debate, should it recur on Report, on the question of who makes the decision. The key point, however, is: why 2017, if the principle is accepted now?
Lord Deighton
My Lords, I welcome the engagement of noble Lords on this critical issue of the leverage ratio and the FPC’s toolkit. Everybody agrees the importance of making sure that our financial institutions are appropriately capitalised. There is no dispute about that and the lessons we should have learnt from the financial crisis. The real question—and again my noble friend Lady Noakes hit the nail on the head—is about the journey we take to get there, how it integrates with what is going on in global standards, and what powers the FPC and the regulators already have to ensure that we are in the right place in the mean time. I think that also comes back to the points made by the noble Lord, Lord Brennan.
I shall try to give some context, particularly for those who are not so familiar with all the aspects. With each of these amendments, I ask myself what the point of substance is between the amendment and the Government’s position and whether I can reconcile the two with the existing actions we are taking. In this case I have been able to comfort myself that adequate protections are absolutely in place, given the objectives of this amendment.
The FPC has two main sets of powers at its disposal. The first is a power to make recommendations. This includes recommendations to both the PRA and the FCA. They can be made on a “comply or explain” basis. The second set of powers, which we are talking about here, is to give directions to regulators to adjust specific macroprudential tools. Amendment 93 proposes that the Government give the FPC direction powers to implement a minimum leverage ratio in the UK. Before explaining why the amendment is not necessary or desirable, let me explain the international and domestic context, beginning with the international.
In order to address recognised problems with the system of risk-weighted capital requirements—which we have all talked about and acknowledged—the Basel III accord recommends a complementary binding minimum leverage ratio. Again, we have all agreed that the right way ahead is for the two to work together, so there is no dispute about that. That standard comes into force in 2018, following a final calibration of the leverage ratio in the first half of 2017 so that we get it right. Separately, at the European level the European Banking Authority will undertake a review of the leverage ratio with a view to the European Commission introducing legislation in 2017. The Government agree, and have consistently argued, that banks must be subject to the binding minimum leverage ratio requirement, which supplements the risk-weighted capital requirements as set out by the Basel III accord. Therefore the Government fully anticipate the development of internationally agreed minimum standards of leverage.
The Government take the view—and we believe that the regulators agree—that the optimal approach to creating a lasting binding minimum standard is to work towards international agreement and its implementation through legislation. As Mark Carney wrote in the Financial Times on 9 September:
“Yielding to calls for unilateral action to protect domestic systems would risk fragmenting the global system, slowing global growth and job creation”.
Once that minimum is agreed domestically, the Government propose—and this directly addresses the point made by the noble Lord, Lord Eatwell—to furnish the FPC with a specific macroprudential tool to vary the leverage ratio, through time, obviously subject to it not falling below the minimum.
However, the question raised by the amendment is: what powers do the regulators have to take action on leverage between now and 2018 in advance of the introduction of that internationally agreed binding minimum requirement through European legislation? Let me reassure noble Lords that the regulators already have extensive powers to address the issues raised by this amendment. The FPC has broad powers to make recommendations to the regulators, on a “comply or explain” basis, including on leverage. The PRA has all the powers necessary—which we have talked about—under Section 55M of the Financial Services and Markets Act 2000 to require individual firms to take specified actions, including on leverage. Under Section 137G of FiSMA it may make rules in pursuance of its general functions, including rules on leverage ratios.
The killer fact, if I may call it that, is that on 20 June—interestingly, one day after the publication of the PCBS report containing this recommendation—the PRA announced that it would require eight major UK banks to meet a tougher leverage ratio than that prospectively required by Basel III. They have already done that. That action followed a March 2013 recommendation from the interim FPC to the PRA to consider applying higher capital requirements to any major UK bank or building society with concentrated exposures to vulnerable assets, or where banks were highly leveraged relating to trading activities. Put simply, the regulators already have the powers to do what the noble Lord appears to be suggesting in advance of international agreement.
Lord Eatwell
I am intrigued by that argument. The noble Lord started off with a powerful argument for the necessity of a leverage ratio that is allied with risk-weighted assets and other measures. He is now saying that we do not need it because it is all there already. Why, then, are we even bothering to think about introducing it in 2017 or 2018? As he said, we have all the powers already. He is absolutely contradicting himself in a single speech. Will he also address the fact that the Bank of England’s response today to the banking commission’s final report states that the FPC will publish its assessment of the appropriate level of the leverage ratio by the end of this year? When the FPC publishes that assessment, what will the regulators and the Treasury do about it?
Lord Deighton
There was nothing contradictory in what I said, but I will clarify it. For the longer term, we absolutely agree that we need an internationally consistent standard that will work with a minimum leverage ratio. In the mean time, before we are able to employ that in a way that is consistent with how those rules work out, we have the powers individually to make sure that leverage ratios exist which protect the system. I do not think that there is anything contradictory about that. It simply shows that in the short term we have the capacity to protect the financial system, and that is exactly what the regulators have done. There is nothing contradictory in that at all. The regulators have the powers to do what they need to do and will continue to have those powers after international agreement has been reached, at which point we will integrate them through the power that we will give the FPC to set the varying leverage ratio through time.
Lord Eatwell
My Lords, will the Minister answer the question I asked about the statement that the Bank of England has made today that the Financial Policy Committee will publish its assessment of the appropriate level of the leverage ratio by the end of this year? When it publishes that assessment, who is then going to act and what are they going to do?
Lord Deighton
I apologise to the noble Lord. I was so excited about the first question that I forgot about the second one. It is consistent with what I have already said that the FPC intends to address this recommendation in that timescale, but a full assessment will depend on the definition of leverage agreed internationally, so it all rather depends. In terms of who is going to implement it, as I said, the regulators already have the power to do so. In June this year, they changed the ratios on our key eight institutions to protect them in the mean time, so they have these powers and they have exercised them. I think that is a killer fact.
Lord Lawson of Blaby
My Lords, in some ways this has been a rather puzzling debate. I warmly endorse what the noble Lord, Lord Eatwell, said. This is one of the most important—if not the most important—issue that we have to discuss in the course of this extremely long Bill. For that reason alone, I think it likely that we will wish to come back to it at Report. Meanwhile, I am encouraged to some extent by what my noble friend the Minister said. However, he seemed to be saying at least two completely different things, if not three. One was that we would have to have the leverage ratio—we are all in agreement that we have to have a leverage ratio—that was internationally agreed. Then he said that we would also have discretion, with the FPC, to decide the leverage ratio, and therefore that there was no need for the amendment because the provision was already there.
First, I am not convinced that it is already there. I shall read very carefully what the Minister said. When my right honourable friend the Chancellor responded to the recommendation of the Parliamentary Commission on Banking Standards, he said nothing of the sort. Nor did he say whether he disagreed with it. He said the first part of what my noble friend said: namely, that we have to accept the international standard.
There are only two major global financial centres: New York and London. It is important that we do what is right for our financial centre—and the United States takes the same view. We should not rely on international agreements. Too often it is the lowest common dominator that is agreed. The United States is going its own way, particularly with large banks. It realises that it is a major global financial centre and that New York is so important to the American economy that they have to get it right.
In the United Kingdom, the banking and financial sector is even more important to the British economy. In relative terms, it is five times as important to our economy as the American banking and financial sector is to theirs. Therefore, it is all the more important, if we are to have a strong and successful financial centre and a strong and successful economy in this country, to do what is right.
It is quite clear that that means that we should have a leverage ratio that may be the same as what is agreed internationally—if it is agreed internationally—but may well be a more prudent one. It certainly would not be a less prudent one, but it may be in the interests of the City of London and the British economy that it should be more prudent.
The amendment states that the decision should be taken by the Financial Policy Committee of the Bank of England. In a sense, my noble friend agreed with that when he said that the duty was already there and that we had given it to the committee. If that is so, it is good news. However, I suspect that it is not entirely the case. Therefore, it is very likely—in fact, more than likely—that we will come back to this very important issue on Report. In the mean time, I beg leave to withdraw the amendment.
Lord Lawson of Blaby
“Proprietary trading
(1) The PRA and the FCA must carry out a review of proprietary trading by banks.
(2) The review must be completed before the end of the period of 3 years beginning with the day on which this Act is passed.
(3) The PRA and the FCA must give the Treasury a report of the review.
(4) The report must include—
(a) an analysis of any action taken by the PRA and the FCA to monitor whether and to what extent banks engage in proprietary trading and any action taken by the PRA or the FCA to discourage banks from doing so;(b) an account of any difficulties encountered by the PRA or the FCA in taking that action and an assessment of its efficacy;(c) an account of any requirement imposed on banks which the PRA or the FCA consider may be engaging in proprietary trading to publish a statement of the banks’ exposure to risk in their trading operations and of the controls applied to limit that risk;(d) an assessment of the impact of the ring-fencing rules on proprietary trading by banks;(e) an assessment, drawing on experience in countries other than the United Kingdom, of the feasibility of prohibiting banks from engaging in proprietary trading or limiting the extent to which, or circumstances in which, they may do so (having regard, in particular, to any difficulties of definition); and(f) a comprehensive analysis of the advantages and disadvantages of prohibiting banks from engaging in proprietary trading or limiting the extent to which, or circumstances in which, they may do so.(5) The Treasury must lay a copy of the report before Parliament.
(6) The PRA and the FCA must publish the report in such manner as they think fit.
(7) The Treasury must, following receipt of the report, make arrangements for the carrying out of an independent review to consider the case for the taking of action in relation to proprietary trading by banks.
(8) The appointment by the Treasury of persons to carry out the review requires the consent of the Treasury Committee of the House of Commons.
(9) The reference in subsection (8) to the Treasury Committee of the House of Commons—
(a) if the name of that Committee is changed, is to be treated as a reference to that Committee by its new name, and(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, is to be treated as a reference to the Committee by which the functions are exercisable; and any question arising under paragraph (a) or (b) is to be determined by the Speaker of the House of Commons. (10) The persons appointed to carry out the review must give the Treasury a report of the review once it has been concluded.
(11) The Treasury must lay a copy of the report before Parliament and publish it in such manner as it thinks fit.
(12) In this section—
(a) “proprietary trading”, in relation to a bank, means trading with funds on markets on the bank’s own account (whether or not in connection with business with the bank’s customers),(b) “ring-fencing rules” has the meaning given by section 417 of FSMA 2000.”
Lord Lawson of Blaby
My Lords, this amendment is in my name and those of the noble Lords, Lord Turnbull and Lord McFall. It concerns proprietary trading, which gave the banking commission so much concern that we produced a report entirely devoted to the subject.
Proprietary trading is speculative activity conducted by an institution entirely for its own benefit, where no clients are involved at all. It uses its own financial resources to conduct the speculative activity, which can be very profitable. I have no argument with it taking place, but I have always believed that it is the sort of thing that hedge funds should be doing—and good luck to them. It is not something that banks should be doing.
There are two main reasons for this. One is that it can be exceedingly risky—and we know that there is enough risk in the system without that. Since the activity can be perfectly well done—and in a free market, should be done—by other institutions, namely the hedge funds, that is fine.
The other reason that it is dangerous for banks to do this is the issue of culture. When the Parliamentary Commission on Banking Standards was set up, one thing that we were charged to do was to look at the issue of banking culture, because it was clear that it had gone radically wrong. Two aspects of banking culture in particular are relevant here. One is prudence. It always used to be the case—and it should now be the case—that this is an essential part of the culture of any bank. People put their deposits in banks thinking that it is a safe thing to do because bankers are prudent. The other aspect of the culture is service to clients. Of course, with proprietary trading, by definition there is no client; there is no service to clients at all. It is pure speculation on the financial markets, and on the bank’s own books, without any clients being involved.
That is why my old friend Paul Volcker—whom I have known for many years; he was chairman of the Fed when I first became Chancellor, and I had a lot to do with him—lobbied the American Government to introduce what was called the Volcker rule, which forbids American banks from conducting proprietary trading. He did this for the same reasons that I outlined. However, we did not go that far.
Incidentally, it is interesting that proprietary trading was rife in British banking before the crash. As much as 30% of the business of some banks was proprietary trading. Now it has almost completely disappeared, in the aftermath of the crash. The banks are saying, “Why are you bothered about proprietary trading? We don't do it any more”. That is true—they do not. But they will. They will come back, as they did before. When they feel that they have got over the aftermath of the disaster, and the blood is coursing rather faster through their veins, they will take these risks and do it all over again.
What we have said is that this is a serious issue that needs to be addressed, and that in three years’ time there should be a serious review of this, which will take into account what is happening in the banking world and will see how the Americans have got on with banning proprietary trading for banks. I am not totally optimistic, because the Americans have a crazy legislative system in which, once a piece of legislation has been introduced, the legislators festoon it like a Christmas tree with all sorts of baubles of this, that and the other. The simple rule that Paul Volcker wanted has been encrusted with page after page of appalling legislation, which he regrets; he makes no bones about that. I am quite sure that we in this country, with our much superior system of government, would not do that.
Nevertheless, we will be able to learn something from the experience of the United States. We will learn from the experience of what happens over the next three years, and I strongly hope—again, I cannot see any objection—that the Government will accept the amendment, which calls for a review to be held in three years’ time, and, in the light of that, for the Government to decide whether we should have a Volcker rule in this country and whether we should ban banks, although certainly not hedge funds, from engaging in proprietary trading.
Lord Eatwell
My Lords, I support the noble Lord, Lord Lawson, in this amendment. It seems a modest amendment, calling for a review in three years’ time when the appropriate information from the United States will be available. It will be valuable to have this clause in the legislation to ensure that that review takes place, because it is so easy—given the exigencies of the moment—for major issues, which were recognised as major in the past, to be neglected because of day-to-day pressures. Therefore, having done all our work on banking in the Bill, if we set this process in motion so that the review happens, we will be performing a valuable service.
Lord Phillips of Sudbury
My Lords, I, too, support the amendment. I moved Amendment 91B at the close of our second day in Committee, which overlapped to a considerable extent with this amendment. In my amendment, I also talked about looking at the cultural as well as economic effects of this mass of gambling, as it is, within the financial markets. I hope that the Government will smile upon this; it may be that if it comes back on Report I will try to amalgamate my amendment and this one.
Lord Higgins (Con)
My Lords, I also support my noble friend’s amendment, but with some qualifications and a request for some clarification. The amendment simply refers to “proprietary trading by banks”; that does not distinguish between one part of a ring-fenced bank and another. The arguments on this issue are so clear that we should take a perfectly clear view that there ought to be no proprietary trading whatever by any ring-fenced bank.
There is also no real need to wait three years for such an inquiry. My noble friend referred to the Volcker rule in America; not all of us in this Chamber have Paul Volcker as a personal friend, but I have great respect for him. He is absolutely right that this should not be carrying on in the United States. Although it may be that there has been a decrease for the moment, over a period of three years the situation might change somewhat. Therefore, we could take a clearer view on this between now and Report than is set out in the amendment. As my noble friend has pointed out, this is effectively the banks’ carrying out risky trading on their own behalf—in the past, not infrequently, it was risky trading on their own behalf with clients’ money—and this, again, is a crucial point. Perhaps we should clarify that aspect of the matter, but I have not the slightest doubt that this is a move in the right direction and I hope that we can make rapid progress on it.
Lord Turnbull
I reassure the noble Lord, Lord Higgins, that it is certainly not intended, while this activity might remain within a banking group, that it should be done, under the plan, by a ring-fenced bank. One of the reasons why we took the view that we should wait and see is that the dividing line between a proprietary trade and a trade on behalf of a customer is not straightforward, which is why it is very difficult in the US. For example, if I lend the noble Lord money he may seek some kind of hedge which I would provide. That might mean that my position as the bank is no longer what I really want it to be. As a bank, I would look around to see what my colleagues have done during the course of the day, and we would then add up all the positions that we have taken. We may well find that that position is not where we really want to be, so on the following day the bank goes out and undertakes a trade which gets it back to the degree of hedged position that it wants. Was that a proprietary trade or was it a trade that was a consequence of serving a customer? That is why this is actually very difficult and why we are wise to wait and see whether workable definitions could be found of what constitutes real proprietary trading and of what constitutes trading in response to a customer. This measured amendment enables us to do precisely that.
Lord Deighton
My Lords, the ICB considered in detail the case for a ban on proprietary trading in the UK, but decided in favour of ring-fencing. The PCBS heard evidence from a wide range of sources that prop trading does not appear to play a large role in the UK at the moment—as my noble friend Lord Lawson pointed out—nor did it play a significant role in the financial crisis. The noble Lord, Lord Turnbull, has already addressed the question of my noble friend Lord Higgins, but it should of course be noted that the ring-fenced banks will be banned from proprietary trading as well as from market-making and other forms of trading activity that would expose them to risks from global financial markets. Therefore, from a prudential perspective, much of the risk posed by prop trading can be addressed by a suitably robust ring-fence which is, of course, the thrust of our legislation. This was the point made by the PRA in response to questions from the PCBS.
It is also worth noting that the evidence heard by the PCBS also suggests that prop trading is not necessarily the sole avenue for the cultural contamination of banks. For example, the PCBS highlighted in its excellent report the serious failings in culture and standards at HBOS, a bank which did not engage in any prop trading at all. Indeed, it is perfectly possible to run an integrated securities business with full integrity in a way that manages any potential conflicts of interest quite satisfactorily, so they do not necessarily follow. It is far from clear, therefore, that prop trading is the real problem facing the UK financial system, or that structural solutions address cultural problems. In light of that, and of observations about the practical difficulties of a ban on prop trading, as it is being attempted in the US through the Volcker rule, the PCBS did not recommend a ban on prop trading.
It is not wholly clear what further evidence would support a different conclusion to that reached by the PCBS in its own assessment, so it is unclear what a further review into proprietary trading within such a short period of the PCBS’s own report would add. Still less is there a need for such a review to be followed immediately by an independent review of the same question. Of course, we have no issue with reviews as a matter of principle: we are just not sure that, in this case, legislating for one in advance really does much for us.
As the findings of the PCBS do not suggest that prop trading presents a serious prudential risk at this time, I do not think we need to legislate for the regulator to carry out a further review. The absolutely valid point made by my noble friend Lord Lawson was that this could change in the future. That is what we are trying to address. Should that happen, the PRA has made it clear that it already has the powers it needs to bear down on prop trading where it endangers the safety and soundness of a firm or where the risk incurred is not consistent with the publicly stated risk appetite of a bank.
Moreover, monitoring and reviewing all risks to a bank constitutes an essential part of the PRA’s work. The PRA’s approach is to insist that firms adopt and follow a risk appetite that is consistent with the PRA’s statutory objective to promote the safety and soundness of firms that it regulates. This will include regular monitoring and review of all risks, not limited just to those associated with prop trading. Therefore, to require the PRA by legislation to undertake such a review seems unnecessary. Should we legislate for a review of how reference rates are set, for example? Should we legislate for a review of mis-selling practices? Why, therefore, should we do it for prop trading? It is not apparent to me what problem a review would solve. While I think that reviews can play a useful role, in this case we are not sure that it is justified in advance.
We need to give the regulator the space to allocate its resources in a way that is appropriate and proportionate when considering all the different risks to the UK financial system, not only focusing on one particular risk. Our more widely framed reporting requirements allow for this. For all of these reasons, I do not think that a review on the particular issue of prop trading is necessary. The regulators are already subject to extensive reporting requirements. I expect the PRA to make the Treasury, and Parliament, aware of any emerging risks it identifies, whether through prop trading or anything else. The deputy governor for financial stability has already written to the chair of the Treasury Committee, offering to discuss arrangements for reporting. I therefore ask the noble Lord to withdraw his amendment.
Lord Higgins
My Lords, the Minister says that we do not want to have the regulator wasting resources. However, if we ban an activity, it would not waste resources. I am also not absolutely clear—I thought I was—that we are going to say that proprietary trading by a ring-fenced bank is absolutely banned. If that is so, ought we not to make it absolutely clear in the Bill?
On the point made by the noble Lord, Lord Turnbull, we have to distinguish between proprietary trading and other activities such as hedging as there may be a case for the bank operating on behalf of its clients by hedging for a foreign exchange risk or whatever. However, that is not at all the same as what is normally meant, certainly by Paul Volcker, whereby banks use a client’s money to take on particularly risky investments which have nothing to do with the client.
Lord Deighton
I was trying to be clear but I shall reinforce my comments. I think this issue was covered on the first day in Committee when we dealt with the details of ring-fencing. It is clear that proprietary trading for ring-fenced banks is not allowed; it is an excluded activity, as defined. As my noble friend implies, there are some exceptions to that which are predominantly related to a bank’s own hedging activities to deal with its own surplus liquidity. My noble friend’s phrasing was accurate and the issue is included in the Bill.
Lord Lawson of Blaby
My Lords, I think that there has been a slight misunderstanding. My noble friend the Minister said that we have gone down the ring-fencing route instead. That is a different matter altogether. The idea of ring-fencing is to put a sharp barrier between the commercial banking operations of a universal bank—the lending to individuals and to small businesses and, indeed, medium-sized businesses—and the investment banking activities. There should be a line between them. There is also the great question, which we debated earlier, as to whether there should be a total separation. This is about whether a universal bank—I agree with my noble friend that it would not be done in the ring-fenced part—should be permitted to engage in proprietary trading at all.
It is all very well to say that there may be cultural contamination as a result of proprietary trading but that, as there are other forms of cultural contamination as well, we should not bother about this one. I do not buy that. If we can significantly reduce the amount of cultural contamination by making proprietary trading by banks illegal, that is a plus. There may still be other problems with the banking culture, but at least we would have solved an important part of it.
My noble friend the Minister also seemed to say that there was no need to review this issue. There is a need to review it for the very reason that the noble Lord, Lord Turnbull, pointed out. The overwhelming weight of evidence received by the commission in conducting its inquiry was that it would be a very good idea for banks not to engage in proprietary trading for some of the reasons that I and other noble Lords have given in this short debate. However, as the noble Lord, Lord Turnbull, identified, the problem was how precisely you define proprietary trading and distinguish between it and market-making and some of the other activities referred to.
I have known Paul Volcker for 30 years. He is a very wise old bird. I am not suggesting that my noble friend the Minister is not wise, but of all the people I have known in the financial sector Paul Volcker is among the wisest, if not the wisest. If he thinks that this measure is desirable and workable, that carries a great deal of weight with me. He said that if a chief executive of a bank did not know whether or not he was engaging in proprietary trading he ought to be fired. At one level that is a perfectly good answer. Nevertheless, there is a complicated issue of definition. That is why we have said that we should see how things develop over the next three years and see whether there is a workable system in the United States or whether those who say that it is completely impossible to have a satisfactory definition because it will not work are right. We will find that out and then we will take action accordingly.
It is nice to hear mention of the notion that the PRA can bear down on proprietary trading as it implies an acceptance that there is, or could be, a problem. However, that is not the same thing as saying very clearly that no bank should be doing this, even if it is not a ring-fenced bank. At present, the Bill does not go far enough in that regard. This is something to which we will almost certainly wish to return on Report. I beg leave to withdraw the amendment.
Lord Turnbull
“Remuneration code
(1) The FCA and the PRA must prepare (and may from time to time revise) a remuneration code.
(2) The remuneration code is to apply to all persons who have approval under section 59 of FSMA 2000 to perform a function in relation to the carrying on by a bank of a regulated activity which is designated under subsection (6B) or (6C) of that section as a senior management function.
(3) The remuneration code must—
(a) require that persons to whom the remuneration code applies are, except in specified circumstances, to receive a proportion of their remuneration in the form of variable remuneration,(b) require that a specified measure of profits is to be used in calculating any variable remuneration which is calculated by reference to profits,(c) require that the nature and amount of variable remuneration is to strike an appropriate balance between risk to the bank providing it and fair reward for the receipient of it,(d) require a proportion of variable remuneration to be deferred for such period, not exceeding 10 years, as is appropriate to strike a balance between risk to the bank providing it and fair reward for the recipient of it, (e) require that no, or only a limited amount of, variable remuneration of a person to whom the remuneration code applies is to be calculated by reference to sales made by the person or by any group of persons employed by the bank providing it, and(f) require that non-executive directors of a bank are not to receive variable remuneration.(4) A requirement imposed by the remuneration code is a relevant requirement for the purposes of Part 14 of FSMA 2000.
(5) In this section “variable remuneration” means remuneration (whether in money or in securities or any other form of money’s worth) the amount or value of which varies in accordance with profits, sales or other matters.”
Lord Turnbull
This amendment stands in my name and in the names of the noble Lords, Lord Lawson and Lord McFall. It seeks to legislate for a remuneration code for banks administered by the PRA and the FCA and to provide some headings on its content. I shall speak also to Amendment 96 which seeks to establish a more stringent regime for clawback.
We can analyse this remuneration issue at several levels. Is a special regime needed for banks? We already have a regime for remuneration in UK corporates, partly determined by BIS regulations and partly enforced by the guidance issued by investors and investor groups such as the ABI and the NAPF. This remuneration structure has recently been reinforced by increasing the amount of disclosure and by increasing the voting power of shareholders. We also have—or have had—a remuneration code for financial institutions—going wider than banks—administered by the old FSA. Why should we go to something more stringent for banks?
The Parliamentary Commission on Banking Standards took the view that a special regime for banks beyond that required for other financial institutions and listed companies generally was justified. Why was that? We identified a number of characteristics that make banks special. They are responsible for an essential service which has to be operated continuously and has, hitherto at least, created a presumption of being too big or too complex to fail, thereby creating an implicit guarantee which can be exploited. Banks are highly interconnected and can fail very quickly, damaging not just themselves but affecting people’s confidence in other parts of the banking industry and the wider economy. Banks are also very highly geared, as has been mentioned today. Their capital structure is not at all like that of the general run of FTSE companies. Equity counts for low single figures. Like the noble Lord, Lord Flight, I read Essays in Money and Banking in Honour of R S Sayers, and the ratios were vastly higher in those days. As a result, those running banks are incentivised to take risks and their shareholders are incentivised to support them. Therefore, I think you can rely less on countervailing pressure from shareholders to achieve restraint in bank remuneration.
Banks are also special in the way they behave. Total remuneration has increased hugely and takes a very high share of the total surplus compared with dividends, taxation, retentions, building up capital and so on. As has also been said today, cash bonuses have been paid on the basis of mark-to-market profits which, in the end, proved ephemeral. There is unlimited upside when remuneration takes the form of equity but, unlike the old partnerships which have gradually been superseded, there is limited downside.
If you accept the premise that there should be something special for banks, what should be the content of this regime? The first thing that should not be there is what the EU and the European Parliament are trying to put in: a limit on the ratio of variable pay to base pay. That is likely to be counterproductive, pushing up base pay and reducing the quantum which is provisional and, therefore, at risk of clawback. What should be there is something about the proportion of variable pay that is deferred and the time period over which it is deferred. The commission recommended that some, not necessarily all, could be deferred for up to 10 years, in recognition of the cyclical nature of banking.
Amendment 96 seeks to strengthen clawback. The terms “clawback” and “malus” sometimes get muddled up. Most of what people have said is strengthening clawback is better described as malus. It is where remuneration has been conditionally offered but not yet vested and there is still the option of cancelling the vesting. This clause suggests that, in the really serious case of a bank being run so badly that it fails and ends up being taken into public ownership or requiring the commitment of public money, even sums that have been vested should be at risk. Some of this could be pension money. If someone has paid for a pension regularly, through contributions, I would, by and large, say it was their money. However, we have seen instances where very large, discretionary amounts are paid into people’s pension funds precisely in order to put them somewhere where, hitherto, they have had immunity.
Those are the principal components of the amendments. You could go further. For example, Charles Goodhart has argued that it is a mistake, in the case of banks, to make variable pay take the form of shares because the shares are highly geared and it would be better if a significant amount was not in shares but in bailable bonds. This would limit the upside but that value would not be transferred if the bank failed.
What is the scope of these arrangements? How far down the bank should they go? They should certainly cover the senior managers’ regime. What is offered below that is not the licensing regime that we suggested which should apply to people who had the ability to damage the bank in some way. As it is set up at the moment, it could be any employee, which is a much less focused scope in terms of who is covered.
The other issue is about which parts of banking should be covered. We came across this argument and are still uncertain about whether it is those people who work in entities which take deposits or whether it should also cover people engaged in investment banking, which is the common sense view. Another amendment in my name attempts—probably unsuccessfully—to produce a definition which is wider than simply those who are in banking entities which take deposits. However, the noble Lord, Lord Newby, has written to a number of noble Lords recognising this problem and undertaking—I hope he will confirm this—to work with us to find a definition which covers the kind of people and activities that we want it to.
The final question is whether this all needs legislation. I can confidently predict the noble Lord’s response as we have had it at least three times today. I think he will say, “We agree there is a need for a special regime for banks and we agree on lots of the components that should be in it. We will work with you to agree the coverage, but we do not agree that it needs to be in legislation as the PRA has all the powers that it needs”. I think that is pretty much what is in his folder. Why is the commission pressing for legislation? In the whole of the financial crisis, two issues have infuriated the general public. The first, which we dealt with last week, is the absence or extreme weakness of personal accountability. The second is the sense that the bankers made the money but did not lose it in the bad times. They were incentivised to excessive risk-taking: too much upside, not enough downside. The public find the existing regime incomprehensible and they want something done about it. In particular, they want assurance that it cannot happen again. The way to ensure that there is no backsliding is to provide the powers proposed in my amendment. We should also set some of the parameters of what that covers.
Lord Eatwell
My Lords, we have already, on some previous amendments, begun to discuss the issue of the culture within banks and the culture which contributed significantly to the disaster in the banking system of the past four or five years. Nowhere does that bite become more evident than in the issue of remuneration. There has been considerable disquiet about the sheer scale of remuneration but this amendment, particularly in terms of the elements listed under subsection (3), goes to the heart of the matter which is the relationship between remuneration and risk-taking and the way in which remuneration systems incentivised, to an extraordinary degree, risk-taking which went way beyond the ability of the financial institution to manage it effectively.
If we are to persist with the banking structure we now have in this country, with very, very large banks—which are extremely difficult to manage—dominating the banking scene, then it is necessary to de-incentivise the risk-taking which did so much damage. That is the most valuable element in this amendment. The elements to which the noble Lord, Lord Turnbull, referred are also important, but we need to provide a clear statement that a remuneration code will be developed which does not incentivise selling insurance or financial instruments that individuals or firms do not need. This has been a characteristic of banking in this country over the past four or five years and has been directly incentivised by remuneration structures. We have to remove that sort of structure by giving the FCA and the PRA the responsibility to develop a code, expressed here in quite flexible terms, without the excessive rigidity in current European Union proposals. This is a very flexible structure but it focuses on the exact issue of incentives and risk-taking. In that sense, I think that it could achieve an enormous amount in changing the culture in British banking and in ensuring that banking is more stable and significantly safer than it has been in the past.
The Lord Bishop of Birmingham
My Lords, I rise to speak on behalf of the most reverend Primate the Archbishop of Canterbury. He regrets very much that he cannot be in his seat today, but it is seldom that one has the opportunity to offer Christian baptism to a young couple, particularly when their child is a future heir to the throne of this country. None the less, I know that he, like me, would want to echo the support for these amendments, which have been spoken to by the noble Lords, Lord Turnbull and Lord Eatwell. In a sense, I now regret that I am here doing my duty, because I could not have put it better myself.
In the wake of the economic debacles following 2008, one of the greatest areas of concern among the public was the apparent lack of change in the financial fortunes of those whom they viewed as being most responsible for the banking crisis. As we have heard, the salaries of senior bankers seem to remain high and bonus levels have quickly regained their old levels, while for many ordinary people and ordinary businesses across the country, it has been a matter of tightening the belt and looking very seriously at difficult household and commercial budget decisions. The submission of the Church of England’s Mission and Public Affairs Council to the banking commission said of this disparity between what I am going to talk about as two cultures that it,
“has gravely harmed the public perception of banking”.
Recognition of the disjunction between these disconnected groups—the wider public, who need the services of good banks, and those who lead those banks—is, I believe, at the heart of what these amendments seek to achieve. It is about implementing sensible measures, and we have been very sensible this afternoon, one with another, about what needs to be done: striking an appropriate balance between risk and reward; looking to the long-term benefits of decisions made by key figures in the banks; and giving incentives for a trustworthy and productive culture, rather than one that promotes excessive risks, ending in disaster. Deferred remuneration, which we have in this proposal, and clawback provisions —central components of the proposed remuneration code—are technical terms, but at the heart of these principles is a simple question: what sort of culture, as has been mentioned by several noble Lords, do we want to establish in these organisations? As the most reverend Primate the Archbishop of Canterbury has already pointed out to the Committee, one rather well known former banking executive said that there had been a culture in the banks focused on what happened when people were not looking.
There is now an increasing interest, including in your Lordships’ House, in culture, and we heard from the noble Lord, Lord Lawson, about the two principles of prudence and customer-centred or customer-focused culture. I hope that both the Government and the banks will give a high priority to insisting on these profound changes in culture. Indeed, at a regional level—and this may seem a little parochial for the high level of discussion that we are engaged in this afternoon—in Birmingham and the Midlands, well resourced bank employees from well resourced organisations, their banks, are already looking way beyond their computer screens and boardrooms to wider and deeper responsibilities in the community. They are looking at simple things such as finding and supporting young entrepreneurs, and giving basic financial skills to local citizens—I have said before in your Lordships’ House that there are 100,000 citizens in Birmingham who do not have a bank account—and they are even getting involved in making sure that future employees of the bank in our local primary schools have enough food at breakfast so that they can learn the basic skills of their education.
These tentative cross-cultural relationships and initiatives give me hope not only that executives in banks will run sound businesses but that, as they experience and affect for good the lives of ordinary citizens, including those who are much less protected than themselves in ordinary life, the worthy values printed in the foyers of the headquarters of many of our large banks may at last begin to enter not just the policies of the banks and their structures and cultures but the policies, structures and cultures of the leading executives in those banks. I shall mention just one of those banks where these values appear; in fact, I may not mention which bank it is because I think that noble Lords should try to work out which one I am talking about. Those values read: “Serving Customers”; “Working Together”; “Doing the Right Thing”—a new one that has been inserted; and, fourthly, “Thinking Long Term”. It is in the policies, structures and cultures of the leading executives in those banks that I believe culture change will really happen. We have high expectations of that change but, as many noble Lords have said, it needs to be undergirded by legislation. It cannot be left simply to hope or chance or to the individual motivation of altruistic colleagues.
Therefore, I welcome that in both amendments we find provisions to limit sales-based incentives at both the individual and business unit level. In the PPI scandal, we saw what happens when banks come to value the sale of financial products as the objective of the whole exercise, with little or no thought for customers’ needs. Banks are now having to take responsibility for this culture of “selling at any cost” and the new remuneration code before us seeks to make explicit the realisation that an excessively sales-based culture can be very damaging both to the financial well-being of customers and to the reputation of the banks.
I hope that my noble friend the Minister will recognise that this amendment is not seeking to overly restrict remuneration, devalue the work that our senior bankers undertake or unduly affect the competitiveness of our world-beating banking sector. What it does is to set out some of the values and virtues that should underlie the banking system: long-term risk management; a fair balance between risk and rewards; valuing customer needs above the sale; and, above all, valuing collective interest beyond the individual or the unit, or even the bank itself. This will be good for both business and society.
Lord Phillips of Sudbury
My Lords, I commend the mover of the amendment, the noble Lord, Lord Turnbull. If, as I assume, this matter is brought back at Report, I should like to raise two questions. The first concerns the fact that the code is to be solely the responsibility of the FCA and the PRA. I wonder whether it should have a broader base than that. The City is a real bubble. The two authorities are part of that bubble, as are most of the people working in them. Everybody—particularly the noble Lord, Lord Turnbull, in moving the amendment—has said that we have to break out of this small enclave to understand the wider national, social and cultural impact of what is going on in the square mile. I just throw that idea out.
My second question concerns proposed new subsection (3)(a) in the amendment, which requires that those subject to the code shall,
“receive a proportion of their remuneration in the form of variable remuneration”,
although it does allow specific exceptions. For the life of me, I do not see why that is being insisted upon. Twenty-five years ago, most of the senior bank executives and those on the boards of banks did not receive a variable element in their remuneration at all. The problem that the amendment seeks to address was not present then, or at least not remotely to the degree that it now is. Therefore, again, if this matter is to be brought back at Report, I should be grateful if more thought could be given to the need for subsection (3)(a).
Lord McFall of Alcluith
My Lords, I support the amendment. The most important and admired banker of the 20th century—the late Sir Brian Pitman, the former chairman and CEO of Lloyds—came to the Future of Banking Commission, which I established, and on which David Davis MP, Vince Cable, Roger Bootle and others served. He gave us a lesson that day: he said very clearly that he understood that banks should be run for the long-term benefit of shareholders, and that that was what customers wanted most.
Sir Brian’s synopsis of what mattered to him as a banker was very clear, when he said in evidence to us:
“Nobody is a greater believer in shareholder value than me ... It’s long term shareholder value and everything has to be structured around the long term, particularly the remuneration structure … The minute you move to a huge emphasis on short term big bonuses you're going to change the behaviour. It is perfectly possible, in our case for 17 years when I was there”—
at Lloyds, that is—
“we were doubling the value of the company every three years for 17 years. Nearly everybody had shares in the company; messengers were worth a quarter of a million pounds when I left because we’d been successful as an organisation. But we believed it all had to start with the customer”.
He was very clear that if you had the customer in mind in terms of remuneration, you had to measure it on a 10-year basis. Only that way do you find out about the business cycle, and about whether the money paid in bonuses is money that has really been earned at all. As was said earlier, that money was not really earned in the past, because remuneration was based on expected profits, which did not materialise.
For the senior executives in banks it was upwards all the way: whether the bank went down or up, they had their bonuses. Sir Brian distinguished banks from other organisations as follows: “Banks and insurance companies have the unique ability to engineer increases in profits by pulling a lever that forces their banks to take more risks to lend and invest more relative to their capital resources, unlike other institutions”. That is why, in our report, we wanted a statutory basis, and we wanted the regulator to look at this issue.
When the noble Lord, Lord Lawson, and I were on the Parliamentary Commission on Banking Standards we considered the same issue on our sub-committee. We examined Barclays and its culture, and looked in particular at the structured capital management division —which, incidentally, the noble Lord, Lord Lawson, referred to as tax avoidance on an industrial scale.
We wanted to find out about the business model for that, and we spoke to insiders. When Sir David Walker and Antony Jenkins came to the committee, we had prepared questions, and my question for Sir David was along these lines:
“I would like copies of all management reporting and management performance information provided to Roger Jenkins”—
who established BarCap, along with Bob Diamond—
“and Iain Abrahams to support the bonus pool”—
in other words, to provide the numbers for us. I continued:
“The second one is the information used for the purposes of calculating the bonus pool of the structured capital management division, and the information used for determining the bonuses in particular for”,
three senior executives for the past decade.
The reason why we asked for that information is that the noble Lord, Lord Lawson, said in the evidence session that Roger Jenkins, who established the division, had had more than £40 million in one year. Bob Diamond had £100 million over a 10-year period. We wanted to find out exactly how they had earned that. The insiders told us that in 2008 BarCap was responsible for 110% of the profits of the whole entity. Here we had a tax avoidance unit on a massive scale masquerading as a bank, and responsible for 110% of the profits—and we did not have a clue how they made their money. I said that we wanted the information,
“in sufficient detail in order to identify each of the subcategories of the structured capital management business. In that respect, it will be the year-end management accounts information and quarterly reports information”,
which we received. We went on to ask for more—and we received absolutely zilch information. So, as we take this banking reform Bill through the House, we still do not know exactly what BarCap was up to.
What I—and the noble Lord, Lord Lawson, and others—want to know is that the regulator has the authority, so that it can see exactly how a business is performing and getting its money, and what business model and culture it has, so that the remuneration structure does indeed have a long-term basis and serves the long-term interests of society and of customers. That is not happening to date. That is why the amendment is before the House.
Viscount Trenchard
My Lords, I am not sure that I agree entirely with what my noble friend Lord Phillips of Sudbury said about what happened 25 years ago in that the senior management of investment banks—merchant banks, as we called them then—did not enjoy variable remuneration. I worked for Kleinwort Benson for 23 years, and then for Fleming for four years, and more recently for the Japanese bank Mizuho for five years. To me, the culture of Kleinwort Benson was absolutely excellent, honourable and upright, even though it was doing investment banking.
There was a considerable cultural difference between the banking department and the bond trading department, but that reflected the environments in which the various people were carrying out their activities. We should also remember that even the asset management business was not separated at all at that time, and there were obviously enormous conflicts between underwriting securities and buying those same securities for clients’ managed portfolios. Those conflicts were dealt with internally, because of the overall culture, which was excellent. That was one of the reasons why the City of London earned respect around the world, and other places have attempted to model their own financial centres on what they perceived to have been London’s strengths.
Notwithstanding the disasters that have befallen us, quite a lot of that regard and respect still obtains today around the world. I worry that we are going too far down the road of state interference in remuneration, which is properly the responsibility of management, who are accountable to shareholders. In a command economy that may be the normal thing to do, but I do not believe that if we go too far down that road it will lead to the establishment of the kind of culture that existed in the City of London for decades. That is tarnished and damaged—we all agree—but I believe that it should be restored.
I do not believe that the case is made that the state should interfere too much in the salaries of bankers, any more than it does in those of the senior management of utility companies, for example. I fear that if the state interferes too much in this area it will definitely lead to the best bankers in the generation now coming up going to work in other centres. Many noble Lords may say, “Good riddance. If they are so greedy, we don’t want them here”, but I do not believe that that is so. We must have a regime that can attract the very best bankers—and I mean the very best in terms of the most capable, but also those with excellent moral standards because that is absolutely necessary.
Over the past few years, the interference in setting the variable remuneration of controlled persons or senior managers in banks has led to a massive increase in fixed salaries in all banks, including small banks and Japanese banks which do not pay multimillion pound bonuses. The senior directors in Tokyo do not receive the kind of figures that shock ordinary hardworking people in this country. That is understandable because they do not accept that a banker is worth thousands of times more than a comparable engineer or anyone else. Inflation in salaries has occurred over the past three or four years because of the limited interference in variable remuneration that has already happened, and I am certain that if we go as far as this amendment would take us, that will lead to a great deal more inflation in the fixed salary element.
That is my advice, based on my experience of being a banker in a merchant bank. Fleming was an investment house that became a merchant bank, but it was not one of the original accepting houses. The Bank of England had an influence on the accepting houses, but they were rightly highly regarded. Of course there were slip-ups from time to time, and there always will be, but if we set up a framework that creates an environment where everything is tightly prescribed by the state, that will not encourage innovation or lead to the development of the right kind of responsible culture.
Lord Lawson of Blaby
My Lords, I strongly support the amendment moved by the noble Lord, Lord Turnbull. I know that my noble friend Lord Higgins wants to give us the benefit of his wisdom, but perhaps I may intervene now because I would like to explain to the noble Viscount, Lord Trenchard, why he has got completely the wrong end of the stick in terms of what this amendment is about. I must say that I was puzzled when he said that one of the reasons we got into difficulties with banking was because of interference with bankers’ remuneration. There has been no interference with bankers’ remuneration at all. It is true that there is a proposal from the European Union to cap bonuses, but that is not something we have in this country and the commission was explicit in saying that we do not want to see it. This amendment has nothing to do with that.
This amendment is about the structure of remuneration, not the quantum. We are not making a statement about the quantum, but about the structure. I shall explain why that is so. I am sure that the right reverend Prelate the Bishop of Birmingham will accept that nothing in this world is without flaws. I yield to no one in my conviction that, for all its flaws, the market system is the best system for conducting an economy and securing economic prosperity for the benefit of the people of a country. One of the essential elements of the market system, without which it cannot work, is the fear of failure. However innovative, adventurous and enterprising industrialists may be, they always know that if they get it wrong, they will fail. The fear of failure is vital because it is an essential market discipline. The problem in banking is that when you have banks that are too big to fail, that fundamental discipline does not work. That is the difficulty. If it is the case, as it was in the management of the banks up to the crisis, of “Let’s gamble, because heads I win, and tails the taxpayer loses”, you are encouraging gambling. You are bound to see more recklessness, which is exactly the reverse of what banks should be doing.
The noble Viscount referred to the good old days of the merchant banks. I knew them very well. While I did not have the privilege of working in a merchant bank, for a time I wrote the Lex column in the Financial Times, so I got to know them. One of the reasons for their great success was that although they were extremely innovative and they were staffed by very clever people, on the whole they were partnerships, and the partners had their own fortunes at stake. That was the vitally important discipline, but that is not the case with the banks. Incidentally, however, it is the case for hedge funds. I can recall, as will many noble Lords, that some years back there were a few people who thought there were dangers in the City and that some things might go wrong. What did they point to? They pointed to the so-called shadow banking system—the hedge funds. They thought that the big banks were fine, but that those dodgy hedge funds might cause problems. In fact, there were very few problems with them. Why was that? First, the hedge funds knew that they were not too big to fail. They knew that they would not be bailed out by the taxpayer. Secondly, on the whole, the proprietors’ own money was invested in the hedge fund.
This remuneration code set out in the amendment is not the whole solution to this problem. We have to make it possible for banks to fail, and that is part of what the Government have been doing with the resolution procedures and the bail-ins; we have read page after page on that. We have to enable banks to fail because that is the only way we will get the right kind of system; not that we want them to fail, but it has to be possible for them to do so. But unfortunately, at the present time, I do not think that they will be allowed to fail. They believe that they will always be bailed out by the taxpayer, so we have to buttress this in another way.
One of the most important aims of the amendment is to replicate after a fashion the discipline of the partnership. It provides that the PRA will be able to insist that bonuses—saying nothing about how much they are—would have to be deferred for a number of years in order to ensure that top management is more careful. It will know that it cannot grab the all bonus money in one year in the knowledge that the institution will be bailed out later on. Management will have to think a bit longer term. In a sense, it is like top managers’ own capital being invested in the company because their bonuses will be deferred for a number of years. The amendment provides a remuneration code to act as a sort of buttress. On its own it will not do much, but it could serve as an important buttress to other measures that the Government are introducing—there are a few more that I would like to see introduced. That will give us a banking system which is not a casino.
Viscount Trenchard
My Lords, I have listened carefully to my noble friend Lord Lawson and I apologise if, as he said, I got the wrong end of the stick. I would like to make just two points. With regard to my noble friend’s assertion that there has been no interference in variable remuneration by the state until now, unfortunately I believe that that is not correct. I have served on the executive committee of a bank since 2009 and the regulator has definitely interfered with the variable remuneration in terms of its ratio to fixed remuneration. Over the past three years, that has led the firm to increase fixed salaries considerably, and that has been going on in many banks all over the City. I am just saying that that has already happened and that the attempt to apply restrictions on the proportion of variable to fixed remuneration has led to inflation in fixed salaries.
The second point is that Kleinwort Benson was a listed company when I joined it and that the other merchant banks were mostly companies by that stage. I agree entirely with my noble friend that the partnership ethos was still there, but the listed nature of the businesses enabled even relatively junior people to be awarded modest amounts of shares as part of their variable remuneration from an early stage.
Lord Higgins
My Lords, we have had a fascinating debate within a debate between the noble Viscount and my noble friend Lord Lawson. I merely make one or two points. It seems to me that there is a case for a remuneration code. In a way we could let the amendment end after subsections (1) and (2) and leave it to the FCA and PRA to take a view. It raises the question of whether, after they have done so, the code they come up with ought then to be considered further in this House. I leave that on one side.
As far as culture is concerned, what my former constituents regard as unfortunate is the whole culture of bonuses. I think that they take very strongly the view that the people concerned should be paid a rate for the job and then get on with it. Rather than specify, as this amendment does, that a proportion must be in the form of remuneration which is variable, I think they would rather the opposite—or at any rate, that the proportion which is variable should be limited.
There are, of course, very real practical problems concerning remuneration in a company which is clearly going on the rocks, when one needs to recruit someone to sort it out. That is a particular case. More generally, we could usefully consider the points made by the noble Lord, Lord Turnbull. The argument for his attitude, if I understand it correctly, on variable remuneration is, “If it is variable, we can claw it back at some later stage”, but that may be a long while after the actual events have taken place. There is also the problem of companies being not just too big to fail but, as has been said on previous occasions, too big to manage. Part of that problem is that we are looking at remuneration for banks which are in that situation. What has become clear in recent events is that people have been paid very large sums when the organisation they are asking to manage is not capable of being managed at the size that it is. Be that as it may, there is a case for a remuneration code, but we should probably leave it to the bodies concerned, which are suggested in this amendment.
Lord Newby (LD)
My Lords, we have had an extremely wide-ranging debate on many aspects of bankers’ remuneration. I remind the House of the two specific amendments in front of us. The first imposes a duty on regulators to prepare an additional code on remuneration in relation to senior managers of banks, while the second proposes additional powers for regulators to claw back deferred remuneration of employees of banks that require state aid.
The statutory requirement on regulators to prepare another remuneration code aims to implement a set of remuneration reforms similar to those recommended by the Parliamentary Commission on Banking Standards. I will explain why the existing remuneration code, current rule-making powers and further regulatory action in response to the parliamentary commission provide a clear basis for the implementation of these proposed reforms.
The existing remuneration code addresses the commission’s objectives for regulating remuneration in a way that combines a concrete legal basis with a rigorous system for application. The remuneration code is made under the rule-making powers given to the regulators in the Financial Services and Markets Act 2000, including Section 137H, which extends the provision which may be included in remuneration rules. Any breaches of the regulator’s rules, including breaches of the remuneration code, can be punished with serious sanctions. The code reflects the Financial Stability Board’s principles and standards for sound compensation practices, and European legislation under CRD IV. So this is a code established under statute and therefore might not in any way be thought to be ephemeral.
The content of the existing code already goes a long way to addressing the content proposed in the amendment and, where that is not the case, the regulators have indicated their intention to consult further on any necessary changes. So, for using profits to calculate pay, the existing code states that firms must assess current and future risks, and the need for consistency with the timing and likelihood of the future revenues. This clearly requires firms to calculate profit-based remuneration carefully with regard to risks to the bank. On the balancing of risk and reward, the code makes extensive reference to the close relationship that remuneration and risk considerations must have. Reward calculation based on profit and non-financial metrics must encourage effective risk management and not constitute a risk itself.
On pay deferral, the code specifically requires that at least 60% of variable remuneration above £500,000 or to a director of a significantly-sized firm is deferred over a period of not less than three to five years. On top of the existing requirement, the regulators have said in their response to the PCBS that they will consider adding to their code requirements on deferral. In this area, the existing code is already rigorous and set to become even more so. Regarding the issue of variable pay for non-executive directors, the PRA has stated clearly in its response to the PCBS that there is currently a presumption that this practice should not take place and that this will continue to be the case.
The FCA is conducting a thematic review of sales-related incentives and assessing what action would most effectively prevent those presenting conduct and stability risks. This could include further high-level remuneration principles for staff not subject to the full remuneration code. Additionally, the PRA and FCA have stated that they will update the remuneration code following consultation next year. This review will take into account the PCBS recommendations, including those on a greater use of instruments such as bail-in bonds to tackle the practice of compensating recruits on change of employment and greater and more granular disclosure by remuneration committees in banks’ annual reports.
Therefore, to specify in primary legislation exactly what the code should cover on top of the rigorous current approach seems unnecessarily rigid. The exact content of the code will need to be updated from time to time, including in the light of international best practice. Ensuring that the regulators have the necessary powers and authority to undertake such changes in a timely manner is crucial—and that is already achieved in FiSMA. Overprescribing in primary legislation risks adding an unwieldy layer to what is already an effective process.
I believe we have already given the regulators the necessary powers to apply rules to manage financial stability risk and promote responsible behaviour in banks. The existing code is based on internationally agreed principles and is responsive enough to incorporate new provisions when called for. Indeed, nowhere is this clearer than in how the PRA and FCA revisions of the code, and the FCA thematic review, will take account of the parliamentary commission’s recommendations.
On the subject of the clawback of deferred remuneration at banks in receipt of state aid, I should begin by being clear that the Government perhaps more than that of any other country, recognise the consequences of bailing out financial institutions. We have been clear that individuals must be held accountable for misconduct and that there should be no rewards for failure. The Government agree that there should be specific powers available for the regulator in relation to remuneration at banks where they require state assistance. The ability to reduce or revoke deferred remuneration when a bank requires state aid would further strengthen accountability and complement the extensive reforms which the Government have undertaken to remove the implicit taxpayer guarantee.
However, regulators already have the power to require the cancellation of deferred remuneration and loss of office payments where a bank requires state-aid support under their existing powers. In the PRA code, specific provision is made for the reduction of deferred remuneration where a bank suffers subsequent poor performance. Additionally, the reforms introduced under the EU capital requirements directive IV have reinforced existing rules on pay at banks in receipt of state support so that: bonuses are strictly limited where inconsistent with the maintenance of a sound capital base and timely exit from government support; regulators will be able to require banks to restructure remuneration in a way that is aligned with sound risk management and long-term growth; and directors should not receive a bonus unless justified.
The Government sought to build on these measures to strengthen further the accountability of individuals who are responsible for an institution which requires government intervention by requesting the PRA to consider the PCBS recommendations on this issue. In response, the PRA has stated that following consultations next year revisions to its code will strengthen and broaden the circumstances in which unvested awards can be reduced and vested awards clawed back. The PRA is also considering to whom these rules should apply and whether further powers are desirable in this regard.
However, extending these powers to cover the removal of pension benefits which have not yet become payable, but which the individual concerned has a contractual right to receive, is difficult. That would restrict the rights of the individual concerned under the European Convention on Human Rights to the “peaceful enjoyment” of his or her possessions. The Government do not consider that this would be appropriate. The PRA will consult further on these issues early next year, including on the details of how the powers should be drafted and the population of staff to whom it should apply.
The noble Lord, Lord Turnbull, specifically asked to whom the remuneration code applies. The code currently applies—and will continue to apply—to around 2,700 firms, including all banks, building societies and capital adequacy directive investment firms. That includes broker-dealers and asset managers—such as most hedge fund managers and all USIT investment firms—as well as some firms which engage in corporate finance, venture capital and the provision of financial advice, brokers, multilateral trading facilities and others. In terms of who is covered within those firms, the code defines “Remuneration Code Staff” to include,
“senior management, risk takers, staff engaged in control functions and any employee receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers, whose professional activities have a material impact on the firm’s risk profile”.
Some of the principles in the code must be applied to the whole firm, including those on guaranteed variable remuneration and the more general principles around risk management et cetera.
The right reverend Prelate talked about the culture in the banking sector and changes that he is seeing in Birmingham, which he hopes are the start of a process. I think we would all agree that that is desirable. In some of the big banks at least, there has undoubtedly been a noticeable change in culture in recent months and years. The right reverend Prelate and a number of other noble Lords talked about the overall level of remuneration. That is a matter for the bank’s shareholders but the Government and my colleague in another place, Vince Cable, have strengthened the powers of shareholders to require boards to explain and get approval for what they plan to do on remuneration. That has considerably increased transparency and, I hope, might have a moderating influence.
The noble Lord, Lord McFall, asked whether the regulator would have access to Barclays management information, to know how it makes its money. I think we talked a bit about this in an earlier debate. The PRA has access under Section 165 of FiSMA to require banks to provide it with all the information or documents that it reasonably requires for its function. That is a very broad power and would cover the information referred to.
The nub of our argument, as the noble Lord, Lord Turnbull, rightly pointed out in his opening speech, is that we have a code. It is operating with increased rigour and will be amended next year to take account in detail of what the parliamentary commission has said. That being the case, we do not need any further provision.
Lord Turnbull
My Lords, I agree that this has been an interesting debate. I start by thanking the right reverend Prelate the Bishop of Birmingham for his supportive remarks. He referred to the way in which companies print mission statements, values et cetera—what the most reverend Primate the Archbishop of Canterbury referred to as doing the three Ps, or, “Print, pin up and pray”. We have to move beyond that and make these things a reality.
First, I will respond to various speakers. The noble Lord, Lord Phillips, made two comments. One was to ask about all the other people in the City. The remuneration code which exists—I declare an interest as a director of an insurance company—still applies and will apply. The issue here is whether a kind of upper tier is to be created that relates specifically to banks. I believe there is a case for that. He also asked why anybody needs variable remuneration. A number of noble Lords have given the answer to that. One is that base pay builds in fixed costs. In the case of banks, why do you defer? One reason is because, particularly given the way that they are accounted for, profits which look okay today vanish tomorrow—they are ephemeral. You suddenly find that a series of trades that you had valued at a certain level just disappears. You should wait and see until the profits are actually made and then you can pay it out. The argument has also been made that this would tend to raise base pay. A degree of variable pay is actually a beneficial part of the system, although it needs to be controlled.
The noble Viscount, Lord Trenchard, asked about leaving the responsibility to shareholders. If shareholders own only 3% of the business, are they really going to be a sufficiently powerful force, particularly when their investment is highly geared? They share the same incentive as the managers. The managers are, in a sense, overincentivised and the shareholders are the same. The other thing that has come out is that there are strong externalities working in this world. The failure of a bank, and particularly the banking system, has the ability to create havoc over a wide area. The impetus and responsibility on the state to see that the banks provide a continuous service means that other people have a locus in this. You cannot simply allow banks to be run with the entire remuneration system being put into the hand of one set of stakeholders, such as the shareholders.
As for inflation over the past two or three years, my reading is that bank pay has probably plateaued in that period. Most inflation came in the decade before that, when there was precious little intervention from either the state or investors. The noble Lord, Lord Higgins, said that my support for variable pay was based on giving it to them so that you can then claw it back, but the deferral is really there because you want to make sure that these profits have actually been delivered and the benefits then shared with the bank, in terms of its capital, and through dividends. I absolutely agree that many banks are too big to manage. At the moment, a lot of them are shedding activity, although we will have to wait to see whether they are going fast or far enough.
The Minister’s response was pretty much as I expected but there was also quite a lot of “wait and see”. There will be new proposals but what is not clear is how far the Government have really taken onboard that there is a case for going further with banks than with other financial institutions. This crisis owed nothing to the rest of the City; if anything, the rest of the City were victims of it. We were arguing that provisions for longer deferral were more appropriate for banks than generally.
It is partly a question of knowledge; I do not know that people really understand what the remuneration code is. Between now and Report it would be quite good if the PRA or the Treasury could circulate to us what this code now looks like, which propositions are currently being consulted on and which decisions, if any, have not yet been put into effect. We will then be better able to judge whether we think this is going to be adequate, otherwise it really is a case of “Trust us, we’ll get round to it”. But this crisis is six years on. Time is moving on, so simply saying “We will get some further proposals next year” is not enough. A better job needs to be done in informing people of what is currently being considered. They will then be in a better position to make a judgment on whether that is good enough or whether we need to go further. Preferably, to pick up the point that the noble Lord, Lord Lawson, made, if there was quite a lot more time between now and Report we would be able to look at that to get a better understanding of what is in the pipeline.
The final question was about pensions. If you say, “What is in someone’s pension fund is inviolable”, you create an absolute incentive for people to stack money in there. This is about not their contributions but the discretionary payments that the company has decided to put in. Perhaps it has put another £1 million into someone’s pension fund. If that is done on a contractual basis, by saying, “Here is the regular contribution we make to your pension fund and here is the addition that we are making. You should be aware that that bit could be clawed back”, then I do not really accept the argument that says, “It’s your money now—it’s absolutely yours forever and we can never touch it”. You need to set up the basis on which deferred pay is offered in a way that makes it possible to claw it back.
We have seen in two cases, RBS and HBOS, that pensions were a crucial issue. In both cases, by a kind of popular pressure, concessions were made but it should not really need to depend on that. We should not simply accept the story that nothing more can be done. However, there is work needed to understand what the PRA and the Treasury have in mind. That would put us in a better place to take the discussion further between now and Report. On that basis, I beg leave to withdraw the amendment.
Lord Turnbull
“Special measures
(1) This section applies where the FCA or the PRA—
(a) has reason to believe that a bank’s systems or professional standards or culture do not provide sufficient safeguards against the commission of actions in respect of which the FCA or the PRA has power to take action, but(b) do not have reason to believe that any such action has been committed (ignoring any action which is already being investigated or in respect of which action has been or is being taken).(2) The FCA or the PRA may give notice to the bank of the belief mentioned in subsection (1)(a).
(3) If the FCA or the PRA gives a notice under subsection (2), it must invite the bank to make representations showing that sufficient safeguards are in place.
(4) Following the giving of a notice under subsection (2) and the receipt of representations under subsection (3) (if any are made), the FCA or the PRA may commission an independent investigation into the bank’s systems and professional standards and culture with a view to establishing whether sufficient safeguards are in place; and for that purpose—
(a) “independent” means independent of the FCA, the PRA and the bank, and(b) an investigation may not be commissioned from a person involved in the auditing of companies.(5) The bank must cooperate with the investigation.
(6) Following receipt of the report of the investigation under subsection (4), the FCA or the PRA may by notice require the bank to take measures to provide sufficient safeguards and to monitor their effectiveness.
(7) The bank must—
(a) comply with the notice, and(b) appoint an appropriately senior member of the bank’s staff to oversee compliance.(8) Compliance by a bank with a duty under this section may be considered for the purposes of the exercise by the FCA or the PRA of functions under FSMA 2000.”
Lord Turnbull
Amendment 97 would create a regime of special measures. In the report of the Parliamentary Commission on Banking Standards, from paragraph 966 onwards, we argued that regulators should have a power to give notice to a bank where they believe that the bank’s systems, professional standards and culture do not provide sufficient safeguards. First, they could require an independent investigation, and then require a remedial programme of corrective action. This would be seen as a precursor to enforcement. It is basically a way of trying to avoid getting into the morass of enforcement. A similar regime is operated in the US by the office of the controller of the currency. It is called the safety and soundness plan.
Although the amendment refers to the PRA or the FCA, I believe that it would work best if the special measures plan was jointly owned. The twin peaks system of regulation has its advantages but there was always a danger that with each regulator focusing on its specific areas of concern, between them they would fail to capture the bigger picture. There could be a more generic problem of standards and culture and this would be an opportunity to work collectively and engage with the bank.
It may well be that yet again the response is that regulators have these powers already. Indeed, if they believe that the way that a bank is being run is a risk factor, they can impose a capital add-on. However, the argument against all these cases where we have these powers already comes back to if that is case, how did we get into this problem in the first place? What we are trying to establish is whether things will be different in the future. It would help us judge that better if the PRA/FCA could produce a working document on how they envisage using powers of this kind—a special measures regime—where they are looking for generalised improvements in the culture and the way that a bank is being managed. I beg to move.
Lord Newby
My Lords, we agree with the spirit behind the special measures proposal, as the noble Lord expected, but we do not believe it is necessary to give the regulators new powers in this area. They already have the powers to do everything the PCBS has asked. We have therefore been working with them on how they could respond to the recommendation using their existing powers.
The regulators published their responses earlier this month. These responses explain that both the FCA and PRA can, and in fact do, use the powers that they already have to do many of the things that the PCBS recommended and that are included in the amendment. The regulators have a significant range of powers to identify and tackle serious failings, either to rectify existing problems or prevent further consumer loss or reputational damage to markets. In fact, the regulators are able to replicate all the steps outlined in the amendment using their existing powers.
For example, the regulators already have the ability to give notice to a firm through an appropriate mechanism, be it a letter or an e-mail, as a matter of course if they have any concerns or think there may be a problem. The regulators will look to engage with the firm to address the concerns they raise. Whenever it is appropriate, the regulators may request information from the firm under Section 165 of FiSMA. If, following an investigation, the regulators believe further action is needed, the PRA and FCA can use their powers under Sections 55M and 55L of FiSMA to impose requirements on firms to undertake or cease a particular action. These powers can certainly be used to require a bank to adopt additional safeguards or to strengthen its existing safeguards.
Similarly, the regulators can appoint an independent person to undertake investigations using their power under Section 166 of FiSMA to commission a skilled persons report, or under Section 167 to conduct an investigation into the business of an authorised person. Both the PRA and FCA are committed to doing so in instances that they believe add substantially to their understanding of an issue. However, we do not think it is appropriate that the use of an independent person should be a requirement in all cases. There are some instances where the necessary information will be available from other supervisory sources making any such requirement unnecessarily costly and counterproductive.
Finally, there are already duties in regulations made by the regulators that require firms to deal with their regulator in an open and co-operative way. It may be that the noble Lord has not had a chance to look at the responses from the regulators and that, having done so, he will be satisfied, or, equally, that he would like further clarification. I suggest to him and any other noble Lords who have a particular interest in this matter that, if they have any further concerns having looked at those documents, we would willingly arrange a meeting with the Treasury to discuss any further elaboration that the noble Lord feels would help clarify how the system is going to work. Given that the powers exist, we really believe that the special measures powers envisaged in the amendment are unnecessary, and I therefore ask the noble Lord to withdraw it.
Lord Turnbull
I am grateful to the Minister. I think I received a link to the document but never got round to reading it. I will go and find it again and if I cannot find it I will come back and ask for assistance. I welcome the fact that this is recognised as a tool by the regulators. It may be that when I have read the remarks the Minister has just made, I will find that satisfactory.
One other point that I agree with concerns the use of Section 166. At various conferences I go to around the City, people think that Section 166 is probably being overused. Very often you could say, “We want you, the company, to investigate this. You could get it done by your chairman of audit or your chairman of risk or someone else”, but inevitably one of the four accounting companies ends up being a rather expensive and laborious way of doing it. I share the noble Lord’s sentiments on that.
I will go and do a bit more homework. In the mean time, I beg leave to withdraw the amendment.
Earl Attlee (Con)
My Lords, the usual channels have set us a bit of a challenge: noble Lords on the Back Benches have two minutes’ speaking time. I can help by reminding noble Lords that when the clock shows “2”, your time is up.
Millennium Development Goals
(10 years, 6 months ago)
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Baroness Jenkin of Kennington
To ask Her Majesty’s Government what assessment they have made of the United Nations High-level Panel report into the successor agenda to the Millennium Development Goals.
Baroness Jenkin of Kennington (Con)
My Lords, I feel a bit guilty with my 10 minutes. Anyway, I welcome this opportunity to debate the impact of the United Nations high-level panel report into the successor agenda to the millennium development goals.
I start by welcoming my noble friend Lord Bates on his maiden outing to the Dispatch Box. Noble Lords may be aware that I co-chair Conservative Friends of International Development. There can be no more consistent and committed friend to international development than my noble friend. I doubt that there are many, if any, noble Lords in the Chamber today who are not aware of his recent walk from London to Derry, spending 35 days of his summer holiday walking 518.8 miles to draw attention to the plight of the children of Syria and in so doing raising the enormous sum of £50,000 for Save the Children. There may be others watching this debate or reading it in Hansard, or who may stumble across it later, who are not aware of this astonishing and generous feat. I urge them to find my noble friend’s JustGiving page, which is still open for donations. Tragically, Save the Children are in just as great a need of support in their humanitarian work in Syria today as when he finished the walk on 9 September.
This has been momentous and exciting year for development. As well as the high-level panel report, highlights include the UK’s achievement of the 0.7% GNI target, and hosting the nutrition summit and the G8. We can all be justly proud of the role that our Prime Minister and his team played in steering the panel and ensuring the delivery of such an ambitious agenda. There were times when the vision now laid out in the report seemed to be a long way off and I congratulate all the panel members and its co-chairs on rising to the challenge.
After five meetings, around 5,000 pages of submissions and more than 500,000 people consulted, the report is clear, intellectually coherent and moves on the debate about poverty and development without losing what is good in the existing agenda. It offers a clear storyline and an indicative set of goals to provide an example of how this might all translate into the post-2015 agenda.
The report is also a big leap of ambition from the MDGs. It includes, but goes well beyond, the core MDG business of health, education and poverty, and encompasses infrastructure, property rights, governance, violence and personal safety, an end to discrimination, and gender equality. It suggests aiming for zero targets—such as no people living in poverty—combined with nationally defined rates of progress towards that end.
The report has been well received both domestically and internationally. It has set the benchmark against which the discussions and processes of the next two years will be judged. This judgment will be against not only the report’s content but the way in which the panel conducted its work. Its emphasis on the importance of broad consultation and listening to the voices of the poor and vulnerable must be continued throughout the process.
No speech about the successor agenda can be delivered without referencing the historic impact of the MDGs. They motivated global action around a common cause: that absolute poverty was indeed beatable. The 13 years since the millennium declaration have witnessed some of the largest and most successful development impacts in history. The target of reducing extreme poverty rates by half was met five years ahead of the 2015 deadline. The target for access to improved sources of water has already been reached and there have been drastic falls in deaths from malaria, and in maternal and child mortality. Fewer people are dying of AIDS, malaria and TB.
That said, there is much more to do and it is important that we do not forget that there are still two years left to deliver on the current MDGs. The need to finish the job is one from which we should not be distracted. However, as the high-level panel itself said, we must go beyond the current MDGs because, commendable as they are, they did not focus enough on reaching the very poorest and most excluded. Reaching the target to halve poverty is a staggering achievement but one that leaves half the people in poverty behind.
The report states clearly that we can and must eliminate extreme poverty from the face of the earth by 2030. The Prime Minister helped to steer the panel to a consensus on the five big shifts required to achieve this visionary aim. Although everyone in this Chamber will be familiar with these shifts, they are worth restating. First, we must leave no one behind. We can end poverty by 2030. We can eliminate preventable infant deaths and we can make dramatic reductions in maternal mortality. Secondly, we must put sustainable development at the core, bringing the environmental and development agendas, which have been separated for decades, back together. Thirdly, we must put a focus on transforming economies for jobs and inclusive growth. As we all know, growth is the only real exit from poverty, meaning a much greater focus on promoting business and entrepreneurship, infrastructure, education and skills, and trade. Fourthly, we must build peace and effective, open and accountable institutions for all, ensuring that we tackle the causes and not just the symptoms of poverty. Fifthly, we must forge a new global partnership that brings national Governments, businesses, community groups, donors, local government and others to work together.
It is also true that ending poverty is not a matter for aid or international co-operation alone. The 2015 process must also be about developed countries reforming their trade, tax and transparency policies. This should build on the work already established under the Prime Minister’s leadership of the G8 in June this year.
Before moving on to the task that lies ahead, I will take a minute to reflect on what we in this House can and should be doing. As we approach the MDG deadline, we must consider the role of democratic governance and parliaments in continuing to promote development objectives. Participation, transparency and accountability are playing an increasingly important part in the post-2015 development agenda. The outcome document from the UN special event on MDGs last month mentioned that the new set of goals should,
“promote peace and security, democratic governance, the rule of law, gender equality and human rights for all”.
Parliamentarians play a critical role in meeting those requirements through their law-making, budgeting and oversight functions and their roles as the representatives of the electorate.
In September, UN states affirmed their commitment,
“to a transparent intergovernmental process which will include inputs from all stakeholders including civil society, scientific and knowledge institutions, parliaments, local authorities, and the private sector”.
However, the onus—and responsibility—is on parliamentarians to engage with those negotiations, which will be launched at the beginning of the UN General Assembly in September next year. We must all remain engaged with the process.
The next couple of years will bring plenty of challenges, but we should not forget that an ambitious successor to the MDGs is in our long-term interests. Every dollar invested in stopping chronic malnutrition returns $30 in higher lifetime productivity. The value of the productive time gained when households have access to safe drinking water in the home is worth three times the cost of providing it.
We will all be encouraged that the UN Secretary-General’s report on the MDGs picked up on the key ideas from the report. I urge the Government to continue to play a prominent role in the discussions, particularly in New York where the negotiations will take place. We wish the UN and the Governments luck and wisdom as they, together with civil society, businesses and other development actors, negotiate the final set of goals over the next couple of years. I think of the report as a Christmas tree, currently loaded with lots of glittering baubles; the task ahead is to prune that tree in order to get the results we need.
I leave your Lordships with this: on page 19 of the report the panel provides examples of the potential impact if its recommendations are successfully implemented. In short, it could mean a real and lasting impact on the poorest in the world. There would be 1.2 billion fewer people hungry and in extreme poverty; 1.2 billion more people connected to electricity; 1.3 billion tonnes of food per year saved from going to waste; 470 million more workers with good jobs and livelihoods; $30 trillion spent by Governments worldwide transparently accounted for; and 220 million fewer people who suffer crippling effects of natural disasters. Can there be a more pressing or important agenda for this House to support?
Finally, during our deliberations and discussions let us never lose sight of the fact that behind these enormous numbers lie people: human beings, individuals and families; real people with the same hopes, fears and aspirations as us, but people born and trapped in poverty, unlike those of us lucky enough to have been born winners of the golden lottery ticket of life.
Lord McConnell of Glenscorrodale (Lab)
My Lords, I thank the noble Baroness, Lady Jenkin, for securing and opening this debate, in particular with such an outstanding and comprehensive speech, allowing the rest of us to add value to what she has said, rather than fill in any gaps. I echo her welcome to the noble Lord, Lord Bates, who, I hope, retains his passion for this subject, even if he is now speaking from a different seat than he was before. It is good to see him on the Front Bench.
In the time available I do not want to restate in detail my deep and firm commitment to have at the heart of the new development goals the eradication of poverty; the need for women and girls to have a central role in making those changes; and the vital need for an expansion in educational opportunities as the surest route out of poverty and the best way to develop the potential of every citizen on the planet. It is vital that we complete—or at least, maintain the momentum to achieve—the millennium development goals between now and 2015.
We cannot have peace without development, nor development without sustainable peace: the two go hand in hand. Therefore it is right that we welcome the report referred to by the noble Baroness, Lady Jenkin, which puts at the heart of this new agenda the need for security, good governance, democracy, human rights and gender equality. If we have one goal over the next two years, in the difficult arguments and negotiations that lie ahead, it should be to ensure that the situation in conflict-affected and post-conflict states, where the poorest of the poor, the most vulnerable and hardest to reach people on our planet suffer far too much, is at the heart of this new agenda, so that we really secure the opportunity to eradicate poverty by 2030.
Lord Dholakia (LD)
My Lords, I add my thanks to the noble Baroness, Lady Jenkin, for securing this debate.
“Leave no one behind” has been the spirit of the millennium development goals since their inception. Yet the fact remains that, even after 15 years in which the proportion of people living in extreme poverty has been halved, 70 per cent of those not lifted out of poverty are women.
As the deadline of the millennium development goals hovers into view, it becomes clear that areas that require critical examination are those that affect women and girls most sharply. For example, only two countries out of 130 have achieved gender parity in education. Development is not always held back because of a lack of resources; sometimes it is held back because someone is holding it back. It is certainly crucial that women and girls are taken into proper account in every single one of the new goals. The lives of millions of girls are blighted by violence, whether that is armed conflict, domestic violence or the gender-based violence faced by girls in their own communities in the form of female genital mutilation. By categorising FGM as something done a long way away, in cultures we do not understand, we resist helping those who have suffered and those in danger of suffering.
The current generation of millennium development goals lets down girls and women. The omission of a goal to eliminate violence against women is a glaring one. This can be cultural violence, the abbreviating of the potential of girls who die when they become pregnant. It can certainly be physical violence, as with the example of FGM. Robbery is also violence; the refusal of some Chinese universities to allow girls to study engineering, as recently reported by the BBC, is to steal from them their potential earnings and status in society. Few of those goals, therefore, can be leapt towards by the simple act of changing one’s mind.
Ending gender inequality is the exception to that, and I call upon Ministers and leaders to seize goal 2 of the high-level panel’s report, hold it in both hands and commit to preventing and eliminating all forms of violence against girls and women.
The Earl of Sandwich (CB)
My Lords, the MDGs were overambitious, but the post-2015 agenda is reaching beyond the bounds of the possible. Through the high-level panel we are promising not to reduce extreme poverty but to end it altogether, in all its forms; to transform economies; and to build peace and good governance, involving civil society. The UN and its various panels have a huge task in reconciling the updated MDGs with the sustainable development goals. There are now almost too many concepts coming out of these panels, and I doubt that we will end up with the clarity of the original MDGs. Sustainability can, however, be a test of effective, lasting development, in which the beneficiaries become the principal actors, such as farmers putting new techniques into action or health workers drawn from the local population.
To achieve the scale of activity required is going to mean even greater commitment to development assistance. Some of the documents referred to increased and more effective methods of finance. The EU is suggesting a range of options and says that investments towards the goals “should work seamlessly together”. Here we hit a snag. Economic recession has meant that aid from the EU has fallen, despite the calls for 0.7 per cent. The Minister might like to comment on that.
Water and sanitation are likely to be rated much higher in future development goals. Climate change is another priority. I welcome also the likely new emphasis on gender, given that women make up about two-thirds of the world’s poorest. Enabling local people to improve their own environment and health is one of the most cost-effective forms of development, saving three or four times its investment in economic productivity.
Institutions such as the EU, the World Bank and even our own DfID cannot easily adapt their perceptions of development to the needs on the ground; they have to learn to build upwards from the knowledge and ability of the communities involved.
The Lord Bishop of Ripon and Leeds
My Lords, I am grateful to the noble Baroness, Lady Jenkin, and I share the welcome for the high-level panel report. I believe it could be strengthened in two areas. The first area is environmental sustainability. The millennium goals are weak on climate change and the high-level panel report does not make it sufficiently clear that global warming already damages the economies, and therefore the poor, in poorer countries such as Bangladesh. The panel has the laudable aim of eliminating $1.25 a day poverty but that needs to be inextricably linked with a new climate equilibrium, which we are far from attaining. Do Her Majesty’s Government agree that there needs to be a legally binding global climate deal in 2015 in line with the scientific consensus?
Secondly, the emphasis on absolute poverty must not hide the danger of increasing inequality in our world. Income inequality is rife in both richer and poorer countries and is one mark of the increasing power of elites at the expense of those in poverty. I regret that the powerful analysis of Pickett and Wilkinson’s Spirit Level, that less equal societies do worse, has almost disappeared from our political debate. This inequality within and between nations is exacerbated by the failure of tax justice so far to ensure that multinationals pay a proper proportion of tax and that this is paid in the countries where their profits are made.
Will the Government support a post-2015 agenda which focuses on inequality as well as eradicating extreme poverty; and how could a new set of goals ensure a more equitable distribution of power and resources, both within and between nation states?
Lord Patten (Con)
My Lords there is no hope at all of the excellent aims of the high-level panel being achieved by 2030 or anything like it unless two preconditions are met. First, that there is good governance and good government in developing countries; and, secondly, that the undoubted vigour and vim of our great multinational corporations is harnessed to do good in the global economic environment in which they work.
On good government, I can do no better than quote what the chief executive of the Catholic Agency for Overseas Development, Chris Bain, said on 31 May when he responded to the panel’s report. He said:
“Ultimately, legitimate goals will hinge on a credible political deal”.
He went on to say:
“Freedom of speech and peaceful protest alongside access to information are fundamental to the right of individuals to flourish”.
So there it is. There is a critical importance to the development of good transparent government, free speech, the rule of law and open and accountable administration.
I am concerned that one of the representatives on the panel comes from Turkey. I do not think that any of those aims are in Turkey at the moment. Those who demonstrated in civil society peacefully in Taksim Square found that. Turkey, of course, has the unenviable record of having more journalists in its prisons than any other country on earth. I agree with the noble Lord, Lord McConnell, that good government is essential.
Secondly, we have to recognise that global corporations and financial institutions can do much good. Foreign and direct investment will soon approach five times more than global development aid at a time when global growth prospects will rely more and more on the opportunities in developing and emerging markets in a symbiotic way across the globe. I look with admiration at the work of great corporations such as Unilever, which are totally transparent in what they do to try to help in development and are doing an enormous amount to aid the agenda which the panel has put forward.
Lord Boateng (Lab)
My Lords, our thanks are due to the noble Baroness, Lady Jenkin, for her work in this field as well as for introducing the report and the debate in the way she has.
The report is welcome, not least for its references to the importance of agriculture—which has been neglected, I fear, in the current crop of millennium development goals—and inclusive growth as a necessary precondition for jobs and the reduction of poverty.
My experience of growing up in Africa as the grandson of two African farmers—we should never forget that women play a greater role in agriculture in Africa than do men—has taught me, as has my experience outside this House in Africa, that in order to bring about the “profound transformation” to end extreme poverty and improve livelihoods, to which the report refers, it is necessary to do what it suggests: to harness innovation and technology to this end. The high-level panel is to be commended for that.
I ask the Minister—I warmly welcome him, as does the rest of the House, to his place—what can we do, what can DfID do, to support higher education, our research councils, our scientific bodies and our private sector in order to promote science, technology and innovation in Africa to underpin agriculture and agricultural growth.
If this report is a Christmas tree—and it is—it needs science, energy and infrastructure in order to bring it alight. Only with that can Africa fulfil its potential and the lion join the tigers as an engine of growth and prosperity, not only for Africa and Asia but for the whole world.
Earl Attlee (Con)
My Lords, I am pleased to say that we are doing quite well.
Lord Jay of Ewelme (CB)
My Lords, I shall try to keep up that sequence.
In my view, the existing millennium development goals have been a success and not just a set of targets announced and forgotten. They have been a focus for development activities within the UN system and by bilateral donors. I agree with the noble Baroness, Lady Jenkin, that we must not let up on them between now and 2015. I am sure that the Minister, whose appointment, like others, I warmly welcome, will give us some reassurance on that. They must be replaced by an effective set of goals for the years beyond that. I welcome the high-level panel’s report but the existing MDGs were successful in part because they were simple, relevant and memorable, and because there were only eight. I urge the Government to keep the new millennium development goals to a maximum of 12, and, if possible, fewer.
I have two specific comments. First, I am glad that sustainable development is at the core. However, I urge the Government to ensure that the renewed MDG process and the UN climate change process are consistent and not contradictory and that they reinforce and do not cut across each other. I would welcome reassurance on that. Secondly, I greatly welcome the first principle in the high-level panel’s report—“leave no one behind”. That is as true for richer countries as for poorer. Think of food banks for hungry children in our own country. It shows that there really is a global agenda here and no longer a “them and us”. Leaving no one behind does not mean a lower priority for growth, quite the contrary. It means a policy that ensures that in all countries the fruits of growth reach those who need it. Making certain that that happens is key for all of us in the years to 2030 and beyond.
Baroness Prosser (Lab)
My Lords, I join others in thanking the noble Baroness, Lady Jenkin, for tabling the debate. The introduction of the millennium development goals in 2000 was greeted with enthusiasm by those involved in international development. A target-based programme designed to address poverty and exclusion in all their forms was a welcome step forward from disparate projects and unco-ordinated expenditure. The outcome document from the UN special event of 25 September this year, convened to review MDG progress and to chart a way forward, states:
“We will place a strong emphasis on all approaches that have a cross cutting and multiplier effect. In particular, we recognise that promoting gender equality, and empowering women and girls, underpins and advances progress across all the Goals. We will resolutely promote gender equality and eliminate the range of barriers to women and girls’ empowerment in our societies”.
This is welcome news. While this concept has been recognised by many for a considerable period of time, programmes which include this approach have been few and far between.
It also has to be recognised that progress will be made only if broad-sweep statements such as the one above are developed into detailed plans which themselves recognise that women’s moves towards equality are stymied and frustrated by systemic hurdles and barriers, many of which have been in place for years and which will be moved only by determination and by educating the men involved as to the value to be gained by the whole community. In part this will be achieved by enabling women to move into positions of influence. This could be at local level, playing a part in the determination of priorities, or regionally or nationally. Decision-making bodies from which women are excluded are most likely to contribute along a traditional path, with little attention being paid, for example, to healthcare or educational needs. Women’s influence on sharing resources is essential to outcomes beneficial to all.
Lord Crisp (CB)
My Lords, I congratulate the noble Lady, Baroness Jenkin, on setting out so well the background against which we all speak. I want to make two points in two minutes. First, leaving no one behind, or the UN Secretary-General’s version of it, a life of dignity for all, are absolutely wonderful ambitions. I draw attention to how this applies to disabled people. I do so in part as chair of Sightsavers, which deals with blind people. I am very well aware that too often disabled children and blind children in particular are left behind in our current MDGs. The crucial point here is not just the political will. It is also about the data and about gathering the data so that we know how these things are being applied not just to disabled people but to other minorities. What is the Government’s assessment of how these data can be collected and how well they can be collected over the next period?
My second point, following others, is that the MDGs in health have not been fully met. HIV/AIDS is not yet beaten. Child mortality is too high and maternal mortality is absolutely appalling in too many places. I ask the Government two things. First, what are they going to do to ensure the implementation of the recommendations of the independent expert review group chaired by Joy Phumaphi and Richard Horton which is arguing for greater acceleration on progress to the health MDGs, particularly MDGs four and five at the moment? Secondly, how can the Governments of the world collectively ensure that the current MDGs are carried forward and progress continues to be made after 2015, as it will need to be?
Lord Judd (Lab)
I declare an interest as the former director of Oxfam and VSO, and also currently as a trustee of Saverworld. Congratulations are due to the noble Baroness, Lady Jenkin, on having secured the debate and on her highly effective speech in introducing it. She established the need for a major debate in this House, preferably in government time, because this is such an important part of their commitments and strategies that we need to have a proper, full debate.
It is essential to recognise that we must ensure shared objectives. It is not us, the wealthy, telling the poor what to do, but ensuring that the poor themselves are involved in the ownership of the programme that is put forward and to which they are expected to respond and that they feel that it is theirs, not ours. It is is also recognising the interplay between specific targets and the matrix. What is the matrix? Let me rattle through the points to illustrate it: children and women, education, ecosystems and sustainable management of natural resources, climate change with the consequent vast movement of people, gaps in achieving MDGs within individual countries, and also the inequality and injustice in income levels between men and women, social groups and the able and disabled, universal public services, redistribution of wealth, effective and progressive tax systems, strengthening resilience and advancing human rights, sustainable peace and state building, conflict resolution, and analysing the causes of conflict. There is a huge list. We cannot possibly do it justice tonight. The sooner there is a full debate, the better.
Lord St John of Bletso (CB)
My Lords, I join in thanking the noble Baroness, Lady Jenkin, for introducing this short yet very topical debate. I agree with the noble Baroness that economic growth is a key enabler to reducing poverty. However, as several noble Lords have already mentioned, the goal of achieving sustainable development requires good governance, transparency and effective accountability. Development requires peace and peace requires sustainable economic development.
Continued rapid urbanisation in many developing countries poses problems of its own. It is estimated that in several African cities the population will treble in the next 35 years. That will have the inevitable result of the proliferation of squatter camps and displaced families. The recent global partnership report highlighted 12 goals to end poverty by 2030 but scant mention was made of what measures were being taken to improve effective communication. Measuring poverty continues to be a barrier to effective policy making. While more than 80% of Africans have access to a mobile telephone, less than 4% have access to reliable and affordable broadband. Africa is well serviced with undersea fibre optic cables but has totally inadequate connectivity to the mainland. My simple call today is for more measures to promote universal affordable broadband, which will by its very nature improve education, healthcare and job creation and ultimately reduce poverty.
Baroness Tonge (Ind LD)
My Lords, I congratulate the noble Baroness, Lady Jenkin, on securing this popular debate, which has been more like “Just a Minute” on Radio 4 than a debate.
The UN high-level panel report emphasises that future development should be sustainable. We must therefore ensure that we address the thorny problem of the growth of world population, which is leading to more and more poverty, conflict and migration. Bad press in the past makes us reluctant to mention it, but goals we set for development will never be achieved because the goal posts will have moved in the mean time, unless we do something about population growth. To tackle the problem, we can and must concentrate on the health and reproductive rights of women, ensuring for instance that the 220 million women with an unmet need for contraception have their needs met. If they can voluntarily—I repeat, voluntarily—limit their family size—and they will—they will then be able to access education and join in with economic activity in their own countries, which we know is key to development.
I implore the Minister to ensure that the Government build on the excellent initiative at the family planning summit last year and ensure that a target is set for universal access to sexual and reproductive rights and the continuing pursuit of women’s empowerment and gender equality. I feel passionately on this issue as a former family planning doctor and chair of the All-Party Parliamentary Group on Population, Development and Reproductive Health.
Viscount Craigavon (CB)
My Lords, I will go straight to what I believe—which the noble Baroness, Lady Tonge, also seems to believe—is the most important part of the MDGs and an integral part of sustainable development: population dynamics and reproductive health. In the recent special event meeting in September, heads of state and government confirmed that they will target the existing most off-track MDGs and those where progress has stalled, such as,
“universal access to reproductive health, including maternal health”.
That wording again emphasises the importance of reproductive health, and confirms that the existing goals have not been forgotten.
For post-2015 goals in this field, there has been widespread advocacy of a stand-alone target on universal access to sexual and reproductive health and rights. Those in this field believe that sustainable development can only be underpinned by meeting the widely acknowledged, unmet need for reproductive health services and by giving women the choice in freely planning the size of their families. At the same time, it has to be acknowledged that another side of sustainable development is reflected in our western overconsumption and excesses. However, to put it rather simply at this stage, the benefits of family planning do not have to wait until levels of education have improved or stable economies are in place. As Marie Stopes International in particular has shown, reproductive health provision, if provided in the right way at any stage of development, can be successful and beneficial to all.
For the new goals and the debate over the coming months, the UN Population Fund has produced a short and highly readable document entitled The Future UNFPA Wants for All. This contains seven key points, each summarised in a few sentences, for the post-2015 development agenda. In the time available, I can only recommend it and say that it demonstrates, in so many ways, how population and reproductive health matters must be an integral part of sustainable development.
Lord Collins of Highbury (Lab)
My Lords, I will not cover all the points that I wanted to in the two minutes available. However, I thank all noble Lords for their contributions and in particular the noble Baroness, Lady Jenkin, for initiating this debate—and I welcome the noble Lord, Lord Bates, to the Dispatch Box.
I welcome many of the recommendations in the high-level panel’s report, especially its focus on inequality of opportunities. However, its failure to recognise the marked increase in income inequality is concerning, as the right reverend Prelate mentioned. That was a major omission from the MDGs. Many leading economists believe that tackling inequality will be essential to achieving the goal of eradicating extreme poverty. However, despite this, the Government have refused to back measures to tackle it. Perhaps the Minister will assist the House by explaining the Government’s reticence to endorse such measures.
On gender equality, the suggested target to eliminate discrimination against women in political, economic and public life is a positive start. However, nothing will change if we do not focus on the means to increase women’s participation. On current rates of progress, women will not be equally represented in parliaments until 2065, and will not make up half the world’s leaders until 2134. Perhaps we can start by setting a better example in this country. Will the Minister therefore back calls for specific measures across all political parties, to increase the number of women candidates at the next general election, including all-women shortlists?
To conclude, I will focus on another issue that is of particular concern to me: economic inclusion. Two and a half billion people do not have access to basic financial services—an issue not featured in previous MDGs. I therefore welcome its inclusion as an indicator for goal 8 on inclusive growth and goal 2 on gender equality. Will the Minister, in responding to the debate, indicate that he will work hard to ensure that these indicators will make it into the final framework? Specifically, will he ensure that they will be discussed by UK officials at the open working group on sustainable development goals when it meets in November?
Lord Bates (Con)
My Lords, I thank all noble Lords who have taken part in this debate. It has been an incredibly disciplined performance, which has allowed me more time to respond than I had anticipated. I will therefore try to respond to as many questions as possible.
I join noble Lords in paying tribute to the noble Baroness, Lady Jenkin, for the way in which she introduced this debate and for her consistent support for this issue as the co-chair of Conservatives for International Development. The noble Baroness talked about my charity endeavours, but I seem to be for ever receiving e-mails from the noble Baroness about her charity endeavours, and I know that many other noble Lords have incredible track records as well. The noble Baroness spoke powerfully and knowledgeably about the issues and in particular highlighted what had happened already through the millennium development goals. Sometimes there is a certain cynicism about goals and targets. However, the fact that since 2000 we have seen the level of extreme poverty reduced by half and that 3 million fewer children under the age of five die each year is quite an extraordinary progression. Much has been done, but as the noble Baroness reminded us, much still needs to be done.
I also thank noble Lords for their warm welcome to me in this position. I was just reminded that exactly five years ago, when I came to this House, I made my maiden speech in a debate on the UN millennium development goals, and here I am making my maiden speech from the Government Front Bench on this same subject. I appreciate that, because when you look at those statistics—and remember that behind each of those statistics, as we were reminded, there are human beings—I can think of no more important issue before your Lordships’ House than this one.
The Government strongly welcome the report of the High Level Panel on Post-2015 Development Agenda. The members of the panel, including, of course, the Prime Minister, came with the very bold target of trying to eradicate poverty by 2030. The noble Baroness, Lady Jenkin, talked about the need to tackle the root causes, as well as the symptoms, of poverty. Noble Lords will know that there is no record of a single conflict-affected country that has achieved one of these millennium development goals. We should therefore remember, as the noble Lord, Lord McConnell, said so passionately, that there can be no development without peace—and there can probably be no sustained peace without development. It is very important to us to see those recognised in these millennium development goals.
The noble Lord, Lord McConnell, also referred to the importance of including women and girls, in particular, in the development targets, as they are critical to a whole range of cross-cutting measures to the reaching of wider goals. The noble Lord, Lord Dholakia, referred to gender parity. Again, we see that that is included in the proposed targets, and the goals to back them up. Specifically and rightly, it is focused on the need to have a target for reducing violence against women and girls. The noble Earl, Lord Sandwich, made a very good point about the number of goals that are increasing, although the proposed targets beneath them are being reduced. This is, of course, a report to the UN General Assembly, so there will be a process through which they will be prioritised and sharpened. However, it was very important to get the maximum amount of consensus around what the targets needed to be. The noble Lord also pointed out that contributions and aid from EU member states had fallen because of the recession. What can the Government do about this? They can use persuasion; and in many areas of life the best way to lead is by example. Her Majesty’s Government, in being the first of the G8 to reach the 0.7% goal set out some 30 years ago, is leading in the right way.
The right reverend Prelate the Bishop of Ripon and Leeds asked two very specific questions on climate change. Of course, on climate change we have in goal 7 the aim to secure sustainable energy, while goal 8 is to create jobs, sustainable livelihoods and equitable growth. The report highlighted some very important issues. One of the most staggering figures was that the bottom billion, to which we referred, consume 1% of the world’s resources, while the top billion consume 72%. It is therefore axiomatic that it is unsustainable. You can argue that you want wealth and prosperity to increase—and we do—but if it happened at that rate, there would be major problems. It is right, therefore, that there is a sustainable dimension to this. That a parallel track is going on here with the Rio+20 initiative is the big contribution. Linking them both together, I think, gives the right balance between development and the environment.
My noble friend Lord Patten spoke with great experience about the importance of businesses in this regard. I would say two things. First, the high-level panel took the approach of trying to include voices from business; 250 representations were received from businesses. This had to be part of a global partnership between NGOs, between businesses and between Governments. My noble friend will be aware that one of the key recommendations to come out of it was the golden thread argument that it all is dependent on economic growth, development and trade. I thought it was a very important point.
The noble Lord, Lord Boateng, spoke from his immense experience in this area about Africa and agriculture and again referred to areas of innovation and technology. There is some good news here in the goals and specific targets, about how technology can be used to deliver the progress that we all seek and the contribution to the Global Fund. Of course, the global partnership will also help move towards this, as will higher education and science. The developed world can do this by attracting and inviting more students and making it possible for more students to benefit from world-class higher education.
Everywhere you look in this Chamber you see people who have been at the forefront of pursuing this agenda over many years. The noble Lord, Lord Jay, talked about the importance of climate change and development. I thought that he spoke very astutely, as a distinguished former Permanent Secretary, of ensuring that the two sides are actually joined up in their thinking as they move forward with their recommendations.
The noble Baroness, Lady Prosser, talked about the cross-cutting issues and in particular about empowerment for girls and women. Again, we see that set out in the second of the goals with a number of new proposals and targets, which I think will make progress in the area that we want.
The noble Lord, Lord Crisp, talked about disabled people and about the data collected. Data are one of the key elements in this. I was reading the excellent contribution from the noble Lord, Lord McConnell, on Lords of the Blog about the quality of data in development. It is a very big issue. That is why there needs to be a partnership. It cannot just be down to the Governments to collect those data. There is a role for NGOs and civil society to provide data that can help us in measuring that.
The noble Lord, Lord Judd, has immense experience in this area from his time with Oxfam, which he mentioned. He talked about a number of things, probably the most important being that we need more time to discuss this. As a business manager as well as a Minister on this occasion, I cannot dodge that. I assure the noble Lord that I will take up that issue and perhaps through the usual channels come back with more time for us to debate this.
The noble Lord, Lord St John of Bletso, talked about the importance of internet connectivity. This is absolutely critical. Mobile telephony has transformed prospects in the developed world through banking and communication. The same could be done through the extension of smart grids, efficient transport, storm-water management, energy-efficient buildings and particularly broadband and internet connection. That is a point very well made.
My noble friend Lady Tonge referred to the importance of population. Of course, when the original millennium development Goals were set out, there were 1 billion fewer people on the planet. If those goals are to be achieved, they will have to be achieved at a time when there will be another 1 billion, by 2030. That is why the provisions on access to sexual and reproductive health measures in the report are so important and why the Government are committed to try to see them through to reality. The noble Viscount, Lord Craigavon, made the same point about population. This is absolutely at the core of what we are talking about.
The noble Lord, Lord Collins—I thank him for welcoming me to the Dispatch Box—talked about the importance of us leading by example in appointing more women candidates and having a greater role for women in this country. I totally agree that that is very important. Probably the best thing that I can say in the Government Benches’ favour is to point to my noble friend Lady Jenkin, who secured this Question for Short Debate; not only has she worked in international development, she has done so much to get more women engaged at the highest level of government.
This has been a very important debate. There have been some immensely strong contributions and, going forward, we can reflect on what has been done, which is substantial in real lives and real progress. We can also be excited by those striving goals of seeking to eradicate poverty within this generation; that will be historic, and we will all have played our part.
Financial Services (Banking Reform) Bill
(10 years, 6 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord McFall of Alcluith
“Whistleblowers’ compensation
(1) After section 206A of FSMA 2000 (suspending permission to carry on regulated activities) insert—
“206B Whistleblowers’ compensation
(1) If as a result of an investigation carried out in accordance with this Act the appropriate regulator is satisfied that an authorised person has mistreated a whistleblower, the appropriate regulator may require the authorised person to pay to the whistleblower compensation of an amount determined by the appropriate regulator to be appropriate having regard to the financial implications of the mistreatment for the whistleblower.
(2) In this section “whistleblower” means an individual who works or worked for the authorised person (whether or not as an employee) and who—
(a) gave information to the appropriate regulator for the purpose of initiating or facilitating the carrying out of an investigation in accordance with this Act, or(b) gave to a colleague information relating to any matter which might be relevant if the appropriate regulator were deciding whether to initiate the carrying out of such an investigation or were carrying out such an investigation.(3) In this section a reference to mistreatment includes a reference to any form of discriminatory or unfavourable treatment.
(4) A payment under subsection (1) is to be made only if the whistleblower chooses to accept it; and a whistleblower who accepts compensation under this section may not bring civil proceedings (including, but not limited to, proceedings before an employment tribunal) in respect of, or in reliance on, the mistreatment in respect of which the compensation is offered.
(5) The procedural provisions of this Act in relation to the imposition of a penalty under section 206 apply to an award of compensation under this section.””
Lord McFall of Alcluith (Lab)
My Lords, it is my pleasure to move Amendment 98 on behalf of my parliamentary banking standards colleagues, the noble Lords, Lord Lawson and Lord Turnbull. Essentially, the Parliamentary Commission on Banking Standards is saying that banks must put in place mechanisms for employees to raise concerns when they feel discomfort about products or practices, even where they are not making a specific allegation of wrongdoing. It is instructive to note that during the whole financial crisis, not one whistle was blown. Why was that? The issue of fear of damage to one’s career is central. Therefore, we must ensure that we have a system that rectifies those deficiencies.
One recommendation from the parliamentary commission is that a non-executive board member, preferably the chairman, should be given specific responsibility under the senior persons regime for the effective operation of the firm’s whistleblowing regime. We would like the Government to consider that. I am sure that the noble Lord, Lord Lawson, and I feel that that recommendation does not go far enough, particularly when one considers the situation in America. My noble friend Lord Brennan informed me earlier that under the Dodd-Frank Act, the SEC has an Office of the Whistleblower within individual companies. The United States is far ahead of us on that, and, if we do not allow the chairman to undertake this, we are ducking one of the main responsibilities that we want to give to the chairman, which is to accept individual accountability.
We were littered with examples of chairmen putting their hands up and saying, “Nothing to do with us. We didn’t know about the mis-selling scandals. We didn't know about the LIBOR scandal. We didn't know about the interest-rate scandals”, et cetera. If the system is to work properly, the chairman must be responsible. We consider that it is important that the chairman should be held personally accountable for protecting whistleblowers against detrimental treatment if we are to have a system that is worthy of the name in this area.
We recognise that whistleblowing reports should be subjected to an internal filter by the bank to identify those that should be treated as grievances. Banks should be given the opportunity to conduct and resolve their own investigations of substantial whistleblowing allegations.
The regulator should also have a part to play here. It should periodically examine a firm’s whistleblowing records in order both to inform itself about possible matters of concern and to ensure that firms are treating whistleblowers’ concerns appropriately.
The FSA’s evidence to the committee appeared to show little appreciation of the personal dilemma that whistleblowers face. It should regard it as its responsibility to support whistleblowers.
We also noted the regulator’s disquiet about the prospect of financially incentivising whistleblowing. As a commission, we call on the regulator to undertake research into the impact in the US of financial incentives in encouraging whistleblowing, exposing wrongdoing and promoting integrity and transparency. Two representatives of the SEC gave evidence at one of our hearings on how incentivising whistleblowing was going in the United States.
It is the financial sector that must undergo a significant shift in cultural attitudes towards whistleblowing, and change its view from one of distrust and hostility to a recognition that whistleblowing is an essential element of an effective compliance and audit regime.
We note that the Government did not reject our proposals, but do not propose to address them in the current legislation, instead placing the issue of whistleblowers in the context of a wider piece of work led by the Department for Business, Innovation and Skills. We feel that the FSA should be right at the centre of the issue. As a commission, we concluded that not only did internal compliance and formal control structures fail to uphold proper banking standards, but a culture of fear prevented employees from speaking out about serious wrongdoing.
There are a number of examples to which we could refer, but the FSA did its own investigation into Barclays at the time of LIBOR. In June 2012, it came out with its final notice in which it imposed a financial penalty of £59.5 million on that bank. Because,
“Barclays agreed to settle at an early stage … [it] … qualified for a 30% … discount under the FSA’s executive settlement procedures. Were it not for this discount, the FSA would have imposed a financial penalty of £85 million on Barclays”.
When we looked at the evidence that was presented to us on Barclays, we found that there were dozens of people in open trading desks for several years while this practice was going on. At UBS we found that there were up to 100 people who were there for a decade and that there was a clear e-mail trail on the issue. We could only conclude that if one is asked to do something wrong, there has to be whistleblowing so that the company can develop a better culture and better process to enable it to deal with it. We do not wish people to feel that their career will be threatened if they do whistleblow or, indeed, if they do not.
When we looked at the LIBOR situation at Barclays, we asked witnesses what this behaviour meant about the culture of Barclays and of the banking industry. As I mentioned, the final notice from the FSA painted a picture of a close-knit group of people who were colluding to try to manipulate LIBOR. For example, the following conversations were noted:
“Trader C requested low one month and three month US dollar LIBOR submissions”.
That was on 7 April 2006. Trader C was quoted as saying to his colleague:
“If it’s not too late, low 1m and 3m would be nice, but please feel free to say ‘no’ … Coffees will be coming your way either way, just to say thank you for your help in the past few weeks”.
Then the submitter replied:
“Done … for you big boy”.
In October 2006, an external trader stated in an e-mail to Trader G:
“If it comes in unchanged I’m a dead man”.
Trader G responded he would “have a chat”. Barclays’ submission on that day for three-month US dollar LIBOR was half a basis point lower than the day before, just as requested. The external trader thanked Trader G for Barclays’ LIBOR submission by saying:
“Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger”.
Those are clear, open e-mails and no one can tell any of us, particularly the banking commission, that others in Barclays did not know what was going on with that situation. The noble Lord, Lord Turner, in one of the most understated comments, said that the actions over this period indicated a cultural weakness with Barclays. One might say: “You can say that again”. We read many submissions covering the direct exchanges. I will repeat just one more. Trader C said:
“The big day [has] arrived…My [New York desk] are screaming at me about an unchanged 3m libor. As always, any help wd be greatly appreciated. What do you think you’ll go for 3m?”.
The submitter said:
“I am going 90 altho 91 is what I should be posting”.
Trader C came back and said,
“when I retire and write a book about this business your name will be written in golden letters”.
The submitter, maybe with a little bit of common sense, replied:
“I would prefer this not be in any book!”.
Those comments are in e-mails—that is the trail. That is why we need whistleblowing. People were scared to give their point of view to those further up the management trail. Barclays is just a case study of all that has gone wrong with the culture. We on the commission are asking for disclosure of significant supervisory correspondence and matters considered. It would be helpful to know how many of these went to enforcement.
When I was investigating this in the last Parliament, I spoke to senior individuals in the FSA. They were very clear with me. They said that Barclays’ legal and compliance team were intimidated by Bob Diamond and others. They said that the senior legal and compliance team should be sacked because they knew about LIBOR and the capital raising for a long time. Not one legal or compliance officer at Barclays ever graced the door of the FSA to complain about that situation.
It happened down the line as well, particularly at the front-line, retail-desk level with PPI, with individuals being pressured in that regard. At a breakfast conference this morning, Martin Wheatley was very clear. He said that these individuals at the front-line level were trying to eke out a salary of £16,000 to £18,000 a year. They had been asked to sell PPI alongside loans and other products and would receive an extra couple of thousand pounds a year for doing so. At the top level, however, huge sums were involved. Distorted incentives led to a situation where, as a result of PPI mis-selling—deliberate mis-selling by companies—the banking industry could face a bill of £30 billion. Financial stability could be threatened as a result of these perverse incentives. The PPI scheme went on for 18 years. I suggest that if a rigorous, appropriate whistleblowing regime had been in place whereby individuals did not feel that whistleblowing would end their career, the PPI scandal could have been stopped well before that length of time had passed. As has been mentioned, a culture shift at the top in terms of accountability would help to increase confidence in this regard down the line. The chairman must be accountable and take responsibility in this area and must ensure that the whistleblowing regime works well.
Martin Wheatley said this morning that the Financial Services Authority had lost its focus on the moral compass and on being honest. Perhaps if we have an appropriate whistleblowing scheme we will start to reinject honesty into the system, to ensure a better culture and better ethics whereby individuals in a company feel free to serve the interests of the company and the customer and thereby help society.
Lord Phillips of Sudbury
Lord Phillips of Sudbury (LD)
My Lords, Amendments 98A and 98B stand in my name. They seek to tease out a little more detail in relation to the amendment just moved by the noble Lord, Lord McFall, on whistleblowing. I say at once that I am wholly in favour of that amendment. The position of whistleblowers in our country is not satisfactory. Amendment 98 would widen the portal to offer assistance and compensation for whistleblowers by giving the appropriate regulator the power of initiative with regard to getting appropriate compensation for whistleblowers.
My amendment is designed to widen the scope of that initiative as, at present, I feel that it is unnecessarily limited in that the whistleblower is defined by proposed new subsection (2) in Amendment 98 as a person who gives information directly to the appropriate regulator or gives it to a colleague. I notice that the amendment does not define “colleague”. Suffice it to say that many of the circumstances in which whistleblowers are sometimes encouraged—and feel morally compelled—to speak out are extraordinarily complex.
I have had the good fortune to do work for the charity Public Concern at Work. Indeed, I set it up 20 or so years ago. That charity continues to do extremely valuable work. I spoke to people at the charity a couple of days ago and, believe it or not, they had been approached by roughly 2,500 whistleblowers in the past year. Astonishingly, I think that scarcely any of the whistleblowers were from the City. There are particular issues around that and we can underestimate the extraordinary pressure that a whistleblower or would-be whistleblower feels under in the context of the City, particularly as it is a very tight community in many ways. At the moment, the only recompense that a whistleblower can get, if he or she is discriminated against and suffers loss, is by using the provisions of the Public Interest Disclosure Act 1998. However, the whistleblower has to take the initiative. This amendment, as I say, gives the initiative to the regulator, which can be of enormous help and assistance to the whistleblower.
The Public Interest Disclosure Act 1998 scores over this amendment by having a much wider entrée to the remedies than is provided by the amendment. In particular, my amendments put the words “directly or indirectly” into the beginning of the two subsections that define how a whistleblower gets into the circle of potential compensation when they talk about giving information to the appropriate regulator or to a colleague. This is because—and I have checked this with Public Concern at Work—a lot of those who want to speak out are really anxious, if not fearful. What very often happens is information gets to the regulator in a really indirect, round-the-houses way, sometimes anonymously. My simple amendment is designed to open up the door but it is also a probing amendment in the hope that between now and Report we can have discussions with the Government on the optimum way of finding the remedy which the amendment seeks to supply.
I finish by giving some idea of how much wider the Public Interest Disclosure Act is regarding “getting into the remedy”. Clause 1 of the Act inserts a four-page amendment into the Employment Rights Act 1996 and provides a multiplicity of definitions of who is a whistleblower for the purposes of the remedy. An example of its sensible provisions is that a “qualifying disclosure” is one that is made in good faith, is substantially true, is not made for personal gain and,
“in all the circumstances of the case, it is reasonable for him to make”,
and so on.
It may be possible, at the next stage of the Bill, to import some of the language of the 1998 Act or, indeed, insert this amendment as an amendment to the 1998 Act.
Lord Eatwell (Lab)
My Lords, I am sure that the Treasury has studied carefully the experience of a measure developed in the United States which is very similar to this and which has been remarkably successful over the past three or four years in bringing forward very important information to the regulatory authorities. When the noble Lord replies, perhaps he would reflect on the American experience and say how valuable it might be to replicate it here.
Lord Brennan (Lab)
My Lords, I support the amendment because it recognises the obligation of society to protect and deal justly with people who report serious wrongdoing, often at personal cost. The 1998 Act recognises that in its statutory effect. This modest amendment is designed to deal with the relationship between the whistleblower and his employer in relation to an employment claim. I invite the House to look at the question of whistleblowing in a much broader context. The more monolithic the organisation, the tighter its internal process controls, the less likely it is you will find out about wrongdoing. Almost paradoxically, the whistleblower becomes more important —single though that person usually is—according to the size of the enterprise about which he makes revelations. That explains to a considerable degree the point raised by the noble Lord, Lord Phillips of Sudbury, about the effects upon these people of taking such a step.
As I said at Second Reading, the four major banks are, in a broad sense, in charge of four times our gross domestic product. Whistleblowing in organisations as big as major banks is a highly exceptional event. In considering the role of the whistleblower in this context, the Government should, I suggest, have regard to public reaction if it is not seen to be the case that whistleblowers are not only protected but encouraged by legislation such as this. Regulators are there to regulate, not to police in the sense of investigation, detection and prosecution. That is not their usual role—certainly not historically—in this country. Therefore, the whistleblower in this country has even greater importance than he or she has in the United States.
In the United States, the Dodd-Frank Act—the US counterpart of this legislation—introduced special provisions for whistleblowing, not just in banking but in financial institutions generally. It provided for payment to whistleblowers according to the extent of the misconduct that the whistleblower had revealed, as assessed by the SEC—the equivalent of our regulators. So, for example, if a whistleblower had disclosed LIBOR, the payment would reflect the importance of the discovery in relation to the economic loss that had been suffered.
That is exceptionally important. The greater the danger to the whistleblower within his or her employment or in relation to their future and that of their family, the more they should be protected, including financially —but within reason, I accept. If you do not do that, you expose the whistleblower to what almost amounts to serious persecution. One has only to look at some of the events that have occurred in the National Health Service, where whistleblowers in different hospitals or hospital trusts have had their careers ruined, and there was even, I suspect, a suicide a year or two back. This is serious stuff. These are citizens revealing misconduct by great institutions, and no more civic an act could you expect an ordinary person to perform.
In the United States as a result of Dodd-Frank, which was enacted in 2011, in the financial year 2012—the first full year after its enactment—there were 3,000 reports to the SEC. My enthusiasm and that of my noble friend Lord McFall led us to misunderstand each other. The Office of the Whistleblower is a permanent office within the SEC, and its purpose is to investigate claims and to co-operate with and look after the whistleblower. It works. When the new chairman of the SEC said publicly, “Now we are not only felt; we are feared”, one of the main reasons was the whistleblower threat. If we want to change culture, this is a very effective way of doing so. Good intentions count for a lot, but in changing culture, an intuitive fear of finishing up in jail counts for a lot more.
Lord Watson of Invergowrie (Lab)
My Lords, I support my noble friend Lord McFall and his colleagues on Amendment 98. I am also in favour of the two amendments tabled by the noble Lord, Lord Phillips of Sudbury. My noble friend drew on his experience as a member of the banking commission when he talked eloquently about the serious matters behind LIBOR and the other issues that contribute to the need for serious whistleblowing legislation to protect those who are, in effect, doing the country a great service.
In reading out those e-mails, my noble friend Lord McFall described the situation very graphically. At one stage I thought that he was going to break into the voice of Robert de Niro or Al Pacino, but his dulcet Dunbartonshire tones were sufficiently menacing to get across the message that the people involved in this crime were playing no games at all, and that it was very serious.
The seriousness of the whole question of LIBOR was brought home to many of us yesterday when we opened our newspapers and saw photographs of people who had been appearing in court charged with offences related to the LIBOR scandal. The first thing that struck me was that the people were relatively young. The “ringleader”, if that is the appropriate term, is barely in his thirties now and was in his twenties in 2008 when the offences were committed, and the other two are not much older. Surely there were older, more experienced people further up the chain who must have known what was going on. If they did not know, they certainly should have done. That is the heart of the matter with regard to whistleblowing. Those responsible have to be held to account.
Amendment 98 works by adding excluded activities under FiSMA or the Financial Services Act 2012 to the list of justifications for making what is known as a qualified disclosure. As noble Lords may know already, the list includes reporting that someone’s health and safety is in danger, damage to the environment, and a criminal offence that a company is not obeying the law or that someone has covered up wrongdoing. Those are generic terms, but many of them would apply to the finance sector. For the new banking system to work well and be policed effectively, protections have to be in place for staff who believe that wrongdoing exists in their organisation and they are not prepared simply to sit on their hands or, as happens in many cases, simply leave the job in the hope of finding employment somewhere else because they fear the consequences of raising the issue.
This amendment is a further attempt to trigger a cultural change in financial services, which I think noble Lords on all sides have acknowledged is necessary. A bank employee may well wrestle with their conscience before deciding to break ranks; it is inevitable that they would. If an honest trader suspects that wrongdoing is under way and is considering informing the authorities, surely protections have to be in place for him or her to guard against a situation where they are held to be at fault. They are the victim because they perhaps lose their job, which in banking, of course, could be a very well paid job indeed. Once the word goes round that someone has left a bank or financial institution for this reason, how difficult will it be for him or her to find other employment?
The LIBOR scandal illustrates the importance of making it easier to report wrongdoing. At the time that we now know the LIBOR rate was being manipulated, certain newspapers did speculate about the accuracy of those claims, and indeed about the accuracy of the LIBOR rate itself. But as we know, no one came forward because no one had the confidence, even if they had the evidence, to break the surface and bring the scandal out into the open. It would have been much easier had it been brought into the open then rather than when it eventually emerged. Surely it is essential that people feel confident about being able to do that in the future.
Amendment 98 simply seeks to bolster the maintenance of law and order, something that I suggest we are entitled to expect that the Minister and his colleagues would agree with. The amendment would make it easier for the regulator and banks’ own compliance teams to do their job. We have heard from my noble friend Lord Brennan that this is being done very effectively in the USA. How could the coalition oppose it being introduced in this country as well?
Lord Newby (LD)
My Lords, the amendment would introduce a system under which the regulators would be able to award compensation against a firm that mistreated a whistleblower. Whistleblowing is an important issue and the Government agree that we need to have a proper system for protecting whistleblowers in the financial services industry as elsewhere. However, I do not think that the noble Lord’s amendment would be a helpful addition to the legislative framework, particularly at this point. Let me explain why.
In the summer, the Government launched a call for evidence on the whistleblowing framework to see whether there was a case for reforming the law protecting whistleblowers. This will be able to take account of submissions from the financial services regulators as well as from other interested parties. The call for evidence closes on 1 November and, once the evidence has been assessed, the Government will consider what if any action needs to be taken. It would not be sensible to prejudge the outcome of the call for evidence and implement changes without first looking at all the evidence available to support any changes. Moreover, the Government do not think that it would be appropriate to have different laws or protections for whistleblowers in different sectors. It would not be right to suggest that whistleblowers were more deserving of protection in some sectors than in others. I am sure that this is not what the noble Lord intended, but there is a risk that giving the regulators a special role in protecting whistleblowers in the financial services sector will be seen as special treatment for that sector.
Finally, this power does not seem consistent with the role and competence of the financial services regulators. There is a comprehensive system of protection for employees in employment law, which applies across the board, protecting workers in every sector. It provides a route of redress using employment tribunals for individuals who have suffered a detriment or dismissal as a result of blowing the whistle.
Lord Lawson of Blaby (Con)
I think my noble friend may have slightly missed the point. It is well documented that what happens normally is not that the whistleblower is dismissed—then, of course, there is the protection of employment law—but that he is stuck in that job and will never ever have any further promotion. I may be wrong, but I do not think there is any redress under employment law for that.
Lord Newby
My Lords, to the extent that there is or is not redress for that, the review which is under way will be looking at that element of the system as well as everything else. The evidence submitted, including by those who are keen to see the law changed and strengthened in that respect, will be able to take account of all that.
Lord Phillips of Sudbury
I am sorry to interrupt my noble friend again but it is important for the House to know a little more about this public consultation. I suspect that not one single person here tonight is aware that there is a consultation out there and that it is closing in a matter of a few days. Can the Minister tell us how widely this has been advertised, because it is news to me?
Lord Newby
My Lords, I am very happy to write to the noble Lord about the process that has been followed up until now. The whole process of this Bill has demonstrated, as the noble Lord has said, that there is tremendous activity—whether in terms of the regulators producing documents or of other regulatory initiatives, which are very hard to keep up with. I will ensure that we write as a matter of urgency to all noble Lords about this exercise.
Before coming on to what the regulators are already doing in this area, I want to stress the basic point about this review. First, it is wide ranging. Secondly, it aims to beef up the current system. Thirdly, it will apply across the board because the Government do not believe that the financial services sector has a different status in terms of whistleblowing to, say, the oil and gas sector or the pharmaceutical sector. What we need is a common approach across all sectors.
The FCA is already extremely active in supporting and encouraging whistleblowing. The number of whistleblowing contacts received is growing rapidly. There was a 370% increase between 2007 and 2012. The SEC has done very well. It received 3,001 reports in 2012. In the same year, the FSA received 3,929 reports. The impression has been given that the Americans have this system which is generating huge quantities of people coming forward and that the City is absolutely in fear to the extent that no one is coming forward. The figures totally contradict that view. I am not saying for a minute that the system is perfect, cannot be improved or will not be improved, but that the numbers of people coming through in the City are higher than is the case in the States. The FCA’s whistleblowing procedures have been revised to actively track whistleblowing outcomes across the FCA while cases are actively monitored to provide feedback, wherever legally possible, to whistleblowers.
On the point that the noble Lord, Lord Brennan, raised, the regulators have a role in enforcement and protection. The Dodd-Frank Act brought in protections for whistleblowers which, to a considerable extent, already existed in the United Kingdom. The American scheme is of course not what is proposed in the UK, as the noble Lord said. Under that scheme, whistleblowers can receive a proportion of any penalty received from successful enforcement action arising from tips that they provide. That is different from what this amendment proposes. Although the PCBS said that it would like research to be undertaken in this area, it did not suggest an incentive scheme. The regulators are undertaking research, as requested by the parliamentary commission.
The regulators are therefore already doing a lot, including undertaking research, while the Government are undertaking a review of the whole issue across all the sectors. In the light of that, I hope that the noble Lord will withdraw his amendment.
Lord McFall of Alcluith
My Lords, the Government’s response to every amendment is, “Manana, manana”. There is nothing in the response but, “Tomorrow, tomorrow”. There is, for example, a public consultation that we know nothing about. As noble Lords have said tonight, this is a very modest proposal. The Minister really has the wrong end of the stick here when he asks why we should protect whistleblowers in the financial services industry and what is different here from in the oil and gas industry. The Government themselves think that it is different. Why? Because they appointed the noble Lords, Lord Lawson and Lord Turnbull, and me to a Parliamentary Commission on Banking Standards, along with Members of the House of Commons. We spent a year of our lives—10,000 questions and 180 hours in committee—before presenting a report to the Government. That is why the financial services industry is different from others.
Lord Newby
My Lords, is the noble Lord seriously suggesting that whistleblowing in the financial services sector—we are talking about whistleblowing here—is of a different order of public interest from whistleblowing in, say, the pharmaceutical or oil industry?
Lord McFall of Alcluith
We have had the biggest financial crisis ever but not one whistleblower. That is the magnitude of the problem which the Minister does not grasp and that is why we looked at this issue. Goodness gracious, look at the fines: £85 million for Barclays and £13 billion for JP Morgan today. There is a litany we could go through, so what is the problem?
The Government set up a commission to look at culture and standards. What did the Parliamentary Commission on Banking Standards find? It found that the culture was rotten and the standards were abysmally low. This whistleblowing amendment—a modest amendment—is being put forward to ensure that we have a better culture, and that we have legal and compliance teams in companies that might have the nerve and confidence to go the FCA and say, “Look, there is wrongdoing in this company and we do not feel that we can assuage our conscience on this. We need to report it to the FCA to ensure that we have a better organisation here”. This has failed totally. That is the magnitude of the problem facing us and that is why we have this modest amendment.
The USA was mentioned. We had two witnesses before us from the USA who were very clear that we did not scrape the ground with the FSA. My noble friend Lord Brennan has given his wisdom on the situation in the USA tonight. We are asking the Government and the FCA to look at the experience in the USA to see if that aspect can be adapted. As the noble Lord, Lord Phillips, said, his charity did not have one person from the City. That backs up the evidence that we heard and gives the initiative to the FCA. That is the purpose of this amendment.
We received representations from trade unions in a sub-committee evidence session. The trade unions were very clear to us that their members at the grass-roots level felt pressurised but were scared stiff to do anything about it. I have a number of examples but will give the Minister one in particular. An individual I have known in my own town of Dumbarton for years, who worked in one of the banks for 25 years, left to become a care worker at less than half the salary. I asked her why she left. She said, “John, I was being forced every week to sell products that were not only unsuitable for people but were making their lives miserable. I could not partake in that, so I left”. There was someone who had been committed for 25 years being pressured on issues like that. Surely we should have a system to say “That person has given loyal service. That’s a person who wants to serve their bank and their community. Let’s establish an appropriate structure so that we protect that person, and also make the company better”.
I suggest to the Minister that there is a link between the almost £30 billion that we will be paying out in fines for PPI and the conduct of a company. If the proper procedure was in place and that information came up from the bottom, we probably would not have the abysmal situation we have with the £30 billion.
This amendment is about not just changing the culture and standards but helping the safety and soundness of companies. It was a responsibility given to us, the Parliamentary Commission on Banking Standards, by the Government to give recommendations to change the culture. This is a sound way of doing that and I would have expected a more sympathetic and engaging response from the Minister than we received tonight.
Lord Phillips of Sudbury
My Lords, I should quickly make clear that the whistleblowing charity, Public Concern at Work, is not mine; I was merely the lawyer who set it up. However, it does wonderful work. I am delighted to hear that there is a public consultation. I am very anxious indeed that it may not have reached the parts that it should have reached. I ask the Minister if it possible for him to look into that and, if necessary, extend the consultation period for, say, a month.
Lord Lawson of Blaby
“Abolition of UKFI
(1) All property, rights and liabilities of UKFI are, by virtue of this section, transferred to the Treasury.
(2) Immediately after the transfer effected by subsection (1) UKFI is dissolved.
(3) “UKFI” means UK Financial Investments Limited, company registered number 06720891.”
Lord Lawson of Blaby
My Lords, the noble Lords, Lord Turnbull and Lord McFall, also have their names to this amendment. It is the simplest amendment that we have before us. It may be because it is so simple that it was the first one that my right honourable friend the Chancellor rejected after the commission had published its recommendations. I think that he was hasty and I therefore hope that the Government will reconsider this.
Briefly, as a result of the crisis that broke in 2008, the Government felt obliged to rescue a number of our biggest banks. The Government took control of these banks to the extent of more than 80% in the Royal Bank of Scotland, which was their biggest stake. This was the previous, Labour Government, and instead of straightforwardly taking this stake which the taxpayer owned—and the Government is a trustee for the taxpayer—they interposed this curious body called UK Financial Investments Ltd. We all know why this was done; I fully understand it and am extremely sympathetic. There is always a fear that a Labour Government might be engaged in a policy of bank nationalisation. In order to demonstrate that this was just a rescue operation and not bank nationalisation, they created this body, UKFI, to stand between the Government and the bank itself.
Clearly, that no longer applies. There is no longer a thought that somehow this is nationalisation by the back door. Whatever else the coalition may be guilty of, it is not seeking to do that. So the whole rationale—the whole raison d’être—of UKFI has gone. Incidentally, not only was it a conclusion of the commission that UKFI should be abolished but it was also the strong view of the previous Governor of the Bank of England, now the noble Lord, Lord King. He made it absolutely plain.
The reason is clear. UKFI gets the Government off the hook in a way that they should not be off the hook and obscures what can really go on. What has happened in practice is that when the Government have had difficult decisions to take, they say, “Oh, we can’t do it. UKFI owns the controlling stake”. When, however, the Government want to intervene—for example, the removal of Stephen Hester from the job of chief executive of RBS—they use their muscle. When it is convenient to act directly, they do; when it is not convenient, they have this charade of UKFI to give them an excuse for not doing what needs to be done.
If, as a Government, you have the responsibility of the controlling shareholding, that should be quite clear and you should exercise that responsibility properly and be held to account for it. The Government say, “But we don’t have banking expertise”. Of course they do not have banking expertise. It does not matter because they can appoint the right people to the boards of the banks that they hold and, as we have suggested, they can also have a cadre of banking experts within the Treasury who can advise them on how to handle the situation.
Like the previous Governor of the Bank of England, we have said that quite simply UKFI should be abolished. I suspect that many people secretly—or at least without admitting it—realise that that should have been done long ago, but it is not too late. The case of the Royal Bank of Scotland is particularly to the point. If UKFI had not existed, the Government would have had to face up earlier to the question of what to do about the Royal Bank of Scotland Group. The commission has said that there is a very strong case, which we have advocated, for the classic good bank/bad bank split. The good bank/bad bank split is a classic technique for dealing with major banking problems: put all the bad loans into the bad bank, as was done with Northern Rock, and not only can the good bank be privatised much more quickly than the group as a whole, it can get back to lending to SMEs much more effectively.
One of the biggest economic problems we have is the difficulty of lending to SMEs. Some people say, “Money is very cheap. The rates could not go any lower: they are 0.5%”. They are not 0.5% for SMEs. A good SME is lucky if the rate of interest, including the charges it has to pay, is in single figures. Very often it is 10%, 11% or 12%. There is a real problem in this country that the banks have so much bad debt on their books, and are so scared of having any further bad debts—particularly since they have been told they have to strengthen their balance sheets and so on—that they are far too reluctant to lend. This is a real problem for the British economy.
I am very glad that my right honourable friend the Chancellor has said that he will set up an inquiry and that he has asked the Rothschild Group to look into this, given that that was the recommendation of the banking commission. I hope that this evening my noble friend the Minister can tell us the outcome of the Rothschild investigation and what the Government’s intentions are. This is important to the British economy, bearing in mind the huge size of the Royal Bank of Scotland Group.
As we have recommended, the way to clean this up is to abolish UKFI, which was there for a purpose that no longer exists. I very much hope that the Government will reconsider the Chancellor of the Exchequer’s overly hasty rejection of the modest and sensible recommendation of the commission. I beg to move.
Lord Garel-Jones (Con)
My Lords, I rise with some trepidation to take part in this debate. Earlier in Committee my noble friend Lord Lawson referred to Paul Volcker as a “wise old bird”. Someone like me is bound to observe that most of the wise old birds in this particular field in our country have taken part in this Committee, so I feel slightly out of my depth. I want to introduce a small piece of anecdotal evidence that casts some dubiety on the amendment just moved by my noble friend.
I also declare an interest, in that I work for UBS. UBS was one of the lead banks in the recent transaction that placed £3.2 billion of shares in Lloyds Bank into the market, although I was not part of the team working on that transaction. When it was all over I spoke to one of the team and congratulated him on the success of the operation. Without any prompting, and for no reason at all, he said to me that UKFI had played a crucial part throughout the whole process. He had no need to say that to me; I had no connection with UKFI whatever. Although I am simply an observer in these matters and no expert, it makes sense to me for there to be some sort of independent buffer between the banks themselves and the Treasury. Your Lordships will no doubt be aware that UKFI has recently recruited James Leigh-Pemberton, who has a distinguished career in the City, as its chairman. I very much hope that the Minister will convey the message that UKFI is well regarded and has a secure future.
Baroness Noakes (Con)
My Lords, I will comment briefly on this amendment and will not comment, of course, from the perspective of the Royal Bank of Scotland. I will take your Lordships back to when I first worked at the Treasury, many years ago, when I was on secondment from my firm at the time. That was when there were lots of nationalised industries in the public sector. Worthy civil servants—and worthy Treasury civil servants, too—thought they knew how to manage the relationships between these large, complex, commercial organisations. They did not do it well. It was the right decision, therefore, when the previous Labour Government started to accrete new, substantial holdings in commercial organisations, to set up an arm’s length relationship to professionalise the handling of those organisations and their ultimate disposal, and to recognise, as that Government did at the time, that those holdings were not to be long-term holdings. I criticised the previous Government because it was not set up by statute, but in a shroud of secrecy without proper accountability arrangements in place. I believe, however, that the principle that civil servants are not the right people to manage these complex relationships with sophisticated organisations is the right one.
Lord Turnbull (CB)
My Lords, there was a similar organisation set up in my time, the Shareholder Executive. The Shareholder Executive is a body attached to BIS, as it is now called, and it creates a centre of expertise for the management of shareholders. What it does not do is claim to be the decision-maker. It is all very well to have the expertise—we need the expertise—but there is a pretence that decisions relating to RBS and LBG are being taken by UKFI as opposed to being taken by the Treasury on the advice of UKFI. It is a pretence that when it suits you, you can decide, and when it suits you, you can hand it on to someone else.
At the moment, with the change of leadership in RBS—the noble Baroness, Lady Noakes, may not want to comment on this—we do not know whether that was a decision of the RBS board, UKFI or the Treasury. It ought to be clear who took that decision. You can have an advisory body—in this case, almost an executive body—but not one that claims to be the decision-maker, which is the pretence of the UKFI situation.
The Commercial Secretary to the Treasury (Lord Deighton) (Con)
My Lords, the intention of the amendment is to transfer into HM Treasury the function of managing the Government’s shareholdings, in particular in RBS and Lloyds. As my noble friend Lord Lawson has pointed out, the Chancellor of the Exchequer, in his Mansion House speech in June, has already made it clear that he rejects this particular PCBS recommendation.
As has been pointed out in a number comments already, UKFI was not a creature set up by this Government; it was set up by the previous Government when they made the initial capital injections into RBS, Lloyds, Northern Rock and Bradford and Bingley, with the idea of being able to manage these investments on an arm’s-length commercial basis. So that was the genesis.
This group works closely with the management of RBS and Lloyds to assure itself of their approach to the strategy and to hold management to account for their performance. RBS and Lloyds are led by their management and board in the interests of all shareholders, including the taxpayer. So, while it may be possible to imagine different arrangements to fulfil these objectives—you can make the arguments and the pros and cons of the different ways of doing it—the current ones work well, as my noble friend Lord Garel-Jones has said, and it would not make sense to change them at this stage. So, just as my noble friend Lord Lawson said it is a simple amendment, there is a simple reason to reject it—it does not make any practical sense. UKFI is working fine and the time and effort it would take to pull it back into the Treasury and to reorient all that work there would distract our efforts on the important work that is currently going on.
My noble friend Lord Lawson referred to the review at RBS in particular, which we are two-thirds of the way through, and the bad bank/good bank option. I am afraid I am going to disappoint my noble friend. I am not going to tell him what the result is but it will be ready this autumn and we will announce the outcome and the rationale behind it. The matter is being pursued with great urgency and the last thing we want to do at the moment is to destabilise the arrangements for conducting that important analysis, which is really the most important thing.
I reiterate that UKFI is staffed by some very good top people. I have worked with them and I have seen the work that they do. Frankly, we have been able to recruit top-class people to do this work on our behalf. I can assure the Committee that the Government continue to value the role that they play. It was demonstrated again, as my noble friend pointed out, by the role they played in advising the Chancellor on the successful divestment of 15.5% of the Government’s shareholding in Lloyds at 75p per share. They will carry on looking at the full range of options for RBS and managing the timing of the subsequent tranches of the sale of Lloyds back into private ownership.
I am grateful to the PCBS and the noble Lord for raising these issues, but the Government consider that UKFI has a vital role to play which it is performing well. I therefore cannot support the amendment and I urge the noble Lord to withdraw it.
Lord Lawson of Blaby
My noble friend will not be surprised to hear that I am wholly unconvinced by his reply; nevertheless I shall please him by withdrawing the amendment.
Lord Eatwell
“Duty of care
At all times when carrying out core activities, a ring-fenced body shall—(a) be subject to a fiduciary duty towards its customers in the operation of core services; and(b) be subject to a duty of care towards its customers across the financial services sector.”
Lord Eatwell
My Lords, Amendment 101 in my name and the names of my noble friends Lord Tunnicliffe and Lord McFall goes to the heart of the change in culture which all of us wish to see in the relationship between banks and their customers, particularly their retail customers. Our objective is for banks to see their relationship with their retail customers as ensuring the financial success and security of those customers as far as may be possible, rather than seeing them as entities from which to make profits. A ring-fenced body should have a fiduciary duty towards its customers in the operation of core services, and a duty of care towards its customers across the financial services sector with respect to other duties.
Following the passing of the Financial Services and Markets Act 2000, the Financial Services Authority developed the notion that customers should be treated fairly. It did an enormous amount of work developing various rules, instructions and procedures whereby customers would be treated fairly. This was a dismal failure. PPI and the interest rate swap stories demonstrate that beyond all reasonable doubt. This was not a failure because of the failure of the regulators as such and their intentions. They were well intentioned, and they were focused on important issues. It was a failure because the culture of the banks was to see customers as entities with which to trade and from which profits would be made. We need to change that.
The amendment will put us in tune with developments that have also been perceived to be necessary in the United States, where the SEC now has the authority to impose a fiduciary duty on brokers who give investment advice. It is the same thematic development. A stronger duty of care would ensure that industry has to take customers’ interests into account when designing products and has to provide advice and support throughout the product life cycle, something which has clearly been lacking in recent scandalous events. This will increase consumer protection and help to restore confidence of the retail customer in banks. It will raise standards of conduct because banks will know they are responsible for acting according to these duties.
I am well aware that there is a general common law responsibility for duty of care, but the importance of this amendment is that the fiduciary duty would be reflected in the activities, responsibilities and powers of the regulators, not simply something enforceable under common law. That is why a fiduciary responsibility akin to that elsewhere in financial legislation, but here expressed generally within the context of the ring-fenced bank, would add significantly not just to consumer protection but to the character, behaviour and culture of ring-fenced banks. I beg to move.
Baroness Noakes
Can the noble Lord, Lord Eatwell, explain how this fiduciary duty and duty of care would be enforced? I think he mentioned a moment ago that it would somehow draw regulators in, but I cannot find anything in his amendment that places any corresponding powers or duties on regulators. I cannot see that a duty of care will make any difference whatever if ordinary consumers—ordinary customers of the banks—are expected to litigate personally on the basis of it.
Lord Eatwell
Surely the point is that by establishing a fiduciary duty a regulated entity would be expected to pursue exactly those duties. Therefore a regulated entity or other authorised person would be deemed by the regulator to be required to follow exactly those duties. If the noble Baroness thinks that this is too weak, I will be very happy to bring a stronger duty of care back on Report.
Lord Phillips of Sudbury
My Lords, the noble Lord, Lord Eatwell, asked an extraordinary question because there is no more onerous duty than the fiduciary duty. It is a novel and maybe a highly effective way of dealing with a great many of the concerns that have occupied this House over the last few days in Committee. An important part of the amendment is that the core activities and services are subject to a fiduciary duty, and other services to a duty of care. Given the big difference in responsibility, is it sufficiently clear what is and what is not a core duty?
Lord McFall of Alcluith
My Lords, I will briefly speak in support of this amendment. My noble friend Lord Eatwell spoke of treating customers fairly. I remember, going back to 2002, when the FSA, bless its heart, introduced this to the industry. The FSA told me that it was a hugely uphill struggle. I well remember having a conversation with the chairman of one of the banks, who said to me, “Treating customers fairly? I don’t know what that FSA is up to, because I’ve always treated my customers fairly”. The gap between what the FSA was trying to do and the mentality of some people in the industry was huge. I remember being at a seminar with John Kay, who has written a great article in today’s Financial Times that I have already referred to. He said that a duty of care, if it was imposed on the banks, would be “transformational”. I think he said that for the following reason. There is today an imbalance between the customer and the bank—the term for that is symmetry of knowledge—which has led to many of the scandals.
Time after time on the parliamentary banking standards commission, when we ask chairmen and chief executives exactly why mis-selling occurred or why the grievous omissions took place in their organisation, they say that they did not know anything about it. There is, therefore, a hiatus between the top and below. One of the amusing aspects of my time as chair of the Treasury Committee was speaking informally to senior executives in the banks who came along to the Treasury Committee and said, “What you did to the chairman today was good because it allows us to educate him”—or her, although it is largely him—“about what is happening in the organisation”. A lot of them do not know what is happening. If we had this duty of care, that responsibility would lie at the very top.
During the deliberations of the parliamentary banking standards commission, I suggested that there should be an annual meeting between the chairmen and chief executives of these institutions, and the regulatory authorities, so that there was a sign-off on how they do their duty and how they serve the interests of their institution and their employees in the wider society. That information is not made public, but at least there is that accountability at the top between the regulator and the chief executive. At present, we do not have that. Having the duty of care would make those at the top much more alive to what is going on in their organisation. I have received evidence in the banking commission, particularly from the lawyers who were advising us, that the term “duty of care” has a specific legal meaning in the law of torts, and tests to establish whether a duty of care exists and whether it has been breached are a fundamental tenet of common law. In the context of banks and their customers, it is not clear what a duty of care would look like in practice. I know that there are huge legal hurdles to overcoming that, but there is a basic, common-sense and moral purpose to the concept of duty of care, and I think it is one that we will refer to again on Report.
I would like the Minister seriously to consider this amendment and ensure in some way or other that, as the Parliamentary Commission on Banking Standards stated in paragraph 416:
“Banks need to demonstrate that they are fulfilling a duty of care to their customers, embedded in their approach to designing products, providing understandable information to consumers and dealing with complaints”.
Lord Brennan
My Lords, perhaps I may take up the points raised by the noble Baroness, Lady Noakes. Paragraph (a) of the proposed new clause refers to a “fiduciary duty” by the ring-fenced body. In practical terms that means a duty exercised by, ultimately, the board of directors. The body acts through it. The practical consequences of such a duty, which does not involve enforceability by the regulators, are twofold. First, if the board of a bank breaches its fiduciary duty to customers in this way, it is perfectly reasonable for the shareholders to refuse to indemnify it in respect of any claims made by customers on the basis that it has breached a statutory duty, which could not conceivably be said to have been acting in the shareholders’ interests. That is the first practical consequence. It is a deterrent. Secondly, although I have not checked this yet, I suspect that in the field of commercial insurance you would not be able to get D&O insurance for protection in respect of a fiduciary duty until you have satisfied the insurability test of having acted reasonably and in accordance with commonly accepted standards of probity and good behaviour in the commercial sector. Therefore, the point is answered, I suspect, by practical consequences.
Lord Deighton
My Lords, this amendment is an opportunity to revisit the imposition of fiduciary duties or duties of care on financial services firms. The other place debated the same amendment at the Committee and Report stages of this Bill. Of course, no one in this House is going to disagree with the proposition that customers need a better deal from their banks, whether we call it treating customers fairly, having better standards or putting customers first. The Government have been keen, for example, to see more competition between banks as another way of addressing this concern. We all want to see better standards in the banking industry and a return to the days when the customer relationship mattered and the customer came first. We want the leadership of banks to appreciate that it is also in their long-term interests in building successful banking businesses. The Government’s amendments so far, which implement the recommendations of the PCBS, will be an important step in the round in that respect.
However, I note that the commission did not itself recommend the introduction of either a fiduciary duty or a duty of care. To cut to the chase, the Government do not consider that the introduction of either a fiduciary duty or a duty of care in legislation would help to drive up these standards within ring-fenced banks. First, banks are already subject to a wide range of legal duties. Most obviously, they are subject to contractual obligations to their customers. Any banking relationship or transaction is subject to a contract between the bank and the customer. Of course, a bank is subject to obligations under FiSMA and the regulator’s rules. Further, the Government’s amendment on banking standards rules means that in future senior managers and ordinary employees will also be subject to conduct rules. Therefore, it is not clear that imposing a fiduciary obligation on a bank would add any value. The fiduciary obligation is the kind of obligation that a director owes to a company, or a trustee owes to a beneficiary under a trust. It is an appropriate obligation when one person is acting on behalf of another or dealing with another’s property on their behalf. However, deposits with a bank are not property held on trust, so a fiduciary obligation would have no place in the contractual relationship between a bank and its customer.
Similarly, it is not clear what a duty of care—
Lord Phillips of Sudbury
I hesitate to interrupt my noble friend at this time of night, but there is an important issue in relation to what he said that needs clarification. He said a couple of times that the relationship between a bank and its customer is a contractual one, and therefore that that was sort of QED. The problem is that until not long ago all banks, in the small print of their contracts, which they knew full well that customers would not read, put material which, had the customers read it, would have led them to not agree the contract. In that situation, the contract said such and such, but the purport was wholly antithetical to the real interests of the customer. How does my noble friend deal with that situation, if he is rejecting the fiduciary concept?
Lord Deighton
It is clear that the essential contractual relationship still exists, regardless of the fine print. It is not clear what a duty of care would add to the existing contractual obligations or regulatory requirements to which the ring-fenced body is subject. The primary duty of a ring-fenced bank is to repay its borrowings, such as deposits, when they fall due, in accordance with the terms of its contracts. If a ring-fenced bank does that and complies with its regulatory obligations, such as those relating to ring-fencing or leverage, it is hard to see what a duty of care would do to make it care more for its customers, inside or outside the financial services industry.
Therefore, the Government firmly believe that it would be better to impose specific and focused requirements, and standards of business, on banks, than to rely on high-level, generic concepts such as a duty of care. Banks can comply more easily with specific requirements. Customers and regulators can more effectively hold to account the banks, and, if appropriate, their senior managers, when they do not comply. Moreover, if our ultimate objective is to improve the deal that customers get from their banks, one of the most effective and direct ways to achieve this is surely by enhancing competition. Banks must be spurred to treat their customers better by the threat of the customers voting with their feet. Through the introduction of the measures in this Bill, including the changes to the regulator’s objectives and powers, and the new payments regulator, we believe that a better deal can be achieved.
Imposing a duty of care or a fiduciary duty would not give banks or their senior managers a clear understanding of what conduct is expected of them. It would not provide a viable and effective means of holding banks to account, and it would not benefit consumers. Therefore, I hope that the noble Lord will agree to withdraw the amendment.
Lord McFall of Alcluith
On the duty of care, at the present moment if an individual opens a bank account, they get 170 pages of dense text to look through. No one is going to look through that. If a duty of care were imposed, does the Minister not think that banks would look at that again and perhaps fillet a lot of the information, so that the information that went to the customer would be readily understood?
Lord Deighton
I certainly agree with the noble Lord’s observation that sometimes the way in which business is done clearly is not in the interests of the customer. However, the Government do not believe that the duty of care is the right way to address those kinds of problems.
Lord Eatwell
My Lords, that was a very unsatisfactory answer. It was both analytically weak and unsatisfactory in terms of the noble Lord’s argument. Let us first deal with the economics. As the noble Lord well knows, in the face of asymmetric information, competition is not necessarily efficient. He knows that: he learnt that at Cambridge. In those circumstances, to argue simply that competition will be an effective means of establishing a satisfactory relationship between the bank and its customers is simply analytically wrong. We ought to take that into account.
Then the noble Lord said that there was a series of relationships: contractual duties, the relationships set out in FiSMA and the senior manager regulations. The first two of those have existed since 2000. They did not work, so let us not rely on contractual duties which have been there all the time and have been happily beavering away. Did they protect the customer from PPI? No, they did not do that successfully. Did they protect the customer from interest rate swap selling? No, they did not do that either. It is no good relying on these contractual duties or on various elements of treating customers fairly in FiSMA. The senior manager regime, although it stiffens up the responsibilities of managers, does not change the actual structure of the relationship.
The noble Lord said something towards the end of his reply that was really quite extraordinary. He said that if bankers were told that they had a fiduciary duty and a duty of care, they would not have a clear understanding of what they were required to do. I find that quite astonishing. I have a sense that trustees have a very clear understanding of the fiduciary issue of what they have to do and all these terribly clever bankers ought to be able to suss that out as well. The idea that they do not have a clear understanding is just unbelievable.
Then the noble Lord said, “But of course, the trustee relationship applies to a situation which is appropriate only when one person is acting for another”. The majority of retail customers who deposit their money in the bank think the bank is going to be operating for them. They think that is what is happening. I know that many bankers therefore regard them as naïve, but that is what people actually believe. That is what we, on this side, believe should actually be the case. The noble Lord then said, “Well, of course, I do agree there should be a duty of care, but it should be specific and focused”. We all know that when you try to make specific lists of issues, the endeavour goes wrong because of the things left off the list. The things that are left off the list are the areas where we will see further consumer scandals appearing.
It is the responsibility of this Government to protect consumers in this country and to protect bank depositors within ring-fenced banks. It is a responsibility that this Government are clearly shirking. This amendment would provide a significant cultural change within the banking system—a cultural change which is desperately needed. I can assure the noble Lord that we will return to this forcefully on Report. For the moment, I beg leave to withdraw the amendment.
Lord Eatwell
“Sale of state-owned banking assets
(1) Before any sale of banking assets in the ownership of HM Treasury, the Treasury shall lay before Parliament a report setting out—
(a) the manner in which the best interests of the taxpayer are to be protected in connection with such sale;(b) the expected impact that any sale might have on competition for the provision of core services, customer choice and the rate of economic growth; and (c) an appraisal of the options for potential structural changes in the bank concerned including—(i) the separation of the provision of core services from the provision of investment activities,(ii) the retention of a class of assets in the ownership of HM Treasury,(iii) the impact of any sale on the creation of a regional banking network.(2) A copy of the report in subsection (1) shall be laid before Parliament and sufficient time shall be given for the appropriate committees of both Houses of Parliament to consider its findings before any sale decision.”
Lord Eatwell
My Lords, I have commented on a number of occasions that despite all the considerable endeavours since the financial crisis by the Treasury itself, by the FSA as it then was—not by the Bank of England—by the Independent Commission on Banking and now by the parliamentary commission, there has been no significant thought applied to the manner in which the banking system could be fundamentally restructured. All those discussions have taken place within the context of the banking system as it is currently structured. There has been no, let us say, Standard Oil approach to breaking up that company or an AT&T approach to say that there should be some fundamental restructuring of the overall banking system. Instead, we have taken the structure as it is and examined how we can make it work better: for example, by a ring-fence, bail-in clauses, resolution regimes or whatever. The only significant change in the structure of the banking industry—the separation of TSB from Lloyds—was done under the instructions of the European Union. It was not a policy developed here in the UK.
This amendment does not propose anything dramatic such as a break-up of the larger banks so that they are small enough to fail, but instead says that when there are sales of banking assets which are in Treasury ownership, the Treasury ought at least to go away and think about this. It ought to tell us how the structure of the sale is in the best interests of the taxpayer and think about the impact on competition—I am sure the noble Lord would like that—on customer choice and, indeed, on the rate of economic growth. It ought also to look at the relationship to the ring-fence and whether there might be a development of regional banking, an idea suggested by a number of commentators. All that the amendment seeks is to say, “Let us please have some thought about the overall structure of the banking industry in this respect”.
We know that the industry consists of entities which are too big to fail. We have one degree of separation with the TSB. There is an endeavour to encourage entry into the banking industry but we all know that it will take a long time for new entities to achieve the scale to be significantly competitive, except perhaps in the occasional niche of the industry. Before we rush further into selling the state-owned banking assets, let us at least consider whether those assets could be used and deployed in a significant restructuring of the banking industry. That would achieve the goals of making the industry more stable and a more effective entity in the overall operation of the UK economy. I beg to move.
Lord Deighton
Noble Lords will know that the Chancellor has already set out at the Mansion House the next stage of the Government’s plan to take the banking system from rescue to recovery. For Lloyds, the Chancellor has taken the first steps to return Lloyds to the private sector and will continue to consider options for further share sales. Value for money for the taxpayer will be the overriding consideration for disposals. There is no pre-fixed timescale for share sales and, given the size of the taxpayer’s stake in Lloyds, the disposal process is likely to involve further multiple stages over time.
For RBS, however, share sales are still some way off. We discussed this earlier when we debated my noble friend Lord Lawson’s amendment. The Treasury is currently examining the case for creating a bad bank for RBS risky assets. As discussed, this review is still ongoing and will be published later in the autumn. Setting out public options for structural change may be advisable in some cases, as the Chancellor’s announcement of the RBS bad bank review makes clear. However, the Government will need to judge in each case whether to do so, given the risk of generating uncertainty and speculation about likely outcomes.
Similarly, selling large numbers of shares in the market is a very commercially sensitive matter: for example, in the case of Lloyds. Any communications from government in advance of placing shares could be destabilising and affect the price that the Government get for the shares. Publication of a report as outlined in the proposed amendment could undermine the Government’s ability to sell shares quickly in favourable market conditions. This could significantly reduce value for money for the taxpayer in that case.
The Government firmly agree that all the topics set out in the amendment need to be carefully considered by any Government in making their decisions relating to the sale of banking assets. UKFI, which we talked about earlier, was established with a very clear emphasis on value for money in executing its core mandate of devising means of exiting the Government’s shareholdings in the banks. In doing so, it is required to pay due regard to the maintenance of financial stability and act in a way that promotes competition.
The amendment seeks to improve accountability. Many mechanisms already provide accountability. On value for money, the Government are scrutinised against the general principles set out in the Green Book. UKFI is also accountable to Parliament through the Chancellor of the Exchequer, and has a mandate to secure value for money for the taxpayer. Moreover, the Treasury and UKFI are accountable directly, through the accounting officer mechanism, to the National Audit Office and to the Public Accounts Committee. Indeed, UKFI published a report, following the sale of Northern Rock, setting out the rationale for returning the bank to the private sector at that time. The National Audit Office completed a review of the sales process and published a lengthy report on it, which was considered at a session of the Public Accounts Committee.
The sale of Northern Rock demonstrated the Government’s commitment to transparency on the sale of their banking assets and the ability for bodies such as the National Audit Office and Parliament to scrutinise the decisions of government on these matters. Finally, the Government are accountable for their decision to Parliament, including through the Treasury Select Committee and in public debate. Overall, it is not clear what value would be added by this mandatory reporting requirement and it might well be detrimental to the objectives it aims to deliver, particularly to value for money. I hope that the noble Lord will therefore agree to withdraw the amendment.
Lord Turnbull (CB)
The first half of a paragraph in the PCBS report asked for a report on the good bank/bad bank option by September: it is going to be a bit late but we are told it is coming soon. The next two or three sentences were on the same subject as the amendment: looking at a wider range of options. Is the Minister telling the House that the Government will fulfil the first half of this PCBS recommendation but not the second half?
Lord Deighton
The Government will announce the conclusions of the good bank/bad bank review and the rationale for why that is the option being pursued. We will be addressing the second half of the undertaking in describing the rationale.
Lord Turnbull
The Government have got to good bank status with RBS. Are they not proposing to do any further analysis on what might happen to the good bank bit that remains?
Lord Deighton
The first thing we have to determine is what we are proposing to do with the good bank/bad bank. Does the split make sense and on what basis does it work? We will subsequently look at what we do with the separate parts.
Lord Eatwell
My Lords, that was not a very satisfactory answer. First, market sensitivity is an extraordinary red herring. Whoever wrote that bit should not be allowed to write any bits again. This is not about market sensitivity: it is about the overall structure of the banking sector and any issues of market sensitivity would, of course, be kept carefully out. Anybody would do that, so it is a really silly argument.
Turning to the good bank/bad bank story, value for money with respect to the disposal of assets is obviously an important component, but so is the future of the banking industry and its performance in relation to the UK economy as a whole, especially its support of the real economy in the provision of financial services. That aspect does not seem to have been considered. After all, the good bank/bad bank story is essentially a defensive move. It is dealing with a bank which is hampered—or potentially hampered; we will see what the report says—by its current mixture of assets and liabilities, particularly non-performing assets. The good bank/bad bank split is a defensive measure; a device for ensuring that you have an operation in the good bank which we hope can start increasing lending, as the noble Lord, Lord Lawson, said, particularly to the SME sector.
However, Amendment 103 is asking for something different, which the Minister did not actually address. It is asking for some thought about what the structure of the banking industry should look like in future. Are we simply going to repair what we have in the best way we can or do we want something really different? Could progress towards that “something different” be made in the sale of state-owned assets? It seems to me that that was what the noble Lord, Lord Turnbull, was talking about when he referred to the second element of the banking commission’s recommendations. Clearly, this recommendation has not been taken on board by the Government. Perhaps it has simply been overlooked; they might look at it now and think more seriously about it. I am sure that we will be returning to this issue later. In the mean time, I beg leave to withdraw the amendment.
Lord Eatwell
“Portable account numbers
(1) Within 12 months of the passing of this Act, the Treasury shall lay before Parliament a report considering—
(a) the adequacy of voluntary arrangements made by UK ring-fenced bodies to facilitate easier customer switching of bank account services; and(b) legislative options for the introduction of portable account numbers and sort codes for retail bank accounts provided by UK ring-fenced bodies.(2) The Chancellor of the Exchequer may, by affirmative resolution procedure, confer powers upon the appropriate regulator to require UK ring-fenced bodies to comply with any specified scheme to establish the use of portable account numbers and sort codes.”
Lord Eatwell
My Lords, this amendment refers to portable account numbers. I am sure that noble Lords will have read in yesterday’s Financial Times the story about the voluntary endeavour by the banks to increase the possibility of customers switching their accounts from one bank to another. The current switching drive does not include portability of account numbers. As the Financial Times boldly declared:
“Account switching drive fails to dislodge customers”.
The general assessment is that the complications associated with the non-portability of account numbers—that is, the complications of changing account numbers—are a significant disincentive to customers to switch their account from one bank to another. This is of course a considerable diminution of competition. The Government have argued very strongly that they are in favour of competition and choice in the retail sector. The noble Lord has repeated that position in discussing some of the amendments that we have already looked at this evening. However, here there is a clear opportunity to increase the possibility of competition in a very concrete way through the portability of account numbers.
The noble Lord will recall how successful this process has been in the telephone industry. The portability of telephone numbers has very evidently provided a significant competitive boost, which suggests that being able to move a number would increase competition significantly in the banking industry as well. I understand that this would be more difficult within the banking industry. For example, the amendment refers specifically to both portable account numbers and sort codes. That makes the issue more difficult because two individuals who bank at different banks may have the same account number but, of course, different sort codes; their entire identification is in the combination of the two. Therefore, a new means of identifying the core bank would have to be developed, and I understand that that would have various knock-on effects.
However, the idea that this would all cost £5 billion, as has been argued by the banking industry, seems to be vastly overstated. We had the same situation with telephony. We were told that this process was going to cost an enormous amount but, in the end, introducing transferable telephone numbers resulted in a tiny proportion of the costs which the industry had said it would need to incur.
Therefore, if we are really going to get competition and choice for the consumer, this seems to be a necessary step. The attempt to develop such competition through facilitating switching but without portability has, it seems, failed. Given that, if the Government are really going to put themselves on the side of the consumer in a competitive market, it is their responsibility to require the possibility of portable account numbers. I beg to move.
Lord Newby
My Lords, it goes without saying that the Government are fully behind the objective of increasing competition in banking and making sure that customers who wish to switch banks can do so without impediment. The notion of portable account numbers was considered by the Independent Commission on Banking and in its final report the ICB chose to recommend a new account switching service over portable account numbers. It considered that such a service, if designed correctly, would provide the majority of the same benefits as portability, but with significantly reduced risk and cost.
The Government acted quickly on this recommendation to secure a commitment from the banking industry to deliver current account switching in two years. This was an ambitious timetable for such a big project, but the banks have met the challenge. The new current account switching service was launched on schedule in September and covers almost 100% of the current account market. It has been designed to meet all the ICB’s criteria for tackling customer concerns over switching and to give customers the confidence they need to make the banks improve their services by ensuring that their customers can vote with their feet.
However, it is important that the new system delivers on its promises. That is why the Government continue to engage closely with the Payments Council, which has delivered the service on behalf of the industry, on the progress of switching.
Lord McFall of Alcluith
The noble Lord mentioned the Parliamentary Commission on Banking Standards and talked about account portability. But that was not as firm a recommendation as he has suggested, because one of the questions we asked was: why can the banks not allocate an account number that works in the way that mobile telephone numbers do, so that people can swap them around in the same way? The banks replied that the IT costs would be too high, but a cursory examination—that is all we did—of the IT aspect indicated that there were legacy problems with the IT. As we have seen with the horrendous examples involving RBS and others, the IT system is in a very poor state. So now is the ideal time to raise our ambitions and ensure that we get for bank customers the portability that telephone customers have.
Lord Newby
My Lords, I did not mention the parliamentary commission; I was referring to the Independent Commission on Banking. None the less, I shall come to the substantive point that the noble Lord has just made.
As I was saying, to aid transparency we have asked the Payments Council to publish statistics regularly, including switching volumes on a monthly basis and more detailed statistics every quarter, which include data on awareness and confidence in the new service. The Government consider that making this information public is the best way to hold the current account switching service to account. As has been mentioned, the Payments Council has just published the first set of data, covering the four-week period following the switching service becoming fully operational. The numbers show that 89,000 switches were completed—an 11% increase on the 80,000 completed during the same period last year. I am a great fan of the Financial Times, but to describe a scheme that has been running for a month as a failure, when it has already got 9,000 extra people to switch, is clearly complete rubbish.
Account portability is a more complicated issue. I am not necessarily disagreeing with the noble Lord, Lord McFall, but the only way to make a properly informed assessment as to whether, or how, steps towards portable account numbers should be taken is to conduct a comprehensive analysis. I must say, almost in parenthesis, that I do not believe that the analogy with telephone numbers takes us as far as might appear at first sight. For a start, as an individual I am quite happy if lots of people know my telephone number —but I am very unhappy if anybody knows my bank account details. This means that I have a completely different view about how I want to deal with that account. That is one of a number of different reasons why this is a complicated issue. It is not, however, an issue that the Government have just pushed to one side. We have made a commitment to ask the new payment systems regulator to undertake the comprehensive analysis that is required.
There has not yet been a proper study of account portability in the UK, but it is clear that operating the payments systems alongside account portability would be one of the significant challenges. That is why we think that the payment systems regulator is the right body to carry out this work. It will have the appropriate expertise and will be able to give an independent view. To be clear, the payment systems regulator will have the powers described in subsection (2) of the proposed new clause. There would be no need to confer new powers on the regulator in order to implement the recommendations of a review. In order to get a complete picture of what benefits account portability could bring, the experience of the current account switching service will need to be fully considered. Therefore, the Government expect the success of the switching service to be firmly within the scope of the payment systems regulator’s view of portability. The switching service is new and the regulator is not yet established. In our view, the logical step is to let them both become properly established and bedded in and then have a proper and comprehensive analysis. On the basis of that, a decision can be taken.
Lord Eatwell
The noble Lord just said that the payment systems regulator is going to be asked to do this. What timetable is the regulator going to be given?
Lord Newby
The regulator will be asked to make this one of its top priorities once it has been established, but it is impossible to say at this point that it will have to do it within three or six months. We think that that would be overly prescriptive. However, it is one of the priority tasks that it will be given from its inception.
Lord Eatwell
My Lords, that is why the amendment specifies 12 months. It seems that what the Government are saying is that they are behind the concept of competition but they are not behind the means of making that concept actually work. However, I must say that it is encouraging that the payment systems regulator is being asked to study this matter. It would be more encouraging if we were given some clarity that this will not simply be kicked into touch but will actually be presented to Parliament within a given timescale.
This is a matter of considerable importance if the Government are serious about competition and giving competitive advantage to consumers. It is therefore a matter to which we must inevitably return. In the mean time, I beg leave to withdraw the amendment.
Lord Sharkey
“High-cost credit agreements
(1) The Secretary of State shall by order provide for each local authority in England and Wales to regulate high cost credit agreements entered into by any person whose registered address for the purpose of obtaining credit is within the area of that authority.
(2) An order under this section shall—
(a) set a maximum level for—(i) the amount of any loan;(ii) the rate of interest that may be charged; and(iii) the associated fees that may be leviedas part of any such agreement;(b) limit the number of times and specify the terms on which such an agreement can be rolled over for any individual to whom this section applies; and(c) require the lender to demonstrate that the borrower has no outstanding high-cost loans.(3) Any local authority choosing not to exercise its powers of regulation once an order is made under this section shall publish a report setting out its reasons for not doing so, and shall make a similar report in each subsequent year in which it chooses not to exercise its powers of regulation.
(4) For the purposes of this section—
(a) “high-cost credit agreement” means a regulated credit agreement as defined by section 137C of the Financial Services and Markets Act 2000 (as inserted by the Financial Services Act 2012) that provides for—(i) the payment by the borrower of charges of a description from time to time specified by the FCA; or(ii) the payment by the borrower over the duration of the agreement of charges that, taken with the charges paid under one or more other agreements which are treated by the FCA’s rules as being connected with it, exceed, or are capable of exceeding, an amount specified by the FCA;(b) “charges” means charges payable, by way of interest or otherwise, in connection with the provision of credit under the regulated credit agreement, whether or not the agreement itself makes provision for them and whether or not the person to whom they are payable is a party to the regulated credit agreement or an authorised person;(c) “authorised person” has the same meaning as in the Financial Services and Markets Act 2000.(5) An order under this section shall be made by statutory instrument subject to approval by resolution of each House of Parliament.”
Lord Sharkey (LD)
My Lords, I will briefly argue in favour of four propositions. The first is that payday loan charges are much too high; secondly, that the current action on payday loans, although it is welcome, will not fix the central problem; thirdly, that we already have plenty of evidence for how to fix this problem; and fourthly, it is possible to act now to benefit payday loan customers and there is no need to wait.
The first proposition is that payday loan charges are much too high, and there is probably no need for me to argue the point extensively in this Chamber. Many Members of the Committee will agree that the scale of the charges amounts to exploitation of the poorest and the most desperate, and perhaps even that these charges are an affront to social justice, or even a sense of common humanity. In fact, there are established markets where the payday loan business flourishes with much smaller charges, of which the United States is a prime example. I shall talk more about the regulatory regime in the United States in a moment.
The second proposition is that the current action, although it is welcome, will not fix the central problem. The FCA, which will take over regulatory responsibility for the sector in April next year, published a consultation paper earlier this month. The paper noted that:
“We consider that the high-cost short-term credit sector poses a potentially high risk to consumers in financial difficulty”.
It put forward five key proposals that would require lenders to,
“assess the potential for a loan to adversely affect the customer’s financial situation; limit the number of times they can seek payment using a continuous payment authority; limit the number of times a loan can be ‘rolled over’; inform customers about sources of debt advice before refinancing a loan; put risk warnings on loan adverts”.
All these requirements were broadly welcomed, but there was no proposal to address the very high cost of payday loans themselves. The FCA confined itself to saying only that:
“After we start regulating consumer credit, our supervision teams will consider firms’ fees and charges practices to decide if we need to intervene further”.
That was it, but it is these fees and charges that are the cause of the present hardship and difficulty. Why wait until next April? The charges are obviously too high. They are lower elsewhere, and they could be lower here, too.
My third proposition is that we already have plenty of evidence about how to fix the high charge problem. I have heard it said that, in fact, self-regulation by payday loan lenders is the best way forward. Quite apart from the fact that it is difficult to see this bringing down costs, the evidence at the moment is that self-regulation is not working. Earlier this month, BIS published a large-scale and comprehensive review of how well the payday loan industry had been complying with its revised July 2012 customer charter and codes of practice. What BIS found was this:
“Overall, the results of the survey show that 9 months after the industry said they would comply fully with the charter and the improved codes of practice, self-regulation is not working effectively and compliance with key provisions is not good enough … lenders appear to fall down significantly in meeting the requirements … overall in relation to rollovers, Continuous Payment Authority (CPA) and the treatment of customers in financial difficulty”.
Lord Eatwell
My Lords, I am delighted that the Liberal Democrats are coming behind the proposals developed by my noble friend Lord Mitchell. I hope they acknowledge his success in having the various clauses limiting payday loans and high-cost credit agreements inserted during the passage of the Financial Services Act 2012.
Given that that Act is now in place and the measures advanced by my noble friend Lord Mitchell are on the statute book, the argument of the noble Lord, Lord Sharkey, as I understand it, is about why nothing is happening and why there is a lack of movement towards getting appropriate regulation in place. If he is indeed correct that things are moving so slowly—I have no reason to believe that he is not—the Government owe him an explanation as to why that is the case. Obviously, one is sympathetic to getting my noble friend Lord Mitchell’s measures going as fast as possible, but I have a couple of questions about the amendment.
First, do we really feel that there is a simple read-over between state government in the United States and a local authority in the UK? It seems that we pile responsibilities on local authorities without giving them sufficient funding, in many cases, to fulfil their responsibilities. I do not see that the amendment provides for any resources to go to local authorities to enable them to do the job.
Secondly, as far as I understand it, quite a lot of payday lending is done online. The amendment will do absolutely nothing to address loans that are made online because it is all geographically defined. A payday lender may have a registered address but that may have absolutely nothing to do with the location of the customers of that payday lender. The disjuncture between the registered address and the location of the customers suggests that knowledge of local needs would not necessarily be very relevant in such a case.
I am very sympathetic to the need to get things moving and look forward to the Government telling noble Lords how energetic they are being and giving us some concrete evidence of how my noble friend Lord Mitchell’s measures are being effectively brought into being. I would also like the Government to consider whether the noble Lord, Lord Sharkey, has, with the notion of the local authority—or indeed any other authority—identified a means of getting things moving more quickly.
Lord Newby
My Lords, the Government wholeheartedly agree with my noble friend that consumers must be protected when they borrow from payday lenders and use other high-cost forms of credit. As noble Lords have pointed out, the Government fundamentally reformed the regulatory system governing these lenders to protect borrowers by transferring the regulation of consumer credit to the Financial Conduct Authority in the Financial Services Act 2012.
The FCA takes up this new regulatory responsibility on 1 April but has already demonstrated that it is serious about cracking down on high-cost lenders. It is absolutely unfair on it to say that nothing has happened since the Act was passed last year.
On 3 October, as the noble Lord, Lord Sharkey, has pointed out, the FCA set out an action plan on high-cost lending to protect consumers, with tough new rules covering a number of issues, including a limit on rollovers and restricting the use of continuous payment authorities. These proposals have won widespread support and will profoundly change how this industry operates. I completely agree with the noble Lord, Lord Sharkey, that self-regulation has failed, but the industry is not going to be self-regulated any more.
Turning now to the noble Lord’s amendment specifically, I am surprised that he thinks that local authorities should be given additional responsibility for regulating high-cost lenders. I can see why it might work in the States, and having looked at the Florida scheme I completely agree that it has been an extremely successful scheme there. I hope that there are a number of additional elements of that scheme that might, in time, be introduced into the UK. However, I frankly cannot see the case for duplicating regulatory effort within such a small geographic area of the UK, especially as consumers will find this confusing. Nor can this be considered a good use of public funds, given that the FCA, which is fully funded by the industry, already has this responsibility.
Most payday lenders have a national reach, especially the biggest players which dominate the market and, by definition, those which are online, so it does not make sense to permit scores of local authorities, in addition to the FCA, to all regulate the same lender. We believe that a well-resourced and empowered single national regulator will provide the best outcome for consumers. Consumers will be better protected by having a regulator with the resources, expertise and national consistency of the FCA. I am not convinced of the benefits for consumers of a federal approach to regulation. In fact, this could lead to more consumer harm; payday lenders are more likely to target consumers in local authority areas where the authority is less active.
The nub of the amendment is, of course, that the noble Lord has framed it to ensure that the Secretary of State imposes a cap on the cost of high-cost credit. While I entirely support the noble Lord’s ambition to bring down the cost of such loans, I am not convinced that the best way to do that is via a mandatory cap. The Government do not believe that current evidence provides sufficient justification to support a cap on the cost of credit.
The noble Lord has referred to the work commissioned by the Government from the University of Bristol. It does not, as he says, say that the main arguments against a cap on the rate relate to loan sharks. It does point out that although that may happen in some cases, lenders may try to bypass the cap by introducing other charges or fees which are not subject to it. Evidence shows that, with a cap in place, lenders may be less likely to show understanding if customers get into repayment difficulties.
While the Government are not convinced that a mandatory cap is the best overall solution for consumers now, they have made it clear that the FCA has a specific power to impose a cap in future, should it decide that it is needed to protect consumers. The FCA has already committed to start analysis on use of this power from April 2014.
Capping the cost of credit is a major intervention with potentially profound consequences for consumers, so it is right that the FCA contemplates use of this power in a responsible and evidence-based way, which is what it will now do. Noble Lords should not be in any doubt about the FCA’s commitment to using its powers to protect consumers whenever it feels it is necessary. The Government stand ready to support the FCA to ensure the best overall outcome for consumers.
I know it is extremely frustrating that we have not got a comprehensive solution in place, but the Government have moved with considerable alacrity in setting up a new, effective regulatory framework. The regulator has acted quickly to set out proposals and on that basis, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Sharkey
I am happy to acknowledge the achievements of the noble Lord, Lord Mitchell. As the noble Lord, Lord Eatwell, may know, when I spoke to the noble Lord, Lord Mitchell, about my amendment, he said that, if he could, he would be happy to speak in support—qualified support, no doubt.
The question of local authorities is a red herring. I would happily trade off local authorities for the FCA if the Government would agree to the substance of the amendment. I do not intend to pursue the notion or the comments that have been made about local authorities by the noble Lord, Lord Eatwell, and my noble friend the Minister.
I am puzzled by the notion of there not being sufficient evidence to introduce a cap. I am hard put to understand how the situation in the United States—we mentioned only Florida but there are 17 other states with low interest rate caps; these systems work well—does not constitute something close to entirely sufficient evidence. I note in passing that Australia introduced the same system last year and there is evidence available from there as well. I also note in passing that this issue about payday lenders being able to avoid any cap by writing in additional charges is explicitly dealt with in the regulations that exist in Florida and the other states that cap these things. It is the total cost of any charges connected in any way with the loan that is capped; it is not just the interest rate.
I listened carefully to what my noble friend the Minister said and I will read it carefully again tomorrow morning. If we can dismiss the notion of local authorities for the moment, there may be merit in returning to this issue and of getting something done more quickly than April and afterwards so that we do not continue to have people taking on these loans at appalling costs. There may be merit in returning to that on Report but in the mean time I beg leave to withdraw.
Lord McFall of Alcluith
“Restriction on disclosure of confidential information by FCA, PRA etc
In section 348 of FSMA 2000 (restriction on disclosure of confidential information by (FCA, PRA) etc), after subsection (4)(b) insert—“(c) it is made available, without imposing any requirement of confidentiality, to a consumer (as defined in section 425A), or to a person imitating a consumer, or to persons who include consumers;”.”
Lord McFall of Alcluith
My Lords, while many aspects of competition, culture and behaviour in the industry are addressed by the Financial Services (Banking Reform) Bill, these amendments focus on the lack of transparency and public disclosure of poor products, practices, individuals and institutions, which remains unaddressed. The focus of these amendments is to open up this aspect of transparency. The amendments would enable the FCA to publish the instructions it gives to firms when it finds that consumers have been unfairly treated. It would improve the accountability of the regulator and of the regulated firms.
Most people are agreed that the FSA was not a transparent regulator. Indeed, in 2009, when the Treasury Select Committee investigated the treatment of customers in mortgage arrears, it concluded that,
“the balance between disclosure to the public and the need to protect firms before they have been found guilty of wrongdoing may have tilted too far towards the interests of the industry”.
More importantly, Section 348 of FiSMA placed a blanket prohibition on the FSA publishing information received from firms without the firms’ permission. The question has to be asked: are any banks going to voluntarily agree to the publication of their poor practice? I would suggest that is highly unlikely.
I will give one example. In the case of PPI, HFC Bank was fined by the FSA in 2007 for mis-selling of PPI. It issued instructions about the steps the bank needed to take to contact customers and review its previous conduct. However, when consumer groups asked for full details of the instructions, the answer given was that the instructions issued by the FSA contained information from HFC and the FSA was therefore prohibited from disclosing them by Section 348 of FiSMA.
This amendment empowers the FCA to release the instructions given to firms. Genuinely confidential information still will be protected, but the regulator will no longer be able to use Section 348 as an excuse for not disclosing the instructions it gives to firms. There are safeguards for firms, requiring the regulator to consult firms on the notice it will issue and to take account of their representations. Indeed, when the managing director of supervision at that time, Jon Pain of the FSA, appeared before the Commons Treasury Committee in March 2010, he was asked if he would like to have the ability to publish names of firms to which the FSA has sent a warning notice on disciplinary process. He said that that process struck the right balance between transparency and process.
The FSA itself would like that facility to be looked at. Indeed, when the Parliamentary Commission on Banking Standards looked into it, we stated that:
“Amendment of Section 348 … is likely to be required to facilitate the publication of appropriate information about the quality of service and price transparency.”
The amendment argues that the definition of “confidential information” should be modified to exclude firm-specific results of mystery-shopping exercises and thematic work. That would prevent consumers being kept in the dark and ensure that firms are not able to get away with not treating their customers fairly without suffering any practical penalty.
The definition should also be modified to exclude price data for certain markets, such as annuities—a very hot topic at the moment—which would make it easier for consumers to shop around to get the best rate and spot when they are getting a bad deal. It would also assist consumer organisations in warning consumers about products to avoid.
Complaints data for individual firms should also be excluded, which would allow the FCA to react swiftly to emerging problems by disclosing specific information about individual product areas to consumers. The legacy of mis-selling which exists happened because of a lack of speed in telling consumers and ensuring that individual companies undertook the remedies which the then FSA asked them to undertake.
If the definition also excluded enforcement activity against firms, that would allow for greater regulatory transparency. That must include the FCA publishing information on the number of cases referred to enforcement, broken down by subject—including product and practice involved—and industry sector; the outcome of cases, including how many resulted in a fine, public censure or were dealt with informally; and the names of firms and individuals involved in cases.
As I said on an earlier amendment, the balance is tilted too much towards the industry. The asymmetry of knowledge is in the industry’s favour. This amendment would help redress that by improving transparency. I ask the Minister to consider the long-standing commitment that I have had to that.
Lord Eatwell
My Lords, my noble friend has made a very strong case. He needed to add one other element to persuade the Government, which is that this would enhance competition. If one improved information in this way, then, given the enhancement of consumer choice, the competitive objective of the Government would be better served. This would be a diminution of some of the severe problems of asymmetric information that distort competition in financial services, especially retail financial services. If it was developed with care it would be a considerable boost to the overall efficiency of retail financial services in this country.
It is very easy to say, “The time is not ripe; it is not really quite the time; there are unintended consequences”. All that is required is a consistent bias towards transparency. The Government should approach this issue by saying, “In principle, we are in favour of transparency”. The argument should be made for not being transparent. In other words, the strong case has to be made for not revealing something. The fundamental prejudice should be that this information should be transparent. Effective transmission of information is a key element in creating an efficient market and enhancing the competitive goal that the Government claim to be their own.
Lord Newby
My Lords, as the noble Lord, Lord McFall, pointed out, we debated this issue at great length during proceedings on the previous Financial Services Bill. Sections 348 and 349 of FiSMA govern the treatment of confidential information obtained by the regulators and the ability of the regulators to disclose such confidential information. The noble Lord argued at the time, and repeated today, that there was inadequate transparency and insufficient disclosure of information in the financial services regulatory regime. This led to the argument that Section 348 should be amended to make it as unrestricted as possible.
In response, the Treasury undertook a careful review of Section 348 and its associated provisions. The review concluded, first, that it would be difficult to amend Section 348 without negative consequences. Scaling back Section 348 would increase the risk that firms would become less willing to share information with the regulators, undermining those important relationships and the regulators’ ability to protect consumers. Secondly, even with Section 348 in place, the FCA could and should do more to increase transparency.
With that in mind, the Government decided at the time not to amend or delete Section 348 but agreed with the FSA, as it then was, for it to carry out a fundamental review of how transparency would be embedded in the new FCA regime. This was published as a consultation in April of this year and received positive feedback from consumer groups—that is, the very people the new or changed approach was intended to benefit. The review covered use of disclosure as a regulatory tool by the regulator, disclosure of information by firms, both voluntarily and as a result of FCA rules, and transparency on the part of the regulator.
In terms of publishing details of enforcement action, the FCA is already required to publish details and information about decisions and final notices that it considers appropriate. It can also publish the fact that a warning notice has been issued in respect of disciplinary action. In response to the recent PCBS recommendation that it should require firms to publish more information, the FCA has outlined its plans to issue a call for evidence next year on data that it should require firms to publish to help consumers better understand the firm and product quality.
I hope the noble Lord will agree that this is exactly what the PCBS was seeking to achieve and that it can be done without further amendment to Section 348.
Lord McFall of Alcluith
My Lords, again the Government’s response is a little timid. However, the hour is late. It is an appropriate time to say, “Mañana” and we will fight it another day.
Lord Turnbull
“Definition of “bank”
(1) In sections (Meetings between regulators and bank auditors, Leverage ratio, Proprietary trading, Remuneration code, Powers of regulator where Bank receiving State support, Special measures, and Regulatory accounts) “bank” means a UK institution which—
(a) has permission under Part 4A of FSMA 2000 (permission to carry on regulated activities) to carry on the regulated activity of accepting deposits; or(b) is an investment firm within the meaning of that Act (see section 424A of that Act).(2) But “bank” does not include an insurer.
(3) In this section—
(a) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom;(b) “insurer” means an institution which is authorised under this Act to carry on the regulated activity of effecting or carrying out contracts of insurance as principal. (4) Subsections (1)(a) and (3)(b) are to be read in accordance with section 22, taken with Schedule 2 and any order under section 22.”
Lord Turnbull
My Lords, this is an amendment to which we have returned on a number of occasions and which is quite fundamental to the Bill. It raises the question of what is a bank and defines who comes within the scope of the various regimes, sanctions, penalties, or whatever. There was a feeling when we last discussed this that defining a bank around whether it took deposits was too narrow and that there could be people who could conduct, for example, trading activities without taking deposits and who ought to be subject to the senior managers’ regime, the criminal sanction or the remuneration regime.
The amendment is an attempt to widen that scope. It was tabled before the letter dated 22 October from the noble Lord, Lord Newby, to the noble Lord, Lord Eatwell, with its offer to set out a note. I think that that will probably deal with the question. I do not think that there is any real difference between us about what we want to cover. We want to make sure that we are covering not only ring-fenced banks but people running major investment bank trading operations, whether they be domestic, such as BarCap, or UBS or whatever.
Lord Eatwell
Perhaps I can be of help to the noble Lord. I do not know whether he has had the opportunity to see the Bank of England response to the final report published today, where the Bank of England provides the answer which the noble Lord, Lord Newby, was unable to provide. It says:
“For the present, the Government’s legislative proposals in this area will apply only to deposit takers”—
Earl Attlee (Con)
My Lords, we are slightly out of order because the noble Lord has not moved his amendment and started the debate. Perhaps the noble Lord would like to finish moving his amendment.
Lord Turnbull
I thought that I had started by begging to move Amendment 104E, but if I have not I shall do so now, and if that allows the noble Lord, Lord Eatwell, to offer his clarification I should be very grateful. I beg to move.
Lord Eatwell
I usually try to be difficult. When I try to be helpful I am stopped. I was referring to the Bank of England response, published today, in which it says that,
“the Government’s legislative proposals in this area”—
this is referring to the senior persons regime which we talked about last time—
“will apply only to deposit takers but not to investment banks and insurance companies”.
So the Bank of England is clear that both the senior persons regime and, I presume, also the offences issue—for which I remember the same issue arose as to the definition of a bank—do not apply to investment banks.
Lord Turnbull
My response to that is that it is completely unsatisfactory. We shall need to come back to it. I hope that there can be some discussion, maybe with officials in the Bill team. I am not satisfied that applying these various provisions simply to deposit takers covers all the areas of conduct that really need to be covered.
One other issue came to light in the course of this evening’s discussions about the remuneration regime. The noble Lord, Lord Newby, read out a list of people who are covered. Those are the people who are covered by the current remuneration regime. What was being proposed in my amendment was in effect a senior tier particularly for banking. Once you do that, you have to find a definition of a bank. I thought that we were a bit nearer to getting an answer until I heard from the noble Lord, Lord Eatwell. It is something we need to sort out, otherwise we shall find a serious area of misconduct in an investment banking area only to be told that when we legislated we forgot to cover these kinds of people. That would be completely unacceptable.
Lord Newby
My Lords, I thought that I read out virtually verbatim last week what the noble Lord has read out from the Bank of England. We are going to confirm that in a letter. However the most important point is the one that the noble Lord, Lord Turnbull, raised about the scope of the senior managers regime and the criminal offence that goes with it. I can confirm now what I attempted to say last time, that my Treasury colleagues are considering the scope of the new regime and of the new criminal offence of reckless misconduct in the management of a bank in the light of the previous debate. I can assure the House that they take your Lordships’ views extremely seriously.
Lord Turnbull
I infer that I should pay more attention to the letter of the noble Lord, Lord Newby, of 22 October than I should pay to the Bank of England’s response, because I think the former is a more constructive response than that of the Bank of England. On that basis, I beg leave to withdraw Amendment 104E.
Lord Newby
ScheduleBail-in stabilisation optionPart 1Amendments of Banking Act 20091 The Banking Act 2009 is amended as follows.
New stabilisation option: bail-in2 After section 12 insert—
“12A Bail-in option
(1) The third stabilisation option is exercised by the use of the power in subsection (2).
(2) The Bank of England may make one or more resolution instruments (which may contain provision or proposals of any kind mentioned in subsections (3) to (6)).
(3) A resolution instrument may—
(a) make special bail-in provision with respect to a specified bank; (b) make other provision for the purposes of, or in connection with, any special bail-in provision made by that or another instrument.(4) A resolution instrument may—
(a) provide for securities issued by a specified bank to be transferred to a bail-in administrator (see section 12B) or another person;(b) make other provision for the purposes of, or in connection with, the transfer of securities issued by a specified bank (whether or not the transfer has been or is to be effected by that instrument, by another resolution instrument or otherwise).(5) A resolution instrument may set out proposals with regard to the future ownership of a specified bank or of the business of a specified bank, and any other proposals (for example, proposals about making special bail-in provision) that the Bank of England may think appropriate.
(6) A resolution instrument may make any other provision the Bank of England may think it appropriate to make in exercise of specific powers under this Part.
(7) Provision made in accordance with subsection (4) may relate to—
(a) specified securities, or(b) securities of a specified description.(8) Where the Bank of England has exercised the power in subsection (4) to transfer securities to a bail-in administrator, the Bank of England must exercise its functions under this Part (see, in particular, section 48V) with a view to ensuring that any securities held by a person in the capacity of a bail-in administrator are so held only for so long as is, in the Bank of England’s opinion, appropriate having regard to the special resolution objectives.
(9) References in this Part to “special bail-in provision” are to provision made in reliance on section 48B.
12B Bail-in administrators
(1) The Bank of England may, in a resolution instrument, appoint an individual or body corporate as a bail-in administrator.
(2) A bail-in administrator is appointed—
(a) to hold any securities that may be transferred or issued to that person in the capacity of bail-in administrator;(b) to perform any other functions that may be conferred under any provision of this Part.(3) The Bank of England may appoint more than one bail-in administrator to perform functions in relation to a bank (but no more than one of them may at any one time be authorised to hold securities as mentioned in subsection (2)(a)).
(4) Securities held by a bail-in administrator (in that capacity, and whether as a result of a resolution instrument or otherwise) are to be held in accordance with the terms of a resolution instrument that transfers those, or other, securities to the bail-in administrator.
(5) For example, the following provision may be made by virtue of subsection (4)—
(a) provision that specified rights of a bail-in administrator with respect to all or any of the securities are to be exercisable only as directed by the Bank of England;(b) provision specifying rights or obligations that the bail-in administrator is, or is not, to have in relation to some or all of the securities.(6) A bail-in administrator must have regard, in performing any functions of the office, to any objectives that may be specified in a resolution instrument.
(7) Where one or more objectives are specified in accordance with subsection (6), the objectives are to be taken to have equal status with each other, unless the contrary is stated in the resolution instrument.
(8) See sections 48I to 48K for further provision about bail-in administrators.”
3 After section 8 insert—
“8A Specific condition: bail-in
(1) The Bank of England may exercise a stabilisation power in respect of a bank in accordance with section 12A(2) only if satisfied that the condition in subsection (2) is met.
(2) The condition is that the exercise of the power is necessary, having regard to the public interest in—
(a) the stability of the financial systems of the United Kingdom,(b) the maintenance of public confidence in the stability of those systems,(c) the protection of depositors, or(d) the protection of any client assets that may be affected.(3) Before determining whether that condition is met, and if so how to react, the Bank of England must consult—
(a) the PRA,(b) the FCA, and(c) the Treasury.(4) The condition in this section is in addition to the conditions in section 7.”
Further provision about the bail-in option4 After section 48A insert—
“Bail-in option48B Special bail-in provision
(1) “Special bail-in provision”, in relation to a bank, means any of the following (or any combination of the following)—
(a) provision cancelling a liability owed by the bank;(b) provision modifying, or changing the form of, a liability owed by the bank;(c) provision that a contract under which the bank has a liability is to have effect as if a specified right had been exercised under it.(2) A power to make special bail-in provision—
(a) may be exercised only for the purpose of, or in connection with, reducing, deferring or cancelling a liability of the bank;(b) may not be exercised so as to affect any excluded liability.(3) The following rules apply to the interpretation of subsection (1).
1. The reference to cancelling a liability owed by the bank includes a reference to cancelling a contract under which the bank has a liability.2. The reference to modifying a liability owed by the bank includes a reference to modifying the terms (or the effect of the terms) of a contract under which the bank has a liability.3. The reference to changing the form of a liability owed by the bank, includes, for example—(a) converting an instrument under which the bank owes a liability from one form or class to another,(b) replacing such an instrument with another instrument of a different form or class, or(c) creating a new security (of any form or class) in connection with the modification of such an instrument.(4) Examples of special bail-in provision include—
(a) provision that transactions or events of any specified kind have or do not have (directly or indirectly) specified consequences or are to be treated in a specified manner for specified purposes;(b) provision discharging persons from further performance of obligations under a contract and dealing with the consequences of persons being so discharged. (5) The form and class of the instrument (“the resulting instrument”) into which an instrument is converted, or with which it is replaced, do not matter for the purposes of paragraphs (a) and (b) of rule 3 in subsection (3); for instance, the resulting instrument may (if it is a security) fall within Class 1 or any other Class in section 14.
(6) The following liabilities of the bank are “excluded liabilities”—
(a) liabilities representing protected deposits;(b) any liability, so far as it is secured;(c) liabilities that the bank has by virtue of holding client assets;(d) liabilities with an original maturity of less than 7 days owed by the bank to a credit institution or investment firm;(e) liabilities arising from participation in designated settlement systems and owed to such systems or to operators of, or participants in, such systems;(f) liabilities owed to central counterparties recognised by the European Securities and Markets Authority in accordance with Article 25 of Regulation (EU) 648/2012 of the European Parliament and the Council; (g) liabilities owed to an employee or former employee in relation to salary or other remuneration, except variable remuneration;(h) liabilities owed to an employee or former employee in relation to rights under a pension scheme, except rights to discretionary benefits;(i) liabilities owed to creditors arising from the provision to the bank of goods or services (other than financial services) that are critical to the daily functioning of the bank’s operations.(7) The following special rules apply in cases involving banking group companies—
(a) a liability mentioned in subsection (6)(d) is not an excluded liability if the credit institution or investment firm to which the liability is owed is a banking group company in relation to the bank (see section 81D);(b) in subsection (6)(i) the reference to creditors does not include companies which are banking group companies in relation to the bank.48C Meaning of “protected deposit”
(1) A deposit is “protected” so far as it is covered by the Financial Services Compensation Scheme.
(2) A deposit is “protected” so far as it is covered by a scheme which—
(a) operates outside the United Kingdom, and(b) is comparable to the Financial Services Compensation Scheme.(3) If one or both of subsections (1) and (2) apply to a deposit, the amount of the deposit “protected” is the highest amount which results from either of those subsections.
(4) In subsections (1) and (2) and section 48B(6)(a), “deposit” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), but ignoring the exclusions in article 6.
48D General interpretation of section 48B
(1) In section 48B—
“client assets” means assets which the bank has undertaken to hold on trust for, or on behalf of, a client;“contract” includes any instrument;“credit institution” means any credit institution as defined in Article 4.1(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council, other than an entity mentioned in Article 2.5(2) to (23) of Directive 2013/36/EU of the European Parliament and of the Council; “designated settlement system” means a system designated in accordance with Directive 98/26/EC of the European Parliament and of the Council (as amended by Directives 2009/44/EC and 2010/78/EU);“employee” includes the holder of an office;“investment firm” means an investment firm as defined in Article 4.1(2) of Regulation (EU) No 575/2013 of the European Parliament and of the Council that is subject to the initial capital requirement specified in Article 28(2) of Directive 2013/36/EU of the European Parliament and of the Council;“pension scheme” includes any arrangement for the payment of pensions, allowances and gratuities;“secured” means secured against property or rights, or otherwise covered by collateral arrangements.(2) In subsection (1)—
“assets” has the same meaning as in section 232(4) (ignoring for these purposes section 232(5A)(b));“collateral arrangements” includes arrangements which are title transfer collateral arrangements for the purposes of section 48.(3) For the purposes of section 48B(6)(h), a benefit under a pension scheme is discretionary so far as the employee’s right to the benefit was a result of the exercise of a discretion.
48E Report on special bail-in provision
(1) This section applies where the Bank of England makes a resolution instrument containing special bail-in provision (see section 48B(1)).
(2) The Bank of England must report to the Chancellor of the Exchequer stating the reasons why that provision has been made in the case of the liabilities concerned.
(3) If the provision departs from the insolvency treatment principles, the report must state the reasons why it does so.
(4) The insolvency treatment principles are that where an instrument includes special bail-in provision—
(a) the provision made by the instrument must be consistent with treating all the liabilities of the bank in accordance with the priority they would enjoy on a liquidation, and(b) any creditors who would have equal priority on a liquidation are to bear losses on an equal footing with each other.(5) A report must comply with any other requirements as to content that may be specified by the Treasury.
(6) A report must be made as soon as reasonably practicable after the making of the resolution instrument to which it relates.
(7) The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.
48F Power to amend definition of “excluded liabilities”
(1) The Treasury may by order amend section 48B(6) by—The Treasury may by order amend section 48C or 48D.
(a) adding to the list of excluded liabilities;(b) amending or omitting any paragraph of that subsection, other than paragraphs (a) to (c).(3) The powers conferred by subsections (1) and (2) include power to make consequential and transitional provision.
(4) An order under this section—
(a) must be made by statutory instrument, and(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.(5) The Treasury must consult before laying a draft order under this section before Parliament.
48G Priority between creditors
(1) The Treasury may, for the purpose of ensuring that the treatment of liabilities in any instrument that contains special bail-in provision is aligned to an appropriate degree with the treatment of liabilities on an insolvency, by order specify matters or principles to which the Bank of England is to be required to have regard in making any such instrument.
(2) An order may, for example, specify the insolvency treatment principles (as defined in section 48E(4)) or alternative principles.
(3) An order may specify the meaning of “insolvency” for one or more purposes of the order.
(4) An order may amend sections 44C(4) and 48E(4).
(5) An order —
(a) is to be made by statutory instrument, and(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.48H Business reorganisation plans
(1) A resolution instrument may require a bail-in administrator, or one or more directors of the bank, to—
(a) draw up a business reorganisation plan with respect to the bank, and(b) submit it to the Bank of England within the period allowed by (or under) the instrument.(2) “Business reorganisation plan” means a plan that includes—
(a) an assessment of the factors that caused Condition 1 in section 7 to be met in the case of the bank,(b) a description of the measures to be adopted with a view to restoring the viability of the bank, and(c) a timetable for the implementation of those measures.(3) Where a person has submitted a business reorganisation plan to the Bank of England under subsection (1) (or has re-submitted a plan under subsection (4)), the Bank of England—
(a) must approve the plan if satisfied that the plan is appropriately designed for meeting the objective mentioned in subsection (2)(b);(b) must otherwise require the person to amend the plan in a specified manner.(4) Where the Bank of England has required a person to amend a business re-organisation plan, the person must re-submit the amended plan within the period allowed by (or under) the resolution instrument.
(5) Before deciding what action to take under subsection (3) the Bank of England must (for each submission or re-submission of a plan) consult—
(a) the PRA, and(b) the FCA.(6) A business reorganisation plan may include recommendations by the person submitting the plan as to the exercise by the Bank of England of any of its powers under this Part in relation to the bank.
(7) Where a resolution instrument contains provision under subsection (1), the instrument may—
(a) specify further matters (in addition to those mentioned in subsection (2)) that must be dealt with in the business reorganisation plan;(b) make provision about the timing of actions to be taken in connection with the making and approval of the plan;(c) enable any provision that the Bank of England has power under paragraph (a) or (b) to make in the instrument to be made instead in an agreement between the Bank of England and the bail-in administrator.(8) For the purposes of subsection (2)(b) the viability of a bank is to be assessed by reference to whether the bank satisfies, and (if so) for how long it may be expected to continue to satisfy, the threshold conditions (as define in section 55B of the Financial Services and Markets Act 2000).
48I Bail-in administrator: further functions
(1) A resolution instrument may—
(a) authorise a bail-in administrator to manage the bank’s business (or confer on a bail-in administrator any other power with respect to the management of the bank’s business);(b) authorise a bail-in administrator to exercise any other powers of the bank;(c) confer on a bail-in administrator any other power the Bank of England may consider appropriate;(d) provide that the exercise of any power conferred by the instrument in accordance with this section is to be subject to conditions specified in the instrument.(2) A resolution instrument may require a bail-in administrator to make reports to the Bank of England—
(a) on any matter specified in the instrument, and(b) at the times or intervals specified in the instrument.(3) If a resolution instrument specifies a matter in accordance with subsection (2)(a), it may provide for further requirements as to the contents of the report on that matter to be specified in an agreement between the Bank of England and the bail-in administrator.
(4) A resolution instrument may—
(a) require a bail-in administrator to consult specified persons before exercising specified functions (and may specify particular matters on which the specified person must be consulted);(b) provide that a bail-in administrator is not to exercise specified functions without the consent of a specified person.48J Bail-in administrator: supplementary
(1) A bail-in administrator may do anything necessary or desirable for the purposes of or in connection with the performance of the functions of the office.
(2) A bail-in administrator is not a servant or agent of the Crown (and, in particular, is not a civil servant).
(3) Where a bail-in administrator is appointed under this Part, the Bank of England—
(a) must make provision in a resolution instrument for resignation and replacement of the bail-in administrator;(b) may remove the bail-in administrator from office only (i) on the ground of incapacity or misconduct, or (ii) on the ground that there is no further need for a person to perform the functions conferred on the bail-in administrator.48K Bail-in administrator: money
(1) A resolution instrument may provide for the payment of remuneration and allowances to a bail-in administrator.
(2) Provision made under subsection (1) may provide that the amounts are—
(a) to be paid by the Bank of England, or (b) to be determined by the Bank of England and paid by the bank. (3) A bail-in administrator is not liable for damages in respect of anything done in good faith for the purposes of or in connection with the functions of the office (subject to section 8 of the Human Rights Act 1998).
48L Powers in relation to securities
(1) A resolution instrument may—
(a) cancel or modify any securities to which this subsection applies;(b) convert any such securities from one form or class into another.(2) Subsection (1) applies to securities issued by the bank that fall within Class 1 in section 14.
(3) A resolution instrument may—
(a) make provision with respect to rights attaching to securities issued by the bank;(b) provide for the listing of securities issued by the bank to be discontinued. (4) The reference in subsection (1)(b) to converting securities from one form or class into another includes creating a new security in connection with the modification of an existing security.
(5) The provision that may be made under subsection (3)(a) includes, for example—
(a) provision that specified rights attaching to securities are to be treated as having been exercised;(b) provision that the Bank of England, or a bail-in administrator, is to be treated as authorised to exercise specified rights attaching to securities;(c) provision that specified rights attaching to securities may not be exercised for a period specified in the instrument.(6) In subsection (3)(b) the reference to “listing” is to listing under section 74 of the Financial Services and Markets Act 2000.
(7) The provision that may be made under this section in relation to any securities is in addition to any provision that the Bank of England may have power to make in relation to them under section 48B.
48M Termination rights, etc
(1) In this section “default event provision” has the same meaning as in section 22.
(2) A resolution instrument may provide for subsection (3) or (4) to apply (but need not apply either).
(3) If this subsection applies, the resolution instrument is to be disregarded in determining whether a default event provision applies.
(4) If this subsection applies, the resolution instrument is to be disregarded in determining whether a default event provision applies except so far as the instrument provides otherwise.
(5) In subsections (3) and (4) a reference to the resolution instrument is a reference to—
(a) the making of the instrument,(b) anything that is done by the instrument or is to be, or may be, done under or by virtue of the instrument, and(c) any action or decision taken or made under this or another enactment in so far as it resulted in, or was connected to, the making of the instrument.(6) Provision under subsection (2) may apply subsection (3) or (4)—
(a) generally or only for specified purposes, cases or circumstances, or(b) differently for different purposes, cases or circumstances.(7) A thing is not done by virtue of a resolution instrument for the purposes of subsection (5)(b) merely by virtue of being done under a contract or other agreement rights or obligations under which have been affected by the instrument.
48N Directors
(1) A resolution instrument may enable the Bank of England—
(a) to remove a director of a specified bank;(b) to vary the service contract of a director of a specified bank;(c) to terminate the service contract of a director of a specified bank;(d) to appoint a director of a specified bank.(2) Subsection (1) also applies to a director of any undertaking which is a banking group company in respect of a specified bank.
(3) Appointments under subsection (1)(d) are to be on terms and conditions agreed with the Bank of England.
48O Directions in or under resolution instrument
(1) A resolution instrument may—
(a) require one or more directors of the bank to comply with any general or specific directions that may be set out in the instrument; (b) enable the Bank of England to give written directions (whether general or specific) to one or more directors of the bank.(2) A director—
(a) is not to be regarded as failing to comply with any duty owed to any person (for example, a shareholder, creditor or employee of the bank) by virtue of any action or inaction in compliance with a direction given under subsection (1)(a) or (b);(b) is to be immune from liability in damages in respect of action or inaction in accordance with a direction.(3) A director must comply with a direction within the period of time specified in the direction, or if no period of time is specified, as soon as reasonably practicable.
(4) A direction under subsection (1)(a) or (b) is enforceable on an application made by the Bank of England, by injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.
48P Orders for safeguarding certain financial arrangements
(1) In this section “protected arrangements” means security interests, title transfer collateral arrangements, set-off arrangements and netting arrangements.
(2) In subsection (1)—
“netting arrangements” means arrangements under which a number of claims or obligations can be converted into a net claim or obligation, and includes, in particular, “close-out” netting arrangements, under which actual or theoretical debts are calculated during the course of a contract for the purpose of enabling them to be set off against each other or to be converted into a net debt;“security interests” means arrangements under which one person acquires, by way of security, an actual or contingent interest in the property of another;“set-off arrangements” means arrangements under which two or more debts, claims or obligations can be set off against each other;“title transfer collateral arrangements” means arrangements under which Person 1 transfers assets to Person 2 on terms providing for Person 2 to transfer assets if specified obligations are discharged.(3) The Treasury may by order—
(a) restrict the exercise of any power within the scope of this paragraph in cases that involve, or where the exercise of the power might affect, protected arrangements;(b) impose conditions on the exercise of any power within the scope of this paragraph in cases that involve, or where the exercise of the power might affect, protected arrangements;(c) require any instrument that makes special bail-in provision to include specified provision, or provision to a specified effect, in respect of or for purposes connected with protected arrangements;(d) provide for an instrument to be void or voidable, or for other consequences to arise, if or in so far as the instrument is made or purported to be made in contravention of a provision of the order (or of another order under this section);(e) specify principles to which the Bank of England is to be required to have regard in exercising specified powers—(i) that involve protected arrangements, or(ii) where the exercise of the powers might affect protected arrangements.(4) References to exercising a power within the scope of paragraph (a) or (b) of subsection (3) are to making an instrument containing provision made in reliance on section 12A(3)(a) or 44B (special bail-in provision).
(5) An order may apply to protected arrangements generally or only to arrangements—
(a) of a specified kind, or (b) made or applying in specified circumstances.(6) An order may include provision for determining which arrangements are to be, or not to be, treated as protected arrangements; in particular, an order may provide for arrangements to be classified not according to their description by the parties but according to one or more indications of how they are treated, or are intended to be treated, in commercial practice.
(7) In this section “arrangements” includes arrangements which—
(a) are formed wholly or partly by one or more contracts or trusts;(b) arise under or are wholly or partly governed by the law of a country or territory outside the United Kingdom;(c) wholly or partly arise automatically as a matter of law;(d) involve any number of parties;(e) operate partly by reference to other arrangements between parties.(8) An order—
(a) is to be made by statutory instrument, and(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.48Q Continuity
(1) A resolution instrument may provide for anything (including legal proceedings) that relates to anything affected by the instrument and is in the process of being done immediately before the instrument takes effect to be continued from the time the instrument takes effect.
(2) A resolution instrument may modify references (express or implied) in an instrument or document.
(3) A resolution instrument may require or permit any person to provide information and assistance to the Bank of England or another person, for the purposes of or in connection with provision made or to be made in that or another resolution instrument.
48R Execution and registration of instruments etc
(1) A resolution instrument (other than an instrument that provides for securities to be transferred) may permit or require the execution, issue or delivery of an instrument.
(2) A resolution instrument may provide for any provision in the instrument to have effect irrespective of—
(a) whether an instrument has been produced, delivered, transferred or otherwise dealt with;(b) registration.(3) A resolution instrument may provide for the effect of an instrument executed, issued or delivered in accordance with the resolution instrument.
(4) A resolution instrument may—
(a) entitle a person to be registered in respect of a security;(b) require a person to effect registration.48S Resolution instruments: general matters
(1) Provision made in a resolution instrument takes effect despite any restriction arising by virtue of contract or legislation or in any other way.
(2) A resolution instrument may include incidental, consequential or transitional provision.
(3) In relying on subsection (2) a resolution instrument—
(a) may make provision generally or only for specified purposes, cases or circumstances, and(b) may make different provision for different purposes, cases or circumstances.48T Procedure
(1) As soon as is reasonably practicable after making a resolution instrument in respect of a bank the Bank of England must send a copy to—
(a) the bank,(b) the Treasury,(c) the PRA, (d) the FCA, and(e) any other person specified in the code of practice under section 5.(2) As soon as is reasonably practicable after making a resolution instrument the Bank of England must publish a copy—
(a) on the Bank’s internet website, and(b) in two newspapers, chosen by the Bank of England to maximise the likelihood of the instrument coming to the attention of persons likely to be affected.(3) Where the Treasury receive a copy of a resolution instrument under subsection (1) they must lay a copy before Parliament.
48U Supplemental resolution instruments
(1) This section applies where the Bank of England has made a resolution instrument (“the original instrument”) with respect to a bank.
(2) The Bank of England may make, with respect to the bank, one or more resolution instruments designated by the Bank of England as supplemental resolution instruments.
(3) Sections 7 and 8A do not apply to a supplemental resolution instrument (but it is to be treated in the same way as a resolution instrument for all other purposes, including for the purposes of the application of a power under this Part).
(4) Before making a supplemental resolution instrument the Bank of England must consult—
(a) the PRA,(b) the FCA, and(c) the Treasury.(5) The possibility of making a supplemental resolution instrument in reliance on subsection (2) is without prejudice to the possibility of making a new instrument in accordance with section 12A(2) (and not in reliance on subsection (2) above).
48V Onward transfer
(1) This section applies where the Bank of England has made a resolution instrument (“the original instrument”) providing for securities issued by a specified bank to be transferred to any person.
(2) The Bank of England may make one or more onward transfer resolution instruments.
(3) An onward transfer resolution instrument is a resolution instrument which—
(a) provides for the transfer of—(i) securities which were issued by the bank before the original instrument and have been transferred by the original instrument or a supplemental resolution instrument, or(ii) securities which were issued by the bank after the original instrument;(b) makes other provision for the purposes of, or in connection with, the transfer of securities issued by the bank (whether the transfer has been or is to be effected by that instrument, by another instrument or otherwise).(4) An onward transfer resolution instrument may not transfer securities to the transferor under the original instrument.
(5) Sections 7 and 8A do not apply to an onward transfer resolution instrument (but it is to be treated in the same way as any other resolution instrument for all other purposes, including for the purposes of the application of a power under this Part).
(6) Before making an onward transfer resolution instrument the Bank of England must consult—
(a) the PRA,(b) the FCA, and(c) the Treasury.(7) Section 48U applies where the Bank of England has made an onward transfer resolution instrument.
48W Reverse transfer
(1) This section applies where the Bank of England has made an instrument (“the original instrument”) that is either—
(a) a resolution instrument providing for the transfer of securities issued by a bank to a person (“the transferee”), or(b) an onward transfer resolution instrument (see section 48V) providing for the transfer of securities issued by a bank to a person (“the onward transferee”).(2) In a case falling within subsection (1)(a) the Bank of England may make one or more reverse transfer resolution instruments in respect of securities issued by the bank and held by the transferee (whether or not they were transferred by the original instrument).
(3) In a case falling within subsection (1)(b), the Bank of England may make one or more reverse transfer resolution instruments in respect of securities issued by the bank and held by the onward transferee.
(4) A reverse transfer resolution instrument is a resolution instrument which—
(a) provides for transfer to the transferor under the original instrument;(b) makes other provision for the purposes of, or in connection with, the transfer of securities which are, or could be or could have been, transferred under paragraph (a).(5) Except where subsection (6) applies, the Bank of England may make a reverse transfer resolution instrument under subsection (2) only with the written consent of the transferee.
(6) This subsection applies where the transferee is—
(a) a bail-in administrator, or(b) a person who is not to be authorised to exercise any rights attaching to the securities except on the Bank of England’s instructions.(7) The Bank of England may make a reverse transfer resolution instrument under subsection (3) only with the written consent of the onward transferee.
(8) Sections 7 and 8A do not apply to a reverse transfer resolution instrument (but it is to be treated in the same way as any other resolution instrument for all other purposes including for the purposes of an application of a power under this Part).
(9) Before making a reverse transfer resolution instrument the Bank of England must consult—
(a) the PRA,(b) the FCA, and(c) the Treasury.(10) Section 48U applies where the Bank of England has made a reverse transfer resolution instrument.”
Transfers of property5 (1) After section 41 insert—
“41A Transfer of property subsequent to resolution instrument
(1) This section applies where the Bank of England has made a resolution instrument.
(2) The Bank of England may make one or more property transfer instruments in respect of property, rights or liabilities of the bank.
(3) Sections 7 and 8A do not apply to a property transfer instrument under subsection (2).
(4) Before making a property transfer instrument under subsection (2) the Bank of England must consult—
(a) the PRA,(b) the FCA, and(c) the Treasury.”(2) In section 42 (supplemental property transfer instruments)—
(a) in subsection (1) for “12(2)” substitute “12(2) or 41A(2)”;(b) in subsection (4) for “and 8” substitute “, 8 and 8A”;(c) in subsection (6) for “or 12(2)” substitute “, 12(2) or 41A(2)”.(3) After section 44 insert—
“44A Bail in: reverse property transfer
(1) This section applies where the Bank of England has made a property transfer instrument in accordance with section 41A(2) (“the original instrument”).
(2) The Bank of England may make one or more bail-in reverse property transfer instruments in respect of property, rights or liabilities of the transferee under the original instrument.
(3) A bail-in reverse property transfer instrument is a property transfer instrument which—
(a) provides for a transfer to the transferor under the original instrument;(b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities which are, or could be or could have been, transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).(4) The Bank of England may make a bail-in reverse property transfer instrument only with the written consent of the transferee under the original instrument.
(5) Sections 7 and 8A do not apply to a bail-in reverse property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).
(6) Before making a bail-in reverse property transfer instrument the Bank of England must consult—
(a) the PRA,(b) the FCA, and(c) the Treasury.(7) Section 42 (supplemental instruments) applies where the Bank of England has made a bail-in reverse property transfer instrument.
44B Property transfer instruments: special bail-in provision
(1) A property transfer instrument under section 12(2) or 41A(2) may make special bail-in provision with respect to the bank (see section 48B).
(2) In the case of a property transfer instrument under section 12(2), the power under subsection (1) to make the provision described in section in section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(3)) includes power to make provision replacing a liability (of any form) of the bank mentioned in subsection (1) with a security (of any form or class) of the bridge bank mentioned in section 12(1).
(3) Where securities of the bridge bank (“B”) are, as a result of subsection (2), held by a person other than the Bank of England, that does not prevent B from being regarded for the purposes of this Part (see particularly section 12(1)) as being wholly owned by the Bank of England, as long as the Bank of England continues to hold all the ordinary shares issued by B.
44C Report on special bail-in provision
(1) This section applies where the Bank of England makes a property transfer instrument containing provision made in reliance on section 44B.
(2) The Bank of England must report to the Chancellor of the Exchequer stating the reasons why that provision was made in the case of the liabilities concerned.
(3) If the provision departs from the insolvency treatment principles, the report must state the reasons why it does so.
(4) The insolvency treatment principles are that where an instrument includes special bail-in provision—
(a) the provision made by the instrument must be consistent with treating all the liabilities of the bank in accordance with the priority they would enjoy on a liquidation, and(b) any creditors who would have equal priority on a liquidation are to bear losses on an equal footing with each other.(5) A report must comply with any other requirements as to content that may be specified by the Treasury.
(6) A report must be made as soon as reasonably practicable after the making of the property transfer instrument to which it relates.
(7) The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.”
(4) In section 48A (creation of liabilities), in subsection (1), after “44(4)(c)” insert “, 44A(3)(b)”.
Compensation6 (1) In section 49 (orders)—
(a) in subsection (1), for “three” substitute “four” and for “and property transfer instruments” substitute “, property transfer instruments and orders and resolution instruments”;(b) after subsection (2) insert—“(2A) A “bail-in compensation order” is an order establishing a scheme for determining, in accordance with section 52A, whether any transferors or others should be paid compensation.”
(2) After section 52 insert—
“52A Bail-in option
(1) Subsection (2) applies if the Bank of England makes—
(a) a resolution instrument under section 12A(2),(b) a property transfer instrument under section 41A(2), or(c) a supplemental resolution instrument under section 48U(2).(2) The Treasury must make a bail-in compensation order (see section 49(2A)).
(3) A bail-in compensation order may include provision for—
(a) an independent valuer (in which case sections 54 to 56 are to apply);(b) valuation principles (in which case section 57(2) to (5) is to apply).”(3) In section 53 (onward and reverse transfers), in subsection (1)—
(a) after paragraph (f) insert—“(fa) the Bank of England makes a reverse property transfer instrument under section 44A(2),(fb) the Bank of England makes a supplemental property transfer instrument by virtue of section 44A(7),”;(b) omit the “or” after paragraph (g);(c) after paragraph (h) insert—“(i) the Bank of England makes an onward transfer resolution instrument under section 48V(2),(j) the Bank of England makes a reverse transfer resolution instrument under section 48W(2) or (3), or(k) the Bank of England makes a supplemental resolution instrument by virtue of section 48V(7) or 48W(10).”(4) In section 54 (independent valuer)—
(a) in subsection (1), after “compensation scheme order” insert “or bail-in compensation order”;(b) in subsection (4)(b), after “order” insert “or bail-in compensation order”.(5) In section 56 (independent valuer: money), in subsection (2)(b) for “or third party compensation order” substitute “, third party compensation order or bail-in compensation order”.
(6) In section 57 (valuation principles), in subsection (1), after “order” insert “or bail-in compensation order”.
(7) After section 60 insert—
“60A Further mandatory provision: bail-in provision
(1) The Treasury may make regulations about compensation arrangements in the case of—
(a) resolution instruments under section 12A(2) and supplemental resolution instruments under section 48U(2), and(b) instruments (made under any provision) that include special bail-in provision.(2) Regulations may—
(a) require a compensation scheme order, a third party compensation order or a bail-in compensation order to include provision of a specified kind or to specified effect;(b) make provision that is to be treated as forming part of any such order (whether (i) generally, (ii) only if applied, (iii) unless disapplied, or (iv) subject to express modification).(3) Regulations may provide for whether compensation is to be paid, and if so what amount is to be paid, to be determined by reference to any factors or combination of factors; in particular, the regulations may provide for entitlement—
(a) to be contingent upon the occurrence or non-occurrence of specified events;(b) to be determined wholly or partly by an independent valuer (within the meaning of sections 54 to 56) appointed in accordance with a compensation scheme order or bail-in compensation order.(4) Regulations may make provision about payment including, in particular, provision for payments—
(a) on account subject to terms and conditions;(b) by instalment.(5) Regulations—
(a) are to be made by statutory instrument, and(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.60B Principle of no less favourable treatment
(1) In making regulations under section 60A the Treasury must, in particular, have regard to the desirability of ensuring that pre-resolution shareholders and creditors of a bank do not receive less favourable treatment than they would have received had the bank entered insolvency immediately before the coming into effect of the initial instrument.
(2) References in this section to the initial instrument are—
(a) in relation to compensation arrangements in the case of property transfer instruments under section 12(2), to the first instrument to be made under that provision with respect to the bank;(b) in relation to compensation arrangements in other cases, to the first resolution instrument to be made under section 12A with respect to the bank.(3) The “pre-resolution shareholders and creditors” of a bank are the persons who held securities issued by the bank, or were creditors of the bank, immediately before the coming into effect of the initial instrument.
(4) References in this section to insolvency include a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) composition with creditors, and (vii) a scheme of arrangement.”
(8) In section 61(1) (sources of compensation),—
(a) omit the “and” at the end of paragraph (c);(b) after paragraph (c) insert—“(ca) bail-in compensation orders,”;(c) after paragraph (d) insert, “, and(e) regulations under section 60A.”(9) In section 62(1) (procedure), omit the “and” at the end of paragraph (b), and after that paragraph insert—
“(ba) bail-in compensation orders, and”.Groups7 (1) After section 81B insert—
“81BA Bail-in option
(1) The Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 12A(2) if the following conditions are met.
(2) Condition 1 is that the PRA is satisfied that the general conditions for the exercise of a stabilisation power set out in section 7 are met in respect of a bank in the same group.
(3) Condition 2 is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the public interest in—
(a) the stability of the financial systems of the United Kingdom,(b) the maintenance of public confidence in the stability of those systems,(c) the protection of depositors, or(d) the protection of any client assets that may be affected.(4) Condition 3 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.
(5) Before determining whether Condition 2 is met, and if so how to react, the Bank of England must consult—
(a) the Treasury,(b) the PRA, and(c) the FCA.(6) In exercising a stabilisation power in reliance on this section the Bank of England must have regard to the need to minimise the effect of the exercise of the power on other undertakings in the same group.”
(2) After section 81C insert—
“81CA Section 81BA: supplemental
(1) This section applies where the Bank of England has power under section 81BA to exercise a stabilisation power in respect of a banking group company.
(2) The provisions relating to the stabilisation powers and the bank administration procedure contained in this Act (except sections 7 and 8A) and any other enactment apply (with any necessary modifications) as if the banking group company were a bank.
(3) Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2) (“the bank”)—
(a) the provisions in this Act relating to resolution instruments are to be read in accordance with the general rule in subsection (4), but(b) that is subject to the modifications in subsection (5);and provisions in this Act and any other enactment are to be read with any modifications that may be necessary as a result of paragraphs (a) and (b).(4) The general rule is that the provisions in this Act relating to resolution instruments (including supplemental resolution instruments) are to be read (so far as the context permits)—
(a) as applying in relation to the bank as they apply in relation to the parent undertaking, and(b) so, in particular, as allowing any provision that may be made in a resolution instrument in relation to the parent undertaking to be made (also or instead) in relation to the bank.(5) Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2) (“the bank”)—
(a) section 41A (transfer of property subsequent to resolution instrument) applies as if the reference in subsection (2) to the bank were to the parent undertaking, the bank and any other bank which is or was in the same group; (b) section 48V (onward transfer)—(i) applies as if the references in subsection (3) to “the bank” included the bank, the parent undertaking and any other bank which is or was in the same group, and with the omission of subsection (4) of that section, and(ii) is to be read as permitting the transfer of securities only if they are held by (or for the benefit of) the parent undertaking or a subsidiary company of the parent undertaking;(c) section 48W (reverse transfer) applies as if the references in subsections (2) and (3) to “the bank” included the bank, the parent undertaking and any other bank which is or was in the same group.(6) Where section 48B (special bail-in provision) applies in accordance with subsection (4) (so that section 48B applies in relation to the bank mentioned in section 81BA(2) as it applies in relation to the parent undertaking mentioned in subsection (3)), the provision that may be made in accordance with section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(3)) includes provision replacing a liability (of any form) of that bank with a security (of any form or class) of the parent undertaking.
(7) Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2)—
(a) section 214B of the Financial Services and Markets Act 2000 (contribution to costs of special resolution regime) applies, and(b) the reference in subsection (1)(b) of that section to the bank, and later references in that section, are treated as including references to any other bank which is a subsidiary undertaking of the parent undertaking (but not the parent undertaking itself).”(3) In section 81D (interpretation: “banking group company” etc)—
(a) in subsection (6), for “, 81C” substitute “to 81CA”;(b) in subsection (7) for “section 81B” substitute “sections 81B to 81CA”.Banks regulated by the Financial Conduct Authority8 In section 83A (modifications of Part 1 as it applies to banks not regulated by the Prudential Regulation Authority), in the table in subsection (2) insert the following entries at the appropriate places—
“Section 8A | Subsection (3)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.” |
“Section 41A | Subsection (4)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.” |
“Section 44A | Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.” |
“Section 48H | Subsection (5)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. |
Section 48U | Subsection (4)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. |
Section 48V | Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. |
Section 48W | Subsection (9)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.” |
“Section 81BA | Subsection (5)(b) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.” |
(a) in subsection (1), before paragraph (a) insert— “(za) subsection (1A),”;(b) after subsection (1) insert—“(1A) The provisions relating to the third stabilisation option (bail-in) are to be disregarded in the application of this Part to recognised central counterparties.”;
(c) in subsection (2), in the substituted section 13(1), for “third” substitute “fourth”.Insolvency proceedings10 In section 120 (notice to Prudential Regulation Authority of preliminary steps to certain insolvency proceedings)—
(a) in subsection (7)(b)(ii), after “Part 1” insert “(and Condition 5 has been met, if applicable)”;(b) after subsection (8) insert—“(8A) Condition 5—
(a) applies only if a resolution instrument has been made under section 12A with respect to the bank in the 3 months ending with the date on which the PRA receives the notification under Condition 1, and(b) is that the Bank of England has informed the person who gave the notice that it consents to the insolvency procedure to which the notice relates going ahead.”(c) in subsection (10), omit the “and” at the end of paragraph (b), and after paragraph (c) insert “, and(d) if Condition 5 applies, the Bank of England must, within the period in Condition 3(a), inform the person who gave the notice whether or not it consents to the insolvency procedure to which the notice relates going ahead.”;(d) After subsection (10) insert—“(11) References in this section to the insolvency procedure to which the notice relates are to the procedure for the determination, resolution or appointment in question (see subsections (1) to (4)).”
State aid11 After section 256 insert—
“State aid256A State aid
(1) This section applies where—
(a) the Treasury are of the opinion that anything done, or proposed to be done, in connection with the exercise in relation to an institution of one or more of the stabilisation powers may constitute the granting of aid to which any of the provisions of Article 107 or 108 of the Treaty on the Functioning of the European Union applies (“State aid”), and(b) section 145A (power to direct bank administrator) does not apply.(2) The Treasury may, in writing, direct any bail-in administrator, or any director of the institution, to take specified action to enable the United Kingdom to pursue any of the purposes specified in subsection (3) of section 145A (read with subsection (9) of that section).
(3) Before giving a direction under this section the Treasury must consult the person to whom the direction is to be given.
(4) The person must comply with the direction within the period of time specified in the direction, or, if no period of time is specified, as soon as is reasonably practicable.
(5) A direction under this section is enforceable on an application made by the Treasury, by injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.”
Other amendments of the Act12 (1) Section 1 (overview) is amended as follows.
(2) In subsection (2)(a), for “three” substitute “four”.
(3) For subsection (3) substitute—
“(3) The four “stabilisation options” are—
(a) transfer to a private sector purchaser (section 11), (b) transfer to a bridge bank (section 12),(c) the bail-in option (section 12A), and(d) transfer to temporary public ownership (section 13).”(4) In subsection (4)—
(a) for “three” substitute “four”;(b) before paragraph (a) insert—“(za) the resolution instrument powers (sections 12A(2) and 48U to 48W),”;(c) in paragraph (b), after “33” insert “, 41A”.13 In section 13 (temporary public ownership), in subsection (1), for “third” substitute “fourth”.
14 In section 17 (share transfers: effect)—
(a) in subsection (1), after “order” insert, “or by a resolution instrument”;(b) in subsection (5), after “order” insert “or a resolution instrument”;(c) in subsection (6), after “order” insert “or a resolution instrument”.15 In section 18 (share transfers: continuity), after subsection (5) insert—
“(6) This section applies to a resolution instrument that provides for a transfer of securities as it applies to a share transfer instrument (and references to transfers, transferors and transferees are to be read accordingly).”
16 In section 21 (ancillary instruments: production, registration etc), after subsection (5) insert—
“(6) This section applies to a resolution instrument that provides for a transfer of securities as it applies to a share transfer instrument.”
17 In section 44 (reverse property transfer)—
(a) in subsection (2), after “more” insert “bridge bank”;(b) in subsection (3), after “more” insert “bridge bank”;(c) in subsection (4), for “A reverse” substitute “A bridge bank reverse”;(d) in subsection (4A)—(i) after “make a” insert “bridge bank”, and(ii) in paragraph (b), for “the reverse” substitute “the bridge bank reverse”;(e) in subsection (5), for “a reverse” substitute “a bridge bank reverse”;(f) in subsection (6), for “a reverse” substitute “a bridge bank reverse”;(g) in subsection (7), for “a reverse” substitute “a bridge bank reverse”;(h) in the heading, for “Reverse” substitute “Bridge bank: reverse”.18 In section 63 (general continuity obligation: property transfers), in subsection (1)(a), for “or 12(2)” substitute “, 12(2) or 41A(2)”.
19 In section 66 (general continuity obligation: share transfers)—
(a) in subsection (1)(a), after “13(2)” insert “, or which falls within subsection (1A)”;(b) in subsection (1)(d)(i), after “11(2)(a)” insert “, or in a case falling within subsection (1A)”;(c) after subsection (1) insert—“(1A) A bank falls within this subsection if a resolution instrument (or supplemental resolution instrument) has changed the ownership of the bank (wholly or partly) by providing for the transfer, cancellation or conversion from one form or class to another of securities issued by the bank (and the reference in subsection (1)(b) to “the transfer” includes such a cancellation or conversion).”
20 In section 67 (special continuity obligation: share transfers), in subsection (4)(c), after “order” insert “or resolution instrument”.
21 In section 68 (continuity obligations: onward share transfers), in subsection (1)(a), after “transferred by” insert “a resolution instrument under section 12A(2) or supplemental resolution instrument under section 48U(2) or a”.
22 In section 71 (pensions), in subsection (1)—
(a) omit the “and” at the end of paragraph (b);(b) after paragraph (c) insert “, and(d) resolution instruments.”23 In section 72 (enforcement), in subsection (1)—
(a) omit the “or” at the end of paragraph (b);(b) after paragraph (c) insert “, or(d) a resolution instrument.”24 In section 73 (disputes), in subsection (1)—
(a) omit the “and” at the end of paragraph (b);(b) after paragraph (c) insert “, and(d) resolution instruments.”25 In section 74 (tax), in subsection (6), for “or 45” substitute “, 45, 48U or 48V”.
26 After section 80 insert—
“80A Transfer for bail-in purposes: report
(1) This section applies where the Bank of England makes one or more resolution instruments under section 12A(2) in respect of a bank.
(2) The Bank of England must, on request by the Treasury, report to the Chancellor of the Exchequer about—
(a) the exercise of the power to make a resolution instrument under section 12A(2),(b) the activities of the bank, and(c) any other matters in relation to the bank that the Treasury may specify.(3) In relation to the matters in subsection (2)(a) and (b), the report must comply with any requirements that the Treasury may specify.
(4) The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.”
27 In section 81A (accounting information to be included in reports under sections 80 and 81)—
(a) in subsection (1), for “or 81” substitute “, 80A(2)(b) or 81”;(b) in the heading, for “and 81” substitute “, 80A(2)(b) and 81”.28 In section 85 (temporary public ownership), in subsection (1), for “third” substitute “fourth”.
29 In section 136 (overview), in the Table in subsection (3), for “152” substitute “152A”.
30 After section 152 insert—
“152A Property transfer from transferred institution
(1) This section applies where the Bank of England—
(a) makes a resolution instrument that transfers securities issued by a bank (or a bank’s parent undertaking), in accordance with section 12A(2), and(b) later makes a property transfer instrument from the bank or from another bank which is or was in the same group as the bank, in accordance with section 41A(2).(2) This Part applies to the transferor under the property transfer instrument made in accordance with section 41A(2) as to the transferor under a property transfer instrument made in accordance with section 12(2).
(3) For that purpose this Part applies with any modifications specified by the Treasury in regulations; and any regulations—
(a) are to be made by statutory instrument, and(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.”31 In section 220 (insolvency etc), after subsection (4) insert—
“(4A) The fact that ownership of an authorised bank is transferred or otherwise changed as a result of a resolution instrument (or an instrument treated as a resolution instrument) does not itself prevent the bank from relying on section 213.”
32 In section 259 (statutory instruments)—
(a) in the Table in subsection (3), in Part 1, in the entry relating to section 60 for “Third party compensation” substitute “Third party compensation: partial property transfers”;(b) in the Table in subsection (3), in Part 1, at the appropriate places insert—
“48F(1) and (2) | Power to amend definition of “excluded liabilities” | Draft affirmative resolution |
48G | Insolvency treatment principles | Draft affirmative resolution |
48P | Safeguarding of certain financial arrangements | Draft affirmative resolution |
52A | Bail-in compensation orders | Draft affirmative resolution” |
“60A | Third party compensation: instruments containing special bail-in provision | Draft affirmative resolution”; |
“152A | Property transfer from transferred institution | Draft affirmative resolution”; |
“Bail-in compensation order | 49” |
“Resolution instrument | 12A” |
“Special bail-in provision | 48B”. |
(2) In subsection (1) “the relevant 3-month period” means the 3 months ending with the date on which the FCA receives the notification under Condition 1 in regulation 8 of the regulations.
(3) In their application to those cases, the regulations have effect with the modifications in sub-paragraph (4); and any enactment that refers to the regulations is to be read accordingly.
(4) In regulation 8 (in its application to those cases)—
(a) in paragraph (5)(c)(ii), for “appropriate regulator” substitute “Bank of England” and after “notice” insert “and the appropriate regulator”;(b) in paragraph (6), omit sub-paragraph (a) (but continue to read “that” in sub-paragraph (b) as a reference to the insolvency procedure to which the notice relates);(c) after paragraph (6) insert—“(6A) Where the FCA receives notice under Condition 1, it must also inform the Bank of England of the contents of the notice.
(6B) Where the Bank of England receives notice under subsection (6A), it must, within the period in Condition 3, inform the person who gave the notice and the appropriate regulator whether or not it consents to the insolvency procedure to which the notice relates going ahead.””
Lord Newby
ScheduleConsequential amendments relating to Part 4Financial Services and Markets Act 20001 (1) Section 59 of FSMA 2000 (approval for particular arrangements) is amended as follows.
(2) In subsection (1), for the words from “the appropriate regulator” to the end substitute “that person is acting in accordance with an approval given by the appropriate regulator under this section.”
(3) In subsection (2), for the words from “the appropriate regulator” to the end substitute “that person is acting in accordance with an approval given by the appropriate regulator under this section.”
2 (1) Section 59A of FSMA 2000 (specifying functions as controlled functions: supplementary) is amended as follows.
(2) In subsection (1)(a) and (b), for “significant-influence” substitute “senior management”.
(3) After subsection (3) insert—
“(3A) “Senior management function” has the meaning given by section 59ZA.””
3 (1) Section 63 of FSMA 2000 (withdrawal of approval) is amended as follows.
(2) In subsection (1A)(a), for “significant-influence function” substitute “relevant senior management function”.
(3) For subsection (1B) substitute—
“(1B) In subsection (1A) “relevant senior management function” means a function which the PRA is satisfied is a senior management function as defined in section 59ZA (whether or not the function has been designated as such by the FCA).”
4 In section 63A of FSMA 2000 (power to impose penalties), in subsection (2), for paragraph (b) substitute—
“(b) P, when performing the function, is not acting in accordance with an approval given under section 59.”5 (1) Section 66 of FSMA 2000 (disciplinary powers) is amended as follows.
(2) In subsection (3), for paragraph (ab) (and the “or” following it) substitute—
“(ab) impose, for such period as it considers appropriate, any conditions in relation to any such approval which it considers appropriate;(ac) limit the period for which any such approval is to have effect;”.(3) In subsection (3A), for “restriction” substitute “condition”.
(4) In subsection (3B), for “or restriction” substitute “, condition or limitation”.
(5) In subsection (3C), for “restriction” substitute “condition”.
(6) In subsection (3D)—
(a) in paragraph (a), for “or restriction” substitute “, condition or limitation”,(b) omit the “or” at the end of paragraph (a),(c) in paragraph (b), for “restriction” substitute “condition”, and(d) after that paragraph insert—“(c) vary a limitation so as to increase the period for which the approval is to have effect.” (7) In subsection (9), for “restriction” substitute “condition”.
6 (1) Section 67 of FSMA 2000 (disciplinary measures: procedure and right to refer to Tribunal) is amended as follows.
(2) In subsection (1), for “or (ab)” substitute “, (ab) or (ac)”.
(3) In subsection (2A), for “restriction” (in both places) substitute “condition”.
(4) After subsection (2A) insert—
“(2B) A warning notice about a proposal to limit the period for which an approval is to have effect must state the length of that period.”
(5) In subsection (4), for “or (ab)” substitute “, (ab) or (ac)”.
(6) In subsection (5A), for “restriction” (in both places) substitute “condition”.
(7) After subsection (5A) insert—
“(5B) A decision notice about limiting the period for which an approval is to have effect must state the length of that period.”
(8) In subsection (7), for “or (ab)” substitute “, (ab) or (ac)”.
7 In section 69 of FSMA 2000 (statement of policy), in subsection (1)—
(a) in paragraph (a), for “or restrictions” substitute “, conditions or limitations”;(b) omit the “and” at the end of paragraph (b);(c) in paragraph (c), for “restrictions” substitute “conditions”;(d) at the end of paragraph (c) insert “; and(d) the period for which approvals under section 59 are to have effect as a result of a limitation under section 66.”8 In section 138A of FSMA 2000 (modification or waiver of rules), in subsection (2), before paragraph (a) insert—
“(za) rules made by either regulator under section 64A (rules of conduct);”.9 In section 138D of FSMA 2000 (actions for damages), in subsection (5), before paragraph (a) insert—
“(za) rules under section 64A (rules of conduct);”.10 In section 140A of FSMA 2000 (interpretation), in the definition of “regulating provisions”—
(a) in paragraph (a)—(i) omit sub-paragraph (iii), and(ii) in sub-paragraph (iv), omit “64 or”;(b) in paragraph (b), omit sub-paragraphs (ii) and (iii).11 In section 347 of FSMA 2000 (the record of authorised persons etc.), for subsection (9) substitute—
“(9) “Relevant authorised person”, in relation to an approved person, means the person on whose application approval was given.”
12 In section 387 of FSMA 2000 (warning notices), in subsection (1A), for “or 55I(8)” substitute “, 55I(8) or 61(2D)”.
13 In section 388 of FSMA 2000 (decision notices), in subsection (1A), for “or 55I(8)” substitute “, 55I(8) or 61(2D)”.
14 In section 395 of FSMA 2000 (supervisory notices), in subsection (13), after paragraph (a) insert—
“(aa) 63ZC(4), (8) or (9)(b);”.15 (1) Section 415B of FSMA 2000 (consultation in relation to taking certain enforcement action) is amended as follows.
(2) In subsection (4)—
(a) in paragraph (b), for “significant-influence” substitute “relevant senior management”, and(b) omit the definitions appearing after that paragraph.(3) After subsection (4) insert—
“(5) In subsection (4)—
“arrangement” has the same meaning as in section 59; “relevant senior management function” means a function which the FCA is satisfied is a senior management function as defined in section 59ZA (whether or not it has been designated as such under section 59(6B) or (6C)).”16 In Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority), in paragraph 8(3)—
(a) in paragraph (b), omit “64 or”;(b) in paragraph (c)(i)— (i) after “section” insert “63ZD,”, and(ii) omit “64,”.17 In Schedule 1ZB to FSMA 2000 (the Prudential Regulation Authority), in paragraph 16(3)—
(a) omit paragraph (b);(b) in paragraph (c)(i)— (i) after “section” insert “63ZD,”, and(ii) omit “64,”.Financial Services Act 201218 In section 14 of the Financial Services Act 2012, omit subsection (4).
19 (1) Section 85 of the Financial Services Act 2012 (relevant functions in relation to complaints scheme) is amended as follows.
(2) In subsection (4)—
(a) in paragraph (b), omit “64 or”;(b) in paragraph (c)(i)— (i) after “section” insert “63ZD,”, and(ii) omit “64,”.(3) In subsection (5)—
(a) omit paragraph (b);(b) in paragraph (c)(i)— (i) after “section” insert “63ZD,”, and(ii) omit “64,”.”
ScheduleThe Payment Systems RegulatorIntroductory1 In this Schedule—
(a) “the Regulator” means the Payment Systems Regulator;(b) references to the functions of the Regulator are to functions conferred on it by or under this Part.Constitution2 (1) The constitution of the Regulator must provide for it to have a board whose members are the directors of the Regulator.
(2) The board is to consist of the following members—
(a) a member to chair it, appointed by the FCA with the approval of the Treasury;(b) a member to be the Managing Director, appointed by the FCA with the approval of the Treasury;(c) one or more other members appointed by the FCA.(3) The persons who may be appointed under sub-paragraph (2) include persons who are members of the FCA’s governing body.
(4) A person may be appointed under sub-paragraph (2) only if the person has knowledge or experience which is likely to be relevant to the exercise by the Regulator of its functions.
(5) A person appointed under sub-paragraph (2)(a) or (b) is liable to removal from office by the FCA (acting with the approval of the Treasury).
(6) A person appointed under sub-paragraph (2)(c) is liable to removal from office by the FCA.
Status3 (1) The Regulator is not to be regarded as exercising functions on behalf of the Crown.
(2) The officers and staff of the Regulator are not to be regarded as Crown servants.
Budget4 (1) The Regulator must adopt an annual budget which has been approved by the FCA.
(2) The budget must be adopted—
(a) in the case of the Regulator’s first financial year, as soon as reasonably practicable after it is established, and(b) in the case of each subsequent financial year, before the start of the financial year.(3) The Regulator may, with the approval of the FCA, vary the budget for a financial year at any time after its adoption.
(4) Before adopting or varying a budget, the Regulator must consult—
(a) the Treasury, and(b) such other persons (if any) as the Regulator considers appropriate.(5) The Regulator must publish each budget, and each variation of a budget, in the way it considers appropriate.
Arrangements for discharging functions5 (1) The Regulator may make arrangements for any of its functions to be discharged by—
(a) a committee, sub-committee, officer or member of staff of the Regulator;(b) an officer or member of staff of the FCA.This is subject to sub-paragraphs (2) to (4).(2) In exercising any functions within sub-paragraph (3), the Regulator must act through its board.
(3) The functions referred to in sub-paragraph (2) are—
(a) giving general directions under section (Directions);(b) imposing requirements under section (System rules) that apply to all operators of regulated payment systems.(4) The function of issuing general guidance may not be discharged by an officer or member of staff of the Regulator or of the FCA.
Annual plan6 (1) The Regulator must in respect of each of its financial years prepare an annual plan which has been approved by the FCA.
(2) The plan must be prepared—
(a) in the case of the Regulator’s first financial year, as soon as reasonably practicable after it is established, and(b) in the case of each subsequent financial year, before the start of the financial year.(3) The Regulator may, with the approval of the FCA, vary the plan in respect of a financial year at any time after its preparation.
(4) An annual plan in respect of a financial year must set out—
(a) the aims of the Regulator for the year,(b) how the extent to which each of those aims is met is to be determined,(c) the relative priorities of each of those aims, and(d) how its resources are to be allocated among the activities to be carried on in connection with the discharge of its functions.(5) In sub-paragraph (4) references to aims for a financial year include aims for a longer period that includes that year.
(6) Before preparing or varying an annual plan, the Regulator must consult—
(a) the Treasury, and(b) such other persons (if any) as the Regulator considers appropriate.(7) The Regulator must publish each annual plan, and each variation of an annual plan, in the way it considers appropriate.
Annual report7 (1) At least once a year, the Regulator must make a report to the FCA in relation to the discharge of its functions.
(2) The report must—
(a) set out the extent to which the Regulator has met its aims and priorities for the period covered by the report,(b) set out the extent to which the Regulator has advanced its payment systems objectives,(c) include a copy of its latest accounts, and(d) comply with any requirement specified in rules made by the FCA.(3) The Regulator must publish each report in the way it considers appropriate.
(4) Nothing in this paragraph requires the Regulator to make a report at any time in the period of 12 months beginning with its establishment.
(5) The Treasury may—
(a) require the Regulator to comply with any provision of the Companies Act 2006 about accounts and their audit which would not otherwise apply to it, or(b) direct that any provision of that Act about accounts and their audit is to apply to the Regulator with such modifications as are specified in the direction, whether or not the provision would otherwise apply to it.(6) Compliance with any requirement under sub-paragraph (5)(a) or (b) is enforceable by injunction or, in Scotland, an order for specific performance under section 45 of the Court of Session Act 1988.
(7) Proceedings under sub-paragraph (6) may be brought only by the Treasury.
(8) The FCA’s power to make rules under sub-paragraph (2)(d) is to be treated as if it were a power of the FCA to make rules under FSMA 2000 (and rules made under sub-paragraph (2)(d) are to be treated accordingly).
Audit of accounts8 (1) The Regulator must send a copy of its annual accounts to the Comptroller and Auditor General and the Treasury as soon as is reasonably practicable.
(2) The Comptroller and Auditor General must—
(a) examine, certify and report on accounts received under this paragraph, and(b) send a copy of the certified accounts and the report to the Treasury.(3) The Treasury must lay the copy of the certified accounts and the report before Parliament.
(4) The Regulator must send a copy of the certified accounts and the report to the FCA.
(5) Except as provided for by paragraph 7(5), the Regulator is exempt from the requirements of Part 16 of the Companies Act 2006 (audit) and its balance sheet must contain a statement to that effect.
(6) In this paragraph “annual accounts” has the meaning given by section 471 of the Companies Act 2006.
Funding9 (1) In this paragraph “the relevant costs” means—
(a) the expenses incurred, or expected to be incurred, by the Regulator in connection with the discharge of its functions,(b) the expenses incurred by the FCA in establishing the Regulator,(c) any other expenses incurred by the FCA in connection with the discharge of its functions under this Part, and(d) any expenses incurred, or expected to be incurred, by the FCA in connection with the discharge of the Regulator’s functions by an officer or member of staff of the FCA under arrangements made under paragraph 5. For the purposes of paragraph (b) it does not matter when the expenses were incurred.(2) For the purpose of meeting the relevant costs the FCA may make rules requiring participants in regulated payment systems to pay to the FCA specified amounts or amounts calculated in a specified way.
(3) Before making any rules under sub-paragraph (2) the FCA must consult the Treasury.
(4) The amounts to be paid under the rules may include a component to cover the expenses of the FCA in collecting the payments (“collection costs”).
(5) The FCA must pay to the Regulator the amounts that it receives under the rules, apart from the following amounts (which it may keep)—
(a) amounts in respect of expenses falling within sub-paragraph (1)(b) to (d);(b) amounts in respect of its collection costs.(6) In this paragraph “specified” means specified in the rules.
(7) The FCA’s power to make rules under this paragraph is to be treated as if it were a power of the FCA to make rules under FSMA 2000 (and rules made under this paragraph are to be treated accordingly).
Penalty receipts10 (1) The Regulator must in respect of each of its financial years pay to the Treasury any amounts received by it during the year by way of penalties imposed under section (Penalties).
(2) The Treasury may give directions to the Regulator as to how it is to comply with its duty under sub-paragraph (1).
(3) The directions may in particular—
(a) specify the time when any payment is required to be made to the Treasury, and(b) require the Regulator to provide the Treasury at specified times with information relating to penalties that the Regulator has imposed under section (Penalties).(4) The Treasury must pay into the Consolidated Fund any sums received by them under this paragraph.
Records11 The Regulator must maintain satisfactory arrangements for—
(a) recording decisions made in the exercise of its functions, and(b) the safe-keeping of those records which it considers ought to be preserved.Exemption from liability in damages12 (1) None of the following is to be liable in damages for anything done or omitted in the discharge, or purported discharge, of the Regulator’s functions—
(a) the Regulator;(b) any person (“P”) who is, or is acting as, an officer or member of staff of the Regulator;(c) any person who could be held vicariously liable for things done or omitted by P, but only in so far as the liability relates to P’s conduct.(2) If the Regulator has made arrangements under paragraph 5 for any of its functions to be discharged by an officer or member of staff of the FCA, references in sub-paragraph (1) to a person who is an officer or member of staff of the Regulator include references to the officer or member of staff of the FCA.
(3) Anything done or omitted by a person mentioned in sub-paragraph (1)(b) or (c) while acting, or purporting to act, as a result of an appointment under section (Reports by skilled persons) or (Appointment of persons to conduct investigations) is to be taken for the purposes of sub-paragraph (1) to have been done or omitted in the discharge or (as the case may be) purported discharge of the Regulator’s functions.
(4) Sub-paragraph (1) does not apply—
(a) if the act or omission is shown to have been in bad faith, or(b) so as to prevent an award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of section 6(1) of the Human Rights Act 1998.”
ScheduleProcedure for appeals to the CMAFunctions of CMA to be discharged by group1 Except where specified otherwise in this Schedule, the functions of the CMA with respect to an appeal are to be carried out on behalf of the CMA by a group constituted for the purpose by the chair of the CMA under Schedule 4 to the Enterprise and Regulatory Reform Act 2013.
2 (1) Schedule 4 to the Enterprise and Regulatory Reform Act 2013 is amended as follows.
(2) In paragraph 35(1) (membership of CMA panel), after paragraph (c) insert—
“(ca) at least one person (a “payment systems panel member”) appointed to the CMA panel under paragraph 1(1)(b) for the purpose of being available for selection as a member of a group constituted to carry out functions on behalf of the CMA with respect to an appeal made in accordance with section (Appeals to Competition and Markets Authority) of the Financial Services (Banking Reform) Act 2013 (a “specialist payment systems group”);”.(3) In paragraph 38 (membership of CMA groups), after sub-paragraph (5) insert—
“(5A) In the case of a specialist payment systems group, the group must include at least one payment systems member.”(4) In paragraph 48 (performance of functions of chair with respect to constitution etc of CMA group), in sub-paragraph (4)(c), at the end insert—
“(v) Schedule (Procedure for appeals to the CMA) to the Financial Services (Banking Reform) Act 2013.”Application for permission to bring appeal3 (1) An application for permission to bring an appeal may be made only by sending a notice to the CMA requesting the permission.
(2) An application for permission to appeal must be accompanied by all such information as may be required by appeal rules.
(3) Appeal rules may require information contained in an application for permission to appeal to be verified by a statement of truth.
(4) A person who applies for permission to bring an appeal in accordance with this paragraph is referred to in this Schedule as the appellant.
(5) The appellant must send the Payment Systems Regulator—
(a) a copy of the application for permission to appeal at the same time as it is sent to the CMA, and(b) such other information as may be required by appeal rules.(6) The CMA’s decision whether to grant permission to appeal is to be taken by an authorised member of the CMA.
(7) Before the authorised member decides whether to grant permission under this paragraph, the Payment Systems Regulator must be given an opportunity of making representations or observations, in accordance with paragraph 5(2).
(8) The CMA’s decision on an application for permission must be made—
(a) where the Payment Systems Regulator makes representations or observations in accordance with paragraph 5(2), before the end of 10 working days beginning with the first working day after the day on which those representations or observations are received; (b) in any other case, before the end of 14 working days beginning with the first working day after the day on which the application for permission was received.(9) The grant of permission may be made subject to conditions, which may include—
(a) conditions which limit the matters that are to be considered on the appeal in question;(b) conditions for the purpose of expediting the determination of the appeal;(c) conditions requiring the appeal to be considered together with other appeals (including appeals relating to different matters or decisions and appeals brought by different persons).(10) Where a decision is made to grant or to refuse an application for permission, an authorised member of the CMA must notify the decision, giving reasons, to the following persons—
(a) the appellant, and(b) the Payment Systems Regulator.(11) A decision of the CMA under this paragraph must be published, in such manner as an authorised member of the CMA considers appropriate, as soon as reasonably practicable after it is made.
(12) The CMA may exclude from publication under sub-paragraph (11) any information which it is satisfied is—
(a) commercial information, the disclosure of which would, or might in the CMA’s opinion, significantly harm the legitimate business interests of an undertaking to which it relates, or(b) information relating to the private affairs of an individual, the disclosure of which would, or might in the CMA’s opinion, significantly harm the individual’s interests.Suspension of decision4 (1) The CMA may direct that, pending the determination of an appeal against a decision of the Payment Systems Regulator—
(a) the decision is not to have effect, or(b) the decision is not to have effect to such extent as may be specified in the direction.(2) The power to give a direction under this paragraph is exercisable only where—
(a) an application for its exercise has been made by the appellant at the same time as the appellant made an application in accordance with paragraph 3 for permission to bring an appeal against a decision of the Payment Systems Regulator,(b) the Payment Systems Regulator has been given an opportunity of making representations or observations, in accordance with paragraph 5(2), and(c) the balance of convenience does not otherwise require effect to be given to the decision pending that determination.(3) The CMA’s decision on an application for a direction under this paragraph must be made—
(a) where the Payment Systems Regulator makes representations or observations in accordance with paragraph 5(2), before the end of 10 working days beginning with the first working day after the day on which those representations or observations are received;(b) in any other case, before the end of 14 working days beginning with the first working day following the day on which the application under sub-paragraph (2)(a) is received.(4) The appellant must send the Payment Systems Regulator a copy of the application for a direction under this paragraph at the same time as it is sent to the CMA.
(5) The CMA’s decision whether to give a direction is to be taken by an authorised member of the CMA.
(6) A direction under this paragraph must be—
(a) given by an authorised member of the CMA, and (b) published, in such manner as an authorised member of the CMA considers appropriate, as soon as reasonably practicable after it is given.(7) Sub-paragraph (12) of paragraph 3 applies to the publication of a direction under sub-paragraph (6) of this paragraph as it applies to the publication of a decision under sub-paragraph (11) of that paragraph.
Time limit for representations and observations by the Regulator5 (1) Sub-paragraph (2) applies where the Payment Systems Regulator wishes to make representations or observations to the CMA in relation to—
(a) an application for permission to bring an appeal under paragraph 3;(b) an application for a direction under paragraph 4.(2) The Payment Systems Regulator must make the representations or observations in writing before the end of 10 working days beginning with the first working day after the day on which it received a copy of the application under paragraph 3(5) or 4(4) (as the case may be).
(3) Sub-paragraph (4) applies where an application for permission to bring an appeal has been granted and the Payment Systems Regulator wishes to make representations or observations to the CMA in relation to—
(a) the Payment Systems Regulator’s reasons for the decision in relation to which the appeal is being brought;(b) any grounds on which that appeal is being brought against that decision.(4) The Payment Systems Regulator must make the representations or observations in writing before the end of 15 working days beginning with the first working day after the day on which permission to bring the appeal was granted.
(5) The Payment Systems Regulator must send a copy of the representations and observations it makes under this paragraph to the appellant.
Consideration and determination of appeal by group6 (1) A group constituted by the chair of the CMA under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 for the purpose of carrying out functions of the CMA with respect to an appeal must consist of three members of the CMA panel.
(2) A decision of the group is effective if, and only if—
(a) all the members of the group are present when it is made, and(b) at least two members of the group are in favour of the decision.Time limits for determining appeal7 (1) The CMA must determine an appeal within the period of 6 months beginning with the permission date.
(2) If—
(a) the CMA has received representations on the timing of the determination from a party to the appeal, and(b) it is satisfied that there are special reasons why the determination cannot be made within the period specified in sub-paragraph (1),(3) In a case where sub-paragraph (2) applies, the CMA must also—
(a) inform the parties to the appeal of the time limit for determining the appeal, and(b) publish that time limit in such manner as it considers appropriate for the purpose of bringing it to the attention of any other persons likely to be affected by the determination.(4) In this paragraph the “permission date” is the date on which the CMA gave permission to bring the appeal in accordance with section (Appeals: general)(8).
Matters to be considered on appeal8 (1) The CMA, if it thinks it necessary to do so for the purpose of securing the determination of an appeal within the period provided for by paragraph 7, may disregard—
(a) any or all matters raised by an appellant that were not raised by that appellant at the time of the relevant application, and(b) any or all matters raised by the Payment Systems Regulator that were not contained in representations or observations made for the purposes of the appeal in accordance with paragraph 5.(2) In this paragraph “relevant application” means an application under paragraph 3 or 4.
Production of documents etc9 (1) For the purposes of this Schedule, the CMA may by notice—
(a) require a person to produce to the CMA the documents specified or otherwise identified in the notice;(b) require any person who carries on a business to supply to the CMA such estimates, forecasts, returns or other information as may be specified or described in the notice in relation to that business.(2) The power to require the production of a document, or the supply of any estimate, forecast, return or other information, is a power to require its production or, as the case may be, supply—
(a) at the time and place specified in the notice, and(b) in a legible form.(3) No person is to be compelled under this paragraph to produce a document or supply an estimate, forecast, return or other information which the person could not be compelled to produce in civil proceedings in the High Court or Court of Session.
(4) An authorised member of the CMA may, for the purpose of the exercise of the functions of the CMA, make arrangements for copies to be taken of a document produced or an estimate, forecast, return or other information supplied to it under this paragraph.
(5) A notice for the purposes of this paragraph—
(a) may be issued on the CMA’s behalf by an authorised member of the CMA;(b) must include information about the possible consequences of not complying with the notice (as set out in paragraph 13).Oral hearings10 (1) For the purposes of this Schedule an oral hearing may be held, and evidence may be taken on oath—
(a) by a person considering an application for permission to bring an appeal under paragraph 3,(b) by a person considering an application for a direction under paragraph 4, or(c) by a group with the function of determining an appeal;and, for that purpose, such a person or group may administer oaths.(2) The CMA may by notice require a person—
(a) to attend at a time and place specified in the notice, and(b) at that time and place, to give evidence to a person or group mentioned in sub-paragraph (1).(3) At any oral hearing the person or group conducting the hearing may—
(a) require the appellant or the Payment Systems Regulator, if present at the hearing, to give evidence or to make representations or observations, or(b) require a person attending the hearing as a representative of the appellant or of the Payment Systems Regulator to make representations or observations.(4) A person who gives oral evidence at the hearing may be cross-examined by or on behalf of any party to the appeal.
(5) If the appellant, the Payment Systems Regulator, or the appellant’s or Payment Systems Regulator’s representative is not present at a hearing—
(a) there is no requirement to give notice to that person under sub-paragraph (2), and(b) the person or group conducting the hearing may determine the application or appeal without hearing that person’s evidence, representations or observations.(6) No person is to be compelled under this paragraph to give evidence which the person could not be compelled to give in civil proceedings in the High Court or Court of Session.
(7) Where a person is required under this paragraph to attend at a place more than 10 miles from the person’s place of residence, an authorised member of the CMA must arrange for the person to be paid the necessary expenses of attendance.
(8) A notice for the purposes of this paragraph may be issued on the CMA’s behalf by an authorised member of the CMA.
Written statements11 (1) The CMA may by notice require a person to produce a written statement with respect to a matter specified in the notice to—
(a) a person who is considering, or is to consider, an application for a direction under paragraph 4, or(b) a group with the function of determining an appeal.(2) The power to require the production of a written statement includes power—
(a) to specify the time and place at which it is to be produced, and(b) to require it to be verified by a statement of truth;and a statement required to be so verified must be disregarded unless it is so verified.(3) No person is to be compelled under this paragraph to produce a written statement with respect to any matter about which the person could not be compelled to give evidence in civil proceedings in the High Court or Court of Session.
(4) A notice for the purposes of this paragraph may be issued on the CMA’s behalf by an authorised member of the CMA.
Expert advice12 Where permission to bring an appeal is granted under paragraph 3, the CMA may commission expert advice with respect to any matter raised by a party to the appeal.
Defaults in relation to evidence13 (1) If a person (“the defaulter”)—
(a) fails to comply with a notice issued or other requirement imposed under paragraph 9, 10 or 11,(b) in complying with a notice under paragraph 11, makes a statement that is false in any material particular, or(c) in providing information verified in accordance with a statement of truth required by appeal rules, provides information that is false in a material particular,an authorised member of the CMA may certify that fact to the court.(2) If the court is satisfied that the defaulter failed without reasonable excuse to comply with the notice or other requirement, or made the false statement, or provided the false information, it may deal with the defaulter (and in the case of a body corporate, any director or other officer of the body) as if that person were in contempt.
(3) In sub-paragraph (2) “officer”, in relation to a limited liability partnership, means a member of the limited liability partnership.
(4) In this paragraph “court” means—
(a) the High Court, or(b) in Scotland, the Court of Session.14 (1) A person who wilfully alters, suppresses or destroys a document which the person has been required to produce under paragraph 9 is guilty of an offence.
(2) A person guilty of an offence under this paragraph is liable—
(a) on summary conviction— (i) in England and Wales, to imprisonment for a term not exceeding 12 months (or 6 months, if the offence was committed before the commencement of section 154(1) of the Criminal Justice Act 2003) or a fine, or both;(ii) in Scotland, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum, or both;(iii) in Northern Ireland, to imprisonment for a term not exceeding 6 months or a fine not exceeding the statutory maximum, or both;(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine, or both.Determination of appeal by CMA15 (1) A determination by the CMA on an appeal—
(a) must be contained in an order made by the CMA;(b) must set out the reasons for the determination;(c) takes effect at the time specified in the order or determined in accordance with provision made in the order;(d) must be notified by the CMA to the parties to the appeal;(e) must be published by the CMA— (i) as soon as reasonably practicable after the determination is made;(ii) in such manner as the CMA considers appropriate for the purpose of bringing the determination to the attention of any person likely to be affected by it (other than a party to the appeal).(2) The CMA may exclude from publication under sub-paragraph (1)(e) any information which it is satisfied is—
(a) commercial information, the disclosure of which would, or might in the CMA’s opinion, significantly harm the legitimate business interests of an undertaking to which it relates, or(b) information relating to the private affairs of an individual, the disclosure of which would, or might in the CMA’s opinion, significantly harm the individual’s interests.(3) The Payment Systems Regulator must take such steps as it considers necessary for it to comply with an order of the CMA made by virtue of sub-paragraph (1)(a).
(4) The steps must be taken—
(a) if a time is specified in (or is to be determined in accordance with) the order, within that time;(b) in any other case, within a reasonable time.Appeal rules16 (1) The CMA Board may make rules of procedure regulating the conduct and disposal of appeals.
(2) Those rules may include provision supplementing the provisions of this Schedule in relation to any application, notice, hearing, power or requirement for which this Schedule provides; and that provision may, in particular, impose time limits or other restrictions on—
(a) the taking of evidence at an oral hearing, or(b) the making of representations or observations at such a hearing.(3) The CMA Board must publish rules made under this paragraph in such manner as it considers appropriate for the purpose of bringing them to the attention of those likely to be affected by them.
(4) Before making rules under this paragraph, the CMA Board must consult such persons as it considers appropriate.
(5) Rules under this paragraph may make different provision for different cases.
Costs17 (1) A group that determines an appeal must make an order requiring the payment to the CMA of the costs incurred by the CMA in connection with the appeal.
(2) An order under sub-paragraph (1) must require those costs to be paid—
(a) where the appeal is allowed in full, by the Payment Systems Regulator;(b) where the appeal is dismissed in full, by the appellant;(c) where the appeal is partially allowed, by one or more parties in such proportions as the CMA considers appropriate in all the circumstances.(3) The group that determines an appeal may also make such order as it thinks fit for requiring a party to the appeal to make payments to another party in respect of costs reasonably incurred by that other party in connection with the appeal.
(4) A person who is required by an order under this paragraph to pay a sum to another person must comply with the order before the end of the period of 28 days beginning with the day after the making of the order.
(5) Sums required to be paid by an order under this paragraph but not paid within the period mentioned in sub-paragraph (4) are to bear interest at such rate as may be determined in accordance with provision contained in the order.
(6) Any costs payable by virtue of an order under this paragraph and any interest that has not been paid may be recovered as a civil debt by the person in whose favour the order is made.
Interpretation18 (1) In this Schedule—
“appeal” means an appeal made in accordance with section (Appeals to Competition and Markets Authority);“appeal rules” means rules of procedure under paragraph 16;“authorised member of the CMA”—(a) in relation to a power exercisable in connection with an appeal in respect of which a group has been constituted by the chair of the CMA under Schedule 4 to the Enterprise and Regulatory Reform Act 2013, means a member of that group who has been authorised by the chair of the CMA to exercise that power;(b) in relation to a power exercisable in connection with an application for permission to bring an appeal, or otherwise in connection with an appeal in respect of which a group has not been so constituted by the chair of the CMA, means—(i) any member of the CMA Board who is also a member of the CMA panel, or(ii) any member of the CMA panel authorised by the Treasury (whether generally or specifically) to exercise the power in question;“CMA” means the Competition and Markets Authority;“CMA Board” and “CMA panel” have the same meaning as in Schedule 4 to the Enterprise and Regulatory Reform Act 2013;“group” means a group selected in accordance with paragraph 6;“statement of truth”, in relation to the production of a statement or provision of information by a person, means a statement that the person believes the facts stated in the statement or information to be true;“working day” means any day other than—(a) Saturday or Sunday;(b) Christmas Day or Good Friday;(c) a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom.(2) References in this Schedule to a party to an appeal are references to—
(a) the appellant, or(b) the Payment Systems Regulator.”
ScheduleConduct of FMI administration1 The following provisions of this Schedule provide for—
(a) the general powers and duties of FMI administrators (by application of provisions about administrators), and(b) the general process and effects of FMI administration (by application of provisions about administration).2 The provisions set out in the Tables apply in relation to FMI administration as in relation to administration, with—
(a) the modifications set out in paragraph 3,(b) any other modification specified in the Tables, and(c) any other necessary modification.3 The modifications are that—
(a) a reference to the administrator is a reference to the FMI administrator,(b) a reference to administration is a reference to FMI administration,(c) a reference to an administration application is a reference to an FMI administration application,(d) a reference to an administration order is a reference to an FMI administration order,(e) a reference to a company is a reference to the infrastructure company, and(f) a reference to the purpose of administration (other than the reference in paragraph 111(1) of Schedule B1) is a reference to the objective in section (Objective of FMI administration).4 Powers conferred by this Part of this Act and by the 1986 Act (as applied) are in addition to, and not in restriction of, any existing powers of instituting proceedings against any contributory or debtor of an infrastructure company, or the estate of any contributory or debtor, for the recovery of any call or other sum.
5 A reference in an enactment or other document to anything done under a provision applied by this Part of this Act includes a reference to the provision as applied.
TABLE 1 OF APPLIED PROVISIONS SCHEDULE B1 TO THE INSOLVENCY ACT 1986
Provision of Schedule B1 | Subject | Modification |
|---|---|---|
Para. 40(1)(a) | Dismissal of pending winding-up petition | |
Para. 41 | Dismissal of administrative or other receiver | |
Para. 42 | Moratorium on insolvency proceedings | Ignore sub-paras. (4) and (5). |
Para. 43 | Moratorium on other legal process | |
Para. 44(1)(a) and (5) | Interim moratorium | |
Para. 46 | Announcement of appointment | Ignore sub-para. (6)(b) and (c). |
Paras. 47 and 48 | Statement of affairs | |
Para. 49 | Administrator’s proposals | The administrator must obtain the approval of the Bank of England to any proposals under sub-para. (1).Treat the reference in sub-para. (2)(b) to the objective mentioned in para. 3(1)(a) or (b) as a reference to the objective in section (Objective of FMI administration) of this Act. Ignore sub-para. (3)(b). |
Para. 59 | General powers | |
Para. 60 and Schedule 1 | General powers | The exercise of powers under Schedule 1 is subject to section (Objective of FMI administration) of this Act. |
Para. 61 | Directors | |
Para. 62 | Power to call meetings of creditors | |
Para. 63 | Application to court for directions | Before making an application in reliance on this paragraph the FMI administrator must give notice to the Bank of England, which is to be entitled to participate in the proceedings. In making directions the court must have regard to the objective in section (Objective of FMI administration) of this Act. |
Para. 64 | Management powers | |
Para. 65 | Distribution to creditors | |
Para. 66 | Payments | |
Para. 67 | Taking custody of property | |
Para. 68 | Management | Ignore sub-paras. (1) and (3).The Bank of England may apply to the court for the variation or revocation of any directions given by the court. |
Para. 69 | Agency | |
Para. 70 | Floating charges | |
Para. 71 | Fixed charges | |
Para. 72 | Hire-purchase property | |
Para. 73 | Protection for secured and preferential creditors | |
Para. 74 | Challenge to administrator’s conduct | For sub-para. (2) there is to be taken to be substituted—“(2) Where a company is in FMI administration, a creditor or member of the company may apply to the court claiming that the FMI administrator is conducting himself or herself in a manner preventing the achievement of the objective of the FMI administration as quickly and efficiently as is reasonably practicable.” |
Para. 75 | Misfeasance | In addition to applications that may anyway be made under para. 75, an application may be made by the FMI administrator or the Bank of England. |
Para. 79 | Court ending administration on application of administrator | For sub-paras. (1) to (3) there are to be taken to be substituted—“(1) On an application made by a person mentioned in sub-paragraph (2), the court may provide for the appointment of an FMI administrator of a company to cease to have effect from a specified time.(2) The persons who may apply to the court under sub-paragraph (1) are—(a) the Bank of England;(b) with the consent of the Bank, the FMI administrator.” |
Para. 84 | Termination: no more assets for distribution | |
Para. 85 | Discharge of administration order | |
Para. 86 | Notice to Companies Registrar of end of administration | |
Para. 87 | Resignation | An FMI administrator may not resign under para. 87 without giving 28 days’ notice of the intention to do so to the Bank of England. |
Para. 88 | Removal | An application for an order removing an FMI administrator from office may be made only by or with the consent of the Bank of England. |
Para. 89 | Disqualification | The notice under sub-para. (2) must be given to the Bank of England. |
Paras. 90 and 91 | Replacement | Para. 91(1) applies as if the only person who could make an application were the Bank of England.Ignore para. 91(2). |
Para. 98 | Discharge | Ignore sub-paras. (2)(b) and (3). |
Para. 99 | Vacation of office: charges and liabilities | In the application of sub-para. (3), payments may be made only—in accordance with directions of the Bank of England, and if the Bank is satisfied that they will not prejudice the objective in section (Objective of FMI administration) of this Act. |
Paras. 100 to 103 | Joint administrators | An application under para. 103 may be made only by the Bank of England. |
Para. 104 | Validity | |
Para. 106 (and section 430 and Schedule 10) | Fines | |
Paras. 107 to 109 | Extension of time limits | |
Para. 110 | Amendment of provisions about time | An order under para. 110 may amend a provision of the Schedule as it applies by virtue of this Act (whether or not in the same way as it amends the provision as it applies otherwise). |
Para. 111 | Interpretation | |
Paras. 112 to 116 | Scotland |
Section | Subject | Modification or comment |
|---|---|---|
Section 233 | Utilities | |
Section 234 | Getting in company’s property | |
Section 235 | Duty to co-operate with office-holder | |
Section 236 | Inquiry into company’s dealings | |
Section 237 | Section 236: enforcement by court | |
Section 238 | Transactions at an undervalue (England and Wales) | |
Section 239 | Preferences (England and Wales) | |
Section 240 | Ss. 238 and 239: relevant time | |
Section 241 | Orders under ss. 238 and 239 | In considering making an order in reliance on section 241 the court must have regard to the objective in section (Objective of FMI administration) of this Act. Ignore subsections (2A)(a) and (3) to (3C). |
Section 242 | Gratuitous alienations (Scotland) | |
Section 243 | Unfair preferences (Scotland) | In considering the grant of a decree under subsection (5) the court must have regard to the objective in section (Objective of FMI administration) of this Act. |
Section 244 | Extortionate credit transactions | |
Section 245 | Avoidance of floating charges | |
Section 246 | Unenforceability of liens | |
Sections 386 and 387, and Schedule 6 (and Schedule 4 to the Pension Schemes Act 1993) | Preferential debts | |
Section 389 | Offence of acting without being qualified | Treat references to acting as an insolvency practitioner as references to acting as an FMI administrator. |
Section 390 | Persons not qualified to act | Treat references to acting as an insolvency practitioner as references to acting as an FMI administrator. |
Section 391 | Recognised professional bodies | An order under section 391 has effect in relation to any provision applied for the purposes of FMI administration. |
Sections 423 to 425 | Transactions defrauding creditors | In considering granting leave under section 424(1) or making an order in reliance on section 425, the court must have regard to the objective in section (Objective of FMI administration) of this Act. |
Sections 430 to 432 and Schedule 10 | Offences |
(2) The further modifications that may be made are confined to such modifications of—
(a) the 1986 Act, or(b) other enactments passed or made before this Act that relate to insolvency or make provision by reference to anything that is or may be done under the 1986 Act,(3) An order under this paragraph may also make modifications of the provisions of this Schedule.”
ScheduleFinancial market infrastructure transfer schemesApplication of Schedule1 This Schedule applies where—
(a) the court has made an FMI administration order in relation to a company (“the old company”), and(b) it is proposed that a transfer within section (Objective of FMI administration)(5) be made to another company (“the new company”).Interpretation of Schedule2 In this Schedule—
“FMI transfer scheme” has the meaning given by paragraph 4(1);“the new company” and “the old company” are to be read in accordance with paragraph 1;“third party”, in relation to an FMI transfer scheme or a modification of such a scheme, means a person other than the old company or the new company.FMI administrator to act on behalf of old company3 It is for the FMI administrator, while the FMI administration order is in force, to act on behalf of the old company in the doing of anything that it is authorised or required to do by or under this Schedule.
Making of FMI transfer schemes4 (1) The old company may—
(a) with the consent of the new company, and(b) for the purpose of giving effect to the proposed transfer,make a scheme under this Schedule for the transfer of property, rights and liabilities from the old company to the new company (an “FMI transfer scheme”).(2) Such a scheme may be made only at a time when the FMI administration order is in force in relation to the old company.
(3) An FMI transfer scheme may set out the property, rights and liabilities to be transferred in one or more of the following ways—
(a) by specifying or describing them in particular,(b) by identifying them generally by reference to, or to a specified part of, the undertaking of the old company, or?(c) by specifying the manner in which they are to be determined.(4) An FMI transfer scheme is to take effect in accordance with paragraph 7 at the time appointed by the court.
(5) But the court must not appoint a time for a scheme to take effect unless that scheme has been approved by the Bank of England.
(6) The Bank of England may modify an FMI transfer scheme before approving it, but only modifications to which both the old company and the new company have consented may be made.
(7) In deciding whether to approve an FMI transfer scheme, the Bank of England must have regard, in particular, to—Before approving an FMI transfer scheme, the Bank of England must consult the Treasury.The old company and the new company each have a duty to provide the Bank of England with all information and other assistance that the Bank may reasonably require for the purposes of, or in connection with, the exercise of the powers conferred on it by this paragraph.
(a) the public interest, and(b) any effect that the scheme is likely to have on the interests of third parties.Provision that may be made by a scheme5 (1) An FMI transfer scheme may contain provision—
(a) for the creation, in favour of the old company or the new company, of an interest or right in or in relation to property transferred in accordance with the scheme;(b) for giving effect to a transfer to the new company by the creation, in favour of that company, of an interest or right in or in relation to property retained by the old company;(c) for the creation of new rights and liabilities (including rights of indemnity and duties to indemnify) as between the old company and the new company;(d) in connection with any provision made under this sub-paragraph, provision making incidental provision as to the interests, rights and liabilities of other persons with respect to the property, rights and liabilities to which the scheme relates.(2) The property, rights and liabilities of the old company that may be transferred in accordance with an FMI transfer scheme include—
(a) property, rights and liabilities that would not otherwise be capable of being transferred or assigned by the old company;(b) property acquired, and rights and liabilities arising, in the period after the making of the scheme but before it takes effect;(c) rights and liabilities arising after it takes effect in respect of matters occurring before it takes effect;(d) property situated anywhere in the United Kingdom or elsewhere;(e) rights and liabilities under the law of a part of the United Kingdom or of a place outside the United Kingdom;(f) rights and liabilities under an enactment, EU instrument or subordinate legislation.(3) The transfers to which effect may be given by an FMI transfer scheme include transfers of interests and rights that are to take effect in accordance with the scheme as if there were—
(a) no such requirement to obtain a person’s consent or concurrence,(b) no such liability in respect of a contravention of any other requirement, and(c) no such interference with any interest or right, as there would be, in the case of a transaction apart from this Act, by reason of a provision falling within sub-paragraph (4).(4) A provision falls within this sub-paragraph to the extent that it has effect (whether under an enactment or agreement or otherwise) in relation to the terms on which the old company is entitled, or subject, to anything to which the transfer relates.
(5) Sub-paragraph (6) applies where (apart from that sub-paragraph) a person would be entitled, in consequence of anything done or likely to be done by or under this Act in connection with an FMI transfer scheme—
(a) to terminate, modify, acquire or claim an interest or right, or(b) to treat an interest or right as modified or terminated.(6) That entitlement—
(a) is not enforceable in relation to that interest or right until after the transfer of the interest or right by the scheme, and(b) is then enforceable in relation to the interest or right only in so far as the scheme contains provision for the interest or right to be transferred subject to whatever confers that entitlement.(7) Sub-paragraphs (3) to (6) have effect where shares in a subsidiary of the old company are transferred—
(a) as if the reference in sub-paragraph (4) to the terms on which the old company is entitled or subject to anything to which the transfer relates included a reference to the terms on which the subsidiary is entitled or subject to anything immediately before the transfer takes effect, and(b) in relation to an interest or right of the subsidiary, as if the references in sub-paragraph (6) to the transfer of the interest or right included a reference to the transfer of the shares.(8) Sub-paragraphs (3) and (4) apply to the creation of an interest or right by an FMI transfer scheme as they apply to the transfer of an interest or right.
Further provision about transfers6 (1) An FMI transfer scheme may make incidental, supplemental, consequential and transitional provision in connection with the other provisions of the scheme.
(2) An FMI transfer scheme may in particular make provision, in relation to a provision of the scheme—Sub-paragraph (2)(c) does not apply to references in an enactment or in subordinate legislation.
(a) for the new company to be treated as the same person in law as the old company;?(b) for agreements made, transactions effected or other things done by or in relation to the old company to be treated, so far as may be necessary for the purposes of or in connection with a transfer in accordance with the scheme, as made, effected or done by or in relation to the new company;(c) for references in an agreement, instrument or other document to the old company or to an employee or office holder with the old company to have effect, so far as may be necessary for the purposes of or in connection with a transfer in accordance with the scheme, with such modifications as are specified in the scheme;(d) that the effect of any transfer in accordance with the scheme in relation to contracts of employment with the old company is not to terminate any of those contracts but is to be that periods of employment with that company are to count for all purposes as periods of employment with the new company;(e) for proceedings commenced by or against the old company to be continued by or against the new company. (4) An FMI transfer scheme may make provision for disputes between the old company and the new company as to the effect of the scheme to be referred to such arbitration as may be specified in or determined under the scheme.
(5) Where a person is entitled, in consequence of an FMI transfer scheme, to possession of a document relating in part to the title to land or other property in England and Wales, or to the management of such land or other property—
(a) the scheme may provide for that person to be treated as having given another person an acknowledgement in writing of the right of that other person to production of the document and to delivery of copies of it, and(b) section 64 of the Law of Property Act 1925 (production and safe custody of documents) is to have effect accordingly, and on the basis that the acknowledgement did not contain an expression of contrary intention.(6) Where a person is entitled, in consequence of an FMI transfer scheme, to possession of a document relating in part to the title to land or other property in Scotland or to the management of such land or other property, subsections (1) and (2) of section 16 of the Land Registration (Scotland) Act 1979 (omission of certain clauses in deeds) is to have effect in relation to the transfer—
(a) as if the transfer had been effected by deed, and(b) as if the words “unless specially qualified” were omitted from each of those subsections.(7) Where a person is entitled, in consequence of an FMI transfer scheme, to possession of a document relating in part to the title to land or other property in Northern Ireland or to the management of such land or other property—
(a) the scheme may provide for that person to be treated as having given another person an acknowledgement in writing of the right of that other person to production of the document and to delivery of copies of it, and(b) section 9 of the Conveyancing Act 1881 is to have effect accordingly, and on the basis that the acknowledgement does not contain an expression of contrary intention.(8) In this paragraph references to a transfer in accordance with an FMI transfer scheme include references to the creation in accordance with such a scheme of an interest, right or liability.
Effect of scheme7 (1) In relation to each provision of an FMI transfer scheme for the transfer of property, rights or liabilities, or for the creation of interests, rights or liabilities—
(a) the property, interests, rights or liabilities become by virtue of this Schedule the property, interests, rights or liabilities of the transferee at the time appointed by the court for the purposes of paragraph 4(4), and(b) the provisions of that scheme in relation to that property, or those interests, rights or liabilities, have effect from that time.(2) In this paragraph “the transferee” means—
(a) in relation to property, rights or liabilities transferred by an FMI transfer scheme, the new company;(b) in relation to interests, rights or liabilities created by such a scheme, the person in whose favour, or in relation to whom, they are created.Subsequent modification of scheme8 (1) The Bank of England may by notice to the old company and the new company modify an FMI transfer scheme after it has taken effect, but only modifications to which both the old company and the new company have consented may be made.
(2) The notice must specify the time at which it is to take effect (the “modification time”).
(3) Where a notice is issued under this paragraph in relation to an FMI transfer scheme, as from the modification time, the scheme is for all purposes to be treated as having taken effect, at the time appointed for the purposes of paragraph 4(4), with the modifications made by the notice.
(4) Those modifications may make—
(a) any provision that could have been included in the scheme when it took effect at the time appointed for the purposes of paragraph 4(4), and transitional provision in connection with provision falling within paragraph (a).(5) In deciding whether to modify an FMI transfer scheme, the Bank of England must have regard, in particular, to—
(a) the public interest, and(b) any effect that the modification is likely to have on the interests of third parties.(6) Before modifying an FMI transfer scheme that has taken effect, the Bank of England must consult the Treasury.?The old company and the new company each have a duty to provide the Bank of England with all information and other assistance that the Bank may reasonably require for the purposes of, or in connection with, the exercise of the powers conferred on it by this paragraph.
Provision relating to foreign property9 (1) An FMI transfer scheme may contain provision about—
(a) the transfer of foreign property, right and liabilities, and(b) the creation of foreign property, rights and liabilities.(2) For this purpose property, or a right, interest or liability, is “foreign” if an issue relating to it arising in any proceedings would (in accordance with the rules of private international law) be determined under the law of a country or territory outside the United Kingdom.
Application of Schedule to transfers to subsidiaries10 Where a proposed transfer falling within subsection (5) of section (Objective of FMI administration) is a transfer of the kind mentioned in subsection (6)(a) of that section, this Schedule has effect in relation to the transfer as if—
(a) paragraph 4(1)(a) were omitted, and(b) in paragraph 4(6), for the words from “both” onwards there were substituted “the old company has consented may be made”.”
ScheduleFunctions of FCA under competition legislationPart 1Amendments of Financial Services and Markets Act 20001 Part 16A of FSMA 2000 (consumer protection and competition) is amended as follows.
2 Omit section 234H (power of FCA to make request to Office of Fair Trading).
3 After section 234H insert—
“234I Matters in relation to which the FCA has competition functions
(1) In sections 234J and 234K “financial sector activities” means the provision of financial services.
(2) The Treasury may by order amend this section.
234J The FCA’s functions under Part 4 of the Enterprise Act 2002
(1) The functions to which this subsection applies (“the concurrent functions”) are to be concurrent functions of the FCA and the Competition and Markets Authority (referred to in this Part as “the CMA”).
(2) Subsection (1) applies to the functions of the CMA under Part 4 of the Enterprise Act 2002 (market investigations), so far as those functions—
(a) are exercisable by the CMA Board (within the meaning of Schedule 4 to the Enterprise and Regulatory Reform Act 2013), and(b) relate to financial sector activities.(3) But subsection (1) does not apply to functions under the following sections of the Enterprise Act 2002—
section 166 (duty to maintain register of undertakings and orders);section 171 (duty to publish guidance).(4) So far as is necessary for the purposes of, or in connection with, subsections (1) and (2)—
(a) references in Part 4 of the Enterprise Act 2002 to the CMA (including references in provisions of that Act applied by that Part) are to be read as including references to the FCA, and(b) references in that Part to section 5 of that Act are to be read as including references to section 234N of this Act.(5) But subsection (4) does not apply—
(a) in relation to section 166 or 171 of that Act, or(b) where the context otherwise requires.(6) Section 130A of the Enterprise Act 2002 has effect in relation to the FCA by virtue of subsections (1) and (2) as if—
(a) in subsection (2)(a) of that section, the reference to the acquisition or supply of goods or services of one or more than one description in the United Kingdom were a reference to financial sector activities involving services provided or received in the United Kingdom, and(b) in subsection (2)(b) of that section, the reference to the extent to which steps can and should be taken were a reference to the extent to which steps that might include steps under Part 4 of that Act can and should be taken.(7) Before the CMA or the FCA first exercises any of the concurrent functions in relation to any matter, it must consult the other.
(8) Neither the CMA nor the FCA may exercise any of the concurrent functions in relation to any matter if any of those functions have been exercised in relation to that matter by the other.
234K The FCA’s functions under the Competition Act 1998
(1) The functions to which this subsection applies (“the concurrent functions”) are to be concurrent functions of the FCA and the CMA.
(2) Subsection (1) applies to the functions of the CMA under the provisions of Part 1 of the Competition Act 1998, so far as relating to any of the following that relate to financial sector activities—
(a) agreements, decisions or concerted practices of the kind mentioned in section 2(1) of that Act,(b) conduct of the kind mentioned in section 18(1) of that Act,(c) agreements, decisions or concerted practices of the kind mentioned in Article 101(1) of the Treaty on the Functioning of the European Union, and(d) conduct which amounts to abuse of the kind mentioned in Article 102 of the Treaty on the Functioning of the European Union.(3) But subsection (1) does not apply to functions under the following provisions of that Act—
section 31D(1) to (6) (duty to publish guidance);section 38(1) to (6) (duty to publish guidance about penalties);section 40B(1) to (4) (duty to publish statement of policy on penalties);section 51 (rules).(4) So far as necessary for the purposes of, or in connection with, the provisions of subsections (1) and (2), references to the CMA in Part 1 of the Competition Act 1998 are to be read as including references to the FCA.
(5) But subsection (4) does not apply—
(a) in relation to sections 31D(1) to (6), 38(1) to (6), 40B(1) to (4), 51, 52(6) and (8) and 54 of that Act, or(b) where the context otherwise requires. 234L Duty to consider exercise of powers under Competition Act 1998
(1) Before exercising a power listed in subsection (3), the FCA must consider whether it would be more appropriate to proceed under the Competition Act 1998.
(2) The FCA must not exercise such a power if it considers that it would be more appropriate to proceed under the Competition Act 1998.
(3) Those powers are—
(a) the power under section 55J(2) to vary or cancel a Part 4A permission;(b) the power under section 55L to impose a requirement on an authorised person with a Part 4A permission, or to vary a requirement imposed under that section;(c) the power to take action under section 88E;(d) the power to take action under section 89U;(e) the power to give a direction under section 192C;(f) the power to impose a requirement under section 196.234M Provision of information and assistance to a CMA group
(1) For the purpose of assisting a CMA group in carrying out a relevant investigation, the FCA must give the CMA group—
(a) any relevant information which the FCA has in its possession, and(b) any other assistance which the CMA group may reasonably require in relation to any matters falling within the scope of the investigation.(2) A “relevant investigation” is an investigation carried out on a reference made by the FCA under section 131 of the Enterprise Act 2002 by virtue of section 234J.
(3) “Relevant information”, in relation to a relevant investigation, is information—
(a) which relates to matters falling within the scope of the investigation, and(b) which—(i) is requested by the CMA group for the purpose of the investigation, or(ii) in the FCA’s opinion, it would be appropriate to give to the CMA group for that purpose.(4) A CMA group, in carrying out a relevant investigation, must take into account any information given to it under this section.
(5) In this section “CMA group” has the same meaning as in Schedule 4 to the Enterprise and Regulatory Reform Act 2013.
234N Information relating to FCA’s competition functions
(1) For the purpose of the functions conferred on it by sections 234J to 234M the FCA is to have the function of keeping under review the market for financial services.
(2) The function conferred by subsection (1) is to be carried out with a view to (among other things) ensuring that the FCA has sufficient information to take informed decisions and to carry out its other functions effectively.
234O Exclusion of general duties
(1) Section 1B (the FCA’s general duties) does not apply in relation to anything done by the FCA in the carrying out of its functions by virtue of sections 234J to 234M.
(2) But in the carrying out of any functions by virtue of sections 234J to 234M, the FCA may have regard to any of the matters in respect of which a duty is imposed by section 1B if it is a matter to which the CMA is entitled to have regard in the carrying out of those functions.
234P Supplementary provision
(1) If any question arises as to whether, by virtue of sections 234J and 234K, any functions fall to be, or are capable of being, carried out by the FCA in relation to any particular case, that question is to be referred to, and determined by, the Treasury.
(2) No objection is to be taken to anything done under the Competition Act 1998 or Part 4 of the Enterprise Act 2002 by or in relation to the FCA on the ground that it should have been done by or in relation to the CMA.”
4 In section 3I of FSMA 2000 (power of PRA to require FCA to refrain from specified action), in subsection (3)(a), after “55I” insert “, a power conferred on it by sections 234J to 234N”.
5 In section 354A of FSMA 2000 (FCA’s duty to co-operate with others), after subsection (2) insert—
“(2A) Subsection (1) does not apply in relation to the Competition and Markets Authority in a case where the FCA has made a reference under section 131 of the Enterprise Act 2002 as a result of section 234J (but see section 234M).”
6 (1) Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority) is amended as follows.
(2) In paragraph 8 (arrangements for discharging functions), after sub-paragraph (4) insert—
“(5) In respect of the exercise of a function under Part 1 of the Competition Act 1998, the power in sub-paragraph (1) is subject to provision in rules made under section 51 of that Act by virtue of paragraph 1A of Schedule 9 to that Act.”(3) In paragraph 23 (fees), after sub-paragraph (2) insert—
“(2A) The functions referred to in sub-paragraph (1)(a) include functions of the FCA under the Competition Act 1998 or the Enterprise Act 2002 as a result of Part 16A of this Act.”Part 2Amendments of other legislationCompany Directors Disqualification Act 19867 In section 9E of the Company Directors Disqualification Act 1986 (interpretation of sections 9A to 9D), in subsection (2), after paragraph (g) insert—
“(h) the Financial Conduct Authority.”Competition Act 19988 In section 54 of the Competition Act 1998 (regulators), in subsection (1), after paragraph (i) insert—
“(j) the Financial Conduct Authority.”Enterprise Act 20029 (1) Section 136 of the Enterprise Act 2002 (investigations and reports on market investigation references) is amended as follows.
(2) In subsection (7), after paragraph (e) insert—
“(ea) in relation to the Financial Conduct Authority, section 234J of the Financial Services and Markets Act 2000;”.(3) In subsection (8), after “the Office of Rail Regulation,” insert “the Financial Conduct Authority,”.
Enterprise and Regulatory Reform Act 201310 In section 52(4) of the Enterprise and Regulatory Reform Act 2013 (power to remove concurrent competition functions of sectoral regulators), after paragraph (g) insert—
“(h) the Financial Conduct Authority.”11 In Schedule 4 to the Enterprise and Regulatory Reform Act 2013 (the Competition and Markets Authority), in paragraph 16 (concurrency report), at the end of sub-paragraph (7) insert—
“(i) the Financial Conduct Authority.””
ScheduleBuilding societiesIntroductory1 The Building Societies Act 1986 is amended as follows.
Exclusion of small business deposits from funding limit2 (1) Section 7 (the funding limit) is amended as follows.
(2) In subsection (3), omit the “and” at the end of paragraph (a) and after that paragraph insert—
“(aa) subject to subsection (3A), the principal of, and interest accrued on, sums deposited with the society or any subsidiary undertaking of the society by a small business (see subsection (10));”.(3) After subsection (3) insert—
“(3A) In respect of any day by reference to which the value of X falls to be calculated for the purposes of subsection (1) in relation to the society, the total amount to be disregarded under subsection (3)(aa) may not exceed 10% of the amount that would, in the absence of subsection (3)(aa), be the value of X on that day.”
(4) After subsection (6) insert—
“(6ZA) Where a person declares that the person is a small business, the person shall, unless the contrary is shown, be conclusively presumed for the purposes of this section to be a small business.”
(5) After subsection (9) insert—
“(10) In this section “small business” means any person (other than an individual acting as a sole trader) carrying on a business which had a turnover in the relevant financial year of less than £1,000,000.
“(11) For the purposes of subsection (10)—
(a) the “relevant financial year”, in relation to any day by reference to which the value of X falls to be calculated for the purposes of subsection (1) in relation to a building society, means the last financial year ending before that day;(b) “turnover”, in relation to a small business, means the amount derived from the provision of goods and services falling within the business’s ordinary activities, after deduction of trade discounts, value added tax and any other taxes based on the amounts so derived;(c) in respect of any relevant financial year, the reference to £1,000,000 includes the equivalent amount in any other currency, calculated as at the last day of that year.(12) The Treasury may, by order made by statutory instrument, amend the figure for the time being specified in subsections (10) and (11)(c).
(13) A statutory instrument containing an order under subsection (12) is subject to annulment in pursuance of a resolution of either House of Parliament.”
3 (1) In article 3 of the Building Societies Act 1986 (Substitution of Specified Amounts and Modification of the Funding Limits Calculation) Order 2007 (S.I. 2007/860), in paragraph 3, for “the modification required by this article” substitute “the modifications required by this article and by section 7(3)(aa)”.
(2) The amendment by this paragraph of a provision contained in subordinate legislation is without prejudice to any power to amend that provision by subordinate legislation.
Ability to create floating charges4 (1) Omit section 9B (restriction on creation of floating charges).
(2) In Schedule 15A (application of other companies insolvency legislation to building societies), omit the following paragraphs—
(a) paragraph 18 (which modifies section 15 of the Insolvency Act 1986);(b) paragraph 20 (which modifies section 19 of that Act);(c) paragraph 40 (which modifies Article 28 of the Insolvency (Northern Ireland) Order 1989);(d) paragraph 42 (which modifies Article 31 of that Order).(3) In consequence of the amendment made by sub-paragraph (1)—
(a) in section 1(1A)(b), for “, 9A and 9B” substitute “and 9A”;(b) in the Building Societies Act 1997, omit section 11;(c) in section 11(3) of the Banking (Special Provisions) Act 2008, for paragraph (c) substitute— “(c) sections 8 and 9A of the Building Societies Act 1986 (restrictions on raising funds and borrowing and on transactions involving derivative instruments etc);”;(d) in section 251 of the Banking Act 2009, omit subsection (7);(e) in the Financial Services Act 2012, omit section 55.Annual business statements5 (1) Section 74 (duty of directors to prepare annual business statement) is amended as follows.
(2) In subsection (4), omit the words from “and other officers” to “them”.
(3) In subsection (8), omit “or other officer”.
Summary financial statements6 (1) Section 76 (summary financial statement for members and depositors) is amended as follows.
(2) After subsection (8A) insert—
“(8AA) The society shall also—
(a) publish the summary financial statement and (where applicable) the auditor’s report on a web site, and(b) ensure that the statement and (where applicable) the report may be accessed on the web site until the publication of the next summary financial statement.”(3) After subsection (8D) insert—
“(8E) If, at any time during the period beginning with the publication of the summary financial statement and ending with the publication of the next summary financial statement, an individual for the first time subscribes for shares in the society, the society shall at that time notify the individual of the information in subsection (8C)(c)(i) to (iii).
(8F) In a case where subsection (8E) applies, the society is not required under section 115B (right to hard copy version) to send the individual a version of the summary financial statement or (where applicable) the auditor’s report in hard copy form (within the meaning of that section).”
(4) Omit subsections (9) to (9E).
(5) In subsection (11), for “subsection (9)” substitute “subsection (8AA) or (8E)”.
7 In consequence of the amendments made by paragraph 6—
(a) in section 78(6), for “subsections (8) and (9) of section 76 extend” substitute “subsection (8) of section 76 extends”;(b) in paragraphs 7(3) and 8(3) of Schedule 2, omit “the summary financial statement,”.Transfers of business: distributions and share rights8 (1) Section 100 (regulated terms etc: distributions and share rights) is amended as follows.
(2) For subsection (8) substitute—
“(8) The terms of a transfer of a society’s business may confer a right to acquire shares in the successor on a member of the society only if the member—
(a) held shares in the society throughout the period of two years ending with the qualifying day, or(b) on that day, holds deferred shares in the society that are of a class described in the transfer agreement;and it is unlawful for any right in relation to shares to be conferred in contravention of this subsection.”(3) In subsection (9), for the words from “who” to “and” substitute “who—
(a) held shares in the society throughout the period of two years ending with the qualifying day, or(b) on that day, hold deferred shares in the society that are of a class described in the transfer agreement;and”.Methods of communicating with members etc9 After section 115 insert—
“115A Deemed agreement to use of web site
(1) For the purposes of this Act, a person is to be taken to have agreed with a building society to access a document, information or facility on a web site if—
(a) the person has been asked individually by the society to agree to access documents, information or facilities generally, or documents, information or facilities of the description in question, on a web site, and(b) the society has not received a response within the period of 28 days beginning with the date on which the society’s request was received.This is subject to subsections (2) to (4).(2) A person is not to be taken to have so agreed if the society’s request—
(a) did not state clearly what the effect of a failure to respond would be, or(b) was sent less than 12 months after a previous request made to the person for the purposes of this section in respect of the same or a similar description of document, information or facility.(3) A person who is taken to have made an agreement by virtue of subsection (1) may revoke the agreement.
(4) Subsection (1) does not apply in relation to the following documents—
(a) a statement required to be sent to members by paragraph 1(1) of Schedule 16 (statements in connection with proposed mergers);(b) a merger statement (within the meaning of Part 2 of that Schedule) required to be sent to members by paragraph 3 of that Schedule;(c) a transfer statement or transfer summary (within the meaning of Part 1 of Schedule 17) required to be sent to members by paragraph 4(1) or (2) of that Schedule;(d) a transfer proposal notification (within the meaning of Part 1A of Schedule 17) required to be sent to members by paragraph 5B(1) of that Schedule.115B Right to hard copy version
(1) Where a person has received a document or information from a building society otherwise than in hard copy form, the person is entitled to require the society to send the person a version of the document or information in hard copy form.
(2) The society must send the document or information in hard copy form within 21 days of receipt of the request from the person.
(3) The society may not make a charge for providing the document or information in that form.
(4) Subsection (1) does not apply if the recipient of the document or information is the FCA or the PRA.
(5) A building society that fails to comply with this section is to be treated as having contravened rules made under section 137A of the Financial Services and Markets Act 2000.
(6) For the purposes of this section a person is treated as receiving a document or information from a building society if—
(a) the society is required by this Act to send the document or information to the person, and(b) the requirement to send it is treated as satisfied.(7) For the purposes of this section—
(a) a document or information is sent or supplied in hard copy form if it is sent or supplied in a paper copy or similar form capable of being read, and(b) a document or information can be read only if it can be read with the naked eye, or (to the extent that it consists of images) it can be seen with the naked eye.115C Other agreed forms of communication
(1) A document or information that is sent or supplied by a building society otherwise than in hard copy form or electronically or by means of a web site is validly sent or supplied if it is sent or supplied in a form or manner that has been agreed by the intended recipient.
(2) For the purposes of this section “hard copy form” is to be read in accordance with section 115B(7).”
10 In the following provisions, omit “, in a manner agreed between him and the society,”—
section 60(7B)(c),section 61(7D)(c),section 68(6B)(c),section 69(15B)(c),section 76(8C)(c).11 In section 81(3B)(c), omit “, in a manner agreed for the purpose between him and the society,”.
12 (1) Schedule 2 is amended as follows.
(2) In paragraph 20A(1B)(c), omit “, in a manner agreed between him and the society,”.
(3) In paragraphs 22B(2)(c) and 33(5C)(c), omit “, in a manner agreed between him and the society for that purpose,”.
(4) In paragraph 24(1B)(b), omit “in a manner agreed between the society and that member,”.
(5) In paragraph 32(2D)(c), omit “, in a manner agreed between the society and the member,”.
(6) In paragraph 33A(9)(c), omit “, in a manner agreed for the purpose between him and the society”.
13 In paragraphs 3(2B)(c) and 9(2B)(c) of Schedule 8A, omit “in a manner agreed between the society and that person,”.
14 (1) Schedule 11 is amended as follows.
(2) In paragraph 4(9C)(c), omit “, in a manner agreed between him and the society,”.
(3) In paragraph 7(7C)(c), for “in a manner agreed between the society and that person, he” substitute “the person”.
(4) In paragraph 8(3B)(c), omit “, in a manner agreed between him and the society for the purpose,”.
Financial year15 (1) Section 117 (financial year of building societies) is amended as follows.
(2) For subsection (1) substitute—
“(1) A building society’s financial years (apart from its final financial year) are determined according to its year-end date in each calendar year.
For provision about a building society’s final financial year, see subsection (1G).(1A) The year-end date of a building society established before 25th August 1894 is—
(a) the date up to which, as at 1st January 1987, the accounts of the society were annually made up, or(b) if the society has, at any time before the day on which subsection (1) comes into force (“the relevant day”), altered its financial year in exercise of a power within subsection (1B), 31st December.(1B) The powers referred to in subsection (1A)(b) are—
(a) the power conferred by section 70(2) of the Building Societies Act 1960,(b) the power conferred by section 128(2) of the Building Societies Act 1962, and(c) the power conferred by subsection (3) of this section (as it had effect immediately before the relevant day).(1C) The year-end date of a building society established on or after 25th August 1894 and before the relevant day is 31st December.
(1D) The year-end date of a building society established on or after the relevant day is the last day of the month in which the anniversary of its establishment falls.
(1E) The financial year of a building society established before the relevant day is the period of 12 months ending with the year-end date of the society (but see subsection (1G)).
(1F) In the case of a building society established on or after the relevant day—
(a) the initial financial year of the society shall be the period of more than 6 months, but not more than 18 months, beginning with the date of its establishment and ending with its year-end date, and(b) its subsequent financial years are successive periods of 12 months beginning immediately after the end of the previous financial year and ending with its year-end date (but see subsection (1G)).(1G) The final financial year of a building society is a period of less than 12 months that begins immediately after the end of the previous financial year and ends with the date as at which the society makes up its final accounts.
(1H) This section has effect subject to section 117A (alteration of financial year).”
(3) Omit subsections (2) and (3).
16 After section 117 insert—
“117A Alteration of financial year
(1) A building society may by notice given to the FCA specify a new year-end date.
(2) A notice given under subsection (1) has effect in relation to—
(a) the financial year in which the notice is given (“the current financial year”), and(b) subsequent financial years.(3) The notice must state whether the current financial year—
(a) is to be shortened, so as to come to an end on the first occasion on which the new year-end date falls or fell after the beginning of the current financial year, or(b) is to be extended, so as to come to an end on the second occasion on which that date falls or fell after the beginning of the current financial year.(4) A notice extending a building society’s financial year is not effective if given less than 5 years after the end of an earlier financial year of the society that was extended under this section.
(5) A financial year of a building society may not be extended so as to exceed 18 months and a notice under subsection (1) is ineffective if the current financial year as extended in accordance with the notice would exceed that limit.”
17 In Schedule 20 (transitional and saving provisions), omit paragraph 16 (existing financial years).
18 The amendments made by paragraphs 15 to 17 have effect in relation to financial years beginning on or after the day on which those amendments come into force.”
Lord Newby
“2A (1) Part 25 of FSMA 2000 (injunctions and restitution) is amended as follows.
(2) In section 380 (injunctions), in subsection (6)(a), omit the “or” at the end of sub-paragraph (i) and after sub-paragraph (ii) insert “or
(iii) which is imposed by Part 7 of the Financial Services Act 2012 (offences relating to financial services) and whose contravention constitutes an offence under that Part;”. “(3) In section 382 (restitution orders), in subsection (9)(a), omit the “or” at the end of sub-paragraph (i) and after sub-paragraph (ii) insert “or
(iii) which is imposed by Part 7 of the Financial Services Act 2012 (offences relating to financial services) and whose contravention constitutes an offence under that Part;”.(4) In section 384 (power of FCA or PRA to require restitution), in subsection (7), omit the “and” at the end of paragraph (a) and after paragraph (b) insert “or
(c) a requirement which is imposed by Part 7 of the Financial Services Act 2012 (offences relating to financial services) and whose contravention constitutes an offence under that Part.””
Lord Newby
These amendments address a minor and technical point in connection with Sections 380, 382, and 384 of FiSMA, which govern when the regulators may seek an injunction or a restitution order from the court, or require restitution themselves. To exercise these powers, the regulator must demonstrate that the person concerned has contravened a “relevant requirement”. The current definition of “relevant requirement” in FiSMA does not include the new offences created under Part 7 of the Financial Services Act 2012, which deal with misleading statements, misleading impressions, and misleading statements in relation to benchmarks such as LIBOR. This means that regulators are unable to seek an injunction or restitution in relation to these offences. That was not the Government’s intention. These amendments correct this oversight by extending the definition of “relevant requirement” to bring these offences within the scope of the regulators’ powers to seek an injunction or restitution. I commend these amendments to the House.
Lord Newby
“2B (1) In Schedule 1ZA to FSMA 2000 (the Financial Conduct Authority), paragraph 20 (penalties) is amended as follows.
(2) In sub-paragraph (3)(b), after “this Act” insert “or under a provision mentioned in sub-paragraph (4A)”.
(3) In sub-paragraph (4), after paragraph (c) insert—
“(ca) its powers under the relevant competition provisions (as applied by Part 16A of this Act),”.(4) After sub-paragraph (4) insert—
“(4A) “The relevant competition provisions” are—(a) section 31E of the Competition Act 1998 (enforcement of commitments);(b) section 34 of that Act (enforcement of directions);(c) section 36 of that Act (penalties);(d) section 40A of that Act (penalties: failure to comply with requirements);(e) section 174A of the Enterprise Act 2002 (penalties).”(5) In sub-paragraph (5)—
(a) in paragraph (a), for “FSMA 2000” substitute “this Act”,(b) in paragraph (b), for “that Act” substitute “this Act”,(c) in paragraph (c), omit “of that Act”, and(d) after paragraph (c) insert— “(ca) offences under Part 1 of the Competition Act 1998,(cb) offences under Part 4 of the Enterprise Act 2002,”.”
Lord Newby
“(2) A statutory instrument containing an order or regulations under this Act is subject to annulment in pursuance of a resolution of either House of Parliament, unless—
(a) the instrument contains only provision made under section 21 (commencement), or(b) the instrument is required by subsection (4) or any other enactment to be laid in draft before, and approved by a resolution of, each House.(3) Subsection (4) applies to a statutory instrument that contains (with or without other provisions)—
(a) regulations under section 8 (building societies: power to make provision about ring-fencing);(b) an order under section (Meaning of “payment system”)(4) (meaning of “payment system”);(c) an order under section (Power to make further consequential amendments) (power to make further consequential amendments) that amends or repeals primary legislation;(d) an order under paragraph 6 of Schedule (Conduct of FMI administration) (conduct of FMI administration).(4) A statutory instrument to which this subsection applies may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(5) In subsection (3)(c) “primary legislation” means—
(a) an Act of Parliament,(b) an Act of the Scottish Parliament,(c) a Measure or Act of the National Assembly for Wales, or(d) Northern Ireland legislation.”
Lord Newby
My Lords, these are technical amendments relating to a number of the new powers introduced to the Bill as a result of the Government’s amendments in your Lordships’ House.
Amendment 113A amends Clause 17 of the Bill to specify the procedures applying to statutory instruments made under the new powers. It provides that the affirmative resolution procedure will apply to: orders made by the Treasury to exclude certain systems from the definition of “payment systems” for the purposes of the new clauses establishing the new payments regulator; orders to make amendments, which are consequential to the Bill, to other primary legislation, under the power introduced by the second amendment in this group, to which I will return in a minute; and orders made under paragraph 6 of the schedule on the conduct of financial market infrastructure administration, which allows the Treasury to make further modifications to primary legislation to make appropriate provision for FMI administration. Orders made under other provisions of the Bill will be subject to the negative resolution procedure, unless they are required to be made using the affirmative procedure, or they are commencement orders.
Amendment 114 enables the Treasury to make amendments consequential to the Bill—and any statutory instruments made under it—to other primary and secondary legislation. For example, it is likely that this power will be used to bring other legislation in line with the terminology of the new senior managers regime. This power can be used only in certain circumstances and the Treasury can make orders under the power only if it considers it necessary or expedient to do so as a consequence of a provision in the Bill. Furthermore, the power applies only to legislation which is made before the Bill is passed, or which is made in the same Parliamentary Session in which the Bill is passed. I beg to move.
Lord Eatwell
My Lords, first, with respect to Amendment 113A, it is useful to see the use of the affirmative procedure here. However, the noble Lord will recall that the Delegated Powers Committee recommended an amendment which referred to the amendment of clauses that deal with ring-fencing. I asked more than two weeks ago how the Treasury would react to the Delegated Powers Committee in this respect and was told that I would receive a reply. I have not, as yet, received a reply. As we are now reaching the end of the Committee stage, it would be very helpful to know whether the Government are simply ignoring the Delegated Powers Committee, in which case we would require an explanation, or what the Government intend to do about this.
On Amendment 114, these powers are sometimes referred to as Henry VIII powers. Given this new clause, the good King Henry would regard it as rather excessive and would be taken aback by the power that the Treasury takes,
“amending, repealing, revoking or applying with modifications any enactment to which this section applies”.
The enactment applies to,
“any enactment passed or made before the passing of this Act”,
so, presumably, since the birth of Henry VIII. The new clause then refers to,
“any enactment passed or made on or before the last day”.
That I understand. What scrutiny will be given to these measures? We have been through a Committee stage which has identified a consistent rejection of proposals by the banking commission and particularly of the amendments that have been put forward. I have not heard the Government accept a single amendment put forward on behalf of the banking commission—not one—so there has been a consistent rejection of those. Now we are told that we will have the possibility of,
“amending, repealing, revoking or applying with modifications”,
a series of quite controversial measures in which the Government have attempted to water down the proposals of the banking commission. I would like to feel that I could get some reassurance that this power is to be used sparingly and is to be used only if there is some oversight or accountability to Parliament when it is used.
Lord Brennan
My Lords, it is the end of the legislative day in an empty Chamber. This is an extremely important amendment. It is what the noble and learned Lord, Lord Judge, our previous Lord Chief Justice, now on our Cross Benches, would have described, as he did in a speech in the City, as a “Henry VIII Plus” clause because it is so wide-ranging.
I want to make several points for the Government’s consideration between now and the next stage. The Banking (Special Provisions) Act 2008 and the Public Service Pensions Act 2013 were both Acts that included clauses not as wide as this coming from the Treasury. Researches over the past few hours have not led me to discover any other Act in which there is a clause that provides for any previous Act and also any subsequent Act to be amended to accord with this Act. I may be shown not to know, but I suspect that if there is such a clause, there will be no more than one or two examples. I am concerned that these should come from the Treasury, lest it thinks that it has some special reserve powers for this kind of legislative amendment procedure.
If I have understood the history of this amendment correctly, it has come in the past couple of weeks. As far as I know, it has not been considered either by the Delegated Powers Committee or by the Constitutional Affairs Committee. This is important because in 2006 the Legislative and Regulatory Reform Bill contained a Henry VIII clause, which was withdrawn by the then Government after a critique by the Constitutional Affairs Committee. I invite the Government’s consideration of this and that of the whole House, when it has had the opportunity to consider that matter.
Subsection (2)(b) refers to a power to amend any subsequent Act that is passed within this Session of Parliament. That means by the end of next April. In the Government’s commentary on the list of recommendations of the commission and the Government’s response paper of July 2013, item 41, dealing with directors’ duties, is the present subject of review with a supposed consideration of a report called Trust and Transparency. The Government are saying that they wish to deal with changing directors’ duties and that that requires legislation. If this is currently before the Treasury and the relevant Ministers, is this coming in within this Session? In item 60 on payments regulation, there is to be a government report to Parliament by the end of this year, 2013. It requires legislation. Will that require yet another Act? We need clarity. On the whistleblower point mentioned earlier, if there is to be a change in the law, will that require further enactment? The final point is on auditors and supervisors. There are various reviews from the Chancellor and the Government which, it is said, do not involve legislation but might involve action, which in turn might involve potential legislative effect.
That is three definite items and potentially a fourth that spring out of this topic, and we need clarity. If this is a banking reform Bill, it should be a complete Bill, and the rest of the Session should be geared to accommodate these matters. It is late in the day to ask for a considered response, but no doubt this can be dealt with in writing, and again when we next deal with the Bill.
Lord Turnbull
Because of the piecemeal way in which the Bill has been constructed, we now have a piecemeal presentation of the secondary legislation procedure as it applies to each bit—and I have completely lost track of it. The first thing that needs to be done is to set out, for the whole Bill—the bits that were there originally and the bits that have been added—what the secondary legislation provisions are. Then we can make a judgment on whether they are appropriate: whether the right things have been assigned to the negative procedure and the right things assigned to the positive procedure. However, it is virtually impossible to do this on the basis of this piecemeal presentation.
Amendment 114 raises enormous issues. The Minister is shaking his head and may try to reassure us, but there are important provisions here that need to go to various committees which we have set up in this House to examine such things.
Lord Newby
My Lords, three issues have been raised. The first is whether we have responded to the Delegated Powers Committee. I explained at some length last week what the Government’s response was. Subsequently, I wrote to the chair of the committee, reiterating what I had said. I am sorry if noble Lords have not seen the letter; I will make sure that it gets to them. I will repeat what I said and what the letter said.
The Government’s view, bearing in mind that the committee said it was for the House to decide and did not make a recommendation on the procedure to be followed, is that, given the technical nature of these statutory instruments, the best way forward, in the light of the Government’s response to the consultation process that they have just completed, is to invite noble Lords who are interested in the secondary legislation to the Treasury to have an informal discussion on the issues, and to see what they feel might be done, and whether any amendments are required. The Treasury does not have a fixed view on the detailed provision of that secondary legislation, and would welcome the further views of Members of your Lordships’ House.
Secondly, I find literally incredible the suggestion of the noble Lord, Lord Eatwell, that the Government took no account of the recommendations of the PCBS.
Lord Eatwell
Which amendment proposed by the PCBS have the Government accepted?
Lord Newby
The noble Lord may or may not remember that at the start of today’s discussions the noble Lord, Lord Lawson, pointed out that the size of the Bill had expanded multiple times. I admit that part of this relates to the Government’s amendments on bail-in. However, every other amendment is in order to implement a recommendation of the PCBS. That is what we spent nearly all of last week discussing.
Lord McFall of Alcluith
There is a real communication problem here. I was at a meeting with the noble Lords, Lord Turnbull and Lord Lawson, and with Andrew Tyrie, and they all complained about the expansion of the Bill from 35 pages to 199. If the Minister, incredibly, is saying that this is to help the Parliamentary Commission on Banking Standards, perhaps the Government should start communicating with us on this, because we are dismayed by the number of pages in the Bill, not accepting of it.
Lord Newby
My Lords, I am sorry; with the exception of the bail-in provisions, the expansion of the size of the Bill is specifically in order to implement recommendations of the parliamentary commission, such as the senior managers regime, the criminal sanctions and the enhanced electrification power. The reason that the Government have not today accepted everything that the PCBS has recommended is that we have already accepted the majority of the commission’s recommendations and put them in the Bill. It is simply not the case that we have accepted no recommendations of the parliamentary commission—quite the opposite.
The final issue is specifically about the powers in this amendment. The powers can only be used to make consequential amendments—that is, those which are needed to deal with the provisions passed in the Bill. The example I gave was in relation to the senior persons regime, and I can reassure the noble Lord, Lord Brennan, that there is nothing sinister or unusual in what is being proposed. These powers are commonly taken in Bills which make significant changes to existing law. I am very happy for Treasury lawyers to set out in a letter the precedents that these powers exactly replicate. The hour is late, but I can assure the House that we are not doing anything here that is in the slightest way unusual.
Lord Eatwell
Will the noble Lord agree that Amendment 114, at least, should be withdrawn until it can be considered by the Constitution Committee and the Delegated Powers and Regulatory Reform Committee? He has plenty of time to bring it back on Report if he then has substantial justification for it, and it would give considerable comfort to the Committee.
Lord Newby
My Lords, I do not think that we need to withdraw the amendment. As I say, it is a standard provision. Interestingly, the specific reason that I gave for requiring it relates to the implementation of a recommendation of the Parliamentary Commission on Banking Standards. However, as I say, this provision is not in any way unusual. Therefore, I do not believe it needs the process that the noble Lord suggests.
Lord Newby
“Power to make further consequential amendments
(1) The Treasury may by order make such provision amending, repealing, revoking or applying with modifications any enactment to which this section applies as they consider necessary or expedient in consequence of any provision made by or under this Act.
(2) This section applies to—
(a) any enactment passed or made before the passing of this Act, and(b) any enactment passed or made on or before the last day of the Session in which this Act is passed.(3) Amendments and repeals made under this section are additional to those made by or under any other provision of this Act.”
Lord Newby
“( ) Section (Building societies) and Schedule (Building societies), apart from paragraph 4 of that Schedule, come into force at the end of the period of 2 months beginning with the day on which this Act is passed.”
Lord Newby
Lord Newby
My Lords, this amendment is consequential upon government Amendments 60A to 60YYV introducing a Payments Systems Regulator, and government Amendments 61 to 78, 107 and 108 which introduced a special administration regime for the operators of financial market infrastructure companies. It amends the Long Title of this Bill to reflect the fact that its scope now extends to payment systems and securities settlement systems and therefore ensures that the Long Title matches the content of the Bill. I commend this amendment to your Lordships.