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Oral Answers to Questions
(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Alan Reid (Argyll and Bute) (LD)
1. What recent discussions she has had with the Scottish Government on broadband coverage in Scotland.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
My Department and the Scotland Office have had regular discussions with the Scottish Government on broadband coverage in Scotland, including on the delivery of two projects for the highlands and islands and for the rest of Scotland. These projects will make superfast broadband available to more than 670,000 homes and businesses.
Mr Reid
I thank the Minister for that answer, but approximately 17% of the homes in Argyll and Bute will not receive next generation broadband from the BT contract to lay fibre-optic cables. More innovative solutions are needed to deliver next generation broadband throughout the highlands and islands. Will my hon. Friend work with the Scottish Government to come up with innovative solutions, so that all the homes in Argyll and Bute can have access to next generation broadband?
John Glen (Salisbury) (Con)
2. What progress her Department has made in rolling out rural broadband.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
Forty two local broadband projects have now agreed contracts and are in implementation, and we are now passing approximately 10,000 premises every week. We have made a huge amount of progress.
John Glen
I thank the Minister for that answer, but what do I say to the local authority and residents in villages such as Pitton who believe they are in the percentage that will not qualify for the imminent roll-out through the BT deal? They want to be free to develop new community-based solutions with alternative providers, as they anticipate they will not get anything from BT for a long time.
Chris Bryant (Rhondda) (Lab)
This is not just an issue for rural areas. Semi-rural areas often fall between two stools. It is difficult for people to get broadband to their home, either because they are too far from the final mile or because the bung that has been given to BT to roll this out across the country and make it almost impossible for anybody else to compete has made it difficult for other operators to get into areas such as the Rhondda.
Miss Anne McIntosh (Thirsk and Malton) (Con)
What will my hon. Friend say to the 5% of those living in the hills, particularly farmers, who will not have access to superfast broadband by 2016? Will he implement the Select Committee report recommendation that they be given advance warning, so they can make alternative arrangements to those on offer from BT?
Mr Vaizey
As I have said repeatedly, it is up to local authorities to publish their local broadband plans and I am delighted, particularly after the Secretary of State wrote to them, that many have now done so. People in Wiltshire and Yorkshire will know where the project is rolling out.
Mr Philip Hollobone (Kettering) (Con)
It seems to me that BT is a big company that sometimes does not treat small communities very well. May I draw to the attention of the Minister the village of Rushden in my constituency, where residents are complaining that they are not getting the proper broadband access they deserve, despite their best efforts with BT?
Sir Tony Baldry (Banbury) (Con)
3. What plans she has in place if newspaper proprietors do not sign up to the Privy Council’s royal charter for regulating the press.
The Secretary of State for Culture, Media and Sport (Maria Miller)
All sides support self-regulation of the press. The royal charter sets out the principles for self-regulators if they wish to be recognised and take advantage of costs and damages incentives. The choice to sign up lies with the industry.
Sir Tony Baldry
I am grateful to my right hon. Friend for that answer. We are here because Lord Justice Leveson said that he wanted a new voluntary code from the press that had statutory underpinning. The press have come forward with a new draft code that does not have statutory underpinning and the Privy Council has come forward with a code that appears not to have press support. Would it not be helpful if Lord Justice Leveson gave us all a steer on what he thinks should happen now?
Maria Miller
I will, of course, leave it to Lord Justice Leveson to speak for himself on whether he wants to contribute further to the debate, but I can say clearly to my hon. Friend that the essence of the Leveson report was self-regulation. I believe that we now have a way forward that will safeguard the freedom of the press and provide a good system of redress when errors are made. It is important to make the royal charter work; it is the best way to stave off the statutory regulation of the press that some are trying to impose.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
Regarding the royal charter, one of the more belligerent newspapers is running a piece today under the headline, “Approved behind closed doors, curbs that end three centuries of Press freedom”. For the benefit of that newspaper’s poor readers, would the Secretary of State care to comment on the accuracy of that headline?
Maria Miller
We have had a great deal of debate on the self-regulation of the press, through the Leveson inquiry and through the 11 subsequent debates in this House and the other place. The important thing is that we make this work for the industry and for people who are seeking redress.
Sir Gerald Howarth (Aldershot) (Con)
I congratulate my right hon. Friend the Secretary of State, the Prime Minister and all those involved in the difficult business of striking the right balance. Given the overwhelming public support for a system of independent regulation, does my right hon. Friend agree that the editors and press barons should now recognise that the will of Parliament has been declared, and that they should support the people, come to terms with this measure and negotiate with her?
Maria Miller
I thank my hon. Friend for his comments. I would add that the public overwhelmingly support a free press, so it is important that we strike the right balance. I am sure that everyone here today would agree that the new system has to have a free press at its heart, while giving individuals the right level of redress, as I believe it will.
Ms Harriet Harman (Camberwell and Peckham) (Lab)
I thank the Secretary of State for the key role that she has played in finally getting the royal charter sealed by the Privy Council yesterday. Clear evidence was presented to Lord Justice Leveson of innocent people suffering as a result of press abuse, and it is almost a year since he produced his report, so a proper complaints system that does not infringe the freedom of the press and that is truly independent of the press and politicians is long overdue. Does the right hon. Lady agree that the press have nothing to fear from an independent complaints system? Will she join me in encouraging the industry to establish a genuinely independent self-regulator and put it forward for recognition?
Maria Miller
I thank the right hon. and learned Lady for her kind sentiments. It is also important to place on record the fact that the press are making good progress on setting up a self-regulator. They have already issued papers and are well into the necessary negotiations. Perhaps I could ask her a further question. Will she join me in staving off any form of pressure for statutory regulation of the press, because it is clear that some are still trying to use that as a threat?
Mr Speaker
We will treat that as a rhetorical question, because questions are put to Ministers, rather than asked by them.
Mr John Whittingdale (Maldon) (Con)
I endorse the view of my colleague on the Select Committee, the hon. Member for Newcastle-under-Lyme (Paul Farrelly), that there is no serious justification for saying that the royal charter marks the end of press freedom. Will the Secretary of State accept, however, that the ability of Parliament to have a say on the rules under which the press regulator operates—even with a requirement for a two-thirds majority, which, as she knows, has no constitutional validity—allows that claim to be made? If it is that provision that is preventing some newspapers from joining, will she now, even at this late stage, consider alternative safeguards such as the one in the PressBoF charter?
Maria Miller
My hon. Friend is right to say that safeguarding that freedom and ensuring that there is no political interference in the system are absolutely critical. That is why I was keen to make the further change to ensure that any changes would require not only a two-thirds majority here and in the other place but the overwhelming support of the regulatory body.
Lucy Powell (Manchester Central) (Lab/Co-op)
4. What assessment she has made of the effect of fixed odds betting terminals on local communities.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)
The Government have conducted a review of stake and prize limits for all categories of gaming machine, including fixed odds betting terminals. We took advice from the Gambling Commission and the Responsible Gambling Strategy Board as part of our review, which was published earlier this month.
Lucy Powell
The Minister will be aware that last week, in answer to a question from my hon. Friend the Member for West Bromwich East (Mr Watson), the Prime Minister said he would look again at the damaging effects of fixed odds betting terminals. When will this review begin, and what form will it take?
Tracey Crouch (Chatham and Aylesford) (Con)
The Minister will be aware that the Kent Messenger recently reported that gamblers across Kent and the Medway lost £33 million on FOBTs, including £1.6 million in my constituency and £1.9 million in her own constituency. Does she agree, therefore, that we need to look properly at the devastating impact that these high-risk, high-stake machines are having on our constituents?
Mr Tom Watson (West Bromwich East) (Lab)
13. The stakes taken by these machines are so great that they have become a magnet for money laundering gains. Coral, the bookmakers, has recently been exposed for taking £900,000 of laundered money. The Serious Organised Crime Agency thinks the problem so great that bookmakers should be included in money laundering directives from the EU, which are currently under review. What is the Minister’s view?
Mrs Grant
As I keep repeating, my view is that these machines raise serious issues, but we need to take a fair and decent approach to the issue of problem gambling, while not over-regulating bookmakers. We therefore need to do our research and look at the matter in detail so that we can come up with a balanced, sensible and fair way forward.
Mr David Nuttall (Bury North) (Con)
Does the Minister agree that one effect of allowing B2 gaming machines in bookmakers is that they help to maintain the viability of these offices, providing employment for local people and an environment where those with a gambling problem are more likely to be identified and pointed in the direction of the help they need than if they were to sit at home gambling on the internet, where, incidentally, they could gamble any amount they liked?
Simon Wright (Norwich South) (LD)
5. What steps she is taking to collect evidence on links between gambling addiction and B2 gambling machines.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)
We are working with the Gambling Commission, the Responsible Gambling Strategy Board, the Responsible Gambling Trust and the industry itself to rapidly advance our understanding. Dealing with problem gambling and protecting the vulnerable are priorities for this Government.
Simon Wright
A recent study conducted in the London borough of Newham found that 87% of gamblers believed B2 machines to be addictive, and many described them as the crack cocaine of gambling. Will the Minister assure gamblers that the Government will listen to their personal evidence and experiences, and respond to them as a matter of urgency?
Ian Lavery (Wansbeck) (Lab)
Has the Minister read the Association of British Bookmakers’ code for responsible gambling and player protection in licensed betting offices, which has been released recently? If so, does she think it goes any way to allaying the fears of many Members?
Philip Davies (Shipley) (Con)
I refer Members to my entry in the Register of Members’ Financial Interests.
Is the Minister aware that virtually every new gambling product since the 1970s has been referred to as the crack cocaine of gambling and that to think that this is unique is ridiculous? Given that people can lose an unlimited amount of money within a minute on a five-furlong sprint at Epsom, does she agree that opposition to FOBTs is ridiculous, particularly given that they have a bigger rate of return for the punter—97%—than any other gambling product in any betting shop or casino, or anywhere else for that matter?
Mrs Grant
My hon. Friend raises some interesting issues, but work has begun and we will look at all the evidence and all the research. In addition, we will put pressure on the industry to develop its own harm mitigation measures. We must ensure that those measures work and that their success is evaluated.
Kelvin Hopkins (Luton North) (Lab)
These wicked machines are destroying lives and families in some of the poorest areas of our country. Ireland has banned these machines; should we not simply follow that example?
Mr Ben Bradshaw (Exeter) (Lab)
6. When she expects the Privy Council to consider the political parties’ proposals for a Royal Charter on press regulation; and if she will make a statement
The Secretary of State for Culture, Media and Sport (Maria Miller)
As the right hon. Member will be aware, the royal charter was granted yesterday. A copy will be placed in the Libraries of both Houses shortly.
Mr Bradshaw
Given the endemic misreporting of this issue by the press itself—including, I am afraid, by the Financial Times, which claimed this week that the right hon. Lady was going to break the all-party consensus and support the non-Leveson-compliant PressBoF charter—will the Secretary of State now explain for all our benefits what she thinks will happen next?
Maria Miller
It is a complicated issue, which explains the difficulties in the reporting of it. The royal charter has been put in place. More importantly, as the House should recognise, the press is well down the road of setting up the self-regulatory mechanism that it needs to move forward. That should be applauded, and the whole House should welcome it.
Laura Sandys (South Thanet) (Con)
7. What steps she is taking to support tourism.
Harriett Baldwin (West Worcestershire) (Con)
10. What steps she is taking to support tourism.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)
The Government place great importance on tourism. It is an excellent part of our growth strategy, which is why we are investing over £130 million, matched between the public and private sectors, in the GREAT and other marketing campaigns, both at home and abroad.
Laura Sandys
Following a very successful summer in South Thanet, profiling some of my beautiful beaches, I was very much hoping that the Government might reopen the issue of daylight saving, which would deliver £3 billion extra to the economy and 700,000 jobs in the tourism sector.
Mrs Grant
I know that my hon. Friend is a passionate advocate of tourism in her area, and I have been fortunate in being able to visit her constituency. However, as the Prime Minister made clear quite recently, in the absence of consensus on this matter throughout the UK—including in Scotland and Northern Ireland—it would be inappropriate to consider making changes.
Harriett Baldwin
With 8,000 people in Worcestershire—the glorious county that gave birth to Edward Elgar—working in the tourism industry, will the Minister welcome the 13.5% increase in long-haul flights into Birmingham airport? Will she also welcome the news that, in 2014, the runway will be lengthened and even more markets will be able to access tourism in Worcestershire?
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
May I push the Minister on the arts as part of the tourism attraction? People come to this great country for our great artistic endeavours, but we have arts in the regions, and is it not about time that, through the Arts Council and other means, the regions got the support they deserve—rather than just, “London, London, London”?
David Wright (Telford) (Lab)
What specific proposals has the Minister for the promotion of world heritage sites? Ironbridge Gorge is an incredibly important world heritage site, and an engine for the regional economy in the west midlands. We are missing a trick as a nation by not promoting such sites more strongly.
Mr Nigel Evans (Ribble Valley) (Ind)
One iconic institution that attracts a lot of tourism into the United Kingdom—and, indeed, within the United Kingdom—is the great British pub, where people can enjoy tremendous real ales, tremendous food and a wonderful welcome, but far too many pubs are still closing every week. Will my hon. Friend discuss with fellow Ministers what more can be done to retain the vitality of this amazing industry, particularly in the realms of rate relief for rural pubs?
Mrs Grant
I am very fond of my own local pub, the Unicorn in Marden, and I do step in there now and again. I reassure my hon. Friend that we are doing a great deal to assist the business sector, and that includes helping pubs by reducing fuel and beer duties. We are also trying to simplify planning, and are continuing to cut red tape, regulation and bureaucracy.
Pete Wishart (Perth and North Perthshire) (SNP)
The Minister will, of course, have noticed that Scotland has been named the third best place to visit in 2014 by the “Lonely Planet” travel guide. The guide cites a
“jam-packed schedule of world class events”,
including the Ryder cup and the Commonwealth games, as well as our
“buzzing cities and stunning scenery”,
much of which is in my constituency. It also notes that the referendum gives Scotland an opportunity to
“shine on the world stage”.
Does the Minister agree that, without even a vote being cast, Scotland has already won?
Mrs Grant
Scotland is a wonderful place in which to live and work, and I am sure that it will put on an absolutely fantastic Commonwealth games event next year. I look forward to my next trip up there. I grew up in the borders and spent many a time in Dumfriesshire and Gretna Green, so I know what a beautiful place it is.
Ian Swales (Redcar) (LD)
8. What assessment she has made of support given to horse racing by the horserace betting levy.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)
I am delighted that an agreement was reached last week on the 53rd levy scheme. The levy provides vital support for horse racing, a sport that is enjoyed by millions, supports thousands of jobs across Britain, and contributes to local economies.
Ian Swales
On Tuesday we have Second Reading of the Gambling (Licensing and Advertising) Bill, which proposes the introduction of a UK licence for offshore gambling providers but fails to deal with levy avoidance. Will the Minister urgently address that issue and get on with the job of producing a long-term, sustainable funding arrangement to support Redcar race course and the rest of our vital horse racing industry?
Mrs Grant
The Bill is actually about increasing protection for British customers, and allowing British-based operators to compete on an equal footing with remote operators. I am sure that the hon. Gentleman approves of that. We do not intend to use the Bill to reform the levy.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
The Minister may be aware of the existence of remote channels. If British racing is to have any sustainable, long-term future, any betting activity must involve a legally binding contribution, including activity through remote channels.
Mr Laurence Robertson (Tewkesbury) (Con)
I am grateful to the Minister for pointing out how many thousands of jobs the horse racing industry creates and sustains each and every year. The levy is largely collected from bookmakers’ shops, the number of which has halved in the last 20 years, falling from a peak of about 17,000 to 8,500. Does the Minister agree that it is important for us to see the debate about machines and gambling in proportion, and for it to be evidence-based, so that we do not lose any more shops and, as a result, jobs in the betting and horse racing industries?
Mr Gerry Sutcliffe (Bradford South) (Lab)
The new agreement between the big four bookmakers and many of the race courses is an important breakthrough and it is important that the momentum is maintained, but, worryingly, some of the smaller courses and independent bookmakers may lose out, so may I encourage the Minister to have an early meeting with the all-party group on the racing and bloodstock industries to talk about these issues so that we can keep the pressure on?
Clive Efford (Eltham) (Lab)
The horse racing industry is not just part of British culture; it is also essential to our rural economies. However, we have an offshore betting industry that largely does not contribute anything, through a levy, to the industry. It is therefore important that the Minister reviews the Government legal advice on the betting levy in the light of the European Commission ruling in July of this year that allows a levy to be imposed. Will she review that in time for amendments to be tabled to the Gambling (Licensing and Advertising) Bill?
Mrs Grant
I agree with the hon. Gentleman to a certain extent, because the levy was created 50 years ago and does not completely deal with modern betting and racing practices, so, as I have previously said, I will consult. We will take evidence and look at the situation very carefully indeed, and try to find a modern, sustainable and enforceable legal solution.
Mr Dominic Raab (Esher and Walton) (Con)
11. What recent discussions she has had with the BBC Trust on reducing the use of golden goodbye clauses in BBC contracts.
The Secretary of State for Culture, Media and Sport (Maria Miller)
It is right that licence fee payers expect their money to be spent responsibly, and a part of that is ensuring that these matters are subject to the right level of scrutiny. Under the leadership of Tony Hall, a cap on all future severance payments has already been implemented.
Mr Raab
I thank the Secretary of State for that answer. Does she agree that the BBC must comply with the Public Accounts Committee order for disclosure of the 150 senior managers who received pay-offs at taxpayers’ expense? Has she made that clear to the director-general and the chairman of the trust?
Maria Miller
I, like my hon. Friend, believe transparency is incredibly important, and in particular for the BBC for the reasons I have just given regarding what licence fee payers expect. Detailed decisions about the disclosure of personnel information are squarely for the management of the BBC, but I understand the point my hon. Friend makes.
Mr John Leech (Manchester, Withington) (LD)
Does the Secretary of State agree that senior executives who have resigned rather than been sacked should get no compensation, and that if they were sacked it should not be covered up as though they had resigned?
Maria Miller
I think it is fair to say the judgment of senior management on some of these matters has been questionable. I am pleased to see that future deals in excess of £75,000 will need to be approved by the BBC senior management committee, and we should not see severance payments exceeding £150,000. I think that is absolutely right.
Duncan Hames (Chippenham) (LD)
12. What recent estimate she has made of the number of households in (a) Wiltshire and (b) the UK that will have superfast internet access on the 4G spectrum but not through fixed-line broadband by January 2015.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
The four mobile network operators are aiming to roll out 4G mobile broadband services to 98% of the population. EE is aiming to reach that by the end of 2014, and the others by the end of 2015.
Duncan Hames
I thank the Minister for his reply, but he has not been able to share with me the number of households that will not have access to fixed-line solutions by that time: in communities in a large part of my constituency, from Hilperton and Semington to Whitley, fixed-line fibre installations will not even have begun. Will he issue guidance to local authorities on how they can use mobile spectrum-based solutions in their broadband programme?
Kerry McCarthy (Bristol East) (Lab)
14. What recent discussions she has had with the Secretary of State for Business, Innovation and Skills on payment to artists by online music streaming services.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
My colleague the Secretary of State for Business, Innovation and Skills and I are keen to ensure that artists are appropriately rewarded for their creative content, including in the online world. Where music-streaming sites are legitimate, the payment of royalties is a commercial arrangement between the rights-holder and the online service provider.
Kerry McCarthy
I thank the Minister for that response. A number of musicians have recently pulled their music from Spotify because the amounts that such online services pay is so minuscule that the emergence of new artists and the financial sustainability of new music are being threatened. Does he think that the larger labels should follow the example of some indie labels and give a 50:50 split to their artists?
Mr Vaizey
As we are talking about new or emerging artists, may I use this opportunity to congratulate James Blake on winning the Mercury award last night? He is a classically trained pianist who won for his album of ambient music. I would hesitate to interfere in the commercial arrangements of either the big labels or the indie labels, but I am sure that each can learn from the other.
Mr Speaker
I am grateful to the Minister for explaining the greatness of that particular James Blake, because I had in mind a very distinguished black American tennis player of the same name. I am obliged to the Minister for educating me.
Chris Bryant (Rhondda) (Lab)
T1. Perhaps you should write a book on tennis, Mr Speaker. Numero uno: if she will make a statement on her departmental responsibilities.
The Secretary of State for Culture, Media and Sport (Maria Miller)
I should also say happy Halloween, if that is indeed appropriate, Mr Speaker.
We recently announced a £10 million fund dedicated to celebrating some of our nation’s most important anniversaries. Visits to museums and galleries are at their highest ever levels. The merger of the Gambling Commission and the National Lottery Commission has now been completed, saving the taxpayer £1 million a year.
Chris Bryant
I was going to say that the Secretary of State is an absolutely wonderful woman, and then she went all American by referring to Halloween—I would prefer us to stick with a British institution. May I say to her that she did a wonderful thing yesterday, I am very proud of her and I hope she will stand firm on these issues? The hon. Member for Aldershot (Sir Gerald Howarth) was right earlier when he said that it is now for the industry to come to terms with what the public want in this country, which is a fair system of redress—nothing more, nothing less. Will the Secretary of State tell us when the body that will be able to regulate the body that is going to be doing the regulating will be set up?
Maria Miller
I will resist saying, “With friends like the hon. Gentleman, who needs enemies.” I thank him for his kind words and, I am sure, the sentiment in which they were meant. Obviously, he is right to say that we have made very good progress, and I hope he will join me in now resisting all calls for any form of statutory regulation of the press, which some others have been trying to impose. He asks me about the timing, and I can tell him that the panel will be set up in the next six to 12 months.
Laura Sandys (South Thanet) (Con)
T4. A small business in my constituency has had its telephone “slammed”: taken out of its hands and given to a local resident. We have been trying to get redress from Tesco, which has been reallocating these telephones lines. It is affecting the advertising and business costs of this small business; it is losing business and the resident is regularly receiving inquiries about tattoos.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
Slamming is against the Ofcom regulations, and I am appalled to hear about what my hon. Friend’s constituent has gone through. I will certainly do everything I can to assist her, as this is an appalling practice.
Helen Goodman (Bishop Auckland) (Lab)
Will Ministers join me in congratulating the National Theatre on 50 years at the very heart of our cultural and artistic life? It is a great reminder of the sheer quality of the excellence of our national arts institutions, many of which are based in the capital. Outside London, however, the picture is now very different. I pay tribute to those who have produced a report today showing the massive disparity in Government and lottery support for the arts. What the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Maidstone and The Weald (Mrs Grant) said earlier is wholly wrong: whereas Londoners get £70 per head each year the rest of the country gets only £4.60 per head. So what are the Government going to do to rebalance our cultural economy?
Maria Miller
The hon. Lady raises a point that we are trying to address, after her Administration did so little to address it. We are trying to make sure that our great national institutions do work regionally and to throw a spotlight on the excellent work they do. Only a month ago, I was at an exhibition in my constituency that had been put on by the Victoria and Albert museum. We should be applauding the work that our national institutions are doing in the regions.
Steve Baker (Wycombe) (Con)
T6. I am extremely grateful to the Minister for the detailed correspondence that he has had with me on the technical issue of radio spectrum use for DAB, but on my constituents’ advice I remain concerned that successive Governments may have wasted some radio spectrum. Would he please arrange a meeting between me and my constituents and the relevant technical staff to try to lay this issue to rest?
Alison McGovern (Wirral South) (Lab)
T2. I hesitate to make a party political point, but I must pick up the Secretary of State on what she has just said. There are real problems with arts funding outside London, as we heard from my hon. Friend the Member for Bishop Auckland (Helen Goodman). It is not the case that the previous Government did nothing. My own city, Liverpool, saw a renaissance in the cultural sector. Will the Government now play their part and commit to a report on proper cultural funding for cities that do not happen to be our capital?
Maria Miller
The hon. Lady is right to say that there is a problem. What I was saying is that we are trying to resolve a problem that we inherited. She will know that Liverpool receives £89 million a year, the highest funding outside London. I agree that we should try to make sure that the great regional culture that we have in this country receives the support it requires.
Neil Carmichael (Stroud) (Con)
T7. With reference to the growing rural economy, what reassurance can my hon. Friend give my constituents that we will have 90% rural broadband roll-out across Stroud by 2015?
Mr Vaizey
I am delighted to update the House on the significant progress we are making. We are connecting more than 10,000 homes a week. Half the projects that are under way are already ahead of schedule and we are bringing in 4G two years ahead of schedule. This is a triumphant programme.
Kerry McCarthy (Bristol East) (Lab)
T3. On Monday I asked the Minister for Universities and Science why the UK is the only country in the EU that will introduce a private copying exception without a levy on copying devices to compensate UK artists, and he said that other countries had introduced far wider exceptions, which is not the case: only two of them have. Will the Minister talk to his counterpart in the Department for Business, Innovation and Skills to ensure that our artists are not left worse off than those in the rest of the EU?
Mike Crockart (Edinburgh West) (LD)
T8. Today has seen the launch of the all-party group report on nuisance calls. It contains 16 excellent recommendations which, if implemented, would significantly increase protection for vulnerable consumers, improve the effectiveness of the regulators, and renew confidence in the telecoms and direct marketing industries. Will my hon. Friend therefore support my private Member’s Bill tomorrow to implement some of those recommendations as soon as possible?
Mr Vaizey
As my hon. Friend knows, he and I have been discussing this issue for many months. I take this opportunity to pay tribute to the fantastic work he has done to make progress on the issue. He knows that I support many of the points that he makes in his private Member’s Bill.
Graham Stringer (Blackley and Broughton) (Lab)
T5. A change to the royal charter on the press requires a two-thirds majority, so some hon. Members’ votes will have twice the weight of those of other hon. Members. Will the Secretary of State put this constitutional innovation to a vote in this House?
Maria Miller
The hon. Gentleman must have missed the 11 debates we have had on that. There is all-party support for the way we are going forward. May I correct him slightly? It is not just a two thirds majority of both Houses, but unanimous agreement of the regulatory body that is required.
Sir Bob Russell (Colchester) (LD)
T9. Does the Secretary of State agree that Britain, where many of the world’s sports originated, ought to have a national sports museum, including a permanent display for the London 2012 Olympic legacy?
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)
That is an interesting idea. There is no current plan for a national sports museum, but I know that the National Football Museum in Manchester is very popular. It is free and it receives about 100,000 visitors every year.
Barbara Keeley (Worsley and Eccles South) (Lab)
MPs from both sides of the House had an excellent meeting with the FA last week on the future of women’s football. Unfortunately, the commission that the FA set up was initially all white and is still all male. What does the Minister think about that, and can we remind the FA that the future of women’s football is important, too?
Julian Sturdy (York Outer) (Con)
The Minister will be aware that North Yorkshire has taken great strides in rolling out superfast broadband across the county. The project is near completion. Will the Minister consider early release of the phase 2 funding for areas such as North Yorkshire to help bridge the digital divide in those areas?
Mr Vaizey
May I use this opportunity to congratulate North Yorkshire on forging ahead with the superfast broadband programme, which has made astonishing progress? I hear what my hon. Friend says. We are working out the details of how to allocate the next tranche of funding to take superfast broadband to 95% and I will keep him informed.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
What progress has the Secretary of State made to prevent tickets for the 2015 rugby union world cup from being bought up and resold with a great mark-up on the secondary market? There is clearly a great desire that something should be done to crack down on that, so will she confirm that she will introduce the necessary legislation, as we had for the Olympics, and kick the touts into touch?
Maria Miller
The hon. Lady brings up an important issue about the supply of tickets. We have it well in hand and we are ensuring that the tickets are released in a way that means we will not fall into the problems she has outlined.
Fiona Mactaggart (Slough) (Lab)
1. What recent discussions she has had on increasing the number of successful prosecutions in cases of rape and sexual violence; and if she will make a statement.
The Minister for Crime Prevention (Norman Baker)
The Home Office has chaired a meeting with the Director of Public Prosecutions and national policing leads to consider the fall-off in police referrals and prosecutions. That has led to a six-point plan to support successful outcomes for victims of rape and sexual violence.
Fiona Mactaggart
The number of women reporting rapes has increased by 4,000, but the percentage of such cases being referred to the Crown Prosecution Service has continued to fall from 50% when Labour was in government to about 30%. The Minister says that he has a six-point plan and the Secretary of State told me on Monday that there had been round-table meetings, but when will we see action for women, or will we continue to see cuts in services for victims of rape and domestic violence?
Norman Baker
We all take this issue very seriously in government. I am concerned about the fall in referrals and I think part of that is due to engagement between the police and the CPS, because the fall-off in referrals has not been matched to the same degree by a fall-off in convictions. This is nevertheless an important matter. I am taking a personal interest in it and I am also talking about it to all the chief constables, who are coming into the Home Office this afternoon.
Mr Philip Hollobone (Kettering) (Con)
What percentage of convicted rapists serve their time in prison in full before they are released?
Norman Baker
I cannot give a specific answer, but we obviously do not release anyone who is a danger to the public. That remains our position.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
According to freedom of information requests compiled by Labour, there has been a 33.5% drop in the number of rape cases referred to the CPS for prosecution since 2010. That figure was rising under the previous Government. Given that police budgets have been cut by 20% over the same period, does the Minister accept that the hollowing out of police services has led to more perpetrators of rape and sexual violence getting away with it? What is he going to do about that disgraceful situation, which will inevitably lead to more perpetrators committing rapes, as they feel emboldened to do so with impunity?
Norman Baker
I welcome the hon. Lady to the Front Bench, as I understand that this is her first outing.
I do not believe that the issue of funding for the police is in any way connected with this matter, because otherwise—[Interruption.] Otherwise, we would have seen a drop in the number of investigations of murder, homicide or complex fraud, and we are not seeing that. Other factors are at play, I think, including the number of historic allegations that are quite rightly coming forward and the fact that there is more encouragement of people to come forward—[Interruption.] I know that this is the hon. Lady’s first outing, but if she let me answer the question rather than chuntering it would be helpful. This is a serious issue and I want to try to address it properly.
We are taking action on this matter. The figures from the Office for National Statistics show a 9% increase in the number of sexual offences being reported and a 9% increase in the number of rapes recorded by the police in the year to June 2013 compared with the previous year. The number of convictions has changed only marginally from earlier years, because prosecution cases that will not be successful are weeded out at an earlier stage. I have already said that we are concerned about this matter. I want to look into the precise reason referrals have gone down, and it is my intention to ensure that we get as many successful prosecutions as possible.
Mr Speaker
Order. We all enjoy hearing the Minister, but on the whole the abridged rather than the “War and Peace” version is to be preferred, so we will leave it there.
Caroline Dinenage (Gosport) (Con)
2. What progress has been made on increasing the number of women on boards of FTSE 100 companies.
The Minister for Women and Equalities (Maria Miller)
The Government support Lord Davies’s voluntary business-led strategy for increasing the number of women in UK boardrooms. Good progress is being made: women now account for 19% of board members in our FTSE 100 companies, up from 12.5% in February 2011.
Caroline Dinenage
I thank the Minister for that answer. Is she aware of the importance of the so-called mumpreneurs, who work from home and contribute approximately £7 billion a year to our economy? Will she join me in congratulating those inspirational women and pledge to support them?
Maria Miller
I absolutely join my hon. Friend in congratulating mumpreneurs and applauding their work. I know that she is a small business woman and knows a great deal about the sector. The figures speak for themselves: in the last quarter we saw a further 27,000 women taking up entrepreneurial roles in our economy, making 1.2 million in total. That is real progress indeed.
Gloria De Piero (Ashfield) (Lab)
There is no board in this country more high-profile than the Cabinet, so what message is being sent to business when only four out of 23 of its members are women?
Maria Miller
I take this opportunity to welcome the hon. Lady to her first questions on the Front Bench. I am sure that she will make a good contribution to all our Question Times. She is right that the Government have a huge role to play in setting an example. In my Department we have a significant majority of women in leadership roles. We want to ensure that in future we have even more women not only in Parliament and as Ministers, but in the Cabinet—something on which the Prime Minister has made his thoughts very clear.
Stella Creasy (Walthamstow) (Lab/Co-op)
3. What steps she is taking to increase awareness of and prevent violence against women and girls.
The Minister for Crime Prevention (Norman Baker)
With permission, Mr Speaker, I will answer Questions 3 and 4 together.
Mr Speaker
I fear that the Minister cannot, because Question 4 has been withdrawn. He can confine himself to Question 3, which should facilitate a shorter answer, for which we are grateful.
Norman Baker
The answer is the same either way, Mr Speaker.
The coalition Government’s action plan to end violence against women and girls sets out a number of commitments to raise awareness and prevent violence against women and girls. We have extended the definition of domestic abuse to include 16 and 17-year-olds, and our national campaigns on teenage rape and relationship abuse challenge the attitudes underpinning violence against girls.
Stella Creasy
With research telling us that one in three young girls in this country report experiencing sexual harassment in school, why did every single Member on the Government Front Bench vote against making sex and relationships education compulsory for both boys and girls in all schools in Britain?
Norman Baker
May I first congratulate the hon. Lady on her involvement in the banknote campaign and say how sorry I was to hear about the abuse she received as a consequence?
The governing bodies of all maintained schools must have an up-to-date sex and relationships education policy. The guidance makes it clear that all young people should understand how to avoid exploitation and abuse and how the law applies to relationships. In addition, we have two hard-hitting campaigns, on teenage relationship abuse and teenage rape prevention, which have been very successful, as the number of website hits shows.
Robert Halfon (Harlow) (Con)
Essex has one of the highest incidences of domestic violence in the country, and two tragic murders have occurred in Harlow as a result of domestic violence. What help can the Government give to education and local charities to reduce domestic violence?
Norman Baker
I have already mentioned the websites we have introduced, which have had over 1 million hits since 2010. We are also taking clear action on online abuse and have published documents this year taking forward our strategy. I intend to make it a high priority during my time in office.
Diana Johnson (Kingston upon Hull North) (Lab)
Despite the commitment that the Prime Minister made in this House that police would be able to retain the DNA of individuals arrested but not charged with rape, we now know that over the summer the police have had to destroy the DNA records of thousands of suspected sex offenders before the appeals process is introduced at the beginning of next month. Has not that shocking incompetence by the Government put more women and girls at risk?
Norman Baker
I am not sure that I accept the version of events that has been given. The hon. Lady will of course understand, as will the whole House, that there is a balance to be struck between the unnecessary retention of DNA in terms of civil liberties and the need to prevent serious crime. Striking that balance is something that the Government are very keen to get right.
Philip Davies (Shipley) (Con)
Is it the Government’s view that taking steps to increase awareness of and prevent violence against women and girls is more important than increasing awareness of and preventing violence against men and boys, or is it the Government’s view that it is equally important to increase awareness of and prevent violence against all of them?
Norman Baker
I certainly agree that it is important to act on violence against any individual. Of course, it is predominantly against women and girls and vulnerable adults, and they must come first in our consideration, but it is also true that the £40 million recently allocated to deal with these matters includes a strand to deal with violence against men and boys.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
5. What steps she is taking to support senior women in business.
The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)
Under this Government, more women are in work than ever before, and we are determined to do more. My right hon. Friend the Minister for Women and Equalities has already mentioned the excellent work to increase the number of women on boards. We have also set up the Think, Act, Report initiative promoting gender equality in the workplace, and 131 companies have signed up, covering almost 2 million employees.
Luciana Berger
I understand what the Minister says, but we have some of the highest levels of female unemployment in a generation. Does she agree that mothers of school-age children need a guarantee of stable, wraparound care if they are to be able to pursue careers in business or elsewhere? If she does, will she back Labour’s primary child care guarantee and explain why her Government scrapped the previous Labour Government’s Extended Schools programme, which provided urgent and necessary breakfast clubs and after-school clubs to help parents, particularly mothers?
Jo Swinson
I certainly agree that child care is an absolutely key element for many women making their way in business and, indeed, in other careers, but I do not agree that making an uncosted proposal that all schools should suddenly provide such wraparound child care without providing the means to do it is a sensible way forward. Instead, the Government are making it easier for childminders to set up in business, breaking down the barriers, and introducing £1,200 per child per year of tax reliefs on the money that parents spend on child care.
Mr Speaker
We are on Question 5. Does the hon. Lady wish to intervene on that?
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Figures from Chwarae Teg indicate that 7% of employed women in Wales are in senior management compared with 11% of men. What discussions has the Minister had with the Welsh Government about action to close that gap?
Jo Swinson
Lots of discussions go on in government among officials on these issues, but I have not personally had any such discussions with Welsh Ministers. However, Governments have a role to play in leading by example with the civil service, in trying to make it easier for women to achieve parity with men on pay and progression, and in working with businesses to make the business case that diverse teams achieve better results.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
6. What steps she is taking to improve the position of disabled people in the workplace.
The Minister of State, Department for Work and Pensions (Mike Penning)
The Government have a number of programmes in place to enable disabled people and people with health conditions to get into and remain in work. We intend to publish proposals for those programmes in our employment strategy by the end of the year.
Mark Lazarowicz
One of those programmes is the Access to Work scheme, but since the election the number of disabled people it supports has dropped by over 15%—that is about 6,000 people. Will the Minister commit himself to taking steps to ensure that that worrying trend is reversed?
Mike Penning
I will commit myself to giving everybody who wants to get into work the opportunity to do so, whether they are disabled or have health difficulties or not, and to keep their jobs and continue in employment. I will look carefully at the figures. The Access to Work scheme is working very well, but nothing is perfect.
Bill Esterson (Sefton Central) (Lab)
Only 3% of disabled people in the employment and support allowance group in the Work programme found a job after two years. Given the Government’s failure to help long-term disabled people into work, is it not a bit rich for Tory MPs to be lecturing disabled people to get a job?
Mike Penning
Nobody is lecturing anybody apart from Labour Members who have selective memory loss about the past 13 years. We will do everything we can. I am sure that the previous Administration did, but they did not do it very well.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
7. What steps she is taking to increase the representation of women on the boards of public bodies.
The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)
The Government have an ambitious aim that 50% of new public appointees should be women by the end of this Parliament. We are modernising recruitment practices and this approach is working. Our figures show that 37% of public appointments during 2012-13were women.
Jo Swinson
My hon. Friend raises a very good point. The Government are working with 52 different firms that have signed up to the voluntary code of conduct. Indeed, my right hon. Friend the Business Secretary has appointed an experienced diversity champion, Charlotte Sweeney, to review the effectiveness of the code and report back to him in the new year. My hon. Friend is right to raise the issue of Departments that employ head-hunting firms for public appointments, but it is made absolutely clear that one of the key attributes that they need to look for is diversity.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Will the Minister confirm whether Labour’s target that 50% of new appointments should be women has continued, and whether the Government have removed the targets to increase the number of ethnic minorities and people with disabilities in public appointments?
Jo Swinson
It is very important that we address diversity in all its forms. Sadly, the previous Government did not achieve the aim of women comprising 50% of all new appointments. We are working towards achieving that by the end of this Parliament, but I think we all agree that we need to do more. The hon. Lady is absolutely right to say that other areas of diversity, including background, ethnicity and disability—a whole range of different characteristics—are also important. To get truly high-functioning teams, we need diversity in all its forms.
Heidi Alexander (Lewisham East) (Lab)
8. What recent assessment she has made of the number of cases of discrimination at work on the grounds of pregnancy.
The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)
Discrimination against a woman because of pregnancy is totally unacceptable, rightly illegal and bad business sense.
The Equal Opportunities Commission’s 2005 report showed that, unfortunately, 30,000 women lost their jobs as a result of their pregnancy. As I outlined during the Children and Families Bill debates, we are now considering how we could best obtain a more up-to-date picture of the current extent of this problem.
Heidi Alexander
I thank the Minister for her forthright answer. Research by the law firm Slater & Gordon has found that only 3% of women who believe that they suffered discrimination because of being pregnant had actually sought legal advice. Does the Minister accept that charging women £1,200 to take a case to an employment tribunal will make it even less likely that such discrimination will be challenged?
Jo Swinson
I understand the hon. Lady’s concern and I think we should all be worried about the issue, but I do not think it helps to suggest that any woman who wants to take a case will be charged £1,200. That figure is only for cases that reach a hearing, which are a small proportion of the overall number. It costs much less—only £250—to lodge a case in the first place. There is also a significant fee remission and costs will often be awarded if there are problems. It is important that we do not scare off people from making claims, because we want to make sure that we crack down on rogue employers who discriminate against pregnant women.
Proposed closure of Skerton Community High School (Lancaster)
David Morris (Morecambe and Lunesdale) (Con)
I am extremely proud to present this petition on behalf of nearly 3,500 members of staff, students and parents of Skerton community high school and the wider community of Skerton. I am also proud to be wearing the school tie. I am pleased that a group of students, led by a parent, Robyn Holtham, are in the Public Gallery to see the petition presented.
The petitioners started their campaign in September, when they were told that their school faced closure by the county council. Skerton community high school has fantastic pastoral care and all the students are immensely happy there. I therefore urge the House to support the community of Skerton and the children and parents of Skerton community high school in their fight to keep the school open.
The petition states:
The Petition of pupils, parents and staff of Skerton Community High School and others in the Skerton community,
Declares that the Petitioners believe that Skerton Community High School provides excellent pastoral care and caters for a high number of special needs students and thus the Petitioners do not believe that it should be closed.
The Petitioners therefore request that the House of Commons urges the Government to take steps to support the school in its bid to remain open.
And the Petitioners remain, etc.
[P001256]
Rural Fair Share Campaign
Andrew George (St Ives) (LD)
I am proud, pleased and humbled to present a petition on behalf of more than 1,000 constituents in St Ives, in particular Peter Greenough of Bluebell cottage in Godolphin Cross. Some 200 people signed the petition in manuscript form and more than 850 did so through an online petition.
The petition is part of the Rural Fair Share campaign. I congratulate the hon. Member for Beverley and Holderness (Mr Stuart), who has spearheaded the campaign. He and a number of other hon. Members will be presenting petitions in support of the campaign on Monday. As I cannot be there, I am presenting this petition tonight. Cornwall is one of the poorest regions in the UK and it receives unfair levels of funding.
The petition states:
The Petition of the residents of St Ives,
Declares that the Petitioners believe that the Local Government Finance Settlement is unfair to rural communities; notes that the Rural Penalty sees urban areas receive 50% more support per head than rural areas despite higher costs in rural service delivery; and opposes the planned freezing of this inequity in the 2013–14 settlement for six years until 2020.
The Petitioners therefore request that the House of Commons urges the Government to reduce the Rural Penalty in staged steps by at least 10% by 2020.
And the Petitioners remain, etc.
[P001264]
Business of the House
(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ms Angela Eagle (Wallasey) (Lab)
Will the Leader of the House give us the business for next week?
The Leader of the House of Commons (Mr Andrew Lansley)
The business for next week is as follows:
Monday 4 November—Second Reading of the National Insurance Contributions Bill.
Tuesday 5 November—Second Reading of the Gambling (Licensing and Advertising) Bill, followed by general debate on the reform and infrastructure of the water industry and consumer bills. The subject for this debate was nominated by the Backbench Business Committee.
Wednesday 6 November—Opposition day [10th allotted day]. There will be a debate entitled “Energy Price Freeze”. The debate will arise on an Opposition motion, followed by a motion relating to explanatory statements on amendments to Bills.
Thursday 7 November—A debate relating to standardised packaging of tobacco products. The subject for this debate was nominated by the Backbench Business Committee, followed by general debate relating to the commemoration of the first world war.
Friday 8 November—Private Members’ Bills.
The provisional business for the week commencing 11 November will include:
Monday 11 November—Second Reading of the Offender Rehabilitation Bill [Lords], followed by a debate on a reasoned opinion relating to the regulation of new psychoactive substances.
Tuesday 12 November—Opposition day [11th allotted day]. There will be a debate on an Opposition motion. Subject to be announced.
I should also like to inform the House that the business in Westminster Hall for Thursday 7 November will be a debate on the fifth report of the Energy and Climate Change Committee, “Energy prices, profits and poverty”, followed by a debate on the fourth report of the Transport Committee, “Cost of motor insurance: whiplash”.
Ms Eagle
I thank the Leader of the House for announcing next week’s business. I also welcome him back to his place. I hope he has fully recuperated.
The Offender Rehabilitation Bill has finally reappeared after I raised its mysterious absence three times and after yesterday’s Opposition-day debate. Will the Leader of the House tell us whether the Government accept or intend to remove the Lords amendment to clause 1, which would require them to seek the approval of both Houses before they continue to push ahead with their reckless plans to privatise the probation service?
A report published by Age UK this week warned that 3 million elderly people are worried about whether they will be able to stay warm in their homes this winter. However, all the Government do is act as a mouthpiece for the big six energy companies, which are profiteering at everybody’s expense. It has been more than a month since we announced our plan to freeze energy prices until 2017 and all the Government do is dither. The Prime Minister says that he wants to roll back green levies, even though he introduced 60% of them. He cannot even tell us which ones he wants to cut. Will the Leader of the House tell the Prime Minister to stop standing up for the wrong people and vote with us next week to freeze energy prices and reset this failing market?
I note that the private Member’s Bill on the EU referendum returns to the House on 8 November. The Electoral Commission said this week that the question in the Bill risks causing a misunderstanding and it suggested a change of wording. The Leader of the House will be aware that, when the Electoral Commission recommended a change to the Scottish referendum question, the then Secretary of State for Scotland said:
“The UK Government has always acted on the advice of the Electoral Commission for every previous referendum.”
Given that the Bill was written in No. 10 and is supported by the Prime Minister, will the Leader of the House confirm that the Government will table the appropriate amendment to the referendum question in the Bill?
In January, the Prime Minister went to Davos and told the world that the UK would use its presidency of the G8 to tackle tax evasion. Last week, he could not tell my hon. Friend the Member for Feltham and Heston (Seema Malhotra) why he had refused to close the £500 million eurobond tax loophole. On Monday, we discovered that the flagship agreement to recoup tax from UK residents who hide money in Swiss bank accounts has brought in more than £2 billion less than the Chancellor scored in last year’s autumn statement. The Chair of the Public Accounts Committee says that £35 billion is only the tip of the iceberg when it comes to the money that the Government have lost to tax scams. Why, then, have the Government appointed as head of tax policy a man who is on record as saying that “taxation is legalised extortion”? Is it any wonder that, despite the meaningless ministerial PR, the tax gap keeps on growing and Tory donors are laughing all the way to their kitchen suppers in Downing street?
The coalition agreement promised to
“put a limit on the number on Special Advisers.”
It has just emerged that there has been a 50% rise in the last three years, costing a record £7.2 million. The Deputy Prime Minister has 19 special advisers in his office alone, which is nearly 20% of the total. Does the Leader of the House agree that that is a complete waste of money? [Hon. Members: “Hear, hear!”] It seems that there is agreement across the House on that.
The only thing that appears to be going up faster than energy prices under this Government is the cost of special advisers, which has gone up by a massive 16% this year. There are now 98 special advisers in the Government, but the more of them there are, the more incompetent the Government seem to become. This week, the Department for Work and Pensions lost its appeal in the Supreme Court on its flagship back to work scheme, the Health Secretary was humiliated in the Court of Appeal over Lewisham hospital and the Government had to slow down universal credit for the third time and apply the brakes to disability benefit changes. Yesterday, they could not even write an amendment to our Opposition motion on education that was in order. We then had the spectacle of the Minister for Schools winding up the debate on teaching robustly in support of the Government and then abstaining on the vote. Will the Leader of the House therefore make time for a debate on the mounting evidence that this Government have abandoned all notion of collective responsibility and are descending into chaos and incoherence?
Today is All Hallows’ eve and children across the country will be dressing up as the Deputy Prime Minister to scare their friends. I just hope that they do not do what he does—promise treats, but hand out tricks instead.
Mr Lansley
I am grateful to the shadow Leader of the House, not least for her kind words after my back operation. Indeed, even when I was not in the Chamber, she kindly said some nice things. I am quite pleased about this back operation; it has got me up and about and I have the picture to prove that my backbone is intact—a useful thing in this life. When I was away, the shadow Leader of the House said that she was pleased she would get to find out what the Deputy Leader of the House, who sits alongside me, was thinking. Of course, I always knew what he was thinking while I answered questions, and we now know the truth. He is thinking, “I know the answer to this one”. He demonstrated that when he did an admirable job in answering questions while I was away.
The shadow Leader of the House asked a number of times about the Offender Rehabilitation Bill, which will come before the House for Second Reading. In fact, I think three Bills came from the Lords at much the same time, and the Offender Rehabilitation Bill will be the first to be debated in this House. We will consider what we need to do but, as was made clear in the other place, our intention is to press ahead with a reform that will enable a large number of offenders with a sentence of less than 12 months to secure rehabilitation for the first time, and bring down the scandalous level of reoffending among those who have been prisoners. It is important to get on with that, which is what we are doing.
The shadow Leader of the House asked about energy prices, notwithstanding that my right hon. Friend the Energy Secretary will make a statement in a few minutes. The hon. Lady should reflect, however, on the apparent utter confusion on her own side during this week’s business in this House and the other place. The Leader of the Opposition stood here and said that he cares about trying to bring down energy bills, while Labour Members in the other place were voting for a decarbonisation target that would have added £125 to the bill of every household. Labour Members cannot have it both ways; they cannot complain about increases in bills when the Leader of the Opposition—as Energy Secretary before the last election—wanted to increase costs through the renewable heat incentive, including a £179 hit on gas bills.
Labour cannot have it both ways, and the so-called price freeze is not a price freeze but a price con. My right hon. Friend the Secretary of State will demonstrate that the Government are doing what needs to be done and introducing to the market competition that did not exist when we came to office. We are getting the lowest tariffs available for customers, and doing everything we can to ensure efficiency and low costs to people, while delivering on our energy security, environmental and carbon reduction targets.
The hon. Lady asked questions, perfectly reasonably, about the Bill for consideration on Friday 8 November, but that is a private Member’s Bill, not a Government Bill—[Interruption.] I will laugh if I like. I think at the end of the debate on 8 November, we will be smiling, not the hon. Member for Rhondda (Chris Bryant). That Bill is a matter for its promoter, my hon. Friend the Member for Stockton South (James Wharton).
It was rather an own goal by the shadow Leader of the House to talk about tax avoidance. Not only are the Government taking measures that are delivering a substantial increase in tax revenue—when compared to our predecessors—from those who would otherwise seek to avoid or evade tax, but today my right hon. Friend the Prime Minister will announce, as reflected in a written ministerial statement to the House by the Business Secretary, that we are going to proceed with a register of company beneficial ownership that will be accessible to the public. That is important not only in this country but across the world to establish who owns what, and who is therefore liable for taxation.
In the business that I announced, I was almost tempted to pre-empt the 12 November Opposition-day debate; no doubt it will be on energy price freezes again, but it ought to be on the economy, as that is the issue. I have not been here for the past two weeks, but it was fascinating listening to business questions and Prime Minister’s questions. Labour Members do not want to talk about employment because we have had record employment figures. They do not want to talk about the economy because figures last Friday demonstrated that the economy is growing at a faster rate than at any time since 2008. [Interruption.] The supposedly silent one—the Opposition Deputy Chief Whip, the hon. Member for Tynemouth (Mr Campbell)—talks about the cost of living. I would be happy to have a debate on the cost of living, because, under this Government, 25 million basic rate taxpayers will be £700 better off than they were under the Labour Government; 3 million people have been taken out of income tax altogether; fuel duty is 13p per litre lower than it would have been under Labour; and there is support from the Government so that councils can freeze their taxes through the life of this Parliament, when, under the previous Labour Government, council taxes doubled. We delivered the biggest ever cash increase in the state pension last year. Those are the things the Government are doing to support people with the cost of living. We will continue to do so.
Karl MᶜCartney (Lincoln) (Con)
My right hon. Friend will recall that, some time ago, he kindly agreed to ask the chief executive of the Independent Parliamentary Standards Authority to meet me. After three and a half years of waiting, I am still very much persona non grata. The disgraceful chairman and chief executive seem to believe that smearing and slandering an individual Member of the House as hysterical—among other vulgar and untrue insults—is an acceptable modus operandi. The situation has reached an impasse. If a Member of Parliament finds that there is no direct redress or recourse in an ongoing issue with IPSA, despite numerous correspondence, e-mails and phone calls, and despite interventions from both the Leader of the House and the party’s Chief Whip, please will my right hon. Friend advise what option is left open to that Back Bencher to secure a professional and equitable conclusion from that inept, discredited and wholly unfit-for-purpose organisation?
Mr Lansley
Although my hon. Friend will understand if I do not comment on the points he makes on his case with IPSA, I suggested directly to the chief executive that my job could be to facilitate a meeting on a without-prejudice basis between him and my hon. Friend. I continue to believe that that is the right way to proceed. IPSA has important responsibilities in relation to all hon. Members, and it should be prepared to discuss and account for the way in which it discharges those responsibilities to hon. Members. I reiterate my offer to my hon. Friend and the IPSA chief executive. I am happy to facilitate and be present at a meeting at which they discuss, on a without-prejudice basis, their concerns.
Natascha Engel (North East Derbyshire) (Lab)
Tuesday will mark another first for the Backbench Business Committee: for the first time, we will have representation from a member of the minority parties, in the form of the hon. Member for Perth and North Perthshire (Pete Wishart). Will the Leader of the House take the opportunity to welcome him to the Committee, but also pledge to review, as soon as possible, the status of minority parties on the Committee, so that they can have full voting rights, as every other member of the Committee has?
Mr Lansley
I join the hon. Lady in welcoming the prospect of the attendance of the hon. Member for Perth and North Perthshire (Pete Wishart) at the Backbench Business Committee. I very much enjoy my opportunities to attend. I am a silent one in the Committee, but I listen carefully. It is a good way of understanding the views and interests of the House for debate. The Backbench Business Committee has admirably demonstrated that it is possible to schedule sittings on, effectively, a non-partisan and consensual basis, reflecting views of Members on both sides of the House. That is a very good basis on which to involve the minority parties and ensure that the views of the House as a whole are heard. The membership of the Committee is a matter not for me, but for the Procedure Committee. I would be happy to facilitate any review by that Committee to that effect.
Andrew Griffiths (Burton) (Con)
You will know, Mr Speaker, that Burton upon Trent is the home not only of British beer, but of the England football team at St George’s park. Football fans throughout England are looking forward to cheering on Roy’s boys in Brazil next year. There is no better way to do so than when enjoying a pint in the local pub, but, because of Britain’s licensing laws and the time difference, many people will be unable to watch the football and enjoy a pint at the same time. Therefore, may we have a debate on UK licensing laws and exemptions, to give some cheer to England football fans and put some money in the pockets of Britain’s publicans?
Mr Lansley
My hon. Friend makes an important point. Fortunately, he has done so in good time for his proposal to be considered before the World cup finals—while I was laid up, one of my pleasures was watching England play Poland. I will raise the matter with my hon. Friends at the Home Office, because there have been occasions in the past when it has been thought appropriate to have exemptions to licensing arrangements to recognise the time at which such major sporting events take place.
Pete Wishart (Perth and North Perthshire) (SNP)
May we have a debate about the membership of this House? We now have the incredible spectacle of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), the former Prime Minister, describing himself as “an ex-politician”. How can someone be a Member of this House and an ex-politician at the same time?
Mr Lansley
The hon. Gentleman will understand that I cannot account for the views of the former Prime Minister. “Politician” is an interesting description, but as Members of Parliament we are all here with a responsibility to represent our constituents, both in the constituency and—in my view—here in Westminster.
Mr John Leech (Manchester, Withington) (LD)
The Bill to pardon Alan Turing completed its passage through the Lords yesterday. Can the Leader of the House assure me that, as in the Lords, the Government will leave the decision to Parliament and not seek to oppose the Bill?
Mr Lansley
My hon. Friend is right that the Bill completed its progress in the other place yesterday and it will in due course come here. I would expect the view the Government took in the other place to be reflected here too.
Simon Danczuk (Rochdale) (Lab)
I recently met a GP in my constituency who described how resources were being wasted on health tourists, but his concerns were ignored when he reported them to the immigration services. I know that the Immigration Bill is making progress, but does the Leader of the House agree that health tourism deserves a debate in its own right?
Mr Lansley
The hon. Gentleman makes an important point, and it is why, when I was Secretary of State for Health, I instituted a review, which reported in the middle of last year. That review is the basis on which the Government are proceeding with the Immigration Bill, and there will be occasions to debate that issue during the progress of the legislation.
Sir Tony Baldry (Banbury) (Con)
May we have a debate on early-day motion 598?
[That this House notes that World Polio Day is on 24 October 2013; further notes that within five years polio, like smallpox, can be eradicated across the world; recognises that in the last 25 years cases are down 99 per cent with 2.5 billion vulnerable children reached through vaccination programmes which offer a blueprint for cost-effective, targeted and outcomes-driven international public health intervention; further notes that just three countries, from an original 125, now have endemic polio – Nigeria, Pakistan and Afghanistan; understands that vaccination programmes must focus on these countries to eradicate the disease and prevent its return elsewhere; further recognises the contribution of more than 50,000 British Rotarians towards a polio-free world through their volunteering and £20 million fundraising contribution; realises that the funding gap for this final effort to eradicate polio is a tangible £620 million; appreciates that the Government has contributed a world-leading £600 million towards eradicating polio to date; and calls on the Government to help finish the job of creating a polio-free world by continuing to commit funding, maintaining the UK’s commitment to the World Health Organisation, Rotary International, CDC and Unicef’s Global Polio Eradication Initiative and associated Polio Eradication and Endgame Strategic Plan 2013-18 and ensuring the UK's continued global leadership role through seeking support from international bodies, governments, non-governmental organisations, corporations and the wider general public to help eradicate this disease once and for all.]
That would enable the House to reflect on the £600 million the Government have already given to eradicating polio; on the fact that we could eradicate it completely, as we have smallpox, within five years; and on the fact that Rotarians across the country have raised £20 million through voluntary efforts to eradicate polio. This is a once-in-a-civilisation opportunity to eradicate polio once and for all. May we have a debate in which we can commit to eradicating polio in our lifetime?
Mr Lansley
I have read early-day motion 598, which highlighted world polio day last week. I cannot promise time immediately, but it would be appropriate to discuss this issue either through the Backbench Business Committee or in an Adjournment debate. It is very important that we achieve this aim, but it is fraught with risk, because of the circumstances we have seen most recently in Syria, where the breakdown of the health infrastructure as a consequence of the conflict has led to an outbreak of polio. We have to achieve polio eradication alongside getting health services into places such as Syria that do not have them at the moment.
Nic Dakin (Scunthorpe) (Lab)
This week Tata Steel announced 500 job losses nationally, of which 340 will be in my constituency. May we have a statement or a debate on what the Government are doing to support the steel industry and steel workers at this time?
Mr Lansley
I cannot immediately offer a debate, but I will discuss this with my right hon. and hon. Friends in the Department for Business, Innovation and Skills. They, along with Tata, recognise the strategic importance of that company to the United Kingdom and have together developed a joint Her Majesty’s Government-Tata Steel strategy to support the business and ensure that it is in the right position to support our growing economy in the future and to enable our competitiveness. Any redundancies are very regrettable, and we feel very much for the difficult time that the work force is experiencing. Jobcentre Plus and its rapid response service will be available and will do all it can to help to support those workers.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I have never doubted my right hon. Friend’s backbone. When can we expect Second Reading of the Water Bill? It contains important provisions on competition and will have a big impact on customer bills and Flood Re insurance. There is enormous interest in the Backbench Business Committee debate next week, which unfortunately clashes with the meeting of the Select Committee on Environment, Food and Rural Affairs, but I am sure we would all like to know when Second Reading will take place.
Mr Lansley
I recognise the interest, which is reflected in the acceptance of the debate by the Backbench Business Committee. I cannot tell my hon. Friend when Second Reading will be. She will understand that we set out to publish draft measures on flood insurance, which are important to Members across the House, and that they will benefit from consultation before we proceed with Second Reading and consideration of the Bill.
Julie Hilling (Bolton West) (Lab)
The sister of my constituent Gemma was murdered last year in Blackpool in the most horrific circumstances. During the court case, the murderer consistently referred to Gemma’s sister as “it”. May we have a statement or a debate on what the Government are doing to tackle the objectification of women and girls?
Mr Lansley
I am sure the House will want to join me in expressing sympathy with the hon. Lady’s constituent. I think I remember the case. If I may, I will ask my right hon. Friend the Home Secretary to respond. We have published a strategy and taken a wide range of measures to tackle violence against women. I will ask her to respond to this particular point.
Steve Baker (Wycombe) (Con)
When the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Bill returns to Parliament, will there be scope and time for a full and proper debate into the principles at stake and the circumstances that have emerged from Labour’s inquiry into the Falkirk selection process? [Interruption.]
Mr Lansley
My hon. Friend raises an interesting point. Opposition Members may shout, but the relationship between the Labour party and the trade unions could have been addressed in the Bill. I invited the Leader of the Opposition to do that and he did not even have the courtesy to reply. It is not too late. Measures could be introduced by the Opposition to regularise the relationship between trade unions and political parties on political funds. Frankly, all I have seen of the investigation at Falkirk suggests that, contrary to the right hon. Gentleman’s protestations, he did not investigate. He is not creating a new relationship and he is not dealing with the issues inside the Labour party and the trade unions. He still continues to dance to Unite’s tune.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
The Leader of the House will know that a general election is due in Bangladesh in a few months. May we have a statement from the Foreign and Commonwealth Office on what we and our allies in the European Union are doing to assist the Government party and the main Opposition party, but not their Islamist allies, to ensure that free and fair elections take place again?
Mr Lansley
If my recollection is correct, I believe I heard Foreign Office Ministers refer to this matter during Foreign Office questions. I will check if that is the case. If it is not, I will talk to them and ensure that they write to the hon. Gentleman and consider at what point it might be appropriate to make a written statement to the House.
Mr Philip Hollobone (Kettering) (Con)
We all enjoy the contribution from the shadow Leader of the House, but this week she made a good point about the number of special advisers in the Government. If she is right that there are 19 special advisers in the Office of the Deputy Prime Minister, that, quite frankly, is a disgrace. May we have a statement on how many special advisers the Deputy Prime Minister has and when he plans to cut that number?
Mr Lansley
I apologise to the shadow Leader of the House for not answering that point. My recollection is that last week the limit on the number of special advisers was further reiterated by my colleagues at the Cabinet Office. If I may say so—this will not make me popular with my hon. Friend—it has to be understood that coalition Government creates special circumstances and a necessity for independent sources of advice to the two parties working together in coalition.
Valerie Vaz (Walsall South) (Lab)
It is extraordinary that in one week two decisions by Secretaries of State have been held by the courts to be legally flawed. May we have a statement on whether they acted against civil servants’ and legal advice, and could the legal costs be published?
Mr Lansley
The case of the back-to-work scheme demonstrated that the Government were operating on the basis of thoroughly sound principles, and it was important for that to be established. On Lewisham, I understand perfectly what my right hon. Friend the Health Secretary did and why he did it, and I think he was right to pursue the issue, because the relevant legislation, which we did not introduce, was not clear. The unsustainable providers regime was established in primary legislation under the previous Government, but unfortunately it was not clear, so it was important to get that clarity by taking the case further.
Tessa Munt (Wells) (LD)
I am delighted that the Prime Minister has announced today that companies must publish and make public details of who owns and controls them. In the interests of further transparency, will the Leader of the House make time for a debate on demolishing the firewall between the taxpayer and private companies holding Government and local authority contracts by requiring them to meet the requirements of the Freedom of Information Act for those parts of their business paid for by taxpayers’ money?
Mr Lansley
I entirely understand my hon. Friend’s point—I recall the issue of private companies providing health care services paid for by the NHS—but it would be intensely difficult simply to apply the Freedom of Information Act to private companies and to draw clear distinctions between those parts of their activities to which public money relates and those to which it does not. That is why the public sector, when procuring services, makes clear in contractual provisions the requirement for proper transparency and openness about the nature of the contracts and services being provided to the public.
Mr Tom Watson (West Bromwich East) (Lab)
On special advisers, the Leader of the House’s answers to the hon. Member for Kettering (Mr Hollobone) and to the shadow Leader of the House were complacent. All over central Government, Ministers are bearing down on spending Departments, yet when it comes to their own personal support, it appears there is one rule for them and one rule for everyone else taking the cuts. A debate would allow us to test whether the Deputy Prime Minister genuinely needs 19 special advisers and why we have a record number of special advisers, given that in opposition they were so opposed to the growth in their number.
Mr Lansley
The coalition agreement made it clear that we would set a limit on the number of special advisers, and we are doing that, but it is also important to recognise, as has been demonstrated properly in the civil service reform plan, the need not only for civil service advice, but for access to external and independent sources of advice. Excellent and necessary though its role is as part of the infrastructure of advice and delivery, the civil service does not have a monopoly of wisdom. We need further advice as well.
Andrew Bridgen (North West Leicestershire) (Con)
I have said previously in the Chamber that the business of business is business and the business of government is creating an environment where business can thrive. Unemployment is now down to 2.8% in my constituency. May we have a debate about the heroic efforts of businesses in my constituency and across the country, which have created 1.4 million new private sector jobs since the last general election?
Mr Lansley
I congratulate my hon. Friend, and I am sure that his constituents share his pride in what they are achieving in employment creation and the wealth creation that goes with it. That is exactly what we are here to encourage. Throughout this Parliament, the extent of new job creation has been encouraging, but it is especially encouraging that we have now turned the corner and restored some of the growth lost in the recession created in Downing street under the last Government.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
Will the Leader of the House find time for a debate on police funding for our capital cities? I ask that in the light of some very odd answers I have received on policing funding for Cardiff, including one in which the Minister for Policing, Criminal Justice and Victims said he had had meetings with a wide range of international partners on the issue. I appreciate that we are rivals in rugby and football, but I would not have thought the Severn estuary too wide a gulf for him to cross.
Mr Lansley
If I may, I will ask the policing Minister to respond directly to the hon. Gentleman, because I cannot interpret that answer.
Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)
A couple of days ago, as the Leader of the House is aware, we had an enormous conference between British and French chambers of commerce to show that we were working together on a lot of energy projects. Total was there; Arriva was there; EDF was obviously there. May we have a debate on the importance of cross-channel inward investment? We have just heard about unemployment in the UK. This is a chance for us to show that this country is serious about our infrastructure and welcomes foreign investment through our chambers of commerce.
Mr Lansley
I completely agree with my hon. Friend. Government Members are supporting investment in infrastructure, although we wonder about those on the Opposition Benches. This is not just a Government-to-Government thing; it is an area in which businesses can work together, and I am delighted that my old friends in the chambers of commerce are working with their counterparts in France in this way.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Last week, the Prime Minister failed to answer my question about why the Government had failed to close the £500 million eurobond tax loophole. Yesterday, the former Chancellor, Lord Lawson, accused the Government of “getting nowhere” on corporate tax avoidance and said that the UK should take the lead on the issue. Given the importance of the issue for Britain, may we have an urgent debate on the Government’s progress and on their unwillingness to explain why they choose to leave loopholes open?
Mr Lansley
I would have thought that our introduction of the general anti-abuse rule, the fact that our Second Reading debate on the National Insurance Contributions Bill next Monday will cover the extension of anti-abuse legislation into national insurance, and our announcement today of the registration of beneficial company ownership all demonstrated that we were taking further steps beyond the many already taken by the Treasury to deliver on the reduction of tax avoidance.
Glyn Davies (Montgomeryshire) (Con)
This week, the right hon. Member for Cynon Valley (Ann Clwyd), who is no longer in her place, published an important report on the need for transparency and genuinely independent powers of review in the NHS in England. Will the Leader of the House schedule a debate on her report, so as to enable Welsh MPs, many of whose constituents are treated in English hospitals, to make the case for the same approach to transparency and genuinely independent review in Wales?
Mr Lansley
My hon. Friend is right to welcome, as I do, the right hon. Lady’s report on complaints. I hope that it will be taken up by the NHS not only in England but in Wales, not least because of the circumstances that gave rise to her serious concerns. I hope that the NHS in Wales will recognise that the NHS in England is making changes in regard to listening and responding to complaints, and that it will emulate the steps we are taking to deliver services on which patients can rely. Cutting the budget in Wales, which Labour is doing, is undermining the delivery of those services.
David Wright (Telford) (Lab)
The Shrewsbury and Telford Hospital NHS Trust is increasing parking charges at the two main hospital sites in Shropshire. I am against parking charges at hospitals—they are a charge on the sick—and is not this the wrong time to introduce such increases anyway? May we have a debate on the cost of living, in that context?
Mr Lansley
The hon. Gentleman will know that parking charges at hospitals in England are a matter for the individual trusts. In Wales, this is a devolved matter and the relevant bodies can make their own decisions. I personally find it astonishing that the Welsh Administration thought it appropriate to abolish parking charges—
Mr Lansley
I know. I am just making the contrast. If the hon. Gentleman thinks it appropriate to abolish those charges, he will have to find the money from somewhere else. In Wales, they have cut the money for patient services and care in order to subsidise car parking, and that cannot be the right decision.
Henry Smith (Crawley) (Con)
A recent report by the TaxPayers Alliance showed that one fifth of house purchases in my constituency last year were subject to stamp duty of more than £7,500, and that is projected to rise to more than 41% of purchases in the next five years. May we have a debate on the reform of stamp duty?
Mr Lansley
It will not surprise my hon. Friend to learn that stamp duty land tax is an important source of revenue; it raises several billion pounds each year. It is important to consider how best we can support the housing market, and we have taken action in relation to first-time buyers. There are also effective ways of doing this through Help to Buy and the NewBuy guarantee scheme, among others. This is of course something that we continue to look at.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I alert the Leader of the House to the fact that quite a rare creature is wandering around the parliamentary estate this morning in the form of Sir David Attenborough. He is here to launch the crowdfunding initiative on flora and fauna to save the gorillas. Did the right hon. Gentleman know that at a press conference this morning it will be announced that tomorrow is a national crowdfunding day? May we have an early debate on the importance of crowdfunding for the renaissance of the communities of this country?
Mr Lansley
I was not aware of that, and I am grateful to the hon. Gentleman for alerting me and the House to this fact. The hon. Gentleman may like to raise the matter again in Treasury questions on Tuesday, as the Treasury will be interested. Members of all parties might find this interesting, too, so they could together ask the Backbench Business Committee whether time could be found in Westminster Hall for a debate on these issues.
James Morris (Halesowen and Rowley Regis) (Con)
A report published yesterday by Invest Black Country in conjunction with the West Midlands Economic Forum showed that over the last two years exports by the west midlands have grown by 30%—a better performance than any other region of the UK. May we have a debate on the continuing need to support the encouraging signs of economic growth in areas such as the black country, part of which I represent?
Mr Lansley
My hon. Friend illustrates a very impressive record of export promotion in the black country and the west midlands generally. We have done very well in increasing exports to some of the emerging markets and key markets for the future—China, India, Brazil and Russia, for example. We need to do more, however, because exports have been depressed, not least because of difficulties in the eurozone. The Government will look continuously to try to emulate the success of the west midlands, to which my hon. Friend referred.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
It is a national disgrace that more than 350,000 people have had to turn to a food bank over the past six months. The Prime Minister has said twice from the Dispatch Box that this is because, under his Government, jobcentres are referring people to food banks. According to the many written answers I have received from Work and Pensions Ministers on this subject, however, that is simply not happening. The DWP has not been able to confirm how many jobcentres are doing this in practice or how officials decide whether someone is in need of emergency food aid. May we please have an urgent debate on this matter, on the wider causes of food poverty and on what the Government are going to do to stop the scandal of our people going to bed hungry?
Mr Lansley
First, it is a fact that Jobcentre Plus is signposting people to food banks, whereas the previous Government decided before the election that they would not do that. That is a positive thing to do. More food banks are being established—locally and more widely. It is important to offer that help. If people are in hardship, resources and funds are available to support them, and it is important for them to access the discretionary hardship funds.
Mr Peter Bone (Wellingborough) (Con)
I have two immigration cases in my constituency, one relating to the Mashongamhende family and the other to the Tapela family. Both families have been in the UK for many years. Despite numerous letters, direct telephone calls to the UK Border Agency and a personal meeting with the Home Secretary in July, both these cases are still unresolved. May we have a statement from the Home Secretary on the cost, inefficiency and delays of the UK Border Agency? In particular, when can I expect my two cases to be resolved?
Mr Lansley
My hon. Friend has rightly and typically been diligent in support of his constituents, and I know they will appreciate that. As he knows, the Home Office is fully aware of those cases and is seeking to make progress on them. I will get the Home Office to respond further to my hon. Friend; it is seized of the importance of doing so. More generally, the House has heard very positive statements from the Home Secretary about how she has reshaped the Border Agency for the future, turning it around as compared with the past. It is still early days when it comes to the progress that we all want to see, but I know that my right hon. Friend is bending every effort to ensure that we make such progress.
Bill Esterson (Sefton Central) (Lab)
A number of charity shops in my constituency sell new goods in direct competition with other retailers, yet they pay a reduced business rate. May we have a debate on the need to create a level playing field between charity shops and other retailers, especially when new goods are sold and the charities are acting as full-blown retailers in their own right?
Mr Lansley
I will not venture too far into this subject, but many charities are, of course, retailers in a substantial way. Just the other day I was talking to representatives of the British Heart Foundation. It has 700 shops all over the country, which provide an important basis for much of its work. However, I will ask my colleagues at the Department for Communities and Local Government to reflect on what the hon. Gentleman has said, and to respond to it.
Stuart Andrew (Pudsey) (Con)
This week. the “Lonely Planet” guide ranked Yorkshire as the third best region in the world. Given the countryside of the Dales, the brand-new retail development in Leeds—with more to come—the Grand Départ and, apparently, the fact that it contains more Michelin-starred restaurants than anywhere else outside London, may we have a debate to prove that Yorkshire is not just the third but, indeed, God’s own county?
Mr Lansley
I think that the House will be staggered by the effrontery of suggesting that Yorkshire is the third best county. We all know that it must be the second best, after Cambridgeshire.
Kevin Brennan (Cardiff West) (Lab)
My hon. Friend the Member for West Bromwich East (Mr Watson) and the hon. Member for Kettering (Mr Hollobone) are right: we do need a debate on the Government’s special adviser job creation scheme. It is not just about the quantity, but about the quality as well. For the last couple of years, the Education Secretary has maintained as his special adviser a semi-house-trained polecat who runs secret, private e-mail accounts to conduct Government business, and runs an anonymous Twitter account on which he abuses even members of his own party. Would not a debate bring the issue into the full sunshine of parliamentary scrutiny?
Mr Lansley
I am only staggering to my feet because I am astonished by the effrontery of the Labour party in suggesting that special advisers might be behaving in a semi-house-trained way. What is happening under this Government bears no comparison with what happened under the last Government.
Damian Hinds (East Hampshire) (Con)
There has been a sharp increase in the fly-grazing of often badly malnourished horses, with a particular concentration in Alton, which is in my constituency. May we have a debate on this so that we can determine how local authorities can be given effective power to deal with fly-grazing quickly?
Mr Lansley
My hon. Friend may wish to apply to the Backbench Business Committee—along with colleagues—or to seek an Adjournment debate, because the issue is important. There is legislation that can be used, but there are unscrupulous owners who are fly-grazing horses and putting landowners at considerable risk as a consequence.
Chris Bryant (Rhondda) (Lab)
May we have a debate in Government time on Government procrastination?
Chris Bryant
Yes, we got that joke.
Earlier today, the Secretary of State for Culture, Media and Sport said that it would take up to 12 months to create the recognising body for the press regulatory organisation. That means that in the next eight to 10 weeks at least one body, and probably two, will be seeking recognition, and there will be no one to recognise them. Should we not get this up and running a little bit faster?
Mr Lansley
The answer to the hon. Gentleman’s question is no. We will not need a debate, because there is no necessity for it.
Julian Smith (Skipton and Ripon) (Con)
On 4 October, The Guardian published in minute detail the techniques used by the intelligence services to apprehend those who use the Tor network—the so-called dark internet—to commit, anonymously, serious online crimes, including crimes involving child pornography. May we have a debate on the impact of those Guardian reports on the combating of serious crime in the United Kingdom?
Mr Lansley
My hon. Friend has been rightly assiduous in pursuing this issue. I entirely share the Prime Minister’s view that The Guardian not least, but others as well, should reflect on the damage that could have been done to the UK’s safety and security by the undermining of those whose job is to keep us safe.
My hon. Friend the Member for Cambridge (Dr Huppert) has secured a three-hour debate in Westminster Hall on oversight of the intelligence and security services. It will take place this afternoon, and will afford my hon. Friend an opportunity to make exactly those points.
Harriett Baldwin (West Worcestershire) (Con)
May we have a debate on the cold weather payment? It starts tomorrow, and will allow many of our constituents who are receiving certain benefits to receive £25 if the temperature falls below zero for seven consecutive days. Such a debate would also allow us to publicise the fact that it is this Government who have made the payment permanent, and the last Government who had budgeted to cut it.
Mr Lansley
My hon. Friend is right. The last two winters have been relatively severe, and in each of them there have been substantial such payments. I cannot promise an immediate debate, but if she catches Mr Speaker’s eye she could further raise these points on the annual energy statement which follows. That payment, the warm home discount and support through the cold weather plan I instituted two years ago, with a warm homes healthy people fund, are all helping people to be energy-efficient and to meet some of their bills in the winter.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Earlier this week the Northern Ireland Affairs Committee met Dr Haass who is undertaking a review of politics in Northern Ireland, which I understand is set to report by the end of this year. Will the Leader of the House tell us when that report is likely to be published and whom it will be sent to, and may we have a debate on the matters Dr Haass raises and his recommendations?
Mr Lansley
We welcome the establishment of the all-party group in Northern Ireland considering these issues, and we are very glad that Dr Richard Haass is chairing the talks; he does so with great ability. My right hon. Friend the Secretary of State for Northern Ireland met Dr Haass for the third time this week and gives that process her full support. As my hon. Friend knows, the process itself is owned by the Northern Ireland political parties, not the Government, so it will be for them to decide when and what to publish, but that will be of great interest to Members across the House and I know my right hon. Friend will ensure that my hon. Friend and others in the House are informed about the progress of the talks.
Mr Nigel Evans (Ribble Valley) (Ind)
May I add my voice to those who have asked for a debate on the national health service? Last year there were 5.3 million admissions to A and E, an increase of 47% over 15 years, which is totally unsustainable. Perhaps we can look at one of the reasons this is happening, which is to do with access to GP services in the evenings and at weekends—unbelievably, people do get ill at these times. We need to look at the whole of the national health service so people get the service they deserve.
Mr Lansley
I hope that before too long the House will have an opportunity to hear from my right hon. Friend the Health Secretary about the further measures he is taking that will have a positive impact this winter, both in relation to supporting general practitioners in looking after patients in the community, rather than admitting them to hospital, and in using the integration funds the Chancellor set out in his spending review— £3.8 billion to enable local authorities and the NHS to work together to ensure community services are there and are effective in minimising the number of emergency admissions to hospital.
Martin Vickers (Cleethorpes) (Con)
North East Lincolnshire council has just installed speed cameras to enforce a 30 miles-per-hour limit on one of the main roads between Cleethorpes and Grimsby, which is a pedestrian-free road with a wall either side of it. The council claims this is in line with Department for Transport guidelines, but a BBC reporter established the opposite. Will the Leader of the House arrange for a statement by a Transport Minister to clarify what the guidelines are?
Mr Lansley
My hon. Friend will know that the process of setting speed limits is a matter for local authorities, notwithstanding that the Department for Transport provides them with guidance. The Secretary of State for Transport and his colleagues will be here next Thursday, and my hon. Friend might like to raise that with them then. Meanwhile, I will alert them to the point he rightly raises.
Robert Halfon (Harlow) (Con)
Has my right hon. Friend seen my early-day motion 652 regarding youth services in Harlow?
[That this House notes the remarkable work of youth organisations in Harlow and the value they give to the local community; further notes that they help young people in need, and provide a range of services in education, skills, mentoring, sexual health services, sport, music, culture and other related areas; thanks the Youth Council for the work it does promoting youth issues in Harlow; further notes the consultation announced by Essex Council about the future of youth services; and urges that youth services in Harlow are protected from any future budget reductions.]
Youth services in Harlow do remarkable work and their future is uncertain because of a consultation by Essex county council. Will my right hon. Friend do everything possible, working with the Secretary of State for Communities and Local Government, to try to ensure youth services in Harlow are protected?
Mr Lansley
Once again my hon. Friend is taking up issues on behalf of his constituents in an admirable way. I completely understand the point he makes about the importance of youth services, and all of us want to ensure we maximise the support we give to young people because, as has been demonstrated, young people not being in employment, education or training presents a serious long-term risk to them and the country, so we need youth services to be effective. I will write to the Minister of State, Cabinet Office, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), who is the Minister for civil society; I know that, with his new responsibilities in relation to young people, he will want to respond positively.
Andrew Stephenson (Pendle) (Con)
This week, we heard reports that the former head of Haringey children’s services, Sharon Shoesmith, has agreed a six-figure payout for unfair dismissal. May we have a debate about rewarding people for failure?
Mr Lansley
There should be no rewards for failure, in the public sector or in the private sector. We have made it clear that legal devices such as non-disclosure or compromise agreements should not be used to gag staff or brush under the carpet golden goodbyes to senior staff. In this context, it is hard to see how Haringey council’s secretive actions can be in the public interest, given the large sum of taxpayers’ money involved and the immense public concern arising from the baby P scandal. Bankrolling a state-sponsored cover-up must be a massive error of judgment on the part of Haringey council, following earlier mishandling of the affair.
Philip Davies (Shipley) (Con)
Will the Leader of the House arrange for a debate or a statement on the sentencing powers for magistrates, so that we can find out if and when the Government intend to allow magistrates to sentence people to 12 months in prison, as opposed to six months at the moment? The law is in place and it just needs activating. Such a debate or statement would help to tease out the Government’s response, and that of other hon. Members, to Frances Crook and the idiotic Howard League for Penal Reform, who believe that magistrates should not be allowed to send people to prison at all.
Mr Lansley
I recall precisely the point that my hon. Friend raises, and I will ask my right hon. Friend the Lord Chancellor to respond to him. I also gently point out to my hon. Friend that we will have questions to the Justice Secretary on 12 November, which may also provide him with an opportunity to push forward this important point.
Annual Energy Statement
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
Today, I am laying before the House the annual energy statement, alongside the statutory security of supply report. This coalition Government are putting in place the most coherent, sustainable energy policy the United Kingdom has ever had. We are creating one of the most competitive and attractive electricity investment markets in the world; improving our energy security and affordability; and boosting home-grown clean energy, and providing jobs and economic growth in the process.
This ambitious energy and climate change policy is vital so that Britain can meet our significant challenges. The coalition Government inherited from the previous Administration an energy future with a huge, multi-billion pound black hole at its heart, which was the result of years of underinvestment, dithering and delay. So this Government are having to take the tough decisions others ducked to make sure that Britain’s lights do stay on. Everything we are doing has to ensure that we drive investment into the system, not scare it off or freeze it out. But, as I will make clear in this statement, energy security must go hand in hand with affordability.
So let me set out the robust plans we have to deliver affordable energy security. To deal with the problem of tightening electricity margins up to 2018, the Government have been working with National Grid and Ofgem to develop existing safeguards, in order to have more electricity available for the grid at peak times, including, if needed, through the use of power plants currently mothballed. We are introducing to Britain a capacity market to ensure that we attract the investment we need in new power stations. The first capacity market auction will take place next year—for delivery from the winter of 2018. In addition to those measures to keep the lights on, Britain now has a long-term strategy encapsulated in the Energy Bill. Over the summer, we published draft strike prices for renewable electricity under contracts for difference. Detailed proposals for the implementation of electricity market reform were published this month.
The fruits of bringing this greater predictability and certainty to investment are already showing. Latest estimates suggest that at least £35 billion has been invested in new electricity infrastructure since 2010, and much more is in the pipeline. In the past 12 months alone, we have provided consent for seven major energy infrastructure applications worth about £20 billion, with the capacity to generate electricity for more than 6 million homes. That, of course, included last week’s announcement that we have reached key commercial terms with EDF for the first new nuclear power station in a generation at Hinkley Point C. And there is more: through the Energy Bill’s final investment decision enabling programme, 23 applications for 26 investment contracts are currently being evaluated by the Department of Energy and Climate Change for a broad range of renewable technologies, including onshore wind, offshore wind and biomass projects.
Even though British households pay some of the lowest prices for gas and electricity in Europe, such facts are scant comfort to those who have seen energy prices rise considerably over the past 10 years. The main driver of these energy price rises has been rising wholesale energy costs, not social and environmental policy. But apportioning blame is also scant comfort to people who are struggling to make ends meet. That is why we have been taking action to help people and businesses struggling with their energy bills.
We have already introduced some help that is immediate. Two million vulnerable households will get £135 off their energy bill this winter, thanks to the Government’s warm home discount. Around 12.5 million pensioners will get the winter fuel payment—£200 for the under-80s and £300 for those over 80. And of course there are cold weather payments if needed, which last year delivered over £146 million to help cut bills for the most vulnerable.
This year we have added to these policies with more direct action. Our new big energy saving network is training 500 volunteers to go out into communities to help people get better deals from energy suppliers and reduce their energy bills. These volunteers will be fully supported. We know how much people in communities across the country rely on the post office network, so we will be working with the Post Office to raise the profile of the big energy saving network so that it can make the links with the elderly, the vulnerable and other cost-conscious families trying to make their budgets go further.
We have also brought together in one place all the advice from across Government—from the Department of Energy and Climate Change and the Department for Work and Pensions—and from charities such as Age UK and Citizens Advice. Today, I am writing to all Members of this House with information about this new guide so that they can share it with their constituents, to make sure they are getting all the help to which they are entitled.
But while such immediate help for consumers and companies is important, we need more permanent change if we are to keep bills down not just for 20 months, but for 20 years and beyond. The energy company obligation is delivering such permanent change by modernising our housing stock and making it cheaper to heat our homes. Some 230,000 low income households will be warmer this winter, thanks to energy efficiency measures already installed through the ECO.
Energy efficiency remains a central part of our strategy both to help the fuel poor and to deliver permanent energy savings, but the permanent energy change that we seek also needs more competitive markets. This, however, is not something that the Opposition understand, for the previous Government created the big six, and their irresponsible policies would only help the big six. In contrast, from day one, this coalition Government have been determined to take on the big six for consumers—[Interruption.] The Opposition do not like it. We have been taking on the big six for consumers with the stick of competition. We have done a lot, but as I will set out, we need to do more.
Already our measures to deregulate have seen a major growth in the number and size of independent energy suppliers. In 2011 there was no independent supplier with a customer base greater than 50,000. Now we have three independents with more than 100,000 customers, and a further eight companies have entered the market since May 2010. We have delivered a doubling of the number of independent energy suppliers offering competition to Labour’s big six, and already hundreds of thousands of people are benefiting, but we are doing more. We are backing Ofgem’s reforms to help consumers get better deals—market reforms to make sure that customers are on the lowest tariffs for them, are moved off poor value dead tariffs, and no longer face the complex web of hundreds of tariffs designed more to confuse than to compete.
Our reforms are ensuring that people are given clearer, more personalised information on their energy bills so that they can compare tariffs and switch more easily to save money. We are also promoting collective switching, particularly aiming to ensure that the more vulnerable get to benefit from the best deals on the market. Today, however, I am challenging the industry to deliver faster switching. If someone can change their broadband provider with a few clicks of the mouse, why should they not be able to do the same with their gas or electric? It should not take five weeks for the change to take effect; 24-hour switching is my ambition.
First Utility has been out in front with its target of reaching 24-hour switching. Now E.ON, SSE and Scottish Power and a number of independent suppliers, including Good Energy, Ovo and Co-operative Energy, have accepted my invitation for urgent talks over the next month on how we can dramatically speed up switching.
I want five-week switching to come down to one-week switching, and then I want to go faster still. Let us be clear that it will not happen overnight. We could announce 24-hour switching and then suppliers would say, “Okay, we’ll put up our prices to cover the cost”. That cannot and will not happen. I want to talk to suppliers who can agree to and deliver a plan to speed up the process of switching down to 24 hours, without increasing bills.
Companies that are interested in making things easier for customers to switch are invited to come and see me, in addition to the others that have already agreed to do so. Our preference is to do that jointly with suppliers, building on the good work of Energy UK, which has raised ambition on the issue across the industry, but we are prepared to take action, if required, to compel those who drag their heels.
I have also written to energy companies about direct debits. I share concerns that they might be holding on to significant credit balances when customers have overpaid through direct debits. I expect all suppliers to make every effort to return money to customers with closed accounts. I accept that that sometimes will not be possible, but, when it is not, my view is that credits should be applied directly to help the fuel poor and other vulnerable customers. The Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), will meet energy suppliers next week to discuss that question and that of the level of credit balances that energy companies are holding on to.
In our debates on energy bills, many have understandably asked whether competition is working in our energy markets. Although the coalition has already done a great deal to promote competition, we are ready to do more. As the Prime Minister announced last week, we now propose to introduce annual reviews of the state of competition in the energy markets. The first of the new competition assessments will be delivered by spring next year. The assessment will be undertaken by Ofgem, working closely with the Office of Fair Trading and the Competition and Markets Authority when it comes into being.
The exact metrics for the review will be a matter for the regulators but I will ask them to look in depth and across the energy sector at profits and prices, barriers to entry and consumer engagement. The Government have equipped the regulators with strong powers to deal with unjustified barriers to competition. If abuses are found they must be addressed.
We also need to ensure that the energy suppliers are open and honest about the profits they are making, so I have also asked Ofgem to deliver, again by spring next year, a full report on the transparency of the financial accounts of the energy companies and ways in which that could be improved, building on the work already completed by accountancy firm BDO.
Ofgem will publish its consultation on financial transparency this afternoon, but the public need to know that our reforms will have teeth and that companies that play outside the rules will be penalised and fined. With our Energy Bill, Ofgem now has powers to require energy companies to make compensation payments directly to consumers who have lost out, but today I want to go further. That is why I intend to consult on the introduction of criminal sanctions for anyone found manipulating energy markets and harming the consumer interest.
Ours is a record of delivery and action. As set out in the annual energy statement—[Interruption.]
Mr Speaker
Order. The remainder of the statement must be heard. Matters are not greatly assisted by the fact that the statement is over-long. Frankly, a blue pencil should have been deployed, as statements should take no longer than 10 minutes, but we must let the Secretary of State trundle towards his conclusion.
Mr Davey
I am concluding, Mr Speaker.
As set out in the annual statement, the Government are acting to help those most in need to keep warm this winter and ensure that everybody gets a better deal from the energy companies. We are also acting to deal with Labour’s energy crunch, filling in its energy black hole with home-grown energy and bringing stability and certainty to drive investment. That is our strategy for affordable energy security, a strategy to power the country, protect the planet and help keep bills affordable. I commend the statement to the House.
Caroline Flint (Don Valley) (Lab)
Oh, dearie me. A coherent energy policy? I must say that I feel for the Secretary of State, because he has to deal with the fact that the Government’s energy policy is increasingly being made at the Dispatch Box by a Prime Minister who has completely lost the plot. I would like to thank him for early notice of his statement and its contents—on Sky, on the BBC’s “Watchdog” last night and on the “Today” programme this morning.
The Secretary of State was meant to be making the annual energy statement, but what we heard today would be better described as the annual excuses statement—excuses for why people’s bills are going up, excuses for why Ministers are doing nothing about it, and excuses for why each and every time they give the companies what they want and leave consumers to foot the bill.
The energy companies blame social and environmental obligations for their price rises, so the Prime Minister promises to roll them back. Threatened by Labour’s price freeze and plans to reset the energy market, suddenly the companies are clamouring for another review to kick the issue into the long grass. On Tuesday the chief executive of E.ON told the Energy and Climate Change Committee:
“I believe that we need to have a thorough Competition Commission investigation, supported by Ofgem, because they are the experts—they have been in the industry for a decade.”
Lo and behold, today the Government have given the energy companies what they want: their review, led by the very same regulator that has let them get away with ripping people off in the past.
Then, today, we heard the big announcement: encouraging people to switch from one company to another. But the truth is that no amount of tinkering with tariffs, telling people to shop around or, as the Prime Minister suggested, wearing another jumper will solve the real problem with Britain’s energy market, because even the cheapest tariff in a rigged market will still not be a good deal.
The proof of how weak and spineless the Government are when it comes to standing up to the energy companies is that only three weeks ago the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker) told the BBC that the idea that Government levies were responsible for bill rises was “nonsense”, but now, boxed in by a Prime Minister who is not willing to stand up to the energy companies and a Chancellor who is actively courting climate change deniers in his own party, the Government say that the levies are to blame.
It is interesting that the Secretary of State conspicuously did not talk about rolling back the green levies in his statement. The truth, of course, is that any obligation to support clean energy or improve energy efficiency must deliver value for money, but how is it possible that social and environmental obligations that, according to his Department’s own figures, make up only £113 of people’s bills can account for price rises of £400? Will he tell us which of the levies, 60% of which were introduced by his Government, he now wants to scrap? Is it the energy company obligation, at £47, the warm home discount, at £11, or the carbon price floor, at £5? Does he accept that, whether it is bill payers or taxpayers who pay, unless he deals with the way people have been overcharged, he is letting the companies off the hook?
As for the annual competition review, I remind the Secretary of State that there have been 17 investigations into the energy market since 2001. If he is today announcing the launch of a new annual review of competition in the energy market, what on earth has Ofgem been doing all this time, and what does he expect it to find out in the next 10 months that it has not discovered in the past 10 years? The last review by Ofgem, to which he gave his full backing, finished only in June. This is what he said at the time:
“I welcome the continued progress of Ofgem’s reform of the retail energy market…That’s why I am backing Ofgem’s reforms”.
The Minister of State, the right hon. Member for Bexhill and Battle, was even more effusive. He said:
“It’s encouraging that Ofgem is going full-speed ahead with these crucial reforms to the retail energy market.”
Today we hear the Secretary of State saying that the Government will build on the BDO recommendations on reform of the energy market, but the truth is that Ofgem ignored BDO’s recommendations and the Government stood by it.
We do not need another review: we need action. We need action to freeze people’s energy bills and fix this broken market; to break up the big six by ring-fencing their generation from supply; to put an end to secret deals and require all electricity to be bought and sold via an open exchange; and to create a tough new watchdog with the power to force these companies to cut their prices when wholesale costs fall—which, I am pleased to tell the House, is now supported by the hon. Member for Westmorland and Lonsdale (Tim Farron), the president of the Secretary of State’s party. That is what real action looks like.
Today’s annual energy statement could not have come at a more important time. Energy prices are rising three times faster under this Government than the previous one, bills are up by £300, and the latest price rises will add another £100 this winter. For people in fuel poverty, the gap between their bills and what they can afford is at an all-time high, but for the companies, the mark-up between wholesale costs and the prices they charge grows ever wider. Fifty-seven households have had work done under the green deal and 7,000 workers in the insulation industry have lost their jobs. Investment in clean energy has halved, and the Government have legislated to stop any future Administration setting a decarbonisation target until 2016 at the earliest. Last year, the UK’s carbon emissions increased by more than any other country in the EU.
That is the Government’s record. As we learned from Age UK on Monday, what it means in reality is that 3 million elderly people will not be able to stay warm in their homes this winter. They want their bills frozen, not their homes. The question they want answered today is simple: why are this Government too weak to stand up to the energy companies?
Mr Davey
I thank the right hon. Lady for her response, in which there was clearly not a single apology to Britain for the black hole in energy security that the Labour party left from when it was in government.
The right hon. Lady talked a lot about Ofgem. Who created Ofgem? The Labour party. Who reformed Ofgem to make it stronger? The Leader of the Opposition. In attacking Ofgem, an independent regulator, she is attacking her own party leader’s record. We are reforming Ofgem; we have given it new, stronger powers. We have created a new regime in the Energy Bill, and there is new leadership. I believe that Ofgem can deliver on competition where the previous Government failed to deliver. We are not kicking competition into the long grass. I am determined that this first annual energy assessment on competition should deliver by next spring.
The right hon. Lady talked about levies. The question is whether levies should be on bills or on taxes, and we are looking at that issue. Interestingly, she referred to a figure of “only” £112. I hope that people noticed that, because her energy freeze will deliver only £120—we think. So she is admitting that her energy freeze is actually the con that we have been saying it is all along.
I end by thanking the right hon. Lady for tabling an Opposition day debate on energy bills for next Wednesday. I want to debate energy with her every day of the week, because I want to expose Labour’s appalling record on energy and its appalling policies, which would feed into the big six that it created. Labour’s big six need competition, and we are up for it—Labour is not.
Mr Speaker
Order. A very large number of right hon. and hon. Members are seeking to catch my eye. I would like to accommodate the level of interest, but I remind the House that we have very important business to follow, and it is heavily subscribed. There is therefore a premium on economy, in which we will be led by Sir Robert Smith.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
I am delighted to welcome the fact that the Government support the Energy and Climate Change Committee’s call for a competition review and to press Ofgem on greater implementation of BDO’s recommendations on transparency. Will the Secretary of State confirm that the market reforms will end the exploitation of the inertia on the part of customers on existing tariffs, which leaves them languishing on uncompetitive tariffs?
Mr Davey
I thank my hon. Friend and the other members of the Committee, whose reports and their grilling of energy company executives have played a very important role and have showed the role that this House can play in holding those companies to account. Our competition reforms are aimed at helping people and preventing them from being stranded. That is what Ofgem’s reforms will do, but the Labour party does not support them, because it is so critical of Ofgem. I assure my hon. Friend that our aim is always to help the fuel-poor.
Glenda Jackson (Hampstead and Kilburn) (Lab)
As the stick of competition, to which the Secretary of State referred, shattered at the first blow into less than matchwood, will he at least now attack the energy companies and dispel their canard that bills are rising so astronomically due to green taxes?
Mr Davey
I agree with the hon. Lady that the evidence that green taxes are pushing up bills is quite weak. They are a cost to bill payers—we should not deny that and we should look at it as we are looking at every single part of the bill.
I regret that the hon. Lady attacks competition, because that is the way we are going to deliver. People are benefiting from competition and making huge savings on their energy bills now, and the Labour party ought to support it.
Mr Tim Yeo (South Suffolk) (Con)
I congratulate the Secretary of State on an excellent statement. Will he now consider the introduction of rising block tariffs to protect the poorest consumers against future price rises without any cost to the taxpayer and without damage to the prospects of urgently needed investment in new capacity, which would be the inevitable consequence of a Government-imposed price freeze?
Mr Davey
I am grateful for the hon. Gentleman’s question, which he also asked me when I appeared before the Select Committee a few months ago. I am afraid that my answer is the same: although rising block tariffs are attractive on one level, the problem is that low-income, high-user households—basically, large families on low incomes—would be hit by their introduction, so I do not think they would be the right move. We need to insulate their homes—that is the real way to help them get their energy bills down.
Mr Speaker
Order. May I remind the House that Members who entered the Chamber after the start of the statement should not expect to be called?
Frank Dobson (Holborn and St Pancras) (Lab)
Surely the Secretary of State understands that the public believe that the energy companies are giving Ministers, civil servants and Ofgem the runaround. Would it not be better if the public and pressure groups had access to the figures that clearly mesmerise officialdom and we applied freedom of information to the energy companies?
Mr Davey
I agree with the right hon. Gentleman on transparency. That is what I announced in my statement and it is why Ofgem is publishing a consultation on greater financial transparency—so that the accounts of these big energy companies can be properly exposed and we can see from where the profits are made.
Mr Christopher Chope (Christchurch) (Con)
VAT on household energy bills is now yielding the Government about £500 million a year. Why do the Government not abolish VAT on household bills? If they say that they cannot because the European Union will not allow it, is that not another good reason for leaving the EU?
Caroline Lucas (Brighton, Pavilion) (Green)
If the Secretary of State was serious about helping the fuel-poor, surely he would be acting to make the UK housing stock far more energy efficient, which is the only permanent way to bring down bills, according to the Child Poverty Action Group, Age UK and many other charities that support proposals to recycle carbon tax revenue into energy efficiency. That would bring nine out of 10 homes out of fuel poverty, quadruple carbon savings and create up to 200,000 jobs, so why does the Secretary of State continue to ignore calls for such ambitious policies?
Charles Hendry (Wealden) (Con)
Does my right hon. Friend agree that some of the levies on energy bills are particularly regressive, such as the energy company obligation and feed-in tariffs? People on low incomes still pay the charges, but it is often people who have much higher incomes who get the benefits. Will the review ensure that these important policies are delivered in the fairest way possible?
Mr Davey
My hon. Friend makes an important point. As we review the levies, and indeed the whole market, we must ensure that they work for the fuel-poor and the less well-off. I am particularly concerned, whether in the levy review or elsewhere, to ensure that we make competitive markets work for the poorest and most vulnerable in our society.
Dr Alan Whitehead (Southampton, Test) (Lab)
The Secretary of State will know that yesterday one of his Ministers said that all green and energy efficiency levies would be included in the review and another Minister said that the renewables obligation, contracts for difference and feed-in tariffs would not be included. Which of his Ministers was right, and will he be writing to the Prime Minister to warn him of the perils of making up policy on the spot?
Mr Tobias Ellwood (Bournemouth East) (Con)
There has been an awful lot of talk about the six big energy companies. Will the Secretary of State explain how we ended up with six companies dominating the market, and what is being done to bring more suppliers into the market?
Mr Davey
My hon. Friend asks a very good question. In 2000, we had 17 energy companies—three generators and 14 suppliers. After that lot on the Opposition Benches reformed the market, we were down to six. We are increasing the number of suppliers and generators because our competition policy is working. We are prepared to go even further. That lot would reduce competition.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
Despite the Secretary of State’s unwillingness to take on the big six energy companies, will he commend the work of Labour-led Cardiff and Vale of Glamorgan councils, which have launched a collective buying scheme to bring down the prices offered by the energy companies, with the support of the Welsh Labour Government?
Mr Davey
I am glad that those councils have caught up. It was this Secretary of State and this Government who introduced the idea of collective switching and purchasing through “Cheaper Energy Together”. In all their 13 years, the Labour Government did not use the principle of co-operative purchasing to help people. They betrayed their principles of collective action—what a shower!
Sir Tony Baldry (Banbury) (Con)
When John Wakeham and I privatised the electricity industry in 1990, we left more than 20 distributors and suppliers of energy. How is it that we ended up with only six after the last Government? Is it not a bit rich for the Labour party, which opposed privatisation and competition at that time, to call for the breaking up of the big six that it created?
Mr Davey
My hon. Friend is absolutely right. The reason I want to keep debating energy is that the more that people understand the history of what has happened, the more they will realise that it is the Opposition who are to blame for the problems. They left a black hole in our energy supplies and prevented competition. We are putting that right.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The public will be appalled by the Secretary of State’s statement. He has announced a review that will report next spring and that will focus on switching. As my right hon. Friend the Member for Don Valley (Caroline Flint) said, the best deal in a broken market is not a good deal. When is the Secretary of State going to help the millions of households and businesses that will be crippled by huge energy bills this winter?
Mr Davey
The hon. Lady and her hon. Friends are doing their constituents a huge disservice. The truth is that people can get much better deals by switching. I was on “Watchdog” last night with Anne Robinson. She used three viewers as examples. They might have been the constituents of Opposition Members. One had saved £240, another had saved £400 and one person had saved nearly £950. The Labour party wants to take that option away from people.
Mr David Heath (Somerton and Frome) (LD)
I was pleased to hear the Secretary of State mention credit balances. Is it not clear that many people who pay in instalments are overcharged as a matter of policy by the utility companies? It is bad enough banking with the banks, but I do not understand why we have to provide interest-free credit to electricity companies as well. When will the Secretary of State bring that to an end?
Yvonne Fovargue (Makerfield) (Lab)
As stated yesterday, the recent uSwitch survey showed that on one or more occasion last winter 75% of people turned the heating off. As those over 75 are particularly vulnerable and least likely to switch supplier, will the Secretary of State back Labour’s plans to put all over-75s on the cheapest tariff automatically?
Mr Davey
We want to do more for those people, which is why we are pushing switching and collective switching. The hon. Lady has a distinguished record as a former chief executive of a citizens advice bureau, and I hope she would welcome our proposal for the big energy saving network. That is now operating, with the help of Citizens Advice, Age UK and National Energy Action, to help people in communities up and down the country get better deals.
David Mowat (Warrington South) (Con)
During her remarks, the shadow Secretary of State said that she believes “secret deals” were being done by the big six—those were her words. If she has that evidence, it is clearly a cartel, which would result in a fine equal to turnover. In the case of Centrica that would be £20 billion. Does the Secretary of State agree that the right hon. Lady should put that evidence to the House—if she has it—and get that £20 billion?
Mr Davey
My hon. Friend makes a good point. If the right hon. Lady knows of secret information, I hope she will confirm that she has told the competition regulator so that it can be investigated. She is not very good at answering questions. I have asked her and her right hon. Friend the Leader of the Opposition questions about their policy, but we have not had a single answer.
Mr Mike Weir (Angus) (SNP)
The Secretary of State made the point that much of the increase in bills has been due to increases in the wholesale price, particularly of gas, but many commentators, including Ofgem, have questioned whether that has been the case over the past year. What powers does the Secretary of State or Ofgem have to tackle the big six energy companies about their most recent rises, which do not appear to be driven by wholesale price increases?
Mr Davey
First, over a period it is absolutely clear that the wholesale price of gas has been pushing up bills, but there is a debate about whether in the past 12 months wholesale gas prices have gone up. If the hon. Gentleman looks at Ofgem’s clarification and the press release on its website, he will find that, depending on how it is measured, it admits that the wholesale price of gas has gone up by more than 8%.
Chris Heaton-Harris (Daventry) (Con)
Will the Secretary of State acknowledge that for too long his Department’s drive for expensive and intermittent renewable energy has driven thousands into fuel poverty? Indeed, a former Secretary of State—now the Leader of the Opposition—said in this place in January 2010 that
“yes, there are upward pressures on energy bills, and that makes life difficult for people, including those in fuel poverty, but it is right that we go down the low-carbon energy route.”—[Official Report, 7 January 2010; Vol. 503, c. 269.]
Surely now is the right time to examine the level of green taxes and how they adversely affect the fuel poor.
Mr Davey
I have to say that the hon. Gentleman is wrong about that. We are trying to ensure we help the fuel-poor with effective policies such as the energy company obligation and the warm home discount. The support in the Energy Bill for green energy is a small part of the Bill—as he knows—and it is helping the country prepare for the ever higher gas prices we are likely to see. If we do not go green, there is a real danger we will expose consumers and our economy to high, volatile fossil fuel prices in the future. We must have a more sensible and diverse energy mix.
Ian Lavery (Wansbeck) (Lab)
Not one measure in the Secretary of State’s statement will prevent the projected death of 24,000 people as a result of the hikes in the cost of energy. At the same there is emerging evidence, which has been mentioned, about a hidden, protected, secret sort of cartel trading scheme whereby companies are buying from each other at above the wholesale price, and knocking that cost on to consumers. Can the Secretary of State say, hand on heart, that he is not aware of anything like that happening and putting a huge burden on the consumer with huge prices from the energy companies?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We must have very short questions in order to try to get everyone in. I understand how important this is.
Mr Davey
We are helping the fuel-poor and people who have problems with their bills through, for example, the warm home discount, which takes £135 off bills. We are publishing a guide. I hope that the hon. Gentleman and every right hon. and hon. Member will use it to help their constituents.
The hon. Gentleman talks about the wholesale market. The previous Government did nothing on competition in the wholesale market; they made it worse. This Government, with Ofgem, which Labour Members want to abolish, are taking measures to ensure there is far more competition in the wholesale markets. That is how to prevent the big six and their vertical integration models from pushing up prices. The Liberal Democrats are the party of competition; Labour is the party of the big six.
Christopher Pincher (Tamworth) (Con)
Most observers agree that, thanks to the previous Government’s omissions, we must invest a great deal of money—£110 billion—very quickly in our energy infrastructure. We want much of that money to come from the private sector. Does my right hon. Friend agree that another consequence of a price freeze would be that such private investment dried up, leaving the poor old taxpayer to foot the bill?
Mr Davey
My hon. Friend is absolutely right. There are many problems with Labour’s energy price freeze. First, it is a con because it will not help consumers. Secondly, it undermines competition. However, worst of all in many ways, it will kill the investment that we need both for green energy and to keep the lights on. People in the energy industry are saying that. The Leader of the Opposition has done one of the most irresponsible things ever done by a Leader of the Opposition.
Angela Smith (Penistone and Stocksbridge) (Lab)
The Secretary of State has nothing to say today about the Chancellor’s imposition of the carbon floor price, which undermines the competitiveness of our energy-intensive industries, which are crucial to the development of a low-carbon economy. When will the Secretary of State bring urgency to bear before more jobs are lost?
Mr Davey
My right hon. Friend the Chancellor produced, some time ago, a £250 million package to help energy-intensive industries—[Interruption.] The hon. Lady should wait. The first part of that package— £113 million—has state aid clearance, and £12.5 million has been paid out after 60 applications were received.
Dan Byles (North Warwickshire) (Con)
Does my right hon. Friend agree that Labour’s dishonest price con would help Labour’s big six by hitting smaller companies the hardest? It is not supported by the managing director of Ovo, and the chief executive of First Utility, which has just 195,000 customers, has said:
“Bluntly, it could put me under”.
Mr Dennis Skinner (Bolsover) (Lab)
The utilities were privatised between 20 and 25 years ago. They have had all that time to prove that they really are in competition, but plenty of evidence, especially the price increases in the past few weeks, indicates that they are acting like a cartel. That is what the Secretary of State ought to examine. That is why the public want us to have a price freeze when Labour gets in. He should have adopted that today. Secondly—this will almost certainly happen—he should take those utilities back into public ownership.
Mr Davey
Hon. Members were waiting for the hon. Gentleman’s last statement. I do not understand where Labour Members are on competition. They complain about cartels, but do not want to promote competition. If they are worried about cartels, they should join us and support what the Government have announced today.
Sarah Newton (Truro and Falmouth) (Con)
The Government have done far more than the previous one for the people living in the greatest fuel poverty—those living off the mains gas grid. Will my right hon. Friend confirm that, as the reviews continue, we will continue remorselessly to pursue the aim of helping people in the greatest fuel poverty, including those who live off the mains gas grid?
Mr Davey
My hon. Friend is absolutely right. The previous Government failed to do anything for people who are off the gas grid. The Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Sevenoaks (Michael Fallon), has been taking action, talking to the companies and the people affected. There is a new code of conduct and there are regular working group meetings. That is action, unlike what Labour did.
Barbara Keeley (Worsley and Eccles South) (Lab)
May I take the Secretary of State back to the issue of older people, who we know do not switch suppliers? I met a constituent recently who was dreading his winter quarter bill of £300 for a bedsit. Labour plans to put all older people on to the cheapest tariff and to freeze prices. What will the Secretary of State do for those older people?
Mr Davey
The hon. Lady should catch up, because the Ofgem reforms and the retail market review will put those people on the lowest tariff, which was backed by my right hon. Friend the Prime Minister. But she does have a point: some people are not using switching—not using the markets and competition—and some of them are older people. I take that issue seriously, and it is one of the reasons we want to use co-operative principles for collective switching, and why I am using third sector voluntary groups such as Citizens Advice and Age UK to deliver face-to-face advice to help exactly the people she is talking about.
Tessa Munt (Wells) (LD)
The Secretary of State will agree that the best way to cut fuel bills is to improve the energy efficiency of households. Would he care to comment on the fact that two of the big six energy companies—npower and British Gas—blame the energy company obligation, a measure designed to help the fuel-poor to cut their bills, for the increase in prices next year?
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
When can we expect the full roll-out of the mitigation policies in relation to the Chancellor’s imposition of the carbon floor price? I say that because this week Tata has announced 500 job losses and Sembcorp, near my constituency in Teesside, has also announced redundancies. When can we expect those mitigation policies to be rolled out in full?
Mr Davey
We are having a lot of applications in for the £113 million package that we announced. Money is now going out of the door to help those companies. Another part of our package for energy-intensive industries is still subject to state aid clearance in Brussels. We are trying to secure that as quickly as possible so that we can get the money to those companies.
Mr Peter Bone (Wellingborough) (Con)
The Secretary of State could become a national hero today if he announced the abolition of his Department so we would have no more silly green regulations and the savings could be passed on to the consumer.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
While anything that the Secretary of State can do to rein in the energy companies is welcome, surely the only reason that we have this recent welcome flurry of activity is Labour’s energy freeze policy and the alternative suggestion from a former Prime Minister of a windfall tax.
Mr Davey
That is not correct. The energy statement is made every year, and we have been working on many of the proposals that have been announced today for many years. We are having to put right Labour’s failure. I am delighted that the Labour party has woken up to the fact that energy bills are hurting people, but Labour Members have not yet apologised for creating the big six, which have caused most of the problem.
Julian Sturdy (York Outer) (Con)
My constituents will welcome the Secretary of State’s determination to ensure rigorous competition in the marketplace. However, the biggest driver of price volatility will be the security of our energy market—or lack of it. Can he assure me that the proper investment is going into that area? The lack of investment by the Labour party over 13 years in power is a disgrace.
Mr Davey
My hon. Friend makes an important point. If we do not have sufficient capacity, not only will that threaten security, but it will cause spikes in prices. The underinvestment that we had under the last Government has caused this problem, and we are having to run to catch up. We have seen £35 billion of investment since 2010, and we have a lot more investment in the pipeline. We have announced Hinkley Point C as the first nuclear reactor in a generation, but we will have to do more to put right the mess that Labour left us.
Nick Smith (Blaenau Gwent) (Lab)
Wholesale costs are up 1.7% but bills for households will go up by 9%. Does the Secretary of State think that is fair?
Mr Davey
We would not want more competition in the market if we were happy with what is going on, but the hon. Gentleman’s figures are not right. It depends on how wholesale costs are defined in any one year. Ofgem says that on one definition they have gone up by more than 8%.
Charlie Elphicke (Dover) (Con)
Does the Secretary of State accept that Labour’s big six are an oligopoly that appears to operate as a price-fixing cartel? Is it not time to break them up?
Mr Davey
We would not be asking for an annual competition assessment if we were not concerned to ensure more competition. My hon. Friend is right: we have faced a market created by the last Government who created the big six. We have already taken many measures that are working to get independent suppliers and generators, and our liquidity reforms with Ofgem will make a big difference in the forward markets.
Bill Esterson (Sefton Central) (Lab)
A disabled pensioner couple summed up the views of many of my constituents when they told me that they pay more than £3,000 a year in electricity and gas, which will go up by another £300 after the price rises. My constituents would benefit from Labour’s plan to put all over-75s on the cheapest tariff. Why will the Secretary of State not do that?
Mr Davey
Again, the Labour party needs to understand that the retail market review in the Energy Bill will get people on the lowest tariff. I hope that the hon. Gentleman will read the new guide that we have published today because it is aimed at those who, like him, are talking to people like his constituents to ensure that they get the help that they need.
Martin Vickers (Cleethorpes) (Con)
My constituents will welcome the possible introduction of criminal sanctions if any company is found guilty of rigging the market. Although I note Ofgem’s powers of compensation, would it not be more appropriate if consumers were to benefit if price or market rigging were found? Can we take action to ensure that such money goes back into consumers’ bank accounts?
Mr Davey
The measures in the Energy Bill provide that, if an individual consumer has been done wrong by an energy company—mistreated or subjected to any other malpractice—the fine, thanks to this Government, will go to the consumer. The criminal sanctions I have referred to today would be applied for systemic anti-competitive practices or manipulation of the energy markets by an individual or company.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
One of my constituents took the Government’s advice and switched his supplier, but he found that after the initial attractive offer he was paying twice as much a month for his energy bills. He cannot switch back to his previous supplier because he is tied in to a minimum 12-month contract. He is now paying £60 a month more than he was previously. What will the Secretary of State’s proposals do for situations such as that?
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
I congratulate the Secretary of State on finally making the decision on nuclear, something that we have not had for 13 years. We still have subsidies for wind and biomass, we are an island country, and there are practical schemes for tidal barrages on the Severn and on the Wyre at Fleetwood in my constituency, so is there any chance of a national policy on tidal energy?
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Wales is a net exporter of electricity—we are an electricity-generation-rich nation. Can the Secretary of State explain, therefore, why electricity prices in my country are among the highest in the British state?
Mr Davey
We are pleased that Wales is making such a contribution. That is good for the Welsh economy and Welsh jobs, and I hope that the hon. Gentleman supports the fact that our policies are ensuring that the energy industry is strong in Wales. He knows that distribution costs vary across the country, and it is not only Wales that has higher-than-average bills. Ofgem keeps the issue under review.
Duncan Hames (Chippenham) (LD)
I am glad that the Secretary of State wants to make it easier for people to switch electricity suppliers. Will he also look at obstacles to switching suppliers of heating oil and LPG, which include tactics such as bills stating that tanks and cages outside homes do not belong to bill payers, which are designed to deter customers from switching? That would help those living off the gas grid.
Nic Dakin (Scunthorpe) (Lab)
Despite the Secretary of State’s answers to earlier questions, Tata Steel, which announced 340 job losses in my constituency this week, is still saying that the carbon floor tax, unilaterally introduced by the Chancellor, is putting its businesses in the UK at risk, compared with the rest of the European Union. Will the Secretary of Sate commit to working with the Business Secretary and the Chancellor to bring action forward rapidly to address that issue?
Damian Hinds (East Hampshire) (Con)
There are 10,000 off-grid homes in my constituency. What more can be done to help my constituents to access good deals, including the ability to buy at times of year when the kerosene price is at least a bit lower?
Mr Davey
There are two things that can help my hon. Friend’s constituents and others like them; first, collective purchase. There are heating oil clubs where people come together to get better deals, and that is helping some people. Secondly, I hope that he is aware of the campaign being pushed by the Minister of State, my right hon. Friend the Member for Sevenoaks, to get people to buy early. If people buy early, they can get heating oil much cheaper than if they buy it later, in the winter months.
Mr Philip Hollobone (Kettering) (Con)
Will the Secretary of State consider legislating for the re-separation of electricity generation from electricity supply, and gas production from gas supply, so that consumers can get the transparency they need in their bills, something Ofgem is not able to achieve?
Mr Davey
My hon. Friend should look at the Ofgem proposals, which have backing in the Energy Bill. They will make a big difference to those markets. I am keen to ensure that forward markets—not just the day-ahead market, but the six-month, 12-month and the two-year market—are far more liquid. We have an illiquid market and that is where the big six can exercise market power. The Government and Ofgem are tackling that. The Opposition are not.
Glyn Davies (Montgomeryshire) (Con)
Will the Secretary of State explain how it can be fair that the most vulnerable people in my constituency in mid-Wales have to pay through their noses for their energy to provide massive subsidies to giant wealthy wind farm developers who, alongside National Grid, are intent on destroying the environment and landscape of mid-Wales where we live?
Mr Davey
My hon. Friend knows that I cannot comment on the planning application that relates to a lot of what he has just said. If he has constituents who have problems with fuel poverty, we have introduced the warm home discount, which takes £135 off their bills, and there are other measures. He should look at the guide that we are publishing today.
Mr Robert Buckland (South Swindon) (Con)
On fuel poverty, is it not the case that, in the five years between 2004 and 2009, an extra 2.8 million people fell into fuel poverty? What further measures can we take to deal with this scourge of modern society?
Mr Davey
My hon. Friend is absolutely right. We are keenly focused on tackling fuel poverty through the energy company obligation and the warm home discount. Within the energy company obligation, there is the affordable warmth scheme. I have some good news: it is working an awful lot better than the warm front policy the Labour party introduced. It is more cost-effective and it is rolling out more quickly.
Robert Halfon (Harlow) (Con)
As well as high energy bills, motorists continue to face high petrol bills, on average paying £1,700 a year to fill up the family car. Will my right hon. Friend extend the principles of competition transparency and extend criminal sanctions for manipulating the market to the oil companies that are ripping off the consumer, despite the excellent Government freeze in petrol duty?
Mr Davey
My hon. Friend invites me to trespass on to the responsibilities of another Secretary of State. I think that would be ill-advised, particularly as the Secretary of State for Transport has just taken his place on the Front Bench. My hon. Friend the Member for Harlow (Robert Halfon) may wish to ask him that question, but he is right to say that the Government have an excellent record on this.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
For 13 years, the Labour Government did little to deal with standing charges. Will my right hon. Friend tell me what impact standing charges have on pensioner fuel poverty, and will he ensure that they are included in the review?
Mr Davey
Ofgem’s retail market review looked at different approaches to standing charges, and there is a debate on them. However, there is a danger that taking them away will lead to a single unit price model—which some people think is better—that will hit low-income households that are high energy users. We therefore need to consider the full distributional consequences. We will keep these matters under review, as we should.
Neil Carmichael (Stroud) (Con)
Increasing capacity is definitely the key to this problem. Ensuring, through the Energy Bill, that we have more competition is part of the story, but would that not be reinforced by strengthening the role of a single energy market to attract more investment and drive even more competition into the system?
Mr Davey
My hon. Friend is right. My right hon. Friend the Prime Minister has been pushing the case for the single energy market at the European Council. Recently, I hosted a meeting of energy Ministers from northern European countries—the northern European energy dialogue—to consider ways to have better interconnections in the northern European grid, which will encourage downward pressure on prices.
Bob Blackman (Harrow East) (Con)
Thank you for the exercise, Mr Deputy Speaker. In the next five years, many of our power stations will close, therefore reducing supply. Will my right hon. Friend confirm how many power stations were built under the previous Government, and how many he plans to build under this Government?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Last, but certainly not least, I call Andrew Percy.
Andrew Percy (Brigg and Goole) (Con)
I can only assume it is because I am from Yorkshire, Mr Deputy Speaker.
The Energy Secretary rightly pointed out how Labour’s non-freeze con would cost jobs and investment. I and my hon. Friend the Member for Cleethorpes (Martin Vickers) heard from a local business—a big employer. We were told, with specific reference to Labour’s price freeze con, that it has lost a major contract. This is costing jobs and investment. The uncertainty that has been created in our energy market will not do anything for bills, but it will cost jobs.
Mr Davey
My hon. Friend is absolutely right, but I have to tell him that it is actually worse than he suggests. People from around the world who want to invest in the UK, and who welcome our strong policies to attract investment, are now worried because of the extra uncertainty created by the Leader of the Opposition and the Labour party. The Opposition’s policies are not just a con for consumers; they will undermine competition and are hitting investment and the economy. They should be ashamed.
High Speed Rail (Preparation) Bill
(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
17:00 - The House divided: - Ayes: 350 / Noes: 34 - Question accordingly agreed to.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I beg to move amendment 18, page 1, line 5, leave out ‘at least’.
Mr Speaker
With this it will be convenient to discuss the following:
Amendment 12, page 1, line 10, leave out ‘and’.
Amendment 13, page 1, line 11, after ‘Manchester’, add
‘and one or more towns or cities in Scotland’.
Amendment 28 , page 1, line 11, at end insert ‘Scottish destinations’.
Amendment 14, page 1, line 12, at end insert
‘, and any newly constructed railway lines, roads, airports and light railways’.
Government amendment 17.
Amendment 19, page 1, line 12, at end insert—
‘(c) extends substantially no further than Phases One and Two of the High Speed 2 network connecting the places set out in section 1(2)(a).’.
Amendment 23, in clause 3, page 2, line 27, leave out
‘comes into force on the day on which it is passed’
and insert
‘shall not come into force until the Secretary of State has published detailed proposals for the Government’s preferred route directly connecting the network with Heathrow airport, has consulted with those residents, local authorities and businesses which may be affected by this connecting route and has published measures to mitigate and compensate for the social, economic and environmental impact, of the line.’.
Mrs Gillan
I welcome to the Front Bench the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill). This is his first outing and it is good to see him in his place. I welcome the hon. Member for Wakefield (Mary Creagh) to her place on the Opposition Front Bench. It is good to have some authentic northern voices speaking on this subject, albeit from the Front Bench, so we probably know exactly what they are going to say. May I also welcome my right hon. Friend the Member for Chelmsford (Mr Burns) and, with your indulgence, Mr Deputy Speaker, thank him for the courtesy he showed towards me during his time in office? This is a difficult subject for me and, I think, it has proved a difficult subject, from time to time, for him.
Amendments 18, 12 and 13 relate to the Government’s commitment to Scotland. I tabled them in Committee, because I felt it was important to have something in the Bill that registered the verbal intentions, expressed by Ministers and others, eventually to take High Speed 2, if it is ever built, through to Scotland. It is ironic, and slightly odd, that clause 3(1) extends the scope of the Bill to England, Wales and Scotland, given that there is no mention of HS2 going to Scotland.
If we have time, we will get on to the Barnett formula. Undoubtedly, there is precedent for the Government ensuring that Wales, Scotland and Northern Ireland get their fair share of the infrastructure spend that is being spent exclusively in England, and I believe there is already such a precedent regarding the money for HS2, but will the Minister confirm that?
Mr Charles Walker (Broxbourne) (Con)
In drafting her amendments, did my right hon. Friend consider how to deliver extra passenger capacity to the east and west coast lines, but without the vast costs?
Mrs Gillan
My hon. Friend makes a good point. I am afraid that I do not have the resources to table an extensive list of amendments, and although I considered that, I dismissed it fairly rapidly. I just do not have the back-up and resource, on a project this large and complex, to keep up with the machinations of the Government, as they bring out 400 or 500 pages of information a couple of days before any crucial stage of the Bill—I am expecting the £50,000 environmental statement to arrive on our desks shortly.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
Obviously, I am as concerned as the right hon. Lady apparently is about high-speed links to Scotland, but is she seriously telling the House that if the Government were to announce that HS2 was going to Scotland, she would drop her opposition to it completely?
Mrs Gillan
No, not at all. I am not arguing that, but I have always been of the principle that if it is to be done, it is to be done properly. I am quite clear about my position—I do not want HS2 at all, but I also do not want a Bill to go through the House that does not reflect what I think the project should encompass, and indeed what the Bill itself states it encompasses.
Mr Jack Straw (Blackburn) (Lab)
Would the right hon. Lady not accept that, on the current plans for phase 1 and 2, there will be a 45-minute reduction in journey times to Edinburgh?
Mrs Gillan
The right hon. Gentleman makes a good point, but the Government recently produced the new business case, and I believe that there is doubt over the timing used for Edinburgh to London. I have been informed by a commentator that they failed to take into account the new rolling stock and the existing time savings from improvements being made to the line. I stand to be corrected—perhaps the Minister can tell us—but I believe that there has been an error in the calculation.
I would like the Bill to refer to Scotland, because it is important that a definite intent be put in the Bill. It would send a good message to Scotland, at a time when we are trying to keep this United Kingdom together, in the teeth of opposition from the nationalist parties, and I think it should be in the Bill simply for that reason.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
I sympathise with the spirit of my right hon. Friend’s amendments, and obviously many of us who support HS2 hope it will go through to Glasgow and Edinburgh and cannot understand why we do not start building from there now. But be that as it may, I am a bit worried because her amendment 18 would remove the “at least”. I read “at least” to mean that HS2 could stop at more stations. Were we to accept her amendment 18 and then her amendment 13, which would add the words
“and one or more towns or cities in Scotland”,
it would leave out everything between Manchester and Glasgow as a potential stop on a high-speed line to Glasgow. That is my understanding of her amendments.
Mrs Gillan
My amendments are intended to probe the Government’s intention. I believe that they should have made provision to include more stops on the line. For example, I would have thought that between Manchester and elsewhere, there could have been other stops giving greater benefit to some of the areas that will be destroyed by the line.
I tabled an amendment in Committee, and it must have struck a chord, because the official Opposition have tabled something very similar, and I am delighted to say that the Government, in an attempt to hug the Opposition closer, have now signed up to it and it has become a Government amendment. I congratulate the shadow Secretary of State on her victory. One of the major problems is with the connectivity of HS2. If it is not fully connected and integrated into our transport system, it will be the white elephant that so many of us believe it will be.
Mr William Cash (Stone) (Con)
I congratulate my right hon. Friend on tabling the amendment. It is not only the Opposition and the Government who need congratulating; she needs congratulating herself.
Mrs Gillan
That is most gratifying. I am glad that my hon. Friend has observed the first rule of politicians: one can never over-flatter another politician.
Connectivity is at the heart of some of the failures of this project. For example, it does not go to Heathrow; it does not connect properly with the channel tunnel rail link; indeed, it does not even go into the centres of the cities it is supposed to serve, whether Sheffield, Derby or Nottingham. All the time savings claimed by the Government come to nought if travellers have to make their way from outside the city centre, as I know will be the case for Sheffield. We need to ensure that if this is ever built, the connectivity is as good as it can be.
Damian Collins (Folkestone and Hythe) (Con)
Does my right hon. Friend agree that HS1 has excellent connectivity with domestic services and that towns such as Folkestone and cities such as Canterbury have high-speed services even though they are not on the high-speed line?
Mrs Gillan
My hon. Friend the Member for North Thanet (Sir Roger Gale) is not in the Chamber, but I understand he feels that it is a work still in progress when it comes to bringing benefits to his constituency. I also gather, from studying the local economies around HS1, that there have been no additional benefits; indeed, there has possibly been some detraction from local economies.
Damian Collins
If my right hon. Friend looks at the unemployment statistics for east Kent, she will see that the rate is falling faster not only than the national average, but the average for the south-east of England, the most prosperous part of the country. The county council says it is impossible to talk of economic regeneration in east Kent without considering the benefits of HS1.
Mrs Gillan
I am very glad to hear that. I do not know how many years after the project this has become apparent. [Hon. Members: “Ten.”] Ten years; thank you.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I want to reinforce something the right hon. Lady said about connectivity. A lot of people think that those of us who oppose HS2 are against connectivity and high-speed transportation. We are not. We want the right connectivity that will help all the towns and cities in this country to grow, but we do not want more of our country’s lifeblood being sucked down into London and the south.
Mrs Gillan
I thank the hon. Gentleman for that intervention. Of course, it echoed the words of Lord Mandelson, who really does know an awful lot about the genesis of this project. It certainly has that vampiric touch about it, as I think Members on both sides of the House can appreciate.
The Secretary of State for Transport (Mr Patrick McLoughlin)
If HS2 is going to suck the lifeblood of the northern cities, as the hon. Member for Huddersfield (Mr Sheerman) suggests, why are the leaders of those northern cities, such as Sir Richard Leese and Albert Bore, the loudest demanders of this service?
Mrs Gillan
Oh simple, simple question, Secretary of State! What leader of any council of any political colour or persuasion would turn down the millions and millions of pounds being thrown at their areas? It would be completely stupid of them to do anything other than support it.
Mr Sheerman
The Secretary of State has commented following my intervention. I have talked to people in the big cities, and many of them have not read the six critical evaluations of the impact of HS2, and they certainly have not looked at the impact of high-speed rail on the provincial cities in France. It is sucking the lifeblood out of them and into the metropolitan area around Paris. We have also not been told on what grounds the local people here, who have not been given a referendum—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The hon. Gentleman should know better. This is his second or third intervention. Let us try to keep the debate calm and orderly, with short interventions.
David Mowat
If it were true that better infrastructure for the north would suck the lifeblood out of the region, would it not be right to close the M6? Perhaps that strategy would make the north really prosperous.
Dan Byles (North Warwickshire) (Con)
I would like to draw the House’s attention to the Transport Committee’s detailed report on high-speed rail. It stated that
“only time will tell whether or not HS2 will, for example, help to rebalance the economy and reduce the north-south divide.”
It is a £50 billion project, yet we are told that “only time will tell” whether it will achieve its main aim.
Mrs Gillan
I am not going to take any more interventions. I want to make sure that other colleagues are able to speak on this group of amendments, and as there are no knives, the longer we take on this group, the less time we will have for other important groups that deal with the economics of the railway line and with compensation.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
Will the right hon. Lady give way?
Mrs Ellman
I thank the right hon. Lady for giving way. Will she point out to the hon. Member for North Warwickshire (Dan Byles) that the Select Committee was very clear that High Speed 2 was the only way in which the necessary increased capacity could be obtained, and that in discussing the economic benefits, we also stated that economic development strategies were required to go with the provision of that extra capacity?
Mrs Gillan
I am grateful to the hon. Lady for that intervention.
A lot of people are saying that there is no alternative to HS2 if we are to solve the capacity problems, when in fact a large number of alternatives are emerging from numerous sources. Suggestions have been made by economic think-tanks and transport economists, including a recent proposal to revive the old grand central line. I fought against an ill-conceived plan to run freight on that line in the early 1990s when I was first elected to the House. That plan did not stack up economically, and we saw it off.
Amendment 19 would narrow the scope of the Bill, which, as currently drafted, could extend to all railway operations. I do not know whether it was the intention to cover not only HS2 but all other railway operations, but the drafting seems to be a bit sloppy. If the provisions are not confined to HS2, it will make a mockery of any limits placed on the costs that the taxpayer will have to face. The amendment attempts to limit this money Bill, and to limit the expenditure to HS2, in line with what I believe the Government intended. If the provision were to include Scotland, that would round up the whole package.
Mrs Ellman
I rise to support amendment 17. I am a firm supporter of High Speed 2. The case for it is essentially one of capacity. It is entirely wrong to state, as some commentators have done recently, that the argument for capacity is something new that has been brought in only at this stage. That is simply not so. The report that the Transport Select Committee produced two years ago made it clear that the need for increased capacity formed the basis of the case for HS2.
Amendment 17 deals with linking HS2 to the rest of the transport network. It specifically mentions the need for it to link to roads and airports. It is important that it should not be seen as a development that is separate from the rest of the rail network or indeed from the rest of the transport network. I therefore welcome the amendment. It is unfortunate that, because no decision has been taken on the need for increased airport capacity in the south-east, no firm proposals on Heathrow have been finalised. That matter needs urgent attention. There is also an issue about freight. In Liverpool, for example, the expansion of the port is creating a need for more freight paths and better access for freight. That, too, needs attention. I welcome the amendment in that it draws attention to networks and connectivity.
Stephen Barclay (North East Cambridgeshire) (Con)
In speaking to amendment 17, the hon. Lady is, in essence, setting out an early case for design changes. Can she confirm that the existing contingency in the spending envelope does not include provision for any such changes?
Mrs Ellman
The hon. Gentleman needs to direct such questions to HS2 itself. It is extremely important that all the financial aspects are fully considered. This specific amendment is to do with networks. The question of access to the high-speed network is critical, and that involves roads as well as other rail tracks.
The case for HS2 is also based on increased economic benefit to the areas in which the railway stations are located, as well as the surrounding areas and the regions that they serve. The issue of freed capacity on the west coast main line as a result of phase 1, and on the east coast and midland main lines following phase 2, is critical. The strategic review states that there will be a £3 billion benefit from the use of freed capacity, and Network Rail has stated that more than 100 cities and towns could benefit.
James Morris (Halesowen and Rowley Regis) (Con)
Those benefits will be crucial to areas such as Birmingham and the west midlands. One of the advantages of HS2 to the west midlands will be that it will free up capacity on the west coast main line and improve connectivity to regions such as the black country, part of which I represent.
Mrs Ellman
Indeed; the hon. Gentleman is absolutely correct. We must not look simply at the HS2 line itself; we must also consider how its connectivity to other lines and other parts of the transport network can be developed.
Dan Byles
If the principal benefit is now capacity rather than speed—this seems very much how the argument has moved—why not slow it down? If it is slowed down, we will no longer have the engineers I sit down with every week telling me, “We can’t go around Water Orton primary school because speed means it must be a straight line; we can’t go around ancient bluebell woods because speed means it must be a straight line.” If we slow it down, we will be able to avoid going over many of the sensitive areas on the route and perhaps even put in more stations.
Mrs Ellman
The strategic review and other studies indicate that alternatives have been looked at and rejected. Network Rail states that more than 100 cities and towns could benefit from this development. Named in the various reports are places including Watford, Milton Keynes, Rugby and Northampton, but many more are possible. There is also a need to increase capacity for freight, which is as important as passengers. About 20 new freight paths can be developed, but I would view that as the absolute minimum.
Mrs Gillan
I hear what the hon. Lady says about freight. How does she react to what Lord Berkeley said? He heads up the Rail Freight group and said that HS2 will in fact constrain freight because it does not link up properly with the existing network on the west coast main line and its northern end in phases 1 and 2? He should know, should he not?
Mrs Ellman
Lord Berkeley was pointing out issues of practical difficulty, but they can be worked on. Indeed, the purpose of this debate and subsequent debates is to identify where the problems are and to do something about them. No plans are finalised. We are talking about principles and strategies. It is essential to look at critical detail and to make changes where they are necessary. Debates such as this one are an integral part of that important process.
Mr Sheerman
I have great admiration for my hon. Friend as Chair of the Select Committee, but she knows the Department for Transport better than most people, and we have had from it a catalogue of confusion and chaos over the west coast franchise and now over the planning for HS2, as it has changed the priorities, rules and bases of all the assumptions. Is she confident that this HS2 project has been thoroughly prepared and that the grounds for it are absolutely perfect?
Mrs Ellman
It is essential to apply the necessary commercial expertise to this scheme—whether it be directly in the Department for Transport or in HS2 itself. I am encouraged by the new appointment of Sir David Higgins to lead this process. I think that will give people increased confidence, which is indeed necessary.
Andrew Bridgen (North West Leicestershire) (Con)
If the hon. Lady is so convinced of the business case, will she explain why the Government are now on the fifth revision of the business case for HS2? Does she think this will be the last revision, or will there be another 25 over the next 25 years to justify the case? I simply cannot believe it: it is amazing that the project has gone up by £10 billion and the Government have now managed to find £10 billion-worth of supposed benefits. I put it to the hon. Lady that this is the biggest work of fiction since Enid Blyton.
Mrs Ellman
It is for Ministers to say why the business case has been reviewed so many times, but when the Transport Select Committee looked at the issue two years ago, it approved a high-speed line, but pointed to a number of critical areas where it was felt more work should be done, which included looking again at the business case. One reason for that was the valuation put on the time people spent travelling, when it was alleged they could not work. We thought that that was not a correct valuation and that it should be looked at again. We raised issues of environmental concern and said they should be looked at again, as we did with issues relating to economic impact, particularly the need to have economic development strategies as well as the essential rail travel links.
The Select Committee called for a review of the case, looking at those specific factors and stressing the importance of relevant and up-to-date information. We thought it would be absolutely wrong to use information that was not up to date and that ignored the concerns we had raised. The report supported the project in principle, but raised real concerns, which we said must be addressed before any final decision could be taken. Not all of those concerns have yet been addressed, but some of them have been, as we have discussed today.
Mr Sheerman
On that very point, my hon. Friend’s very good report was two years ago and since then many people have used it to do the very thing she asked to be done. The subsequent reports built on her report, however, show a very different picture. Is that not the problem?
Mrs Ellman
I do not know to which reports my hon. Friend refers, but there have been no comprehensive reports looking at the whole scheme. Some have looked at some aspects of it, but not at the up-to-date information, which was published only this week. I am not aware of any reports that have looked at that. I am sure that the Transport Committee will look again at the information, as we have it.
Julie Hilling (Bolton West) (Lab)
Does my hon. Friend agree that the business case is not just about the financial case? Public transport is a public service, so we need to look at the need to run trains throughout the country. We should not be looking only at pound signs, but at the overall need for this service.
Mrs Ellman
I agree with my hon. Friend’s general point. It is important to assess individual aspects of the project, but we also need to look at the concept and what it is trying to achieve. It is about expanding essential infrastructure in this country. If we do not have vision and if we are not prepared to look ahead at the nation’s needs, we will lack the essential infrastructure needed for economic prosperity. It is essential, too, to look at the detail, which is why we called for a review of the cost-benefit ratio, for a review of the environmental and economic factors and for up-to-date information on the projections of capacity, for freight as well as passengers. The concept must not be lost in the vital necessity to look at the individual components and make an assessment of them.
Mr Roger Godsiff (Birmingham, Hall Green) (Lab)
My hon. Friend is surely aware of the National Audit Office report on this subject, which referred to
“fragile numbers, out-of-date data and assumptions that do not reflect real life.”
What does she say to that?
Mrs Ellman
The strategic review produced this week provides the up-to-date information. When the previous reports, including the NAO report, were produced, that information was not available. It is necessary to examine the new information that has come forward and look at it very carefully indeed—and that is the up-to-date information. As I say, previous reports did not look at it.
Andrew Bridgen
The hon. Lady talks about looking at the detail, so let us look at the facts. This project started out at £20 billion; it has hit £50 billion; the Treasury is working on £73 billion—and it was all priced in 2011 money, with indexation of 3% on top of it. Is it going to go the same way as HS1, which started at £1.5 billion and finished up at £11 billion?
Mrs Ellman
Again, I think it is for the Minister to answer those questions. This specific amendment deals with networks. The hon. Gentleman raises an important issue about the costs and the contingencies and how they will be put together, but that is a matter for the Minister and for broader debate than for discussion on this specific amendment.
Graham Stringer (Blackley and Broughton) (Lab)
When the Transport Select Committee went to France to look at the economic impact of high-speed rail, we found that there was a huge economic benefit in Lille and most other cities. The fact is that the Department for Transport assessments do not capture that economic benefit. Talking about people working on trains really misses the point about the economic impact and the economic benefit that will come from high-speed rail. Does my hon. Friend agree?
Mrs Ellman
I do agree. When the members of the Select Committee went to France and elsewhere in Europe to look at high-speed rail there, we were struck by the success of the system and by the enthusiasm with which it was greeted by people living in the areas that it served. Indeed, what struck us was they wanted more: more stops, more stations, more access to high-speed rail. That made a considerable impact on us.
Mark Pawsey (Rugby) (Con)
Does the hon. Lady think that the Spanish economy has benefited from Spain’s investment in high-speed rail?
Mrs Ellman
I am here to talk about the United Kingdom and an amendment concerning networks.
Rehman Chishti (Gillingham and Rainham) (Con)
Does the hon. Lady agree with the comments of the hon. Member for Blackley and Broughton (Graham Stringer), which appeared in the Evening Standard yesterday? He said:
“The leadership have completely misjudged the mood both of the Parliamentary Labour Party and the party in the whole of the country.”
Mrs Ellman
I am a firm supporter of High Speed 2. I believe that it will increase capacity and create the infrastructure that is essential for the future of the nation.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Rail infrastructure in Spain has been mentioned. Studies show that the economies of both Seville and Madrid have benefited from a high-speed line, although only Seville was expected to benefit.
Mrs Caroline Spelman (Meriden) (Con)
I am sure that the Select Committee is aware of a contrasting example, namely the line between Le Mans and Tours. Le Mans invested in a local connection to the TGV route, and saw a tenfold increase in economic benefit compared with Tours, which had failed to do so. That underlines the importance of local connectivity.
Mrs Ellman
The right hon. Lady has drawn attention to the importance of connectivity and the importance of using the opportunities offered by high-speed rail to bring benefit to areas that are not on the line. That is an essential component. In the regions, a great deal of work has been done to assess what the benefit might be. Centro estimates that there will be an additional 22,000 jobs in the west midlands, while the Core Cities Group expects an additional 400,000.
Mr Jim Cunningham (Coventry South) (Lab)
My hon. Friend speaks of the economic benefits for the midlands. Cities such as Coventry will certainly not benefit from this investment; indeed, the opposite will be the case.
Mrs Ellman
I think it essential for HS2 to think about how it can assist areas that do not look as though they will benefit, such as Coventry. The current process—not just today’s debate, but the consultations that are taking place and the progress of the hybrid Bill—enables important points to be raised, such as the one raised just now by my hon. Friend. I am fully sympathetic to that.
Mr Clive Betts (Sheffield South East) (Lab)
I am sure that my hon. Friend is aware of the tram-train pilot scheme which will begin in Sheffield in 2015, and which may lead to an excellent opportunity for trams to use under-utilised heavy rail track to connect wider city regions through high-speed rail stations. Will my hon. Friend encourage the Government to carry out a review? Indeed, the Select Committee itself might wish to look into the matter.
Mrs Ellman
That is an example of the kind of development that should be supported.
What concerns me is not that the principle of high-speed rail is not recognised—indeed, it is clear from what has been said by Members today that the importance of connectivity, in general and in relation to specific areas, is very well understood—but the possibility that it is not being pursued strongly enough at the national level to guarantee its consistent application throughout the country.
I referred earlier to initiatives taken in the west midlands and to statements made by the Core Cities Group, and I know that a great deal of work is being done in Manchester, but I am not sure that that is happening everywhere in the country, and I think it important for someone to take the lead. Of course work must be done in the regions. Elected Members and local businesses know their areas and are aware of the opportunities and the potential, but someone should be ensuring that the same is happening nationally, so that we do not miss out on the vital and perhaps unique opportunity to develop our network for the benefit of localities, regions, and indeed the country as a whole.
Mr Sheerman
When my hon. Friend’s Committee was considering HS2, she will have been made aware of the likely cost, which is estimated to be at least £80 billion. Should not the people who will be affected be allowed a vote? I agree with her about the northern hub, of which I am in favour, but if my local people had a vote, would they vote for all that money to be invested in this high-speed train? I do not think so.
Mrs Ellman
I do not accept the figure that my hon. Friend has given, but the people do, in fact, have a vote. They have a vote with which they can elect a Government by voting in Members of Parliament, and they have a vote with which they can elect members of local authorities—and I note that the leaders of the major local authorities in the north are speaking very loudly indeed in favour of this project.
Karen Lumley (Redditch) (Con)
Does the hon. Lady agree that we should commend Labour-controlled and Conservative-controlled Worcestershire—my own authority —for their foresight in predicting the benefits of HS2?
Mrs Ellman
I do agree. I think that that is an excellent example of what could be done. However, I want to be sure that such examples are being followed up nationally.
Frank Dobson (Holborn and St Pancras) (Lab)
Let us assume that the Government’s £50 billion estimate is correct. That investment is expected to bring the greatest benefits to Birmingham, Nottingham, Sheffield, Leeds and Manchester: five cities. Does my hon. Friend think that if the £50 billion were broken up into nuggets of £10 billion, and if each city were offered that amount to promote its local economy, the five of them would decide to club together to pay for a high-speed rail link? [Laughter.]
Mrs Ellman
The whole point of major infrastructure is that it makes a major difference in connectivity across the country, which benefits all parts of the country. If that benefit is fragmented, it will not accrue.
I certainly support economic development in the regions, and I deplore the abolition of the regional development agencies, but I hope that the local enterprise partnerships—alone, working together, or working in transport cores—will ensure that economic benefit comes to their areas, and that the Government provide the support that will enable that effort to be private sector-led and succeed.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Obviously we are talking about a lot of money, but if it is true that the rail capacity of the three main north-south lines will be exhausted within about 15 years, what impact does my hon. Friend expect that to have on the economies of the cities north of London?
Mrs Ellman
My hon. Friend has made a crucial point, which goes to the nub of the matter. If those lines run out of capacity—which, indeed, they are rapidly doing—a grave blow will be dealt to the economies in the northern regions, in terms of passengers and freight. One of the reasons more freight cannot travel by rail now is the fact that no freight lines are available. High Speed 2 will solve that problem.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
A railway line is for many decades, not just for the immediate future. When considering the whole issue of connectivity and networks, did the Committee think about the implications of a longer time scale rather than some of the much shorter ones that people are currently discussing?
Mrs Ellman
The Committee was very clear about the fact that this is about the future, and about long-term thinking. I strongly believe that while it is always essential to scrutinise spending, it is also essential to have vision. If we do not have vision, we do not have a future. I note that the aim of Lord Deighton’s taskforce is to maximise the economic benefit that can result from High Speed 2, but I am not sure whether that includes expanding connectivity and making the maximum use of freed lines, as well as more economic development issues. I ask the Minister to give us a response at the relevant time as to who, if anybody, is in charge of expanding connectivity and the opportunities offered by HS2 so the maximum economic benefit can be realised. HS2 is needed for capacity reasons, and it produces major economic development opportunities for most parts of the country, but they must be grasped, and unless somebody is in charge of making sure that happens, they will be squandered.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
Of the amendments in this group, I was delighted to be able to add my name to amendment 17 tabled by the Labour Front-Bench team. That demonstrates the cross-party support and co-operation we will need to deliver this project, which is so vital to the future of our country. Indeed, when I offered to add my name, I was asked, “Would you like to go on first, Minister?” I said, “No, no; I wouldn’t want people to get the wrong idea.” Our intention has always been for this landmark project to be part of a truly connected and integrated transport system, and the amendment would ensure that any preparatory work needed to integrate HS2 with the rest of our transport infrastructure can be funded using the Bill’s expenditure powers.
Phases 1 and 2 of HS2 will directly link eight of Britain’s 10 largest cities, serving one in five of the UK population. HS2 will also connect to the existing rail network, so as soon as phase 1 is built, high-speed rail trains can start directly serving 28 cities in the UK.
I welcome the reference to “footpaths” and “cycleways” in amendment 17 tabled by the hon. Member for Wakefield (Mary Creagh), and I should point out that as part of the Government’s wider commitments to boosting cycling in the UK, in August 2013 the Prime Minister announced the commissioning of a feasibility study to explore how we might create a new cycleway that broadly follows the proposed HS2 corridor. Such routes would also be open to pedestrians—presumably this is a case of great minds thinking alike. The cycleway could provide cycling and walking routes for the public to enjoy, linking local communities and stations to the countryside and tourist destinations along the way, and benefiting those living along the HS2 route.
HS2 will be at the centre of an unprecedented level of investment in the nation’s transport infrastructure. From 2015-16 to 2020-21 the Government have committed £56 billion-worth of investment in road and rail, on top of the £16.5 billion investment in HS2. We are investing more than £6 billion in this Parliament and £12 billion in the next on road maintenance, enough to resurface 80% of the national road network and fill 19 million potholes each year.
Mrs Gillan
I am grateful to the Minister for confirming the billions of pounds the Department for Transport is going to spend over the next five or six years, but how does he respond to the National Audit Office, which has highlighted serious doubts over the ability and capacity of both the Department for Transport and its subsidiary company, HS2 Ltd, to deliver the project successfully? He is now claiming to have one of the largest infrastructure budgets of any Government Department, but the NAO does not think the Department is fit to run it.
Mr Goodwill
The Department has gained a lot of experience in managing big projects from projects such as Crossrail. Following the appointment of Sir David Higgins to head HS2 from January onwards I feel very confident indeed that we can deliver this project on budget and on time. Indeed, the budget is about £50 billion. Therefore, if rolling stock were excluded and nothing else was done with the Department’s budget, this project would be the equivalent of about 10 months of the Department’s total budget. That puts it into context.
We are adding 400 miles of capacity to our busiest motorways thanks to work scheduled in this Parliament and the next, and between 2014 and 2019 Network Rail has put forward plans to spend £37.5 billion on improvements to the railways. We are clearly not putting all our eggs in the HS2 basket, therefore—far from it, in fact.
HS2 will be integrated with the nation’s airports, with direct services to Manchester and Birmingham airports and a short connection to East Midlands airport from the east midlands hub station.
Mr Sheerman
What the Minister has just said is rather confusing, because the Howard Davies inquiry has not yet reported. We can get very lovey-dovey about HS2 in some regards, but there has been no love lost on the London airports question. When are we going to make up our minds about London airports, let alone the rail service to feed them?
Mr Goodwill
The timetable for the Davies commission report is well known, and there will be an interim report in December. Whether or not we put the spur in from HS2 down to Heathrow, in the plans we have published there is already a connection through Old Oak common; there will be an 11-minute connection to Heathrow via the Crossrail service with up to eight services an hour. So Heathrow will have a connection whether or not we embark on the spur.
Karen Lumley
Does my hon. Friend agree, however, that a 38-minute journey time makes it easy to get from London to Birmingham international airport, which means that people in north London would not need to go to Heathrow?
Mr Goodwill
Indeed, that will increase choice for people who have the unfortunate experience in life of having to live in the south-east of England. It will give them more opportunities to visit the north and use airports up and down the country.
We need to ensure that we maximise the cumulative benefit of individual investments by ensuring they are all properly connected. I have to say that amendments 18 and 19 in the name of my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) slightly confuse me. Amendment 19 seeks to limit expenditure to projects under phases 1 and 2 of the Bill, which finishes in Leeds and Manchester, but amendment 18 says that there should be more connectivity in Scotland. There is a degree of contradiction in those two amendments.
David Mowat
My hon. Friend has just said that phase 2 finishes in Manchester, which indeed it does as far as the business case and the benefits statement KPMG produced are concerned, yet under phase 2 we are building a 40 km spur north of Manchester. I wonder about the logic of that, since there is a £1 billion cost with no benefit. Is that an under-run that the Minister could book at this point?
Mr Goodwill
The trains do not stop at Manchester and Leeds; they keep going. In terms of the connectivity of this new system, it is important that we take traffic away from the existing rail network and allow more freight and passenger services so as to address the problem of the 5,000 people every weekday morning who are standing as they arrive at New Street in Birmingham. To address that problem we need to ensure we have the connectivity.
Limiting this legislation to a particular phase, or to particular phases, would simply mean that a further Bill would be required to be placed before Parliament to prepare for any potential future phase.
On Scotland, I would simply say that officials from the Scottish Government made clear during this Bill’s Committee stage that they are content with the Bill as it is, and see no need for the naming of any locations in Scotland. The critical point is that the network is defined as “at least” including the named locations in the Bill. Therefore, not including locations in Scotland will not be a barrier to high-speed rail extending there at some point in the future. The locations named are limited to those which have been named in public consultation documents issued by the Department.
Again I must stress that while some rolling stock will run exclusively on the high-speed network, so-called classic compatible gauge trains will run through to Glasgow and Edinburgh. These new trains are part of the £7.5 billion rolling stock investment in the project and their arrival in Scottish cities will demonstrate how HS2 will benefit Scotland at an early stage.
Mr MacNeil
Can the Minister confirm that once this rolling stock reaches Edinburgh it can go further north up to Aberdeen and cities in between?
Mr Goodwill
That will be for the railway companies to decide; it will be up to them to decide how best to utilise this stock. Obviously, the rolling stock will be rolled out as it is produced, but having trains arriving in Glasgow and Edinburgh at that early stage of the project will make a major contribution to helping to keep our kingdom united.
Lilian Greenwood (Nottingham South) (Lab)
I wish to begin by welcoming the Under-Secretary of State for Transport, the hon. Member for Scarborough and Whitby (Mr Goodwill) to his place. I know that he has a strong personal interest in transport issues. Although I am sure we will disagree on many issues, I am glad that we have been able to reach agreement on a number of today’s amendments, and I look forward to our future debates.
Amendment 17 has its origins in the Bill’s Committee stage. Members on both sides of the House contributed to its development, after my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) moved an amendment requiring integration with other modes of transport. The Minister at the time, the right hon. Member for Chelmsford (Mr Burns), who is in his place, said that he was minded to accept it. We want people to have a real choice about how to travel, be it by rail, by car, on a bicycle or by walking. We especially want to make sure that active travel is an attractive option, because it has many huge benefits, including for health and tackling congestion. We want that to be encouraged, so we welcomed the move to have better integration. We warned, however, that any amendment should pay regard to walking, cycling and light railways, so I am pleased that those concerns have been addressed by this sensibly worded addition to the Bill—of course I would say that, because it stands partly in my name.
Light rail will play an important role in linking stations in Birmingham, the east midlands and Sheffield to the high-speed network. The importance of making conventional rail accessible to pedestrians and cyclists is now recognised across the country; we have seen increasingly that railways stations have been adapted in that respect. It is right to enshrine that objective in the legislation for HS2. It is a real achievement that both cycling and walking will now be acknowledged in the Bill on the same basis as other modes of travel. We need to acknowledge that when people make a journey they regard it as starting when they close their front door. Making that whole journey as seamless as possible—not just the train bit, but how they get to the railway station and how they progress at the end—is vital. We therefore welcome the approach that has been taken.
Amendment 17 is a good example of a Bill being improved through parliamentary scrutiny. Integration between high-speed rail and the conventional rail network will benefit communities far beyond the areas directly served, and we want to make sure that HS2 is fully accessible to everyone, irrespective of their mode of travel. I am happy to commend the amendment to the House.
Mr Sheerman
Given some predictions of the level of fare that might be charged on HS2, many people think it will be exclusively for very well-off business people and that ordinary people will not be able to use it.
Lilian Greenwood
I thank my hon. Friend for that. He is right to say that we cannot afford the new high-speed rail line to become a “rich man’s toy”, as a former Secretary of State put it. Clearly the new network must be available to everyone, and I am sure the Minister will confirm the view that the fares will be no greater than they are on the current network.
Mr Jim Cunningham
Has my hon. Friend taken into consideration the frequency of the trains on the west coast main line and what effects this new project will have on that?
Lilian Greenwood
The whole point of the project is to provide extra capacity, including on the west coast main line. Obviously, the detail of what timetables will be in place needs to be worked out, but we would hope that they will be able to provide additional services to many cities, including my hon. Friend’s city, and we will call for that.
Mr Goodwill
There will certainly be very good news for people in Shrewsbury and Blackpool, where operators are keen to provide services but cannot currently do so because of congestion on the existing network.
Lilian Greenwood
The Minister rightly talks about the capacity constraints we already face on the west coast main line, and it is vital that everyone in the country is consulted on how the additional capacity is used when it is created by the high-speed line.
Mark Pawsey
The hon. Lady has moved on to the question of capacity on the west coast main line. Does she accept that the heavy growth that took place on that line occurred immediately after the upgrade in 2008, and that since that upgrade the rates of increase have slowed tremendously and that, therefore, there could be additional capacity on the existing line? Does she also accept that we can create more capacity by having longer carriages, and by changing the mix between first and second class?
Lilian Greenwood
It is well known that on the west coast main line the additional capacity created by the upgrade is already starting to run out and that the line will be full. Of course we can create additional capacity on a train by converting some carriages from first class to standard class, but that does not create extra space on the line for additional trains. As the Minister acknowledged, places such as Shrewsbury and Blackpool want to have an additional direct service but cannot because the capacity is just not available. I am sure that the hon. Member for Rugby (Mark Pawsey) would like to have directed his question to the Minister.
Andrew Bridgen
Under freedom of information requests, we have discovered that the average spare capacity on the west coast main line is currently 40% and that demand at peak time actually increased by only 0.9% last year?
Lilian Greenwood
I am not sure why the hon. Gentleman did not address that to the Minister who is responsible for the railway. I feel like I have been given entire responsibility for it, although I would be happy if we swapped places. The point is that the capacity is not available at the times when people want to travel—at peak times—and that there is insufficient capacity for additional services and for freight, which is also vital.
Mrs Gillan
Some people who study this subject and take issue with the Government’s claims about capacity on the west coast main line say that much of that capacity could be improved by allowing Virgin Trains passengers in peak hours to get off at Milton Keynes—that currently does not happen. What is the hon. Lady’s opinion of that? What studies has she made of how that could relieve capacity problems in the future?
Lilian Greenwood
I am sure that many people who want to go to the north would not, for a minute, wish to get off at Milton Keynes. The fact is that there simply is not enough capacity. I am sure that people who live in Milton Keynes are looking forward to the extra capacity created by HS2 and the possibility of additional services, particularly for commuters, that that will free up on the west coast main line.
Let me now deal with the amendments relating to the links to Scotland. Labour has always supported the principle of bringing high-speed rail to Scotland, which is why the previous Labour Government set up HS2 Ltd to examine possible routes to Scotland. HS2 will bring real benefits, enabling faster journey times and adding to capacity on the main line routes to Scotland. We wanted to put those benefits in the Bill in Committee, but we were told by Transport Scotland that the Scottish Government opposed altering the Bill. It was therefore somewhat curious to see the Scottish National party tabling such amendments.
One purpose of the Bill is to provide a legal basis for future extensions of the high-speed network, providing that the economic case can be made for them. With the Government failing to keep the costs under control, we need to focus today on the HS2 network as planned. I would be interested to hear what work the Government are doing on the costs and benefits of extending the line. We have seen reports in the media that the Government are going to launch a feasibility study into extending the line to Scotland. I do not know whether the Minister would like to take this opportunity to intervene to confirm that and explain the timetable for the study.
Mr Goodwill
I always think it is a good idea not to try to run before we can walk; let us get to Birmingham and Manchester first. I am sure that we will be looking at extensions, but they are not at the top of my to-do list at the moment.
Lilian Greenwood
I thank the Minister for his response; clearly the media reports are wrong. It is ironic that the SNP should be proposing to take this line to Scotland, given that the one thing we can guarantee is that the SNP plans for separation would make the possibility of a high-speed line across the UK even less likely.
Mark Lazarowicz
One can excuse the Minister for not having this at the top of his to-do list only because he is new in his job. I have asked similar questions of previous Ministers over the past few months, so may I suggest to my hon. Friend that if it is not at the top of a Minister’s to-do list now, it should be pretty soon and that the Minister should be giving details of this study in the near future?
Lilian Greenwood
My hon. Friend is right. We will continue to press the Minister on the issue in the months ahead.
Mr MacNeil
The hon. Lady has made the same catastrophic mistake as the Minister in thinking that a transport project is the same as a political governance project. If that were true, High Speed 1 could have been construed by the Eurosceptics on the Government Benches as part of some major European integration project, and the high-speed line that is going through the Baltic countries up to Helsinki would be seen as some nation-unification project. It is not; it is a transport project. I encourage the hon. Lady not to make the same daft mistake as the Minister made earlier.
Lilian Greenwood
I can assure the hon. Gentleman that we will not be making any of the same mistakes as the Minister.
Finally, I take the opportunity to comment on amendment 23 in the name of my hon. Friend the Member for Hayes and Harlington (John McDonnell). He has rightly introduced this amendment to advance his constituency and the interests of the people living there, but I am concerned that we would be straying into territory that is covered by the Davies commission. The Labour Front-Bench team share the frustration of those who want to see from the commission an earlier resolution of the issue of airport capacity. It was we who called for those cross-party talks, to which the Government somewhat belatedly agreed. Nevertheless, we are bound into the process and there can be no justification for delaying preparation work on this important project until after the election, when that commission is due to report.
We want to see the new high-speed line built without further delay. The whole country can benefit from the improved capacity and connectivity that it will bring. I am happy to see it fully integrated into the wider network and to support amendment 17.
Mr Simon Burns (Chelmsford) (Con)
It is a pleasure to follow the hon. Member for Nottingham South (Lilian Greenwood). I confirm that I will support amendment 17. As she rightly said, it resulted from an idea put forward by the right hon. Member for Holborn and St Pancras (Frank Dobson) and my right hon. Friend the Member for Meriden (Mrs Spelman). If we are to have an integrated transport system, it is crucial that we do not link just high speed rail to the conventional lines, but take into account all the other forms of transportation to help people get from A to B.
It is particular pleasure to see the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), in his place and leading on the issue. It is an important issue and I know that he will do well on it, ably supported by officials at both the Department for Transport and High Speed 2.
I support amendment 17 and oppose amendment 18 and the amendments that flow from it. In many ways I have a feeling of déjà vu, because we had copious debates in Committee on the matter, and I never quite understood why so many people got certain parts of their apparel in such knots over the issue. It is clear from clause 1(2) that the Bill applies to
“railway lines connecting at least—
London,
Birmingham,
the East Midlands”
and so on. The whole point of the Bill and the purpose of getting it on to the statute book is to provide financing not of an actual project, but of the preparations for the project ad infinitum, because High Speed 2 need not necessarily stop at Leeds or Manchester. My right hon. Friend the Secretary of State for Transport made that plain in October last year, when he announced that he was going to set up an inquiry into the feasibility of a third phase to Scotland.
The Bill will allow the expenditure of money for the preparation of not only phases 1 and 2, but potentially phase 3, if there is one, a spur to south Wales, if a business case were made that it was needed, to the south-west or—a possibility closer, I suspect, to the heart of the distinguished Chair of the Transport Committee, the hon. Member for Liverpool, Riverside (Mrs Ellman)—all the way into Liverpool. The Bill grants the Government permission to spend the money on those preparations.
The thought that there will not be full and proper consideration of the continuation of the project to Scotland at some point is bizarre. It is an obvious part of a viable rail network along the spine of the country for it to continue in time to Glasgow, Edinburgh and potentially—depending on the wishes of Government and the business case at the time—beyond that. That is what the Bill does.
Mrs Gillan
I am sorry that my right hon. Friend observed members of the Committee getting parts of their apparel in a twist. As I was not a member of the Committee, it obviously was not mine. He has outlined what so many critics beyond this place say of the Bill—that it is a blank cheque. Can he confirm that it is an open-ended financial commitment to spend any sum of money on any part of any preparation for any railway network anywhere in the country—the blank cheque that everybody dreads?
Mr Burns
My right hon. Friend is right—she was not on the Committee. It seemed as though she was, because she was in the Public Gallery the whole time, assiduously following our deliberations. I think I am right in saying, from memory, that we discussed a number of amendments that she tabled for that Committee which were moved by members of the Committee.
My right hon. Friend advances an argument, but repeating it does not mean it becomes more accurate. That argument is that the project has a blank cheque. It does not have a blank cheque. It is not a machine for printing money. There are very tight financial procedures in place to ensure that it does not exceed budget.
Before anyone asks how that can be considered a viable proposition, one should look at Crossrail, the largest engineering project in Europe at present, a multi-billion pound project. Owing to tight financial controls, it is on time and on budget, and I have every confidence that, with the mechanisms that have been put in place, that will be the case with HS2. I see figures quoted about what the project will cost which are from Alice in Wonderland. The cost is £42.6 billion, but that sum includes £14.4 billion of contingency funding, of which the vast majority, I am confident, will not be spent.
Damian Collins
I am grateful to my right hon. Friend for giving way. Does he agree that there is a myth in this country that we cannot do big projects? Look at the success of Crossrail and the High Speed 1 line and compare that with the west coast main line upgrade, the kind of incremental project that some Members are keen on, which was four years late and 240% over budget.
Mr Burns
My hon. Friend makes an extremely valid point. I was particularly interested to hear his views in the debate because he is a Kent MP. When I first came into the House 26 and a half years ago, in one of the first Adjournment debates I ever sat in and listened to—I confess that I have not listened to many since, except those that I have taken part in—two of my hon. Friends made a vigorous case that, if High Speed 1 went ahead, it would turn the garden of England into the garbage can of England, destroy house prices, ruin the economy of Kent and end the world as we knew it. High Speed 1 went ahead and Kent’s economy has been regenerated and improved. House prices have not gone through the floor; in fact, house prices along the line of route have kept pace with those in other areas. In some cases, they have increased beyond them because of the houses’ proximity to good commuter links. Capacity has increased, particularly for those commuters who are prepared to use High Speed 1 from Canterbury, for example, to London.
The supreme irony is that one town in Kent, Maidstone, successfully lobbied not to have a station—it was put at Ebbsfleet instead—and people are now begging for a station at Maidstone because they are missing out on the regeneration and improvements to the economy that are taking place in Ashford and Ebbsfleet. The other irony—my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) should listen carefully to this, because I know she is a lady with an open mind and strong views—is that Kent county council, along with hon. Members of this House, led the opposition to High Speed 1 in the late ’80s but is now a strong supporter of the high-speed railway because of the benefits it has brought to the community and the county. The leaders and officials of Kent county council have offered to go and talk to the leaders of Buckinghamshire county council, Warwickshire county council and Staffordshire county council to explain that in their experience the railway did not destroy their communities or environment but actually greatly enhanced them. Unfortunately, there is certainly one county council that does not seem to have the wish or the will to hear the facts or the benefits that high-speed rail could bring.
Mr Burns
I will not give way, for the simple reason that many of my hon. Friends and many Opposition Members want to take part in the debate—[Interruption.] The hon. Member for Huddersfield (Mr Sheerman) speaks from a sedentary position. I think it is fair to say that we have had many interventions from him today, so perhaps there might be a chance for someone else to have a turn.
The country needs this project because of all the important arguments: the greater connectivity; the fact that it is an engine for growth; the regeneration along the line of route; and, most importantly, the fact that it will deal with the capacity issue. I think that when High Speed 2 was announced in late 2008 and into 2009, little thought was given to its name. Those who took the decisions immediately called it High Speed 2, as they already had High Speed 1. Unfortunately, it is a misnomer that has, in some ways, led us up a cul-de-sac.
Of course, faster journey times are important, but they are not the most important thing. The most important thing is capacity. As I have said before, to echo what Tony Blair said in a different context, it is about capacity, capacity, capacity. The west coast main line will be full by 2024. We need capacity on the conventional railway for those who want to travel between London, Birmingham and Manchester but do not want to go along the whole route, and we need capacity to get even more freight off our congested roads and on to the railways.
Dan Byles
My right hon. Friend and I had many discussions on this issue during his time as a Transport Minister. Yet again, we have come back to the idea that it is about not speed but capacity. Would he therefore support redesigning the line to run at a slower speed so that it could go around places such as Water Orton primary school, ancient monuments and people’s houses?
Mr Burns
I heard my hon. Friend say that in an intervention on another of my colleagues. Let me tell him gently and in a spirit of friendship that, if one takes the line that he is suggesting, it will no longer be a high-speed train. In effect, it will be a parallel conventional rail line like the west coast main line. All the reports on having a conventional new rail line in parallel rather than a high-speed one show that it would cost about 90% of the cost of HS2 but without the benefits that high-speed railways bring.
Mr Burns
No, I will not.
Unfortunately, a project of this scale and size cannot meet the problems and objections of every part of the route while still keeping to the reason for and need behind the railway. It is rotten when one cannot deal with every problem, but we need to balance what is in the national interest against what can be done to minimise the impact. I believe that the Secretary of State for Transport, his Ministers, the Department for Transport and High Speed 2 Ltd have gone a considerable way—as far as they can—towards meeting and overcoming those problems without ruining the concept of high-speed rail and without it being disastrous for the taxpayer.
For those reasons, I am as confident as one can be that High Speed 2 will become High Speed 3 and go to Scotland, and that in years to come it will go to other parts of the United Kingdom as well. That can happen in an orderly way only if this Bill is passed to enable money to be spent on the preparations—not on building the railway, because the Bill does not deal with that. For those reasons, I will support the hon. Member for Nottingham South and my right hon. and hon. Friends on amendment 17; we gave a commitment to the right hon. Member for Holborn and St Pancras that we would do so. I will certainly oppose amendment 18 and those that flow from it, however, because they are superfluous and, as my hon. Friend the Minister said, contradictory.
Madam Deputy Speaker (Dawn Primarolo)
Order. A large number of Members wish to participate in the debate. May I ask people to keep their comments a little more clipped so that we can facilitate as many people as possible? I cannot impose a time limit as we are on Report, but Members can watch the clock and appreciate that five to 10 minutes would be a good proxy as regards the length of their speeches.
John McDonnell (Hayes and Harlington) (Lab)
I shall try to be brief. I have tabled amendment 23 on the link between the network and Heathrow. Some hon. Members will understand that I have raised the issue on behalf of my constituents, as is my right, in each debate we have had on High Speed 2.
Let me briefly give the context. My background is in supporting rail expansion and investment. I represent a constituency with a railway estate and a large number of railway workers and, in addition, I chair the RMT trade union group in Parliament. We have been strongly behind the development of increased capacity and investment, so when the idea of high-speed rail was first proposed it was welcomed in my constituency for a number of reasons. One was that if we could get railway journeys below four hours, that would take pressure off Heathrow airport and reduce the need for short-haul flights into Heathrow. That assisted in our campaign against the expansion of Heathrow.
When the route was published, every Member south of Birmingham could assess its impact on their constituency, except me, because the link to Heathrow was not included. The route of the link to Old Oak Common was published, but then we were told that there would be a direct link at some stage, the options would be published, there would be a consultation, a preferred option would be considered, compensation arrangements for those affected would be discussed and then this House would make a considered decision.
There are real concerns about the environmental impact where the network hits the north of my borough. The right hon. Member for Uxbridge and South Ruislip (Sir John Randall) and the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd) have valiantly argued the case for their constituents and achieved some tunnelling, but a lot more needs to be done. Other facilities that serve the whole borough will be affected, such as the Hillingdon outdoor activities centre, which will need to be relocated.
I am also concerned that my constituents now have no idea what impact the route will have on them because, following the introduction of the Davies commission, the whole timetable and consultation process for the link to Heathrow has been deferred until after the next general election, which means more years of blight for my constituents. That affects all of them, because nine different options for linking to Heathrow are being discussed, which means everyone’s home or business is under threat. That is no way to run a railway or consult on such a massive project. We were promised a logical process with a tight time scale. We were told that as the main network was decided, the routes would be published, there would be consultation on a preferred route, and a decision would be made relatively speedily, which would at least have given us some certainty. That has all gone now.
My hon. Friend the Member for Nottingham South (Lilian Greenwood) said that we do not want to put off any decision on high-speed rail until after the Davies commission reports. The solution, then, is simply to ensure that the commission reports earlier. The fact that it is due to report after the next general election is a political fudge to get everybody off the hook. In the coming six weeks the commission will report on a range of options, but there will be no final report until after the general election. Why is that length of time needed? All the experts, and indeed a number of Government Members, have been clear that the deadline could be brought forward so that we can have certainty about the Government’s preferred option before the next general election.
Andrew Bridgen
I have great sympathy for the hon. Gentleman and his constituents facing the blight of uncertainty over possible routes for HS2 and the link to Heathrow. It is the same for my constituents in relation to the route for phase 2, which is out for consultation, and it could be changed, so huge swathes of my constituency and those of fellow Conservative Members are similarly blighted. To paraphrase, we are all in this together.
John McDonnell
I understand that, which is why I said that Members south of Birmingham know roughly what the route will be.
I was given promises and undertakings in this House about the process that would be followed to determine the route of the link to Heathrow. At least we thought we had some certainty on the time scale for the consultations. In fact, I was holding public meetings to go into some detail about the compensation arrangements for whatever option was to be proceeded with. Now it is all up in the air again and the route that the link will take is uncertain. The Government have opened discussions about a potential third runway at Heathrow. Sometimes Members can become paranoid in this House and think that they are coming for them.
John McDonnell
I will not take it too personally.
Frankly, my constituents have had enough of political fudge after political fudge. What they want to know, and they want to know it soon, is where the line will go, how they will be affected, how we can cope with the social, environmental and economic consequences, and how they will be fully compensated.
Steve McCabe
I have great sympathy with my hon. Friend’s predicament, but is not part of the problem that the Government are missing a trick? This uncertainty is allowing opposition to the whole project to develop. Were we to focus on reducing domestic air travel as part of the project’s value by tackling some of the uncertainty, that would help everybody.
John McDonnell
My hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), who chairs the Transport Committee, has made the point time and again, with regard to the overall matter of strategic planning—with regard to aviation, I think that she and her Committee are absolutely clueless—[Interruption.] She knows that she has my respect and affection. If we are planning for transport infrastructure in the long term, we must ensure that it is integrated. The way to have integration for this project is by ensuring that the timetable set out for HS2 is integrated with the Davies commission’s report, which means having the report sooner. That could be within six months of the initial report being published this month. The decision could then be taken before the next general election. It is also about being more honest with the electorate on rail and aviation, and not only in my constituency, but nationally.
Rehman Chishti
In relation to the hon. Gentleman’s comments on the Transport Committee, in an earlier debate on aviation he said that it keeps coming back with the proposed expansion of Heathrow, which he disagrees with. If it keeps coming back with that in different guises and compositions, clearly that shows that it must be right.
John McDonnell
It shows a consistent aberration of judgment, because time and again Governments eventually say no.
I appeal to the Secretary of State. There is a solution to my constituency problems and those of the right hon. Member for Uxbridge and South Ruislip. First, we must address the environmental damage that is still being threatened in the north of my borough. The right hon. Gentleman and the hon. Member for Ruislip, Northwood and Pinner have a series of requests that could readily be met to overcome some of the environmental and social damage.
Secondly, please give us certainty. That means having the Davies commission’s final report sooner, which could be done early next year, and integrating it with the final decision on the link to Heathrow, giving a properly planned process in which people can have confidence. Otherwise, I will take every opportunity I can to vote against high-speed rail until my constituents are satisfied that their views have been taken into account.
Karen Lumley
I rise to support amendment 17 and will speak extremely briefly. My views on HS2 are fairly widely known, but I want to place on the record that the project is needed now. The west coast main line is nearly full, and as a regular traveller on that service I know that it is essential for many commuters. HS2 is about capacity as well as speed, a fact that is sometimes lost in the argument. I totally understand where those of my colleagues who oppose it are coming from, as there are also strong views in my constituency, but I firmly believe that it is of huge national importance and must go ahead. In my region, the west midlands, we cannot ignore the facts: a £1.5 billion increase in economic output, thousands of additional jobs and increased wages.
Rehman Chishti
As a Kent MP who has benefited from High Speed 1 and over £10 billion of private sector investment coming into the south-east, including Kent and Medway, I think that the economic benefits my hon. Friend is talking about for her area are absolutely vital. People in Kent have seen those benefits, and people in the north should not be deprived of them. I fully support her in that respect.
Karen Lumley
I thank my hon. Friend for that intervention.
As Members have heard already today, I am a big champion of Birmingham international airport. To be able to access it from Euston in just 38 minutes will make a huge difference to the people of north London. It will mean a choice between either Birmingham or Gatwick and Heathrow—I know which airport I would choose. Those Members who have travelled from Birmingham international airport know how excellent it is, and those who have not should try it, because they will not regret it.
HS2 is also about rebalancing our economy. We talk about that a lot, but this is proof that we are serious about getting on with it. I know that we will hear many arguments for and against HS2 today, but I am sure that they were heard when the House debated HS1. This is something that the country needs, so we should all be brave and stand up for the national interest. We owe it to our constituents and to our country. I hope that colleagues will join me in the Lobby tonight to vote for something north of Watford.
Mr MacNeil
I wish to speak to amendment 28 tabled in my name on behalf of my party.
The Scottish National party and the Scottish Government have been supportive of HS2 in principle. Of course, that is conditional on it being properly managed and, most importantly, it coming to Scotland, so that Scotland, which pays more tax per capita than the UK average, can benefit from it. We also look to help the rest of the UK. As I mentioned earlier, the line that links Seville to Madrid, which it was envisaged would help Seville alone, benefited both ends, as, on reflection, it should have done. We want this link because it would link us into the wider European high-speed rail project that will be found in many places in Europe. Scotland, as an economic powerhouse, deserves to be part of that, not just for Scotland but for the rest of Europe, which deserves to have Scotland linked with it. This will be happening in 25 or 30 years, by which time quite a few of us will not be in this Chamber, if on this earth; we are leaving a legacy for the future.
I am glad to hear that Baroness Kramer will be coming to Scotland tomorrow as part of seeing what benefits can be brought not just to Scotland but to the wider UK and wider Europe through increased links to the central belt of Scotland, which is an important market.
Robert Flello
The hon. Gentleman talks about the wider benefits to the UK. At the moment, my constituents have a service that gets them into Euston in one hour and 23 minutes. If HS2 goes ahead, the 30 trains a day we have now will be reduced to three and there will be an extra hour’s journey time to pick up the HS2 link, so my constituents will go from taking one hour and 23 minutes to get to London to taking two and a half hours. How is that an improvement for the rest of the country?
Mr MacNeil
The hon. Gentleman represents his constituents very well. He will of course forgive me if I am not au fait with the train timetable to Stoke-on-Trent. It has sadly been an oversight on my part not to visit Stoke-on-Trent.
Mr MacNeil
I am glad to hear from a Labour MP that I will be welcome. I will happily make a speech on the benefits of Scottish independence not just to Scotland but to other European countries and to the denizens of Stoke-on-Trent.
Mr MacNeil
It is great to hear that. The point for Stoke-on-Trent is probably to liaise better with the rail authorities and the authorities here to make sure that it is represented and gets a better deal. I am sure that the hon. Gentleman, as an assiduous MP—probably the finest Stoke-on-Trent has had—will indeed be doing that. I am sure that will now be very welcome in Stoke-on-Trent.
It is in Scotland’s interests to have the high-speed rail link. It is also in Scotland’s interests to make sure that the north of England is well connected, because we want to make sure that when we are independent we have on our borders a prosperous region of Europe. The north of England becoming a prosperous region of Europe is therefore exactly what Scotland wants. When Scotland is independent it will do everything it can to facilitate and help that.
Mr MacNeil
I give way to the hon. Gentleman, who is, let us say, a bit blinkered when it comes to Scottish independence.
Mr Reid
Of course I agree that it is important that the high-speed rail link is extended north to Glasgow and Edinburgh. The hon. Gentleman said that he was speaking to the amendment on behalf of his party. Let me draw his attention to the Scottish Government’s evidence to the Public Bill Committee. Question 174 was answered by a representative from Transport Scotland as follows:
“The view of the Scottish Government is that we are content with the Bill as it stands.”––[Official Report, High Speed Rail (Preparation) Public Bill Committee, 11 July 2013; c. 100, Q174.]
The hon. Gentleman’s party runs the Scottish Government, so if it is content with the Bill, why is he speaking to an amendment on its behalf?
Mr MacNeil
As the hon. Gentleman knows, thinking is always evolving. When a person is content, they can become happier as a result of improvements. The Liberal Democrats started from a position of being opposed to student tuition fees and seemed to be content with that, but the position evolved so that they wanted £9,000 tuition fees for students, and they seemed happier still. He will probably understand that I think that our evolution towards happiness is perhaps a bit more understanding of the needs of citizens, whereas the evolution of the Liberal Democrats’ thinking leaves many people in debt, unfortunately.
We want Scotland to be linked to a high-speed European network. The mistake made earlier, originally by the right hon. Member for Chesham and Amersham (Mrs Gillan), was to think that this is some sort of political project. It is not. There are high-speed rail links all over the place. They go to Helsinki through the Baltic states, and there is no movement for political unity between those states. They fiercely retain their independence while supporting and helping each other to get rail links, including high-speed links, through their countries to move into the main European markets. That is a natural and understandable thing to do. Many states in Europe are independent and co-operating together. In fact, Europe has not been as together as it is now, with its 50 independent states, since the empires declined.
Mrs Gillan
I am grateful to the Member for the former Western Isles constituency for giving way. I declare an interest because my father was a Scot. Does he think that if Scotland becomes independent the UK Government will be in a hurry to create the link through to the Scottish cities or will they take rather longer?
Mr MacNeil
I think that money talks far more than narrow political ideals as they are expressed at the moment. Absolutely yes: the Government will understand full well that it makes sense for the central belt of Scotland, one of 40 global mega-regions, to be linked to other mega-regions, and the political machinations or whatever political understanding the right hon. Lady has in her mind will vanish. The former BBC correspondent Stephanie Flanders put it very well when she said that people will play up the difficulties pre-independence but will play them down afterwards and work well and co-operate, as in the Baltic states and in Finland.
Mr MacNeil
I am afraid that that is the truth, and I am sure that the right hon. Lady knows it in her heart of hearts.
To achieve this link going into Scotland, we have to accept that it will go through England first. I hope to see the benefits in the north of England that Kent has seen. It is only right that our fellow Europeans, wherever they are, see their economies grow and prosper.
We are concerned about the KPMG report that arose from a freedom of information request. The report showed that part of Scotland could lose economically, but on further examination that proved to be only one part of the picture. It was the worst-case scenario, and the best-case scenario showed benefits. Rather than Scotland losing out, it was shown that HS2 would bring gains of £40 million-odd a year to Aberdeenshire and Morayshire.
Andrew Bridgen
Will the hon. Gentleman confirm that if Scotland is mentioned in the Bill, that will satisfy Scotland and it will not seek Barnettisation of this project, which would put the cost up even further?
Mr MacNeil
I am glad to hear Conservative Members speak against privatisation. That is very encouraging. Perhaps they should have thought about that with regard to Royal Mail, when they transferred loads of people’s money from the taxpayer to private pockets. [Interruption.] I think I misheard the hon. Gentleman and he said “Barnettisation”. It is the accent—I am sorry. If he is indeed talking about Barnettisation, I will come to that point. If he is patient, as I am sure he will be, he will get an understanding of exactly what our viewpoint is.
It is important that HS2 happens and that we work within Scotland to make sure that we have connectivity and can benefit by linking into the network. The Scottish Government do not agree with the assumptions that have been made by KPMG and the Department for Transport. We feel that there is an error in some of the modelling and that some of the assumptions are out of date. We are more pleased with what came out of the Department yesterday, which said:
“Scotland will benefit from high speed services from Edinburgh and Glasgow as soon as Phase One of HS2 opens. Phase Two is expected to reduce journey times by up to an hour without the need to change trains, benefiting the Scottish economy. The Government’s goal is for a network that brings the country closer together, so we are taking forward a study with the Scottish Government to consider how these benefits could be extended further. This is looking at how to boost capacity and cut journey times between Glasgow/Edinburgh and London to less than three hours”.
That journey time offers further access to an inter-European market, which is vital for Scotland.
I hope there will be Barnett consequentials, which are important, so that Scotland can prepare for the benefits of the extension of European high-speed rail. We could consider a link north of Edinburgh up towards Aberdeen. I often remark that the rail journey between Glasgow and Fort William takes about three hours, but the distance is only 100 miles. The average speed is 33 mph, so perhaps medium-speed rail would improve journey times.
The benefits of HS2 will be strong, but they will be stronger still when Scotland is included, as the example of Seville and Madrid shows. We shall work for assurances from the UK Government that they will consider a sensible extension that will benefit not just Scotland, but the south-east of England and the European markets. This is in everybody’s economic interest, as shown by the Baltic line running from Helsinki to the European markets.
High-speed rail will benefit everybody. As the hon. Member for Warrington South (David Mowat) flippantly said earlier, the counter-arguments suggest that, if connectivity is such a bad idea, closing the M6 would result in a boom in the north. Of course, that is nonsense. As Adam Smith said in “The Wealth of Nations”, the more markets and economies are linked, the better for all. There will be mutual benefits and we will all win.
Mike Thornton (Eastleigh) (LD)
I will maintain my habit of being brief.
The Liberal Democrats have long supported a fully integrated transport system, and thus we welcome amendment 17. We also believe that the only way to achieve that is by building a modern, 21st-century railway system, not by merely tweaking a bit of this and a bit of that, extending a platform here and adding a coach there.
The west coast main line will run out of space in the next 10 to 12 years. One option would be to improve the line by extending it, but that would subject passengers to 14 years of weekend bus journeys and chaos, and even when completed it would be completely insufficient.
Mr John Leech (Manchester, Withington) (LD)
My hon. Friend will probably be aware that we have already gone through the tortuous process of upgrading the west coast main line. It made a significant difference, but, despite billions of pounds having been spent, it is already full.
Mike Thornton
I agree with my hon. Friend and I think that extending the line would lead to exactly the same result.
I hope that the right hon. Member for Chesham and Amersham (Mrs Gillan) is sure, like me, that northern local government leaders have the best interests of all their residents at heart. I am puzzled that opponents of the scheme seem to think that a high-speed, modern railway system that is fit for the 21st century and that would increase economic activity throughout the whole of the United Kingdom would not benefit the country as a whole, but only those cities directly served by it. Surely it is clear that a line that would improve north-south links—I include Scotland in that—would at the same time improve and grow the economy of the whole of the United Kingdom, including my constituency of Eastleigh.
Mr Stewart Jackson (Peterborough) (Con)
Is the hon. Gentleman aware of the evidence the Public Accounts Committee reviewed when we looked at High Speed 1, particularly on the received wisdom of its effect on regional economic regeneration? It showed that, notwithstanding that some places in Kent did improve, particularly Ashford, there were substantial pockets of poverty in places such as Dover, Folkestone and Thanet, which were not specifically affected by the regeneration effects of High Speed 1.
Mike Thornton
I am sure that building a railway line will not solve every economic problem in every part of the county. I happen to know that the improved economy of Kent also improved the economy of Sussex and its effect also reached all the way to Hampshire.
Charlie Elphicke (Dover) (Con)
It pains me to disagree with my hon. Friend the Member for Peterborough (Mr Jackson), whom I deeply respect, but the economic benefits to Dover and to Deal in my constituency have been immense. It has been transformational and made a massive difference to the whole of east Kent. I urge Members of all parties to back HS2.
Damian Collins
Following on from my parliamentary neighbour, my hon. Friend the Member for Dover (Charlie Elphicke), I have to say that my hon. Friend the Member for Peterborough (Mr Jackson) is totally wrong. I would be happy to take him to Folkestone and show him the areas of the town that are benefiting from the better connection. Yes, there were areas of deprivation in east Kent, but the way to do something about that was better infrastructure and that is what we now have.
Stephen Barclay
I thank the hon. Gentleman for the generous spirit in which he is taking interventions. To support my parliamentary neighbour, my hon. Friend the Member for Peterborough (Mr Jackson), I point out to colleagues who take issue with his intervention that paragraph 15 of the National Audit Office report on HS1 concluded that
“the project is not value for money.”
Key finding 6 states that although passenger numbers grew, they were below expectations and estimates were inflated.
Robert Flello
I am grateful to the hon. Gentleman for his generosity. Is he able to answer the question I asked the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) from the SNP? How will the people of Stoke-on-Trent benefit from a worsened service? They will have to spend an hour travelling to hook up to a line that will only be as good as the current one, and they will have to go from using 30 trains to three. How is that an improvement?
Mike Thornton
I am afraid it is beyond my capacity to decide what trains the relevant train company will run, but I doubt we can predict exactly what the train times will be in 10, 15, 20 or 30 years’ time.
Members will be glad to hear that I have nearly finished. The Liberal Democrats know that a modern, high-speed, national rail network is vital to the future of this country. Consequently, I fully support the Bill and amendment 17.
Stephen Timms (East Ham) (Lab)
I rise to support amendment 17 and I will support the Bill later, too.
I want to pick up on one particular point that the right hon. Member for Chesham and Amersham (Mrs Gillan) made at the beginning of the debate and with which I agree, namely the connectivity problem with HS2, particularly the lack of a proper link to High Speed 1. That is a serious problem and it needs to be addressed. I recognise that there has been some improvement in the view of how the two high-speed lines should be connected, but the current proposal—this is extraordinary—is for a single track, shared connection and a capacity of only three trains per hour going rather slowly.
The argument is that that is sufficient capacity for the international services likely to be coming to High Speed 2 from the channel tunnel. That may be correct, at least in the early years: three an hour may be enough. However, with that constraint in place, it would be impossible to run regular domestic services from High Speed 2 to High Speed 1, even though we need those regular connections. Research commissioned by my local authority, the London borough of Newham, suggests that there could be demand for seven trains per hour on the interconnection between HS2 and HS1 to meet the needs of domestic services.
I have found this discussion interesting. I agree with the point made by the hon. Member for Folkestone and Hythe (Damian Collins) about the regeneration benefits of HS1, and they are largely due to domestic services. I think, therefore, that the new high-speed line has to be built with sufficient capacity for the domestic services we will need. We certainly want HS2 to connect to Kent, East Anglia and other destinations, and we need proper interconnection between the two high-speed lines in order to facilitate that.
Nadine Dorries (Mid Bedfordshire) (Con)
I am aware of the right hon. Gentleman’s interest in regeneration. Does he agree with my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) that the Bill does not put a cap on the amount that will be spent? The figures that are quoted go from £14 billion upwards. I am sure he agrees that there are other infrastructure priorities in our constituencies, such as housing, and that there are areas in desperate need of regeneration. Does he not think that supporting this project will deprive those other valuable projects of finance?
Stephen Timms
I think that investment in this project will contribute to national wealth. My concern, however, is that it should be adequately designed and planned. To have a single track connecting High Speed 2 and High Speed 1, with a capacity of three trains an hour, is a mistake.
Stephen Timms
I will make one more point before I give way to my right hon. Friend because it relates to the concerns that he has raised.
If there were a proper link between High Speed 1 and High Speed 2, some of the trains coming towards London on High Speed 2 would not have to terminate at Euston. Some could run on to High Speed 1, some could terminate at Stratford International station, in which I have a particular interest, and some could run further along High Speed 1. As a result, significantly fewer platforms would be required at Euston than are proposed and there would be a reduction in the big problems in my right hon. Friend’s constituency, to which he has rightly drawn attention.
Frank Dobson
I am sure my right hon. Friend is right that the proposal to have a tunnel from Old Oak Common to Primrose Hill and to run the rest of the connection above ground across Camden Town will not provide an adequate service. It will certainly wreak destruction in Camden Town, which the people behind the project denied until recently. As an indication of their general incompetence, when the cost of that proposal went up from £170 million to £300 million, they said that it was because of unforeseen circumstances, including the need to widen the line.
Stephen Timms
I am grateful to my right hon. Friend. I am aware that the proposal for that interconnection is now rather more costly that it was initially. However, as far as I can see, the problem has not been solved. There is still a limit of three trains per hour, which is clearly insufficient. I warmly welcome amendment 17.
Mrs Spelman
Just to help the right hon. Gentleman on the question of whether the expenditure on High Speed 2 will come at the cost of investment in existing infrastructure, which might provide the kind of connection that he is seeking, “The Strategic Case for HS2”, which was published yesterday, states:
“Between 2014 and 2019, Network Rail will spend over £35bn allowing it to continue a substantial programme of expansion and renewal.”
That might allow him to seek the kind of amelioration that he wants.
Stephen Timms
I am grateful to the right hon. Lady. However, I believe that an adequate connection should be part of the initial proposal.
Stephen Timms
No, I will not give way again.
I welcome amendment 17 and the Government’s support for it. I have raised this matter with Ministers before, but I ask the new Minister for the first time to pay particular attention to the connectivity problem between High Speed 1 and High Speed 2, which was highlighted by the right hon. Member for Chesham and Amersham.
Sir John Randall (Uxbridge and South Ruislip) (Con)
I welcome the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), to the Front Bench. It is a pleasure to see him there.
Unaccustomed as I am to public speaking, at least from this side of the Chamber—I must say what a great view one gets from the back of the stands—I am happy to speak in support of amendment 17.
I know that the hon. Member for Hayes and Harlington (John McDonnell) has had to go to Westminster Hall to check up on GCHQ, but, to use words that he would understand, I give him my fraternal solidarity and will support amendment 23. I know that it is rather impractical, but that does not always stop us supporting an amendment. The issues with Heathrow, which affect his constituents badly, also affect mine.
As the Heathrow loop is in the second phase of the project, we cannot have a decision on it. The Minister said that connectivity with Heathrow will be amply secured through Old Oak Common, so regardless of any decision on the expansion of Heathrow, which I hope will not happen, perhaps we can save a bit of money and scrap the Heathrow loop straight away. That would bring great benefits to the London borough of Hillingdon where we stand as one, although not to my constituency specifically because there will be tunnelling there. My hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd) and I face some severe problems. It would help immeasurably if there was no Heathrow loop, because the tunnelling could be extended past the houses in Ickenham. There is understandably a considerable amount of opposition to HS2 emerging just next to those properties.
I will not take long, because I want to get on to the proposals on compensation and mitigation. Perhaps I am being rather optimistic. It is a very important subject. I would like to have had the chance to mention the awful position of the Hillingdon outdoor activities centre. I want that to be looked at. My hon. Friend the Member for Ruislip, Northwood and Pinner has written to the Minister about various matters and I back him up entirely.
Unlike the hon. Member for Hayes and Harlington, who will oppose the Bill tonight, I will support it in the hope and expectation that our gentle requests will be looked on more favourably if I am not too much of a pain during this early outing on this matter. However, I say to my right hon. and hon. Friends on the Front Bench that after this rare outbreak of good-natured bonhomie, I will be going back to the default position of grumpy old man of Uxbridge.
Kelvin Hopkins (Luton North) (Lab)
It behoves all of us who are sceptical about HS2 to suggest practical and realistic alternatives.
Some people say that the project is about capacity, not speed, and others say that it is about speed, not capacity, but most of the emphasis has been on capacity. The capacity problem is between London and Birmingham, not elsewhere in the country, where we could have more trains without any difficulty. It is that section of our railway network that I will address.
There is an alternative route from Birmingham Snow Hill to Paddington. The trains currently run to Marylebone, but they could easily run to Paddington, which would be quicker and would link up with Crossrail. InterCity 125s could run on that line from the centre of Birmingham to Paddington—a very convenient station—at very little expense. That would solve the capacity problem between London and Birmingham.
I will go further and say that that route should be electrified, which could be done at a modest cost. If it was electrified, electric trains could run directly from Birmingham Snow Hill—and, indeed, from Birmingham airport and elsewhere—into the City of London, Canary Wharf and beyond via a link to Crossrail at Old Oak Common.
Nadine Dorries
My constituency neighbour is a renowned expert on the railways. Would his proposal cost less than HS2? Does he have a figure for it?
Kelvin Hopkins
My railway expert friends tell me that the electrification of that line would cost about £500 million and that the track work that would be required at Old Oak Common to link it to Crossrail would cost about £10 million. We are talking about tiny amounts of money in comparison with HS2.
There could also be a direct link to Heathrow for the electric trains, which would go off at Greenford and on to the Great Western main line. That would link to Heathrow at one end and to Crossrail at the other. Trains would be able to go from Heathrow to Birmingham airport or the centre of Birmingham, as well as from Canary Wharf to the centre of Birmingham. That would double the capacity between London and Birmingham very easily. The line could even go on to Stratford and there could be a transfer—although perhaps not an easy one—to the channel tunnel rail link and to Eurostar. That would solve the only real capacity problem, because the others involve train frequencies. My railway engineer and signalling friends say it is easy to run more trains, but the problem is that franchisees of privatised railways like crowded trains. It is more profitable to run crowded trains than half-empty trains, so if as many people as possible are crammed on to fewer trains, more profit is made.
James Morris
The hon. Gentleman talks about capacity between London and Birmingham, but HS2 addresses capacity around Birmingham. Commuter traffic has increased by about 20% in and around Birmingham—a capacity issue that HS2 will address. It is not just about capacity between London and Birmingham.
Kelvin Hopkins
I would like to explore the hon. Gentleman’s argument further. I would have thought that was a local transport matter and that we need more investment in local transport, not HS2.
James Morris
The development of HS2 will free up capacity on the west coast main line and on the radial routes serving Birmingham. That is an important benefit of increasing capacity with HS2.
Kelvin Hopkins
I am convinced that elsewhere on the network train frequencies and train paths are the problem. We have far too few trains on the existing network, and we could run many more trains much more quickly. The only real tight capacity is between London and Birmingham. Beyond that it is not difficult.
I do not want to speak for too long, but I want to mention other routes. In 1990, British Rail ran a test train from London to Edinburgh on the east coast main line. They cleared the line of everything else, ran the train straight through with a two-minute stop at Newcastle, and did the journey in three and a half hours—two minutes faster than the original time proposed for HS2.
Mark Lazarowicz
Is not the answer to my hon. Friend’s objection the fact that, as he said, they cleared the line of everything else? The point is that we cannot just clear the line of everything else.
Kelvin Hopkins
Perhaps my hon. Friend will allow me to continue. Clearing the lines is obviously not possible all the time, but upgrading the line so that we can have through trains is not difficult. [Hon. Members: “It is!”] I have specifics. We need to double the viaduct north of Welwyn, and four-track the line between Huntingdon and Peterborough. We need flyovers at Peterborough and Newark, and we could then have non-stop trains straight through to Edinburgh if we wished. The train would have to slow down at Newcastle and York, but by and large the journey could be done in three and a half hours maximum. That is the east coast main line.
As we know, the midlands main line is going to be electrified, and we also want it to improve. With some track remodelling at Leicester and Derby we could make the trains run faster there. We need to straighten out the line at Market Harborough and restore the straighter line that used to exist, and we must take freight traffic off those three lines. That is the key to more train paths, because if we can take all the freight off those lines, we will not have a problem. To do that, however, we need an alternative. We have such an alternative: a GB freight route, which I have been promoting for some years with colleagues from the railway industry. We have a detailed scheme, carefully worked out and costed, to build a dedicated freight line from the channel tunnel to Glasgow, linking all the main conurbations of Britain, and capable of taking lorries on trains. We need to take freight off the road—and off the main lines, of course, but 80% of freight travels by lorry, not by container or other means. To get lorries on trains is crucial to modal shift, and to do that we need a gauge capacity that is capable of taking lorries on trains.
Nadine Dorries
The hon. Gentleman is incredibly generous in giving way a second time. Will he say why he feels that his proposal—which, knowing his interest in this subject over many years, I have no doubt is well thought out and accurate—has not been considered? Why is HS2 on the drawing board if the hon. Gentleman’s proposal is less invasive and more cost effective?
Kelvin Hopkins
I thank the hon. Lady—my close neighbour—for her question. We took a team of 15 people, including rail constructers, and representatives from Eurotunnel and the supermarkets, to meet Geoff Hoon when he was Secretary of State for Transport. It was clear they were worried that our scheme might conflict with HS2, not because it would take up the same track, but because it might remove freight from the railway lines and make the case for HS2 weaker. We argued that HS2 could go ahead if it was thought essential, but that a GB freight route is much more vital to Britain’s economy than HS2 has ever been. What is the total cost of the scheme? A generous figure, based on outturn costs for HS1, would, we think, be less than £6 billion—a tiny fraction of HS2.
Mr Marcus Jones (Nuneaton) (Con)
The hon. Gentleman has mentioned various lines, links between the west coast and east coast main lines and so on, but he has not mentioned the Trent Valley spur on the west coast main line, on which Nuneaton station in my constituency sits. That is an extremely important junction, and the hon. Gentleman’s proposals will not do anything to help capacity there or improve fast services from Nuneaton, which HS2 would do.
Kelvin Hopkins
I think I mentioned that on other lines there is no problem with capacity, provided we are prepared to increase train frequencies. We do not do that, however, because it is not profitable to do so while private franchisees can make more profit by running fewer trains with more people on them—very simple. The rest of the railway network clearly needs heavy investment, and Network Rail is undertaking a lot of that. This specific scheme would solve many problems and be a fraction of the cost of HS2. Indeed, upgrading the other lines I have suggested would solve almost all the capacity problems that we are now facing.
I am a passionate believer in railways, but if we are serious about them we must invest in dedicated rail-freight capacity, as I have suggested. At the moment the continent of Europe is building large rail-freight capacity right across the continent; indeed, trains can go from China to Europe even now. We will miss out on that if we cannot transport lorries on trains. We must be able to put lorry trailers on trains, or we will not see a shift from road to rail and the rest of Europe will leave us behind. For the sake of our economy, we must invest heavily in dedicated rail freight that is capable of taking lorries on trains.
Eric Ollerenshaw
It is a pleasure to be called in this debate and to follow the hon. Member for Luton North (Kelvin Hopkins) who has obviously thought the issue through. Some of his proposals are quite interesting, but the fact of the matter is that the success of privatisation and competition means that we will need the capacity—we might need the hon. Gentleman’s suggestions on top of HS2.
I will support amendment 17, and I thank Ministers for finally including the Y route in the Bill. Two years ago when this scheme was first suggested, there was a great debate between Ministers and civil servants about whether we should build a line just to Birmingham, and a separate one to Manchester and Leeds. I am really grateful to Ministers that the Bill includes London to Birmingham, East Midlands, Sheffield, Leeds and Manchester. I would of course suggest that the left side of the Y could be built faster and quicker, and would be far better, and I agree with the right hon. Member for East Ham (Stephen Timms) that we need to look seriously at the connection. International business men and foreign tourists will want to get on trains in Europe, bypass London and go straight beyond Manchester on to the spur to get to central, rural Lancashire and see the delights available. The sooner we can get that done, the better.
Mrs Gillan
If HS2 is going to be built, will my hon. Friend support my suggestion that it is started in the north? That would enable the Howard Davies commission to report, we could look at airport capacity in the south, and my hon. Friend would get his wish much quicker because connectivity among northern cities could be established.
Eric Ollerenshaw
I thank my right hon. Friend for that intervention. I always thought that was my suggestion, but never mind. I do not know how the engineering will be done—I assume it will start in many different points and I agree with my right hon. Friend. One of my earliest interventions in a debate on this issue—two years ago, I think—was to suggest that we start construction now in Glasgow and Edinburgh, while the southern counties make up their minds which back garden HS2 is going to go through.
Mr Brian Binley (Northampton South) (Con)
Is not the fact of the matter that the real bottleneck is Birmingham? If we follow the suggestion that we start the project from the north, Birmingham will become an absolute nonsense in terms of railway transport.
Eric Ollerenshaw
I thank my right hon. Friend for bringing us back to reality—[Interruption.] Sorry, he is my hon. Friend, soon to be right hon. Friend.
We must be serious on capacity. I and fellow Lancashire Members have been fighting for some time for a direct train service from London Euston to Blackpool. We had the agreement of Virgin, and a cross-party group was involved, including me, my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) and the hon. Member for Blackpool South (Mr Marsden). We thought we were there, but only a month ago, Network Rail said, “We cannot put on two direct trains per day from Euston to Blackpool because the line cannot cope.”
Mr Straw
I confirm what the hon. Gentleman says, although I would much prefer all trains to turn right at Preston to go to Blackburn. The truth is we all have an interest in the prosperity of Lancashire as a whole. I would like the line to start from the north, but all the economic arguments say that it should start from the south. Does he accept that the benefit of the reduction in journey time to Preston is one of the best in the plans for the area? The journey time is improved by 44 minutes—it is cut to an hour and a half—which will have a dramatic impact not only on Preston and central Lancashire, but on the whole county.
Eric Ollerenshaw
Lancaster is not on the line yet—it might be eventually, and I might stand here in future asking for a stop there—but we will reap the benefit, as the right hon. Gentleman says. The spur line that will be built means that high-speed trains will enter the normal west coast main line just above Wigan. We will enjoy the benefits of that service, which will be fantastic for the economy of our area.
I am grateful to my right hon. Friend the Member for Chelmsford (Mr Burns), the previous Minister. I congratulate him on his incredible speech and I am grateful for the support he has provided all the way through the process to get the Bill right.
Another issue is the north-south balance. People in some areas of the north ask why we are spending that money. I am grateful for what appears to be an outbreak of political consensus. Some Government Members and some northern Members were worried that the consensus would break down, but from what right hon. and hon. Opposition Members have said today, it looks like the consensus is restored, for which I am grateful.
Charlie Elphicke
I, too, am pleased to hear of consensus. Does my hon. Friend share my concern at the comments of the shadow Chancellor, who says that the money would be better spent on roads, cross-country rail, affordable houses, hospitals and schools rather on important and essential infrastructure for our children and grandchildren?
Eric Ollerenshaw
I am tempted to go down that line, but, given the outbreak of consensus, I will stick with that. To be fair, northern MPs of every party have sat on the all-party parliamentary group on rail in the north, and fought together to get the northern hub from the Government—an £800 million completed deal. They have fought together for electrification of the connection between Liverpool, Manchester and Sheffield. Southern and London MPs should realise that, on the current system, I can get to London quicker than I can get to Birmingham, Sheffield or Leeds. That must be ridiculous in the 21st century. The Bill is part and parcel of such connectivity.
Mr Betts
I reassure the hon. Gentleman that, in parts of the north such as Sheffield, the consensus has never broken. We have always been firmly in favour in principle. The city’s MPs, the city council—unanimously —and the chamber of commerce, and the local enterprise partnership support high-speed rail as a matter of principle.
Eric Ollerenshaw
I would assume nothing less, having worked with the hon. Gentleman and fellow northern MPs to get that extra investment. To be fair, the Government have delivered in the non-high speed section across the piece. In my small patch, they have agreed to electrification from Blackpool to Preston. Only a few months ago, nearly £1 million was spent on Lancaster station to enable trains to turn round. All those improvements are happening as I speak. They are all part of the connectivity in the Bill, which provides preparatory expenditure for the
“network referred to in subsection (1)”
and expenditure on the network that
“connects with the existing railway transport network.”
For me, and for parts of the north where the high-speed rail will not reach, that is the key to our support for the Bill.
I am grateful for the cross-party support, but some hon. Members rightly have concerns in their constituencies. I ask them to look at the proposals in the context of the north-south situation. Currently, it seems to my constituents that, when London demands something, things suddenly happen. Perhaps that is an exaggeration, but Crossrail cost £16 billion, and nearly £6 billion has been spent on Thameslink—we will take its second-class trains, which will apparently be marvellous for us.
Nick de Bois (Enfield North) (Con)
If only it were so easy for London! It has taken 14 years to get investment on the Liverpool street east coast line. I am very grateful to Ministers for it, but it was not provided instantly.
Eric Ollerenshaw
That could be a benefit of having a Conservative London Mayor. From my perspective in Lancashire, I see that the Olympics cost £9 billion; there are continual tube upgrades; I do not know how much is spent on subsidising bus fares in London; HS1 into London cost £6 billion; we are immediately talking about Crossrail 2. I am not complaining—they are all marvellous things.
Mr MacNeil
I am enjoying the hon. Gentleman’s broadcast on behalf of the Lancashire national party. Perhaps there will be a letter to Scotland asking to come and join us. Do not the spend on high-speed rail and the debate it generates pale into insignificance compared with the money we spend in the blink of an eye on nuclear weapons? At the very least, the spend on high-speed rail will leave something tangible in the country. That cannot be said of some of our spending.
Eric Ollerenshaw
I assumed we were already joined to Scotland. That could be an exaggeration—[Laughter.] For some of my constituents, it is not an exaggeration.
For coalition Members, one key thing was to rebalance the economy of this country. For me, high-speed rail is a key part of that. I am grateful for Ministers’ work in getting us this far on the Y shape. I wish we were already into a third high-speed rail or whatever, but High Speed 2 is fundamental to our commitment to deliver a rebalanced economy between the regions and London. I will support the Bill tonight.
Mark Lazarowicz
A number of amendments in the group deal with the extension of HS2 to Scotland. Unsurprisingly, I shall concentrate my remarks on the case for the building of HS2 and the benefits it will bring to Scotland and my city of Edinburgh.
It is patently clear that the improvement to the railway system that HS2 will deliver will benefit Scotland. At the moment, we suffer from capacity problems further south on the rail network. Unless something is done to deal with them, as rail demand increases, journey times and railway services to Scotland will be affected. We will obviously benefit from the reduction of 45 minutes that will be brought about by HS2, and I hope that further reductions will be achieved in the fullness of time.
We will also benefit from the way in which HS2 will help to rebalance the economy towards the north of Britain. The development of HS2 will lead to a reduction in the pressure for growth in domestic air travel, which will have other advantages. Extending high-speed rail to the points proposed by HS2 and beyond will also improve the business case for high-speed. All the evidence suggests that the business case for the improvements further south will be strengthened by extending HS2 to the points currently provided for and beyond to Scotland as well.
Andrew Bridgen
The hon. Gentleman is obviously very keen on HS2, but can he explain why Lord Prescott has called the project “the great northern con”?
Mark Lazarowicz
I did not hear those comments. Front Benchers will put forward the Labour position on the matter, and I am pleased that this high-speed rail project was started under the Labour Government of which Lord Prescott was a member.
The case for HS2 is overwhelming, and that is why we have seen a wide degree of political consensus across the parties in Scotland and certainly in my city. It is a project that has the support of the business community, the local authority and practically all political parties in Edinburgh.
Mark Lazarowicz
Interestingly, in Scotland, it is not only those communities and councils that would directly benefit from the high-speed line that are in favour. Communities further north recognise that, although they might not get a direct benefit, it would still be beneficial overall to the Scottish economy. That is the kind of constructive approach that other communities not directly served by the line should note and use as the basis for their approach to the development of HS2.
One of my concerns was the possible temptation to extend the line as far as Birmingham and never any further north. I therefore welcome the commitment in the Bill to go further north in England and the possibility that the line will go even further than outlined in the HS2 documents. I will look for any commitment for high-speed rail to go beyond the current terminus points for HS2. I would also ask why we have to accept a 20-year programme for high-speed rail to go from London to York and somewhere near Wigan when other countries seem to manage to do it much faster than we do. I hope that that issue can be addressed in the preparations for the scheme over the next few months and years.
Mr Goodwill
I can confirm that our new Minister, Baroness Kramer, will be in Scotland tomorrow and we will no doubt hear more on that subject then.
Mark Lazarowicz
I am grateful for that update, which has been circulating over the last hour or so as the information has reached the public domain. I presume that Baroness Kramer will not announce that high-speed is coming to Scotland, but I am looking forward to some positive announcements tomorrow. There is an opportunity here for the Scottish Government—of whatever colour, as we are obviously talking about a long-term process—to work with the UK Government. It is recognised that it will be possible to do some work on high-speed rail in Scotland, perhaps to link Edinburgh and Glasgow but also to provide the basis for a route further south. Although we cannot immediately have a high-speed route all the way from Edinburgh and Glasgow to London, other sections of high-speed rail would certainly benefit the Scottish economy. Just as the business case for high-speed rail further south is strengthened by bringing into it business from Scotland, any high-speed rail in Scotland that would bring passengers into the GB-wide high-speed system would be beneficial for the rest of the country.
I understand why those communities that will not be served directly by the line, especially those that currently have a good rail service, will be concerned that they could lose out as a result of HS2 being constructed. The answer for those communities is to engage as actively as they can with central Government and neighbouring local authorities to try to ensure that they put the case to get the best benefits. It is also important that connectivity is examined, the point of the amendment tabled by my hon. Friends on the Opposition Front Bench.
It is important for the Government, and for Front Benchers of all colours, to use the opportunity of developing HS2 to rebuild the vision for rail in the country as a whole. HS2 is not just a question of trains running on the high-speed line and then going no further; they can serve other destinations in the way they will serve Edinburgh and Glasgow. On the continent, high-speed trains do not just run on high-speed lines; they serve other communities too. That is something we should aim for in Britain.
The case for high-speed developments beyond HS2 is powerful. I understand why a Government would not want to start putting down lines on a map to other parts of Britain, because that would set off scare stories about costs, but the points made by the right hon. Member for Chelmsford (Mr Burns) on possible development should not be lost or forgotten—the lines to Scotland and routes to the north-east of England in particular. There are clear capacity problems between Yorkshire and the north-east of England and they will need to be on the agenda at some stage.
I started my comments by referring to the amendments on Scotland. The amendments tabled by the right hon. Member for Chesham and Amersham (Mrs Gillan) and the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) are superfluous. The Scottish Government have accepted the Bill in its current form. The Scottish Parliament has passed the relevant Sewel motion endorsing the proposals in the Bill. I do not always agree with the current Scottish Government and Scottish Parliament, but on this occasion if it is good enough for them, it should be good enough for this House. I will not support the amendments, as they do not take the debate any further. We have good proposals that have achieved broad consensus across the House. I hope we can continue to proceed in that fashion.
Stephen Barclay
I shall speak to amendment 17 and, in particular, to the costs associated with connectivity.
On Sunday, it was my daughter’s third birthday. As the list of presents she was hoping to receive grew ever longer, I had to remind her that we did not have a magic money tree in the garden. Her response, quick as a flash, was to say, “Why don’t you plant one?” When we look at amendment 17 and consider the remarks at the beginning of the debate from the Chair of the Transport Committee, the hon. Member for Liverpool, Riverside (Mrs Ellman), we need to reflect on the reality of a budget set at £42.6 billion—this seems to be used interchangeably with the spending envelope, albeit that it appears to have now grown to a £50 billion cap—that does not include the changes in design referred to in the powerful speech from the right hon. Member for East Ham (Stephen Timms).
I want to draw hon. Members’ attention to the remarks that David Prout made to the Public Accounts Committee. One might have expected the contingency to have anticipated changes in design costs. Of the £50 billion cap, £21 billion is currently unspecified. More than £14 billion includes dealing with optimism bias and risk inflation—the initial 10% on that £15 billion figure—and then on top of that there is a further contingency of more than £4 billion for phase 1. Nowhere do the figures address changes to design, yet many of hon. Members’ remarks have been based on exactly that premise. I predict there will be public campaigns in Camden where people will say, “If we are going to have High Speed 2, let us connect it to High Speed 1 in a far better way.” Dare I say it, but there may be one or two well-connected opinion-formers in north London who will help that campaign. Yet David Prout said:
“The contingency would not include major changes in scope, for example, that the Select Committee might require. If the Select Committee requires an additional station”—
as some in Sheffield are hoping for—
“that is not included in the contingency. If it required 20 more miles of tunnelling”—
as the people of east Cheshire are hoping to secure—
“that is not included in the contingency. What we would expect to include in the contingency are the more minor adjustments in Select Committee to mitigate environmental impact.”
Those are the very environmental issues on which we still do not have a report.
Damian Collins
Does my hon. Friend agree that local government could also consider some of these issues? Kent county council is thinking of using money from the regional growth fund to upgrade the railway connection from the high-speed rail point in Ashford through Canterbury to Manston airport. Contributions could come from other pots of public money besides those found centrally by the Department for Transport.
Stephen Barclay
Indeed. That brings me to the distorting effect at the heart of the remarks made by my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) and the paradox that the scheme will divert more funding to London.
Stephen Barclay
I will, but before doing so, may I thank my right hon. Friend, who, throughout his time as Minister, was most courteous and responsive? I take his intervention with pleasure.
Mr Burns
I am grateful to my hon. Friend and I hope my intervention does not spoil that record. Is he taking into account the fact that some of the changes, particularly to phase 1, will actually save money? For example, the decision to tunnel around Hanger lane in west London will be cheaper than the original overground proposal, leaving us with money for swings and roundabouts.
Stephen Barclay
Of course, there will be some give and take. My hon. Friend the Member for Warrington South (David Mowat) highlighted the issues involved, but let us consider, for example, the Heathrow spur, on which we have had interventions. If Howard Davies decides to go with a hub airport at Heathrow—and one would think it logical for HS2 to connect to it—the cost of that is not in this budget, and neither is the cost of the connection in Camden, so the cost of tunnelling and the additional work that is likely to flow are not in these figures either. I wish, then, to draw the House’s attention to the pressure that is likely to follow from what Donald Rumsfeld would probably refer to as the “known unknowns”, which we know are going to be huge.
Mrs Gillan
My hon. Friend is listing all the items that are not included but which will add to the price of this project. The Government have now indicated their intention to accept the official Opposition’s amendment. I have been looking at some paperwork, and I believe that the cycling lanes in Birmingham, Manchester and Leeds will add up to another £750,000; the light rail construction, if it goes ahead, in Liverpool and Birmingham will cost about £1.6 billion; and if there is a walking programme for the seven cities, that will cost about £750,000. Those projects are all in the infrastructure pipeline, so we are looking at adding between £3 billion and £4 billion just to provide the connectivity to which the Government have agreed.
Stephen Barclay
My right hon. Friend makes a valid point. Inevitably, when large sums are being spent, there will be pressure to leverage it, and already the Government have signalled some tipping towards schemes linked to HS2. For example, they have referred to making cities “HS2 ready”, so it is in the very lexicon they are using.
Mrs Spelman
On a point of clarification about connectivity, local authorities have to take some responsibility as part of their transport plans. The Greater Birmingham and Solihull local enterprise partnership’s top priority is to make a bid to the single regeneration pot for light rail connections to Birmingham airport and the interchange station. When Lord Adonis was promoting high-speed rail, and we were not sure about it in the west midlands, the deal was basically that we would find the funds to build the station. There is a balance between local authority spend and other pots; it should not all come from a single resource.
Stephen Barclay
My right hon. Friend makes a fair point, but it is not the point that I am seeking to make. The £35 billion that has been allocated for control period 5, between 2014 and 2019, referred to in paragraph 18 of the Department’s case, does not cover many of the items on the wish-lists that Members are compiling today.
Andrew Bridgen
I totally agree with my hon. Friend’s analysis: there will be increased pressure on the HS2 mitigation budget for the route, which will put costs up. I put it to him that the only way in which any Government will be able to keep a cap on the cost of HS2 will be drastically to cut back on the compensation scheme for householders who are unduly affected by the project. That would be devastating for my constituents.
Stephen Barclay
I will come to the direct costs in a moment, but my hon. Friend makes a valid point. The Royal Institution of Chartered Surveyors has told me that land prices have gone up threefold in the past decade. Not many households have been compensated so far, but the House of Commons Library informs me that 32 homes have been compensated to date—a very modest sample—and that the average cost per home has been £500,000. I do not know what the cost will be in north London, but I suspect that London house prices are going up quite quickly.
Paul Maynard (Blackpool North and Cleveleys) (Con)
I would not wish to compete with my hon. Friend’s clear expertise in this matter, but has he considered reducing the budget for HS2 by using Old Oak Common as a terminus, thereby avoiding any of the activity in the Camden area that appears to be causing concern financially? That would fit with many European models, in which the terminus is situated outside the city centre and connected to the high-speed and cross-borough links. Has my hon. Friend considered that possibility as part of his investigation?
Stephen Barclay
My hon. Friend is a fellow Lancastrian, and he is a great champion for his constituents. Surely one of the difficulties with opting for out-of-town stations is that it would take people longer to get to where they needed to be. The clue is in the name: high-speed rail. If they travelled to an out-of-town station, they would still need to get into the city centre to complete their door-to-door journey.
Paul Maynard
This is a good opportunity to remind Members that the point of HS2 is to allow people to get to the areas of greatest economic activity, and those are not necessarily within five minutes of Euston station. The benefit of a terminus at Old Oak Common would be an ability to transfer quickly to the City, where the bulk of the economic activity takes place. This is the clear message from all high-speed rail networks around the world.
Stephen Barclay
Of course there is a debate around Old Oak Common, but I must point out the lack of clarity. Clearing a similar site for the Olympics cost £1 billion. Where is the figure for clearing and regenerating the site around Old Oak Common? Transport for London is putting in requests, stating that it is possible to leverage HS2 with better connectivity using Old Oak Common, and I think it is right to do so, but where is that proposal reflected in the figures?
The Chief Secretary to the Treasury made a clear statement on “The Andrew Marr Show” on Sunday. He did not say that the project would be delivered for £42 billion; he said that it would be delivered for less. That was the promise he made. Now we are talking about a cap of £50 billion, so an extra £7 billion has appeared in the space of a few days. In today’s debate, Members are adding their own wish-lists, which will add further to the costs.
Mr Simon Burns
The cost of HS2 is £42.6 billion, within which there is a contingency fund of £14.4 billion. The figure of £50 billion that my hon. Friend has referred to reflects the addition on top of that of £7.1 billion for rolling stock, of which £1.7 billion is the contingency fund. It is not for the building of the railway.
Stephen Barclay
The size and quantum of the contingency points to a lack of detail and of financial discipline in the cost estimates. That is why so much of it is vague.
I started my remarks believing that my time was unlimited, but having been made aware by one of my colleagues that my time is more finite than I originally expected, I shall dramatically shorten my speech and finish with reference to two issues.
First, on direct costs, reading the business case put forward this week, it is difficult to get a sense of the impact of energy prices on construction. We justified the high cost of our nuclear deal last week on the basis of rising energy prices, yet we seem to be quoting the same HS1 energy costs for steel construction for this project. Land prices seem vague. Network Rail still has a 23% efficiency gap. Is it to be a subcontractor? Are we going to fix the governance of Network Rail, which is still out of the scope of shareholders, of the National Audit Office and of freedom of information requests?
Secondly, there seem to be a number of contradictions with this project. If economic growth is as good as the passenger forecasts suggest, will it not put pressure on supplier costs for construction, particularly on a project that will deliver at its peak 40% of construction market work? We need far more transparency on costs.
Frank Dobson
It may interest the hon. Gentleman to know that about 220 households in my constituency will need to be re-housed at the expense of HS2. The authorities were rather shocked to discover that a one-bedroom flat in a block recently built in the locality is currently going for £482,000. Most of the people who need to be re-housed need a family-sized flat.
Stephen Barclay
The right hon. Gentleman brings great expertise to these issues. That takes me back to the reference to a blank cheque: my concern is that the House is being asked to exercise blind faith, which will have a hugely distorting effect on transport schemes elsewhere in the country—as pressure grows, for example, for Crossrail 2 to connect not at Tottenham Court Road, but at Euston. Other schemes in the system, such as the one in my area of Cambridgeshire, will be asset-stripped of what they rightly deserve.
Let me leave the House with the image that we look like someone coming down the platform with five business cases, while the train has already left the station and we are waiting for the announcement of whether we will hit our destination, which will be given next year not by the Government, but by the shadow Chancellor. I do not think that is the right way to proceed. We need to be far more careful with controlling the costs.
Andrew Bridgen
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Question put, That the amendment be made.
Question accordingly negatived.
Amendment made: 17, page 1, line 12, at end insert
‘as well as with such other parts of the transport network (including roads, footpaths, cycleways, airports and light railways) as the Secretary of State considers appropriate.’.— (Mr Goodwill.)
Mrs Gillan
I beg to move amendment 20, page 1, line 12, at end insert—
‘(2A) Expenditure permitted under this Act and in connection with the network (including rolling stock to be used on it) is limited to £50 billion.’.
Madam Deputy Speaker (Dawn Primarolo)
With this it will be convenient to discuss the following:
Amendment 30 , page 1, line 12 , at end insert—
‘(2A) Expenditure under this Act shall be limited to £5 billion.’.
Amendment 15, page 1, line 13, leave out ‘includes’ and insert ‘is restricted to’.
Amendment 21, page 2, line 1, at end insert—
‘(4) No payments in connection with expenditure under this Act shall be made to personal service companies, meaning any body set up for the purposes of allowing an individual or group of individuals to receive payments indirectly, including so as to reduce any part of their tax liability. The Secretary of State shall have power to make rules defining such companies, which shall be laid before and approved by resolution of both Houses of Parliament.’.
Amendment 22, page 2, line 1, at end insert—
‘(4) No bonuses shall be paid to any person working on the network or the preparatory work for it, and the expenditure authorised under this Act does not extend to the payment of any bonus. The Secretary of State shall have power to make rules defining such bonuses, which shall be laid before and approved by resolution of both Houses of Parliament.’.
Amendment 27, page 2, line 2, at end insert
‘For the purposes of Barnett formula spending, the network shall be designated an England-only project.’.
Government amendment 25.
Amendment 8, in clause 2, page 2, line 15, at end insert—
‘(d) the number and value of contracts placed with—
(i) UK companies with fewer than 500 employees,
(ii) UK companies with more than 500 employees, and
(iii) non-UK companies.’.
Amendment 16, page 2, line 15, at end insert—
‘(d) all expenditure in all departments across Government on matters related to the high speed railway transport network.’.
Government amendment 26.
Amendment 6, page 2, line 24, at end add—
‘(6) As soon as is reasonably practicable after preparatory spending ceases the Secretary of State will place before Parliament a final financial report, setting out all spending authorised by this legislation and including equivalent information to that required under subsection (2).’.
Amendment 31, page 2, line 24, at end add—
‘(6) Within six months of Royal Assent the Secretary of State shall present to Parliament an estimate of the expenditure to be incurred under section 1 during the period ending on 31 March 2015.
(7) On or before 30 September 2015 and on the anniversary thereof in each subsequent year the Secretary of State shall present to Parliament an estimate of the expenditure to be incurred under section 1 during the year ending 31 March following the date of such presentation.’.
Mrs Gillan
I am very glad that we managed to get through the preceding group of amendments without a vote. I think it is clear that the Government have not allowed enough time for proper scrutiny of the Bill, and it worries me considerably that a wider audience beyond the House will not understand that we reached that point. I shall therefore try to speak fairly briefly on this group of amendments, although it is one of the most important groups, apart from—if the Government press on with their proposals—the group relating to compensation, which is of great concern to everyone in the House.
HS2 is a huge financial risk. For some time, people—including, I believe, the Information Commissioner—have been pressing for the Government to release the Major Projects Authority report in full, but, as far as I am aware, neither that full report on the implications nor the amber-red report has yet been made available. Certainly neither has been made available to my office.
When I asked the Secretary of State
“if he will publish the report from the Audit and Risk Management Committee presented at the board meeting of HS2 Ltd on 18 July 2013”,
he replied:
“The update from the Audit and Risk Management Committee was given verbally at the meeting. HS2 Ltd does not hold a written report.”—[Official Report, 8 October 2013; Vol. 568, c. 193W.]
In the absence of the transparency that would enable us to read the risk analysis from the Major Projects Authority, and given the Secretary of State’s response to a request for a regular update on financial risk, it is difficult for us to assess whether the Government are sticking to their guns.
In amendment 20, I have sought to provide the cap that everyone is talking about. I had expected Labour Members to table such an amendment, and I am surprised that they did not, because they have made much of the fact that they will not give this project a blank cheque, and that the expenditure can go only so far and no further. Amendment 25—which I think the Government are minded to accept, as two Conservative Members have added their names to it—is limited to some financial reporting, and some crystal ball-gazing on the effect that an underspend or an overspend would have. It reminds me rather of “The Merchant of Venice” in many ways. I think that the Labour party has bottled out completely and remains sitting on the fence, and I do not think that people will forgive it for that.
Steve McCabe
I want the cost to be contained as well, but does it not worry the right hon. Lady that if she presses ahead with her amendment, she will effectively put a cap on transport links to northern cities, in which none of her side was interested when we were talking about London and south-east developments?
Mrs Gillan
I do not think that that is true at all. I think that what I am doing is giving Members—such as my right hon. Friend the Member for Chelmsford (Mr Burns)—who claim that the project will come in at bang on £42.6 billion, or indeed less, an opportunity to enshrine that in statute.
Mrs Gillan
I would like to make some progress.
What worries me particularly, even in the case of this project, is that it will run out of money. Infrastructure projects have a very unfortunate history, both in this country and abroad, and megaprojects—
Mrs Gillan
I have already said that I will not.
Mega-projects of this sort are subject to great risk, and almost never fulfil their promise. The passenger numbers never equal those that were predicted, and the costs always exceed those predicted. What will happen if this Government, or any Government of any complexion, start to run out of money and see the bills going up? The contingency reserve may not be enough, and what will suffer is what will come at the end of this project.
We make much of protecting our environment—Members in all parts of the House make much of our green credentials—but we should consider what the reinstatement of our countryside will cost. We should consider the ancient woodlands that have been destroyed, and the work that will be necessary for some time to maintain biodiversity, mitigate noise, and offset the loss of some of our amenities. I do not agree that compensation will suffer. The Government seem perfectly capable of paying compensation with or without this Bill. The sum of compensation paid to date is £52 million, so I think that that is irrelevant to whether this Bill goes through or not. I worry greatly about that, but the genesis of this project is the fact that in March 2010 the cost for the whole route was £30 billion; by February 2011 it had risen to £33 billion; by January 2012 it had risen to £33.4 billion; and we are now at £42.6 billion without the rolling stock being included.
Mrs Gillan
I want Members to make their own points, and I am just going to make the points I need to make on my amendments.
Mrs Spelman
I am very grateful to my right hon. Friend, because I am worried that, given the time, we may not get to my amendments about biodiversity offsetting. I received a letter from the Secretary of State for Environment, Food and Rural Affairs on 20 October saying DEFRA and Natural England are currently working with HS2
“on a proposed methodology for accounting for habitats.”
That is for biodiversity offsetting, showing clearly the funds and methodology needed to offset the loss of green space. I am sure she and I very much want to see that.
Mrs Gillan
I am pleased I let my right hon. Friend make that intervention, because I, too, am worried.
Mrs Gillan
How could I resist my right hon. Friend the Member for Chelmsford?
Mr Burns
I am very grateful to my right hon. Friend. May I seek clarification from her because I am very concerned? This Bill is authorising the spending of money on the preparation work for building HS2. In one of her amendments, she is trying to limit that spending on the preparatory work to £50 billion, which seems far more, to the Nth degree, than the Government would ever want to spend on preparatory work. Surely there is something slightly wrong with this amendment.
Mrs Gillan
I do not think there is anything wrong with this amendment at all. It was a probing amendment, and just as the Government managed to slip their name under the official Opposition’s leading name on one amendment, I hoped that the Opposition might slip their name under mine as it contains the cap they wanted. Also, if we had had some adjustments to this Bill, it would have encompassed the spend. If we are going to have a money Bill, it should not just cover the open-ended preparatory work—now my right hon. Friend is wanting to have his cake and eat it—but should cover the money that is going to be spent on the project. After all, he has been arguing for—[Interruption.] Well, we know the hybrid Bill is coming. It will be a gargantuan monster of a Bill that will take up more time in this House than any other Bill has ever done.
Amendment 15 seeks to restrict the preparatory expenditure. I am sure my Front-Bench colleagues will say that these amendments are contradictory, but they are probing amendments. I did not serve on the Bill Committee so this is the opportunity for me to get these matters discussed. I think we need to restrict the expenditure to those items that are on the face of the Bill. Currently, the word “includes” in clause 1(3) means that the Bill is the blank cheque to which I referred earlier. I think that, in the Bill’s current form, there is no restriction. I am sure the Government will not accept any restriction, but they would have been in a much better place if they had done so.
I shall move on now, as I know many other Members want to speak. There are colleagues who are not in the House today but whom I have consulted in Buckinghamshire. The Attorney-General, my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve), knows his residents at Denham are wholly opposed to this proposal, and I know that the Minister for Europe, my right hon. Friend the Member for Aylesbury (Mr Lidington), is continuing to work tirelessly within Government to put to the most senior Ministers the arguments and interests of his constituency. He has asked me to point out today that there are serious mitigation issues both in Wendover and Aylesbury that are still not resolved, yet the Department’s current plans make no adequate provision either for the measures to reduce noise or for fair compensation. I am also concerned for Mr Speaker, whose constituents in Buckingham continue to express overwhelming opposition.
This money Bill writes a blank cheque for the Government, or it purports to write a blank cheque and give the Government a fig leaf to cover their embarrassment about the hundreds of millions they have already spent and the £1 billion they will spend by the time we reach the next election. I was, however, hoping that we could regularise some of the terms and conditions of the people working on this project, which is the aim of amendments 21 and 22.
Amendment 21 deals with payments made through service companies. I do not know how many people in this House pay close attention to this matter, but there has certainly been a lot of fuss about service companies, particularly in connection with the BBC and others. When I asked a fairly innocuous parliamentary question, I was surprised to find out that in the past 12 months HS2 Ltd has engaged 48 people paid through personal service companies. Apparently, eight of those people have either left the company or transferred to the payroll, and a further 12 will have left or transferred by 31 December. That means that there will still be many people who are paid through personal service companies. Apparently, the Department was carrying out an assurance process at the time to ensure that all those people were compliant with their tax and national insurance obligations, and the good news is that the response was that they were—none was not compliant. But on a Government project of this sort, being paid for from the public purse, people should be paid as civil servants and they should not be in receipt of bonuses.
Much has been made about bonuses in and around this House in connection with many other professions. MPs do not get a bonus, and neither would I be asking for one as an MP, but I was shocked to find that between 2011 and 2013 people in the Department for Transport, including people working on HS2 Ltd, have been paid bonuses of more than £3 million between them. I admit that many of those bonuses will be small, but we should still put our money where our mouth is and the practice should cease. I also understand that HS2 Ltd, which was operating bonus schemes, is no longer doing so for its employees. I am pleased about that, because I do not think we can say one thing in one area of government and practise a different set of procedures in another.
Stephen Barclay
When my right hon. Friend tabled that parliamentary question, did she get clarification of whether any of those on personal service contracts were ex-staff of the Department for Transport and whether they had received any pay-off from the Department?
Mrs Gillan
No, I did not, but that is the sort of fine detail of the finance that we will need to look at, as it should be examined. One thing I have been trying to have a look at is Mr Higgins’s new employment contract, which I understand does not start until January. I have been denied sight of that, but I wanted to see what performance bonuses, or any other inducement or performance-related measure, it contained.
Amendment 27, tabled by the—[Interruption.] Forgive me, a year is a long time, and I cannot recall the constituency.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Carmarthen East and Dinefwr.
Mrs Gillan
As a former Secretary of State for Wales, I am particularly concerned—[Laughter.] You can’t know everything, can you, Madam Deputy Speaker? I do apologise.
As a former Welsh Secretary, I am concerned that this railway, currently planned only to be in England, needs also to make sure that it bears the costs of “Barnettising” that expenditure, particularly for Wales, but also for Scotland, if the railway does not go there, and for Northern Ireland. That is particularly the case in the light of the PLANET Long Distance model—PLD—zone information in the KPMG report, which showed that places like Neath, Port Talbot and Newport completely miss out. I am sure the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) shares my sadness that there are no Welsh Members on the Opposition Benches to plead the case for Wales. I am rather disappointed that they are not here because it shows that they are not interested in pressing the case for Wales.
Andrew Bridgen
Does my right hon. Friend have any estimate of the cost of Barnettisation on this project and what that would add to the total cost of HS2?
Madam Deputy Speaker (Dawn Primarolo)
Order. Before the right hon. Lady resumes her comments, may I gently remind her that she has been speaking for some 16 minutes? The knife comes down at 4 o’clock and there are many other Members who would like to speak on this group of amendments, so I hope she might be coming to a conclusion.
Mrs Gillan
Indeed, Madam Deputy Speaker, I am.
Finally, on my amendment 16, I say, “Mark my words”: the cost to the taxpayer, the council tax payer and other Departments will rise and rise. The costs in Birmingham, Manchester and Liverpool just of promoting the project show that there is public money going into the project which is not being accounted for, particularly in the Bill.
Will the Minister include and publish the costs that have been incurred and will be incurred on a regular basis in other Departments, such as the Department for Communities and Local Government, the Department of Energy and Climate Change, the Department for Environment, Food and Rural Affairs and the Treasury? If we do not get to see those costs, the Government will be concealing the real cost of HS2, which should be taken into consideration.
Mr Straw
I shall speak particularly to amendment 25, which has the support of my Front Bench and, I am pleased to say, of the Government as well. I was a member of the Cabinet in 2009 which first gave formal approval to HS2. That was endorsed in the run-up to the general election by all-party agreement. Although I have taken a close interest in the project ever since, I have seen nothing in the intervening period to persuade me to withdraw my support for it.
The case is clear. First, thanks to a dramatic increase in the usage of the railways in the past 15 years—I am very proud of Labour’s record—we face a situation where, for both freight and passengers, the existing lines cannot cope. As someone who for years has had to endure the west coast main line, I have to say that large sums of money were spent during that period—one of the reasons why there was so little electrification—on patch and mend to that line and on quadrupling the line in the Trent valley, with very little overall benefit. If folk in the House and outside think there is an alternative to HS2, they are right that there is, but it is a worse alternative, with more disruption and greater cost.
The second reason why I strongly support HS2 is that it will help to rebalance our economies. I have listened to some fancy arguments in the House, but among the fanciest are those that I have heard today and from colleagues in the Tea Room—that if we put in this investment, it will somehow suck more economic activity into London. It is worth turning that argument on its head or, as the Treasury likes to say, looking at the counterfactual. If that were the case, it would be overwhelmingly an argument for reducing the capacity of the railways north-south and for slowing up the lines. It is simple nonsense.
Mr Straw
I will in a moment, but I am conscious that others want to get in before the knife.
I come to the issue of the costs. No one is in favour of providing blank cheques for schemes, but I have seen no evidence that a blank cheque is being provided for this scheme. What we are talking about is £42 billion until 2033, which works out at just over £2 billion a year. That is a lot of money but, in the grand scheme of things, including infrastructure investment, it is not huge, particularly when compared with the massive amount of money that has rightly been put in by successive Governments to improve infrastructure in London and the south-east. I would be happy to support that, but it is time that the investment went elsewhere.
Frank Dobson
Does my right hon. Friend feel that some people might be a bit suspicious that a contingency sum of £14 billion closely resembles a blank cheque?
Andrew Bridgen
The right hon. Gentleman is obviously an advocate of HS2, and that can be his view, but will he explain the discrepancy between his view and that of the noble Lord Mandelson, who was also a member of the previous Labour Government?
Mr Straw
I have certainly never wished to speak for my right hon. and noble Friend Lord Mandelson. All I can report as a matter of fact is that my right hon. and noble Friend was in the same Cabinet Room in 2009 when the project was endorsed. If he has had some reverse damascene conversion, it is for him to explain that, not me.
Let me turn to the issue of costs. I was chairman of the Cabinet Committee on the Olympics for its first four years. The first bid was put in at about £2.5 billion and the ultimate cost came out at £9 billion. Let me explain why there is no direct comparison. The bid was not based on the contingency but on a prayer that we would win it. Not a huge amount of effort was put into costing it because, frankly, very few people ever thought we would win. It was only after we had won on 6 July 2005 that the serious work began and led, quite properly, by the Treasury, we considered the contingencies.
I say to my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) that a contingency of such a size is sensible, because there needs to be an optimism bias. That was what was put into the budget for the Olympics by the man who is now Sir David Higgins, who turned that project around. Contrary to what was said by the right hon. Member for Chesham and Amersham (Mrs Gillan), the Olympics as an infrastructure project came in not only on time, because it had to, but on budget. Those who are worried about a blank cheque—any Chancellor or shadow Chancellor needs to be—should be reassured that Sir David Higgins is now in charge. I have every confidence in him, not only from his time running this operation and the Olympics, but from his time at Network Rail. He got costs down and took a close interest in the detail of the projects.
Frank Dobson
Can my right hon. Friend confirm that Sir David Higgins spent all the contingency sum on the Olympics?
Mr Straw
Not quite, I think. There were reasons for that, however, and for the contingencies. These are very large projects. There were also contingencies for Crossrail, for Thameslink and for the expansion of Euston in 1968 and I do not recall Members who would have benefited directly from those projects raising issues about contingencies at the time.
Jake Berry (Rossendale and Darwen) (Con)
The right hon. Gentleman and I worked with David Higgins on the improvements to the Blackburn-Manchester rail line, which serves both our constituencies. Given the right hon. Gentleman’s experience with that project, does he regret the fact that a long-term view, which we found we needed, is not being taken by those on his own Front Bench, who seem to be holding a question mark over the future of HS2?
Mr Straw
The hon. Gentleman is absolutely right that he and I have had direct experience of dealing with Sir David Higgins on a micro-level as well as a macro-level, and very impressive he is too. I do not criticise anybody who either holds or might hold the purse strings for wanting to ensure that we bear down on costs, but those on my Front Bench and the whole of the parliamentary Labour party, as has been made clear, support the project and the Bill. That is why, if a Division is called at 5 o’clock, we will be in the Lobby with the Government in support of the Third Reading of the Bill. Let me make that clear. We started this project and I hope very much that the Labour party is in a position to ensure that we finish it.
Steve McCabe
Does my right hon. Friend agree that it might help those who want to support the project and perhaps make it easier for the softer opponents if the contingency figure was reduced? At a third of the projected total cost, it seems remarkably high, and it might risk inflating the project’s costs.
Mr Straw
I know about optimism bias contingency costs because I faced exactly the same situation when I chaired the Cabinet Committee for the Olympics. My initial reaction was the same as that of my hon. Friend and my right hon. Friend the Member for Holborn and St Pancras: “Why on earth are we building in a contingency reserve on this scale?” I got the Treasury officials in and cross-examined them—I bumped into one the other day who remembers it—but in the end I was convinced that what was proposed was prudent, to use an adjective that used to be owned by the Labour party, and still is. Contingency reserves of that size are sensible and realistic. Yes, the cost is £42 billion, but that is over 20 years, so we are looking at a cost of about £2 billion a year, of which the optimism bias contingency reserve is about £700 million. In my judgment, such things are manageable.
Mr Straw
I must make some progress.
Of course I understand the concerns of Members on both sides of the House about their constituencies. Were I in their position, I would probably be voicing similar concerns. However, when the grand motorway schemes were being built across the country, including in the Chilterns—the M40 goes right through them—there was no parliamentary process of this kind at all. There were no private Bills; there were private inquiries and compulsory purchase orders, and on it went. Of course there was an argument about the exact route the M40 would take when it went through the escarpment out of the Chilterns and around Oxfordshire, but I do not recall any Member from Buckinghamshire standing up in the House recently to say that building it was a disaster, that the effect on biodiversity was terrible and that we should return the land to the way it was.
Had there been a parliamentary process for the M40, the right hon. Member for Chesham and Amersham can bet her life that such would have been the opposition in the Chilterns—I understand exactly why, because we are all concerned about our own back gardens, including me—that it would never have been built. However, that road, at far greater disruption to the area than any railway will ever cause, has brought benefits to her constituency and county. While she continues to pursue her constituency concerns, I hope that she also recognises that there is a national interest in rebalancing our economy and ensuring that people in the north can get to the south more quickly.
Mrs Gillan
My concern is not only about my constituency, but about how we use taxpayers’ money. I am as keen as the right hon. Gentleman to rebalance the economy between the north and the south; I just do not think that HS2 is the way to do it. The M40 has of course brought benefits, but that does not mean that the damage that will be done to the environment by yet another breach of the area of outstanding natural beauty can be brushed aside, although it is quite obvious that he thinks that the suffering of my constituents and their businesses is a price worth paying.
Mr Straw
My last point is this: far from being brushed aside, the environmental concerns are being taken into account in far greater measure than was ever the case with the motorway schemes. I hope that the Bill goes through this afternoon so that we can then see an all-party consensus behind the project and introduce the hybrid Bill, if possible before the general election.
The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
It is a great pleasure to see you in your place, Madam Deputy Speaker, and a great pleasure and honour to follow the right hon. Member for Blackburn (Mr Straw).
These amendments deal with expenditure, reporting and costs. The Government have set out in a strategic plan the spending plans for High Speed 2, which are £21.4 billion for phase 1 and £21.2 billion for phase 2 —a total cost of £42.6 billion, including £14.4 of contingency. I am convinced that, as the right hon. Gentleman pointed out, that is likely to decline as the date of construction nears. HS2 Ltd has set out a target cost for phase one of £17.16 billion.
The original purpose of the reporting duty on the Government was to give Parliament an opportunity to scrutinise the manner in which we were spending the preparatory expenditure and to get a sense of how we were making progress on the project. Amendment 25 is very much in the spirit of that objective. I am happy to provide the commitment that the Government will ensure that the reporting duty makes information on underspends and overspends explicit.
Managing costs is at the heart of how the Government intend to manage this project.
Stephen Hammond
If I were to do that, as my right hon. Friend the Member for Chelmsford (Mr Burns) has pointed out, I would be making a commitment of £50 billion on the preparatory expenditure. I do not intend that we spend anything like £50 billion on that. As my right hon. Friend said in response to my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan), this Bill is about the preparatory expenditure.
Mr Simon Burns
There seems to be utter confusion about this. The cost of the project is £42.6 billion, with £7.1 billion for the rolling stock, but the Bill is about the preparatory work. It is preposterous to grant, in legislation, the Government of the day £50 billion to spend on preparatory work.
Stephen Hammond
I thank my right hon. Friend for that intervention. He is absolutely correct in his understanding; of course he would be, as he has so skilfully managed the Bill so far.
Stephen Hammond
I am going to make some progress because I think that my hon. Friend is going to refer to amendment 20. If he waits for a moment I will deal with that.
We have always made it clear that HS2 will provide a significant opportunity for vocational skills across the lifetime of the project, giving a real boost to British industry. This Government are committed to raising skill levels and creating an environment for small and medium-sized enterprises to succeed. Amendment 26 would place an obligation on the Government to report on their progress in delivering those opportunities and to demonstrate what we mean when we say that HS2 is an engine for growth. I have always been convinced, as have many Members across the House, that we will be able to do that. HS2 is a generational scheme, and as such we need to make sure we have the right home-grown talent that allows us to deliver it. I am delighted that there is cross-party support for amendments 25 and 26, and I hope that the whole House will be able to support them.
Mr Chope
Will my hon. Friend turn his mind to amendment 30, which seeks to limit the amount of expenditure on preparatory works to £5 billion—a pretty substantial sum, but obviously not as large as £50 billion? Will the Government undertake not to spend more than £5 billion on preparatory works?
Stephen Hammond
I might be prepared to consider that. However, my hon. Friend needs to be absolutely clear that this is about the preparatory works on phases 1 and 2 as opposed to preparatory works for the whole scheme were it to go further and create a network. His amendment does not cover that, and that is why it is unnecessary.
Mr Simon Burns
As I understand it, this Bill relates not only to phases 1 and 2 of current high-speed rail projects, but to phases 3, 4, 5, 6 and 7 of such projects at any time in the next 40 to 60 years. How could the Government of today restrict the amount of money available without knowing the value of money in 40 years’ time?
Stephen Hammond
My right hon. Friend is completely correct. This Bill is about the preparatory expenditure. It is also about not only phases 1 and 2, but the whole network as it may be conceived in the future. It would, therefore, be completely erroneous to restrict ourselves to a limit on preparatory costs, because we do not know the future extent of any network. That is also why I agreed with my right hon. Friend a moment ago that amendment 20 is unnecessary.
I know that the intention of my right hon. Friend the Member for Chesham and Amersham was to put a limit on expenditure and I understand why she wanted to do that, but the amendment does not explicitly address preparatory expenditure, which is what this Bill is about. I note that she said it was a probing amendment.
Mrs Gillan
The Minister knows exactly what my intention was with my amendments. I will not press any of them to a vote, but what is worrying about the Bill is that it is not restricted in any way, shape or form. It is totally open-ended, as my right hon. Friend the Member for Chelmsford (Mr Burns) has just admitted, and this House has no control or say over what moneys will be spent on the preparation, and on the HS2 project itself. That is what I object to and that is where I think the Government have failed.
Stephen Hammond
It is rare that I disagree with my right hon. Friend, but in this case I do. What this Bill does is explicitly place reporting obligations on the Government for the preparatory work. Moreover, it is the hybrid Bill, which my right hon. Friend has mentioned, that will provide the opportunity to scrutinise all stages and costs.
We have created the reporting duty precisely to ensure that Parliament can scrutinise the expenditure and see that we are spending it responsibly. Planned expenditure on design works for the financial year 2013-14 is about £2.5 million, and for 2014-15 it is about £9.2 million.
There are a number of other amendments in this group and I know that other Members want to get in. I sympathise with the spirit of amendment 8, but it does not clarify the exact level that most people recognise as the number of people employed by small and medium-sized enterprises. Moreover, it would restrict a small or medium-sized enterprise that had fewer employees, but that hoped to secure a high-value contract that would result in many UK jobs. The amendment goes beyond the direct nature of the contract.
Stephen Hammond
On amendment 31 and the transparency of the project, I do not believe it is necessary to produce six-monthly reports of spending estimates in addition to the annual reports to which we have already committed. Given what my right hon. Friend the Member for Chesham and Amersham has said, I am sure my hon. Friend the Member for Christchurch (Mr Chope) would not want us to waste money or create bureaucracy just to produce six-monthly reports. Such a requirement would be onerous on the Government.
Stephen Hammond
The Government accept that we need to come to the House to explain our actions and report on our preparatory expenditure. As has been discussed extensively this afternoon, the initial target cost for phase 1 is £17.16 billion.
My right hon. Friend the Member for Chesham and Amersham has tabled amendments on the monitoring of tax avoidance and the payment of bonuses to those who work on High Speed 2. We must manage the costs, but we must balance that with ensuring that the staff reward arrangements attract the right talent. We need to ensure that those who work in the public sector demonstrate the highest standards of integrity and meet their tax obligations.
Following the review of the tax arrangements of public sector appointees last year by the Chief Secretary to the Treasury, all Departments and agencies have a duty to seek assurances about the tax arrangements of their long-term specialists and contractors to ensure that they are paying the right amount of tax. The Government are committed to tackling all forms of tax avoidance and have taken a wide range of measures to close tax loopholes.
It is essential that we guard against the payment of bonuses that are not in line with the Government’s goal of reducing the public sector remuneration package. However, we must ensure that we have the right reward structure in place. We must not put provisions in legislation that would tie the hands of the whole supply chain. I am happy to confirm to my right hon. Friend the Member for Chesham and Amersham that Sir David Higgins will move to High Speed 2 on the same salary that he received at Network Rail and that he has guaranteed that he will not accept any bonuses. I hope that that satisfies her.
I hope that the House will support amendments 25 and 26.
Lilian Greenwood
I am pleased to speak in support of amendment 25, which represents a significant strengthening of the financial reporting requirements in clause 2.
Taxpayers need to know that the costs are being controlled. Under this Government, the budget for HS2 has swelled from £773 million to at least £900 million in this Parliament. The botched design for Euston pushed the cost of that station from £1.2 billion to £1.6 billion, even though some of the features of the design were downgraded. The Government announced in June that, with a sizeable increase in contingency funding, the headline budget for the project had increased by £10 billion to £50.1 billion.
Lilian Greenwood
I am afraid that I am very short of time.
That headline budget includes the costs of construction and procuring rolling stock. That is reflected in amendment 25, which I believe is superior to amendment 20, which has been proposed by the right hon. Member for Chesham and Amersham (Mrs Gillan).
In short, Ministers have failed to keep the costs under control. The rising budget for HS2 has damaged the public perception of the project. It is therefore vital that, under the incoming leadership of Sir David Higgins, financial discipline is imposed. The use of the project’s £14.4 billion contingency fund must be minimised wherever possible. Ministers must ensure that Sir David Higgins has their full backing in that task.
Amendment 25 is designed to ensure that that happens. It will introduce a powerful mechanism to ensure that there is financial responsibility. It will force the Government to announce any overspend of the yearly budget. It will also provide an incentive to identify areas in which costs can be reduced, as was successfully done on the Crossrail project.
Lilian Greenwood
I will not give way at the moment.
Given that the Government have produced annual budgets for the project up to 2020-21, it makes sense to measure progress against that yardstick.
Madam Deputy Speaker (Mrs Eleanor Laing)
We will hear the point of order after 4 o’clock.
Lilian Greenwood
The Government’s hopelessly ambitious timetable to pass the hybrid Bill for phase 1 by the middle of 2015 makes it even more important that we introduce stringent reporting standards. Even Ministers acknowledge that that plan is challenging, and that is putting it mildly. It appears to be certain that spending will continue under the authority of the preparation Bill beyond the general election. If it does, there must be proper reporting requirements in place. In fact, we submitted a similar amendment in Committee, and I am sorry it was deemed unnecessary at the time. I am glad the Government have been persuaded to think again and have accepted our amendment. It will make for a tougher Bill that makes Ministers accountable for bearing down on costs, and it will deliver better value for public investment.
Mr Cash
On a point of order, Madam Deputy Speaker. We have not reached the last group of amendments, which are vital to all the people in my constituency and throughout the country who are affected by the Bill. This point of order is about the travesty of proceedings in relation to the programme motion and all that goes with it.
Madam Deputy Speaker (Mrs Eleanor Laing)
The hon. Gentleman, as ever, makes his point, but as he and the House know, that is not a point of order. The timetabling of discussions on this Bill is a matter for the House.
Madam Deputy Speaker (Mrs Eleanor Laing)
The hon. Gentleman indicates that he wishes to move an amendment that has not been spoken to, and I cannot take his amendment.
Third Reading
Mr McLoughlin
I beg to move, That the Bill be now read the Third time.
Let me begin by thanking all Members who served on the Public Bill Committee. In particular I thank my right hon. Friend the Member for Chelmsford (Mr Burns), not only for his work on the Bill, but also for the hard work that he put into the Department for Transport during his time there. It was a great pleasure to work with him.
For a project as important as this, everyone should have their say—indeed, it sometimes feels as if they do. At the same time, however, we need to move the debate forward, which is what the Bill does. This is the point at which the debate starts moving from “if “ to “when”. The House has already voted overwhelmingly in favour of the principle of a new high-speed, high-capacity rail network. I hope it will do so again this evening because the decisions we take today will benefit our country for decades to come.
Just this week, with the storms that hit the south and east, we have seen how crucial our railways are to national life. When trains are crowded and disrupted, life for hard-working people gets more difficult. That is why the new north-south line is not some expensive luxury.
Mr McLoughlin
I will, but I do so reluctantly because of the number of hon. Members who want to take part in Third Reading.
Mr Cash
I understand why the Secretary of State is reluctant to give way. Throughout the whole of this land, people are deeply disturbed by the manner in which the Bill is being rammed through. Furthermore, as he well knows, the arrangements he has described as benefits are not accepted by my constituents and many other people, nor by the many reports emanating from the Public Accounts Committee and others that demonstrate that HS2 is not a straightforward benefit, and is in fact quite the opposite.
Mr McLoughlin
I know my hon. Friend is not in favour of the new line—he loses no time in telling me that. I dare say that similar comments were made in debates on railways in the House over the centuries. The truth is that the line will be the first line built north of London in 120 years. I understand the concerns of hon. Members whose constituencies the line goes through. I do not dismiss them and have never done so. I want to ensure that we have a fair compensation scheme in place. I believe that the scheme is, without any doubt, right for the future of the UK.
I find it rather ridiculous that I can go from London to Paris on a high-speed train, and that my hon. Friend can go from London to Brussels on a high-speed train—I know he keeps a close eye on what goes on there—but we cannot go from London to Birmingham, Manchester or Leeds on a high-speed train. The time has come for a steep uplift in our transport system.
I should tell my hon. Friend that there is still a long way to go. We must take the hybrid Bill through the Commons. There will be plenty of opportunities to debate it in detail. As the right hon. Member for Blackburn (Mr Straw) said, HS2 will be debated in far more detail than roads that now go through various constituencies when they probably caused greater environmental damage.
Mr McLoughlin
I do not want to take too long because I know many hon. Members want to speak. I will give way—for the last time—to my hon. Friend.
Andrew Bridgen
I thank my right hon. Friend for giving way. It is true that this is a high-speed debate. Does he agree that an hour is completely insufficient parliamentary time for a Third Reading debate on the largest infrastructure project the country has ever seen?
Mr McLoughlin
My hon. Friend has taken part in the Third Reading of many Bills—they have always been hour-long debates. In fact, it is only recently that we have had debates on Third Reading. Back in the days when the right hon. Member for Blackburn was Leader of the House, we sometimes did not have debates on Third Reading because we simply did not have the time. The Government are trying to help everybody we can—[Interruption.] I do not want to get any more partisan now that I have the right hon. Gentleman on side.
The Bill is about helping communities and businesses, and helping the cities of the north and the midlands to compete on equal terms with London. Nobody begrudges the money we are spending on Crossrail or Thameslink. They are huge investments in our capital city, but it is time we looked at what is happening in the rest of the country.
Three important words—room for growth—sum up why the project is so important. They are at the core of the strategic case we published on Tuesday. The responses to the report show the crucial message of growth. The British Chambers of Commerce states:
“This report bolsters the economic case for HS2…HS2 is the only scheme that can transform capacity on Britain’s overstretched railways.”
The CBI has thrown its considerable weight behind the project. It did so because the new line is part of the answer to the infrastructure deficit that faces our country. The leaders of our great cities back HS2. Sir Richard Leese, leader of Manchester city council, has said:
“It’s straightforward and simple. We need more capacity and the only way is through this new network.”
Since 2008, the country has learned some tough lessons, but we must make ourselves more resilient and competitive as an economy. That will not happen if we do not take the long-term decisions on investment and stick to them. Our society is changing, our population is growing, people are travelling more, and demand for inter-city rail travel has doubled in the past 15 years and will continue to increase.
As I have said all along, I welcome suggestions for creating more capacity, but the so-called alternative suggestions from the critics simply do not add up. We have looked at the case for building new motorways and dramatically expanding domestic aviation. Neither does the job. Some people believe we can carry on squeezing more room out of our current railways, patching up our problems. The work we published this week shows that, if we tried to create the capacity we needed by upgrading the three current main north-south lines, we would face 14 years of weekend closures. That is not an alternative to the new line, it is disruption on a nightmare scale.
We are already investing record sums in the existing railway. Network Rail will spend £38.3 billion in its next five-year control period, and the Government have a £73 billion budget for wider transport investment over the next Parliament. Despite all that, we will still need new rail capacity. If one accepts that—and that we need room to grow—there is no choice about how to provide it. As the strategic case makes clear, a new high-speed north-south line is not just the right way, it is the only way.
The new north-south line will be the backbone of Britain. It will have 18 trains an hour, each carrying up to 1,100 passengers, transforming the available space on inter-city lines. As long-distance services transfer to the new line, capacity will be released on the existing network. Of course, not every city across Britain will benefit in the same way, but Network Rail estimates that more than 100 cities and towns could benefit from released capacity. It would mean significantly more commuter services, better connectivity and more routes for rail freight, taking lorries off our most congested roads.
We know that HS2 is the best answer to our transport problems, but as with any large infrastructure scheme, we also know we will face opposition. I respect the fact that some people are concerned about the impact on the places they live, and I respect those with serious proposals for improvements. Already, the environmental impact of the new line has been vastly reduced thanks to such improvements. But I also respect what Sir John Armitt said in his recent report on infrastructure—that big schemes need “broad political consensus” as well as “resolution” from political leaders.
HS2 must be a national project with support across the parties, or in the end it will be nothing. Labour leaders in our great cities across the north and the midlands know that HS2 is right. To those who say that there is no blank cheque, I say that there never has been and there never will be. I know that hon. Members want costs controlled. Here are the facts. The target price for the first phase is £17.16 billion. That is the price for construction agreed with HS2 Ltd. For the whole Y-route, the agreed budget is £42.6 billion, including a contingency of £14.4 billion, which we are determined to bear down on. Sir David Higgins—the man who built the Olympics on time and on budget—will make sure that happens. As the new chairman of HS2, he will bring his penetrating eye and expertise to the task to get the best value for our country.
As the strategic case published this week shows, our updated benefit-cost ratio has fallen slightly from 2.5 to 2.3. We have been open about that, but it means that the business case for the new north-south line is still strong, with more than £2 returned for every £1 invested—about the same as Crossrail and Thameslink, and nobody seems to doubt those projects. In fact, the ratio for HS2 could increase to 4.5 if rail demand continues to rise until 2049.
It is still important to recognise that the benefit-cost ratio cannot take account of unpredictable factors. That was true of the Jubilee line extension in London, for instance, which did not include the 100,000 jobs it now supports at Canary Wharf. It was true for High Speed 1, which did not include benefits from redevelopment at King’s Cross and St Pancras. When I first became a Member of Parliament, King’s Cross and St Pancras were places where people did not want to spend any time if they could possibly get away with it. They would try to turn up just before their train was due to leave. Those stations are now destinations in their own right. People go there and look with amazement at what has happened to the UK’s railway system.
Frank Dobson
I represent not just St Pancras, but Euston and King’s Cross. Does the Secretary of State accept that virtually all the people in my constituency who are now opposed to HS2 were strongly in favour—indeed, the first advocates—of the transformation of St Pancras and the improvements at King’s Cross?
Mr McLoughlin
Of course I do. I am more than happy to meet the right hon. Gentleman to discuss the particular issue of Euston station, because the redevelopment will bring specific problems. But we must also ensure that we get the very best deal for his constituents in the redevelopment of Euston station. I am meeting the leader of Camden council next week, although I do not know if the right hon. Gentleman will be there. I do not discount the concerns of local residents about the work on major infrastructure projects, and we have to take them into account.
Jonathan Edwards
Last week it was disclosed that the Treasury had made a mistake and awarded Barnett consequentials to Wales in the 2015-16 spending round. Subsequently, the Treasury said it would claw the money back in the next spending review and that it did not set a precedent. Will the Secretary of State confirm that there will not be a clawback, that the precedent has now been set and that Wales will have the consequentials? Unless he does so, we will vote against him on Third Reading.
Mr McLoughlin
It would be a brave Secretary of State who started second-guessing the Treasury, and I will not do that now. I understand the hon. Gentleman’s representations and will bear them in mind.
I will briefly explain the next steps. We intend to submit the hybrid Bill before Christmas. In February, the growth taskforce reports. I know the challenges ahead, but also the opportunities. We are not here to patch up our railway once again, only to spend far more later when it turns out that we should have invested properly at the start. It will take determination to strengthen our country. I urge this House to support the Bill. It is our chance to get ahead and to invest in our long-term prosperity.
Mary Creagh (Wakefield) (Lab)
I welcome the Under-Secretary of State for Transport, the hon. Member for Scarborough and Whitby (Mr Goodwill), to his new role, and I look forward to working with him. I pay tribute to my predecessor, my hon. Friend the Member for Garston and Halewood (Maria Eagle), for her work in holding no fewer than four Transport Secretaries to account, and for her tireless work to develop Labour’s transport policy. I pay tribute, too, to my hon. Friend the Member for Nottingham South (Lilian Greenwood) for piloting the Bill through Committee in a co-operative manner. Following in her footsteps, I am proud to support High Speed 2, and I am proud to support getting good value for public money, too.
We support plans for a new north-south rail line, but we are clear that the Government must get a grip on the costs. High Speed 2 was the brainchild of Lord Adonis, the Labour Government’s last Transport Secretary. We understand that the railway is not needed just to tackle the rail capacity crunch that we face in the next ten years: managed properly, HS2 has the power to transform the economic geography of our country. It will build our great cities and bring them closer together. It will connect people to each other, to work and to leisure. It will help to rebalance the economy, creating and using our country’s manufacturing skills.
Charlie Elphicke
This is an important project requiring national consensus. It needs all parties to support HS2 if it is to go ahead—no ifs, no buts. Will the Labour party support this project properly: yes or no?
Mary Creagh
If the hon. Gentleman had listened, he would know that I just said we will support HS2. We shall be voting in favour of it this evening.
This is the first new north-south railway for more than 100 years, but Labour's brainchild has, sadly, been neglected by the Government. Instead of gestation, we have had stagnation. The project has been put at risk by delays, project mismanagement and, in July, by a huge increase to the budget.
First, on delays, Ministers looked at strategic alternatives to High Speed 2. That took until November 2011, which wasted 18 months and led to slippage in the project timetable, with Ministers now playing catch-up. Costs in this Parliament have risen from £700 million to £900 million. The National Audit Office has warned that this tighter time scale poses risks to the project:
“Faster preparation for the bill may increase the extent of petitions to Parliament which may make it less likely that royal assent is granted by the planned date of May 2015.”
Another delay is that the consultation on phase 2 of the route has only just been launched for the Y part of the network, despite the fact that it was being worked on when we were in power three years ago. Ministers have been trundling along; it is time for more urgency.
Secondly, on project mismanagement, the Government’s early cost-benefit reports were criticised in May this year by the National Audit Office for failing to make the strategic case for the new railway. I welcome that that has now been published in full. In September, the Public Accounts Committee warned that Ministers’ plans to present the hybrid Bill to Parliament before Christmas were “ambitious” and “unrealistic”. I would be interested to hear from the Secretary of State whether that is still his plan.
Andrew Bridgen
Will the hon. Lady confirm, as he has stated in the media, that the shadow Chancellor will have the final say over whether Labour supports HS2?
Mary Creagh
The shadow Chancellor has never said that in the media. In fact, he has told the media that it will be a collective decision, so I do not know where the hon. Gentleman has got that from.
Finally, this summer the contingency budget ballooned to £14.4 billion, now one third of the railway’s cost. Our concern is that putting in such a large contingency at such an early stage of the project could be a self-fulfilling prophecy, a point made by my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe). We are living in austere times. Our constituents are facing the largest cost of living crisis for a generation. Prices have risen faster than wages for 39 of the 40 months of this Government, and working people are, on average, more than £1,500 a year worse off. In these circumstances, and given the public finances, it was right for my right hon. Friend the shadow Chancellor to call the Government to account for their mismanagement of the project, which has led to this ballooning of costs. That is the right thing to do, because public consent for this great project depends on people like the shadow Chancellor having the courage to stand up against sloppy, incompetent and bureaucratic government. It is we, the Opposition, who are the true friends of HS2 and this Government who have put it at risk. We will continue our scrutiny of these costs and our discipline on the public finances.
Mr Betts
My hon. Friend rightly draws attention to the problem of delay. Certainly in Sheffield, we are particularly concerned about the delay between completing phases 1 and 2. Now that the welcome appointment of Sir David Higgins has been announced, should not one of his jobs be to consider how we can build the second phase more quickly? Perhaps we could start building in the north as we start building in the south.
Mary Creagh
Again, that is for Sir David Higgins to work out with Ministers, but undoubtedly that could keep costs down and allow further benefits to be realised.
Mr Godsiff
Is there a figure above which the Opposition Front-Bench team would not support this project, if the incompetence to which she refers is played out by the Government? Is there a figure at which the Labour party would pull out?
Mary Creagh
I do not know whether my hon. Friend was here when this was discussed, but we tabled an amendment on Report that was agreed by the Government and which makes it clear that any contingency spend must be reported to the House annually.
We will continue to hold up the weaknesses of the management of HS2 until every one of them has been addressed. We want to see swift progress with the hybrid Bill and we shall scrutinise the latest strategic case, published this week, to satisfy ourselves that it is based on sound assumptions. The Government must drive down those contingency costs and have a clear strategy for doing so. This fiscally disciplined scrutiny is what one would expect from any credible official Opposition seeing a Government desperately mismanaging a project. We will go ahead with the project, but the Government must bring down the costs, and the benefits to the nation must be clear. We say: get a grip on the project, get control of the budget and get it back on track.
The increase in rail usage during our time in government was a record to be proud of, but we now face serious challenges. We understand that current and future capacity constraints on the existing rail network place a brake on regional and city growth. We know that demand for rail travel continues to grow, despite the tough economic times, and our support for a north-south line rests on tackling that capacity problem and supporting 21st century transport infrastructure. This week’s strategic case shows the intense pressure our major mainline stations are under, and not just in the south. In four years, there will be 200 people for every 100 train seats arriving into Birmingham New Street at 5 o’clock. Rail freight is growing at 3% a year, and HS2 would free up space for more freight trains on the east coast, west coast and midland main lines, and take those lorries off our roads.
Kelvin Hopkins
As I said in my speech, if we want a serious transfer of freight on to rail, we must make it possible to transport lorries on trains, but we cannot do that on the existing network because the gauge is not big enough. We need a dedicated freight network for that to happen.
Mary Creagh
I am not sure whether my hon. Friend is proposing that we build an entirely new freight network—
Mary Creagh
Okay, well perhaps we will park that thought for another day, because many others want to come in. My hon. Friend is absolutely right, though, that we have to shift freight from the roads and on to the more environmentally friendly railways, and we want to ensure that this line can do that. We want HS2 to give people a real choice between short-haul aeroplanes and the more environmentally friendly trains. We want to see more inter-city services for cities that currently have a poor service to London. We want HS2 to free the west coast, east coast and midland main lines for new commuter services between the midlands and the north.
These are not just transport arguments. They are social and economic arguments about the sort of country we want to be: a country in which no town or city is left behind. We want to ensure that cities such as Wakefield, which currently enjoys a twice-hourly inter-city service to London, are not downgraded. I obviously have a particular interest in Wakefield’s twice-hourly service to London, which I am happy to declare.
The public consultation on compensation arrangements is important, and the Government need to ensure that they respond fully to specific local issues such as those raised by the right hon. Member for Chesham and Amersham (Mrs Gillan), and that proper compensation is given to residents who are affected or blighted, such as those in the constituency of my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson). We will maintain pressure on the Government to work closely with the communities affected.
We will vote today in favour of this paving Bill to allow preparatory expenditure on the scheme. We believe that how we build something is as important as what we build. This is not just a transport project; it is also a social and economic project. I am glad that the cities are already looking at how they can invest in skills so that local people can benefit from the employment opportunities that HS2 will bring. We are pleased that the Government have agreed to our amendments on vocational training audits for the scheme. That will help us to realise our Labour vision of creating 35,000 high-quality apprenticeships over the lifetime of the project, representing a step change in vocational education for this country’s young people. HS2 is not just a transport project; it is also an employment project.
We are glad that the Government have accepted our amendments on annual reports to Parliament on contingency spending to ensure that the scheme is kept on budget, and on linking the railway with active travel such as cycling and walking. Having said that, I will not make any promises about cycling the new cycle path that will run alongside the track. After cycling from London to Brighton, I think I know my limits. We will also continue to scrutinise Ministers to ensure that they work closely with UK companies to use procurement to deliver the maximum jobs, growth and skills for UK companies, small and large.
High Speed 2 is a huge project which, if managed properly, will bring great social, economic and environmental benefits to this country. The project is about how we deliver capacity for more passengers and services, and connectivity to bring cities closer together, while ensuring that the trains run on time. We will serve our great cities by having HS2 come in with a budget that is under control and with benefits that are clear for all to see. The Secretary of State should do his job and I will do mine, and my job is to ensure that he does his job properly.
High Speed 2 is a project that is in the national interest. It has suffered from the fiscal and project management incompetence of this Government, and I hope that this Secretary of State will get it back on track. Britain deserves better than this. It will fall to the next Labour Government, a one-nation Government, to build HS2—on time, on budget and in the national interest.
Mrs Spelman
I should like to congratulate the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), on his new appointment and thank him for taking up the baton on the Bill on Report. That was not an easy task. He was preceded by an excellent Minister, my right hon. Friend the Member for Chelmsford (Mr Burns), who did a very good job in Committee. I really enjoyed the spirit of co-operation between both sides in Committee, and the latitude that the right hon. Member for Holborn and St Pancras (Frank Dobson) and I were given to table amendments that have genuinely improved the Bill.
Anyone who will have High Speed 2 going through their constituency is having a difficult time. Those who will have an interchange station will have what I have described as the pain and the gain. The quality of the local connectivity can tip the balance between pain and gain in those areas, and I am delighted that an amendment has been accepted on a cross-party basis to improve local connectivity. That will make a big difference to the constituencies that will have those stations. It will provide for local road, rail, cycle and pedestrian connections to the new interchange stations.
The Birmingham interchange station will offer a rare opportunity to improve the already integrated international airport and its main line station, through a connection with high-speed rail. Seeing the potential for that, the airport has proposed a second runway, even though it has plenty of spare capacity on its recently extended runway. It hopes, of course, to relieve some of the pressure on London and the south-east. With the interchange station being approximately 38 minutes from Euston, it is obviously competitive in terms of journey time with some of the London airports. This had led my local authority to see the potential of this transport hub, designating it as “UK Central”. HS2 is central to that vision.
To fulfil that vision, I hope that the Department will be able to look at the design stage of the new junctions required on the M42, as it serves Birmingham airport, the present station and the National Exhibition Centre. We need help with that. It would be worth giving consideration, too, to the development of the surface area and perhaps take another look at providing a tunnel—I would very much like to see that—where HS2 crosses over the existing west coast main line.
I believe that the extra time the Government have given for this Bill has allowed important improvements and mitigations. The draft environmental statement was indeed a draft—one on which we could consult our constituents and seek to secure improvements. I am sure that my constituents and those of many other Members appreciate the value of that.
Unfortunately, we did not reach my amendments today. They would have improved the terms of the compensation for all affected constituents and enshrined in statute a property bond. I am pleased that the Government are consulting on a property bond, and we have every hope that that will be brought to fruition.
Mrs Gillan
I support my right hon. Friend in her search for a property bond. As she knows, my constituent Hilary Wharf, the railway economist, has done a great deal of work on the property bond issue, and believes this will be a much fairer way of compensating all those people whose lives and properties will be damaged by this project.
Mrs Spelman
I agree with my right hon. Friend and I urge all Members whose constituencies are affected by HS2 to make sure that their constituents respond to the consultation that is under way; the Government remain open-minded about the eligibility criteria, which is important. I indicated in an intervention that there is an important need to offset the impact on biodiversity. I know that the present Secretary of State for Environment, Food and Rural Affairs is working with HS2 to make sure that no net loss of biodiversity arises from the infrastructure.
For the west midlands, HS2 is a lifeline. We should not overlook the fact that, at a time when west midlands manufacturing is undergoing a renaissance for the first time in my generation, there is no capacity for transporting manufacturing products on our railways. Anyone driving down the M40 will see transporter load after transporter load of cars going for export. We export 82% of all the cars we produce, and 50% of them go to other EU countries. They should be able to be transported by rail. The freight aspect of HS2 is thus incredibly important.
Finally, in view of the completion date, this project is principally going to benefit our children and our children’s children. I would like us to be the generation with the foresight to provide for them.
Frank Dobson
I am going to be the original parochial MP. For many people in my constituency, this issue is not a question of “not in my back yard”, but one of “not through my front room”. A total of 220 homes will be destroyed and a further 1,000 homes will be blighted for the 10 years while the works go on at Euston. A large number of small businesses will be bankrupted because of what is going on there.
When it comes to getting compensation, both the qualifications and the quantum for compensation in Greater London, and most particularly at Euston and in Camden Town, are much worse and far inferior to what will apply in rural areas. I hope that some people in the House of Lords will see fit to help Ministers keep the promises they made about being fair to everybody in terms of compensation. There can be no justification for saying that the noise is less in Euston than in Great Missenden. Noise is noise, dirt is dirt, filth is filth. The main difference is that in Euston all that will go on for 10 years, whereas on most other parts of the line it will go on for only a short period.
HS2 Ltd, and the HS2 apologists, say “Oh, it will not be as bad as Frank Dobson says.” Well, if the trouble will not be as bad as Frank Dobson says, why cannot those at HS2 come up with full, decent compensation? The main reason is that they know that it is going to be terrible and that proper compensation would cost a lot of money, but why should people living in my area experience dreadful blight for a decade or more while a national project goes through? Why should they be sacrificed on the altar of that national project?
It has been suggested that buildings in the area will act as buffers against noise. The people who live in Mornington terrace, the people who live in Ampthill square, the people who live in Park Village East, the people who live in Eversholt street, the people who live in the Regent’s Park estate, the people who overlook the railway now and the people who will overlook the railway when the “buffer” blocks of flats have been demolished—all those people face 10 years of noise and filth and disruption, and we are proposing that they should not receive the same level of compensation as people living in Great Missenden. That cannot be fair, and it cannot be decent.
I think that nearly everyone in the House wants to support and help small businesses. Drummond street, in my constituency, is full of small businesses with very hard-working owners and staff, providing restaurants and cafés and shops. It is on the west side of Euston station. The shopkeepers and restaurateurs have conducted surveys, and have found that between 40% and 70% of their trade is passing trade—people who are going to or from Euston to catch a train, the tube or a bus.
It is currently proposed that about a third of Drummond street will be demolished—which does not include any of the shops—that a huge fence will be built around the construction site for 10 years, and that there will no longer be any access to the west side of Euston station from Drummond street. Anyone trying to get from the shops and restaurants into the station will have a quarter-of-a-mile wander around the boundaries of the site. That means bankruptcy for the small businesses there which will lose their trade. Those businesses are already being damaged and blighted. The kitchens of one of the restaurants are getting a bit past it, and the restaurant is thinking of replacing them, but there is no point in investing in that replacement. Let me say this to both Front Benches: do they seriously think it right to go ahead with this project and damage those little, ordinary citizens?
I raised this matter in the Committee, which took evidence from witnesses. When the problems in Drummond street were brought to the distinguished attention of the man who is the director general of the HS2 project at the Department for Transport, he gave his considered opinion of the Drummond street traders, saying
“Their business will develop. We hope that businesses in Drummond street will benefit from the construction workers on the HS2 site.” ––[Official Report, High Speed Rail (Preparation) Public Bill Committee, 11 July 2013; c. 154, Q292.]
Does he seriously think that some construction worker, knackered and stopping for his snack break, will walk a mile to and from Drummond street to get food? No is the answer to that, but what is worse, had this great person inquired of the traders in Drummond street, they would have confirmed to him that a major construction site nearby had supplied them with no single remembered user during their lunch breaks. This, I have to say, is someone who works for the outfit which has been promoting HS2 until now.
As I have said to the Secretary of State and his predecessors, if I was in favour of this hare-brained scheme, I would get rid of a lot of the people involved, because in my constituency alone their original estimate of the costs has proved to be £1 billion less than their revised costs. That is £800 million extra at Euston and £125 million for running the works across Camden town, where, apparently, the cost went up from £170-odd million to £300 million because they had not realised they would need to widen the track. If that reflects the quality of thought and advice, I say to those people who are in favour of this scheme, “Watch it, because it’s a mess, and even the great man who, at the Olympics, did manage to spend the contingency fund is going to have difficulty sorting it out.”
I therefore have to say that I believe it will be necessary for the House of Lords to try to look after and properly compensate the people I try to represent. At the last general election I made two promises. I promised I would try to stop HS2 happening and, failing that—this was a twin-track approach, if people will excuse the expression—I said I would try to make sure all their interests were looked after. I have great belief in the integrity of the current Secretary of State, and if he is going to discharge his promise to look after people properly and treat them fairly, he will have to deal properly with the people I have been trying to represent.
Sir John Randall
Madam Deputy Speaker, may I take this opportunity to welcome you to the Chair for the first time when I have been speaking?
I am very sorry that time on Report did not allow us to address all the various matters I hoped we were going to talk about, especially with regard to compensation and mitigation. I am equally sorry that I was otherwise occupied on Second Reading so I was not able to speak then. I would just say to my former captors, who held me hostage for the last 13 years, that I hope that when we come to the Second Reading of the hybrid Bill we will have plenty of time—several days—because this is a hugely important issue.
Many issues of huge concern to many of my constituents and to even more of my fellow residents in the London borough of Hillingdon have not been solved by what we have heard today. The right hon. Member for Holborn and St Pancras (Frank Dobson) mentioned the property bond not being extended outside rural areas, and that is a matter of real concern to us. However, my constituents can rest assured that I will be raising those concerns inside the Chamber, outside the Chamber, and in any way I can. I and the other two Members of Parliament for Hillingdon—we like to be regarded as the three musketeers, “one for all, and all for one”—will be raising these issues.
Voting for this Bill tonight does not mean I will be giving a green light to the whole project. There is still some way to go for me to be persuaded that the pros outweigh the cons, and I shall be looking at things very seriously. But one thing I would say is that if there is one person in this Chamber who can persuade me of that, it is the Secretary of State.
Phil Wilson (Sedgefield) (Lab)
Sedgefield has a particular place in the history of railways, as it was in a place in Sedgefield, Heighington crossing, that Locomotion No.1 was assembled by George Stephenson in 1825, on its route to Darlington to open up the Darlington and Stockton railway. It was said at the time that such was the velocity that in some parts the speed was frequently 12 mph, but it still took 65 minutes to travel the eight and a half miles to Darlington from Heighington crossing. Obviously we have come on a long way since then, but there is still a long way to go, which is why I support the Bill.
I wish to talk a little about supply chains and how this project will have an impact on jobs. Hitachi is opening a factory in my constituency which is going to build the intercity express programme trains, and the Secretary of State is coming to the constituency tomorrow to celebrate the start of construction there. That is just one example of what impact this will have on factories in areas that, in the first instance, are not affected by high-speed rail, because the route will not be going through the north-east initially. We are talking about 730 jobs, with 3,000 to 5,000 jobs in the supply chain. We also have a new university technology college opening. Hitachi and other companies in Newton Aycliffe are in negotiations with Sunderland university to open the UTC. It will create a plethora of people who are interested in engineering, electronics and all the other kinds of apprenticeships that we require to continue the work and the factory going forward. In addition, the research and development facility for trains for Hitachi will be based in Newton Aycliffe.
We should not forget that Hitachi built the bullet train in Japan, so if Hitachi is lucky enough to win the contract, it will have the technology to build the trains in this country. These trains would not be imported; they could be built in this country. That would mean 3,200 permanent jobs, not necessarily at Newton Aycliffe, but around the country, and jobs to maintain the trains as well. The capacity for the supply chain is fantastic.
The system of high-speed rail in Japan—the Shinkansen —covers 1,500 miles. The first high-speed rail started there in 1964, and Japan is on its eighth generation of high-speed train. The average delay on these trains is 36 seconds. I want a bit of that for the UK.
Mrs Gillan
May I, too, welcome you to the Chair, Madam Deputy Speaker, as this is the first time I have spoken with you in that position, and offer many congratulations? I will be brief, because I have spoken at length before. I still think that HS2 is an expensive toy. I remember that we once had something else that went fast—it was called Concorde, and we know what happened to that. [Interruption.] It is still not flying these days, and it lost out to the jumbo jet.
The Government have introduced this Bill, but it has not really moved this House or our knowledge of HS2 much further on. The Bill writes a blank cheque for the Government to spend as much as they want on the preparation of any of our railway works throughout the country, in perpetuity. The Government really introduced the Bill because they have lost control of the public relations on this project and they have lost control of the costs. I cannot even remember how many times we have read about the Department for Transport carrying out a “fightback” on this project.
No one is very impressed that four and a half years down the line a project that is supposed to be so worthy is still in the position it is in: the business case has worsened; the capacity claims have not been backed up in this Chamber today by any facts; the speed has now dropped away and is no longer the prime reason; and the connectivity is poor, as we have seen. Of course, all of us would agree with some of the aims and objectives, including mending the north-south divide, as has been discussed. We would all like those aims to be achieved, but I do not think that HS2 will do that.
I am sorry that we did not have more time to discuss compensation, but compensation consultation is still going on and I hope that the Government will have a property bond.
Alec Shelbrooke (Elmet and Rothwell) (Con)
I am grateful to my right hon. Friend for giving way on the point about compensation. Although it is important that the Bill be given a Third Reading tonight, because many of my constituents would otherwise be left in limbo, it must be placed on the record that the project cannot go ahead if a property bond is not put in place to defend people not just now, but in future. Even if the project is dropped, they still need that property bond.
Mrs Gillan
I hear that, and many people would agree with my hon. Friend.
I am sad that the Bill is coming up for Third Reading without our having had longer to debate it. I, sadly, will be going through the Lobby to vote against it. I do not think any help or support should be given to the project. Many people around the country share my view. Simon Walker, director general of the Institute of Directors, said recently:
“We agree with the need for key infrastructure spending, but . . . It is time for the Government to look at a thousand smaller projects instead of . . . one grand folly.”
Richard Wellings of the Institute of Economic Affairs said:
“This lossmaking project fails the commercial test, while standard cost-benefit analysis shows it to be extremely poor value for money.”
I could go on. Even the Adam Smith Institute says that HS2 is a disaster.
Andrew Bridgen
Does my right hon. Friend agree that if there were a genuine business case for HS2 the Government would not have to put £50 billion-plus of taxpayers’ money into it, and the chief executive of Legal and General, which has announced a £15 billion fund for UK infrastructure, would not say that he does not want one penny of that money spent on HS2?
Mrs Gillan
I am grateful for the support for the quotes that I cited.
As the Secretary of State well knows, we have an outstanding meeting on compensation. I know he has tried to fulfil that and I hope we can get together on compensation, because my constituents are so badly affected.
I hope HS2 does not go ahead. The new love-in between those on the two Front Benches does not fool me much. I am pretty sure Labour will play politics with the project right up to the wire, but if it does go ahead, we must make sure that we have the best protection for our environment and our countryside, and the best compensation for people whose lives, businesses and communities will be rent asunder by the project. Nothing less will do.
Mr Godsiff
I spoke and voted against the Bill on Second Reading, and I regret to say that nothing I have heard subsequently has convinced me that I should not vote against it again today. After Second Reading, the argument put forward by the Government began to unravel and people came out stating different positions from those that they had taken before.
First, the Department for Transport upped the figures to £42 billion. Then a previous Chancellor of the Exchequer said that the cost could go to £80 billion and he was withdrawing his support. Then Lord Mandelson said that he attended the Cabinet meeting—presumably the same one as my right hon. Friend the Member for Blackburn (Mr Straw) attended—where the project was dreamed up as a big idea on the back of an envelope without proper analysis or costings. You pays your money and you takes your choice as to what you want to believe, but I do not think that is the way we should undertake such a project.
There are two points that I wish to make. First, the Government say, not unreasonably, that to go ahead with such a big infrastructure project, they need the support of the main Opposition party. That is perfectly reasonable, but I have been there before, as have many Members in the House. I remember when Michael Heseltine was making preparations for the millennium. He went to the Labour party and said, “Look, I can’t build a millennium dome unless you commit yourselves to it.” We committed ourselves to it, and what happened? Well, there was a good party for the great and the good on new year’s eve, then attendances at the dome dwindled, we could not give it away, and eventually we ended up with £600 million of taxpayers’ money being totally wasted because it had to be given away to AEG for nothing. That is what happens when we go in for a vanity project without proper costings.
Secondly, if this is a such a great bargain for the taxpayer and for this country, why is it not being financed by private capital or foreign sovereign wealth funds? The Government are no great lover of public enterprise. Indeed, they are doing their best to pass the very successful franchise on the east coast line back into private ownership. That is their position, fine, but why is private capital not coming into this project? Why are foreign sovereign wealth funds not coming in? The Government are quite happy to have a new generation of nuclear reactors built by a state-owned Chinese company that is answerable to the Chinese politburo, yet this project needs to be paid for with public money. I suspect the reason is quite simple: private capital will not touch it with a bargepole, because those involved know that it cannot be done within the figures that have been talked about. It will go massively over budget and they are not going to pick up the bill.
I asked my hon. Friend the Member for Nottingham South (Lilian Greenwood) whether there was a pull-out figure for this project. She declined to give me a figure, and I understand that, but if there is no figure to all intents and purposes we are signing a blank cheque. If we go along with the Government and costs escalate—she made a very good point about degrees of incompetence—what will the pull-out figure be? What will happen if we get half the line built and all of a sudden the figure shoots up to nearly £100 billion? What will we do then? Just continue?
I have a great deal of time for the Secretary of State and in many ways he is in a hole. As an ex-miner, however, he ought to know perfectly well that when someone is in a hole, they should stop digging. My strong advice to him is that he should stop digging. He does not want to end up with a white elephant.
Alec Shelbrooke
HS2 is a very important project for the city of Leeds. The benefits it will bring to the north of England are immense, but they cannot be built on the back of hard-working people who have invested their livelihoods in their houses and so on. It is therefore vital that, before we sign the Bill off next spring, proper compensation is in place in the form of property bonds, and that the suggestions on rerouting, which are not about “not in my back yard” but propose sensible alternatives to ensure that the route follows existing transport corridors or goes through open countryside, are dealt with. With the best will in the world, we cannot mitigate the effects of such a development just 30 metres from the back of someone’s house.
I was a supporter of this project before I came to this House, but I cannot support it if the compensation package is not right. I urge the Secretary of State to ensure that it is right before the subject returns to the House in the spring.
Mrs Ellman
High Speed 2 is essential national infrastructure, and we are at a critical part of the process. The concerns raised in today’s debate are very important, and many of them were raised by the Transport Committee two years ago. Some of them have been addressed, but some need to be looked at further. It is now the responsibility of the Secretary of State, working with High Speed 2, to ensure that they are dealt with. The concerns relate to the environment, value for money and ensuring maximum economic benefit, including giving opportunities during construction for employment and apprenticeships across the country. The project is essential, but it must benefit the maximum number of people, and that is the Secretary of State’s responsibility as we reach this very important juncture.
Mark Pawsey
Being given the opportunity to speak now feels like winning the lottery, Madam Deputy Speaker.
I will make one quick point on the impact on my constituents in Rugby. We currently benefit from a fast and frequent service on the west coast main line, so with Virgin Trains we can be in London in 50 minutes and with London Midland we can be there in just under an hour. That is attractive to businesses coming to Rugby, which we can present as a great location. My fear is that, if the Bill goes ahead and the money is given to build High Speed 2, the legacy line will become a stopping line, with trains stopping at every station as the operator seeks to maximise revenues, because the city-to-city business will have been lost—
Business without Debate
Political and Constitutional Reform
Petitions
David Morris (Morecambe and Lunesdale) (Con)
I am extremely proud to present this petition on behalf of nearly 3,500 members of staff, students and parents of Skerton community high school and the wider community of Skerton. I am also proud to be wearing the school tie. I am pleased that a group of students, led by a parent, Robyn Holtham, are in the Public Gallery to see the petition presented.
The petitioners started their campaign in September, when they were told that their school faced closure by the county council. Skerton community high school has fantastic pastoral care and all the students are immensely happy there. I therefore urge the House to support the community of Skerton and the children and parents of Skerton community high school in their fight to keep the school open.
The petition states:
The Petition of pupils, parents and staff of Skerton Community High School and others in the Skerton community,
Declares that the Petitioners believe that Skerton Community High School provides excellent pastoral care and caters for a high number of special needs students and thus the Petitioners do not believe that it should be closed.
The Petitioners therefore request that the House of Commons urges the Government to take steps to support the school in its bid to remain open.
And the Petitioners remain, etc.
[P001256]
Andrew George (St Ives) (LD)
I am proud, pleased and humbled to present a petition on behalf of more than 1,000 constituents in St Ives, in particular Peter Greenough of Bluebell cottage in Godolphin Cross. Some 200 people signed the petition in manuscript form and more than 850 did so through an online petition.
The petition is part of the Rural Fair Share campaign. I congratulate the hon. Member for Beverley and Holderness (Mr Stuart), who has spearheaded the campaign. He and a number of other hon. Members will be presenting petitions in support of the campaign on Monday. As I cannot be there, I am presenting this petition tonight. Cornwall is one of the poorest regions in the UK and it receives unfair levels of funding.
The petition states:
The Petition of the residents of St Ives,
Declares that the Petitioners believe that the Local Government Finance Settlement is unfair to rural communities; notes that the Rural Penalty sees urban areas receive 50% more support per head than rural areas despite higher costs in rural service delivery; and opposes the planned freezing of this inequity in the 2013–14 settlement for six years until 2020.
The Petitioners therefore request that the House of Commons urges the Government to reduce the Rural Penalty in staged steps by at least 10% by 2020.
And the Petitioners remain, etc.
[P001264]
Academy Status
(11 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
John Cryer (Leyton and Wanstead) (Lab)
I applied for an Adjournment debate on academy schools because Snaresbrook primary school in my constituency was told some time ago that it was likely to become an academy. It is clear that the parents, governors, teachers, staff and surrounding community are opposed to that. The ward councillors, all three of whom are Conservatives, are also against it. The campaign is supported, impressively, by the hon. Member for Ilford North (Mr Scott) and by Redbridge council, which again is a Conservative local authority. By the way, Redbridge has invested a considerable amount in the school and has improved its fabric under very difficult circumstances over the past few months.
Snaresbrook has a very good history by any objective judgment and was always well regarded. Suddenly, in June, it received a bad Ofsted report and was put into special measures. That took everybody by surprise. Under a new head, Carel Buxton, the school has shown clear signs of improvement and it is clear to everybody in the community that, in the long term, it will re-establish its reputation as a good primary school.
I was therefore surprised to receive a letter a couple of weeks ago from Lord Nash, the Parliamentary Under-Secretary of State for Education, saying that, regardless of anything else, the school was to become an academy. Only this week, the hon. Member for Ilford North received an e-mail from the Department for Education saying that the school would not become an academy, but would remain as a maintained school. That was extremely welcome news.
Mr Lee Scott (Ilford North) (Con)
Does the hon. Gentleman agree that we must congratulate the parents and, as he rightly said, London borough of Redbridge council? We must also congratulate the hon. Gentleman himself, and everyone else involved—that probably includes me. We should thank the Department for Education, the Minister of State, and the Secretary of State for ensuring that Snaresbrook primary school is given the opportunity to continue the good work it has done in recent months.
John Cryer
I have no hesitation in agreeing with the hon. Gentleman about that, and I was about to praise him for his work in supporting the campaign for the school to remain a maintained school. A number of children from his constituency are at the school and we have worked together successfully on a number of issues in our area, of which this is the latest. I have no hesitation in praising Redbridge council for doing an excellent job. As I said, it has managed to invest £110,000 in the fabric of the school. That is pretty unusual given the scarcity of resources at the moment, yet the council managed it, and the local councillors deserve praise as well. I also thank the Department for Education.
There are, however, issues relating to the processes that lead to academisation—to use a fairly modern sort of phrase. Before I raise those with the Minister, let me make it clear that I am not making a party political argument. I was not a fan of academies when the Labour Government were in power—in fact, I was not a fan of quite a few things they did. I have not checked this, but a while ago I was reliably informed that I voted against my own side 84 times when we were in government. That must be some sort of record and it goes to show that I am not above having a crack at my own side if I think it necessary.
It is widely agreed that two things contribute to improvements in schools—good leadership and good teaching—but neither necessarily arises out of academy status. I am sure there are academies with good leadership and good teaching, but there are also state maintained schools that have both those things. Serious concerns have been highlighted in various media reports about the governance and accountability in academy schools and free schools, although we are focusing on academies.
We have seen stories in the press about chains of academies that are starting to form and which have been accused of moving investment from the schools to other things. Their chief executives are earning very high, perhaps inflated, salaries, and large sums are spent on hospitality and junkets. The Select Committee on Education is yet to look at the record of academies. I am sure it will find that there are good ones, but also that there are question marks over accountability and democratic processes, which are not in place.
The process by which schools become academies raises questions for the Department for Education. There are, for instance, conflicts of interest. On 20 December last year, the BBC revealed that at least four advisers contracted to work on the sponsored academies programme by the Department for Education are also Ofsted inspectors, which I would say was a conflict of interest. There are also a number who, according to the same report, have financial interests with academies and free schools but also work for the Department—again, there are questions to be answered.
On 13 February The Independent reported that the Department was busy offering money—in other words, inducements—to schools, which seems to have happened mainly in the north-west. It was reported that 32 schools in Lancashire were offered sums of £40,000, or slightly less, for that purpose. They were told, “If you become an academy, you will receive a cash injection of £40,000.”
Bill Esterson (Sefton Central) (Lab)
I am glad my hon. Friend has mentioned what is going on in the north-west, because there has been a lot of concern in schools in Lancashire, Merseyside and elsewhere about the approaches made by brokers—not just financial inducements, but a lot of pressure put on to a school to convert to academy status. Does my hon. Friend agree that one reason there is so much opposition to these conversions is the concern among parents, and others, about the use of unqualified teachers? That has been allowed in academies since July last year.
John Cryer
We had a debate earlier this week about the use of unqualified teachers. My view is that teachers should be appropriately qualified, and there is a question about that. Parents also have serious concerns about admissions. Once the local education authority is taken out of admissions, who co-ordinates that? Will there be an element of anarchy because no central body is controlling admissions? In other words, will it be a free-for-all?
On 11 February, The Guardian reported a claim by the National Association of Head Teachers that academy brokers—that phrase is new to me—are given targets by the Department for Education on the number of the schools they must convert. One question I wanted to ask the Minister is whether those targets exists. Are academy brokers told, “You have to convert so many schools by such a point in future”? The same story recorded one head who claimed she had gone to a meeting and been told she was not allowed to leave until she had made a decision on the future of her school. Clearly, that is an unacceptable way to treat anybody, including a head teacher.
There are also examples of head teachers and governors having to concentrate on demands placed on them by the Department rather than concentrating on improving the school. I am thinking of schools that have problems—failing schools in special measures or schools that are given an Ofsted verdict of requiring improvement. They might find that their time is taken up engaging with the Department in discussions on the future status of the school rather than engaging in improving the school.
I have seen a number of Ofsted reports that make it clear that that is happening. For example, one report—I cannot mention the local authority or the school because it is in another constituency, and mentioning it would be a contravention of parliamentary convention—states:
“Another significant barrier to improvement has been the amount of time the headteacher has been involved in the discussions about transferring to an academy…Lengthy and time-consuming meetings with parents, unions, staff and external agencies have taken leaders’ and governors’ focus away from school improvement”.
I have a feeling that, over the next few years, we will see in the media stories of financial mismanagement arising from a lack of accountability, checks and balances, and democracy in the governance of academies and free schools. A parallel can be drawn with the situation when the Government introduced co-operation for further education colleges in 1992. Some of the colleges were fine and worked perfectly well but, because of the lack of accountability, a series of scandals followed—they were documented pretty closely by a number of publications—in which some principals, because they were given a free hand, abused their position. They got up to all sorts of things, financial and otherwise, that were deeply questionable.
To conclude, I have a number of questions for the Minister. I should like him to answer them, but if he does not have answers to hand, I should like him to write to me with the information. Are any contractors who are paid by the Department also Ofsted inspectors? Is anybody working in any way for the Department who has a financial interest in academies and/or free schools? Are academy brokers required by law to abide by the civil service code of conduct? The answer to that last question was given some time ago in another Adjournment debate, and it seemed to be that they are required to abide by the code of conduct. However, in a later Question Time, the Secretary of State equivocated and did not say whether they must abide by the code of conduct or not.
I asked whether brokers are given targets for converting schools to academy status. Is it legitimate for schools to ask academy brokers to declare any conflicts of interest at the outset of their engagement? In other words, would it be legitimate, at the first meeting, for the schools to say, “Is there any conflict of interest you would like to bring to our attention or of which we should be aware?”
As I understand it, when the Academies Commission reported in January 2013, it found that there was no evidence that academies performed significantly better than maintained schools. Is that so? Will the Minister confirm that TUPE rights apply to all staff who are transferred from maintained schools to academies?
I thank the Minister for replying to the debate. He has drawn a bit of a short straw by getting the Adjournment debate on a Thursday afternoon. By the way, it appears that the massed ranks of Parliament have turned out for it, compared with previous Adjournment debates I have introduced. That shows what an important issue this is. I have been to Adjournment debates on Thursdays with the Minister and one Whip, and no one else. Today, there is a magnificent turnout on both sides of the House. I pay tribute to the hon. Members who are here and the Minister.
The Minister for Schools (Mr David Laws)
I congratulate the hon. Member for Leyton and Wanstead (John Cryer) on securing this important debate and raising these issues, in which he takes a close personal interest. I assure him that I have no problem being here this evening, and I am actually the duty Minister for tomorrow as well so I would be here anyway. I do not know why I am getting all these short straws.
I also pay tribute to my hon. Friend the Member for Ilford North (Mr Scott), who intervened. Although he is not the constituency MP for the school, I know that he has taken an interest on behalf of concerned parents and others in the area, and we have listened closely to both hon. Members on this issue.
The hon. Member for Leyton and Wanstead asked several questions, including about the circumstances of the individual school, which I shall go into in detail; about general policy on academies, which I wish to cover; and some specific questions about the performance management of academy brokers and potential conflicts of interest between Ofsted inspectors and others. On those latter points, I shall write to him—as he anticipated —to ensure that I can supply detailed answers, because I do not have the answers to some of those specific questions to hand.
It is now three years since we expanded the academies programme to enable all schools to become academies, including the ability for primary schools to become academies in their own right for the first time. We did this because we believe that teachers and heads should have more freedom to run schools and more power to innovate in the best interests of their students. More than half of secondary schools and a significant proportion of primary schools are now academies, with more converting every month.
Schools across the country are taking advantage of the freedom that academy status gives them, including having more control over their funding. The decision whether a school should become an academy is, rightly, entirely voluntary for the overwhelming majority of schools, and will remain so. More than 2,500 schools have decided to convert and have become academies. These range from small rural primaries to large secondary schools. We expect these academies to work in partnership with other schools to share their knowledge, experience and expertise, with the highest performing institutions helping the weaker institutions to improve.
In addition to the converter academies, there are now almost 900 sponsored academies. We have made it clear that we want to turn around underperforming schools by finding new academy sponsors for them. As the hon. Gentleman said, this is about raising standards and getting better leadership and governance in weak schools. It is not good enough that some children are left to struggle in schools where a large proportion of the pupils are unable to achieve minimum standards year after year. We want to find lasting solutions to underperformance so that all children have the opportunities that they deserve. This is crucial because each child has only one real chance in life to secure a good education. That is why improving schools rapidly is really important.
Our priority now is to continue tackling poorly performing primary schools so that all pupils have the skills they need to succeed in secondary education. There are schools whose history of underperformance and inability to sustain improvements are causing us real concern. That is why we are working with local authorities across the country to secure better outcomes for their pupils, sometimes by transforming under- performing schools into sponsored academies. In several areas we can point to dramatic improvements in schools that have been failing for some years, but with a new sponsor they have seen significant improvements in performance over time.
In the case of Snaresbrook primary school in the hon. Gentleman’s constituency, the school was judged by Ofsted in June to require special measures. It is worth saying that Ofsted found that the achievement of pupils, quality of teaching, behaviour and safety of pupils and leadership and management at the school were inadequate. As the hon. Gentleman will appreciate, that is a serious matter where prompt action is required. As a result of the inspection, we asked the governing body to consider the benefits of becoming an academy and we proposed an academy sponsor based on a nearby outstanding school. Our policy remains that becoming an academy with the support of a strong sponsor is often the best way to ensure rapid and sustained improvement. However, in this case we recognise that Snaresbrook primary school does not have a long history of underperformance and was previously judged good by Ofsted.
We also acknowledge that the school has made progress since being placed in special measures. The local authority acted swiftly in removing the head teacher and chair of governors, brokering a partnership arrangement with a nearby outstanding school, and providing specialist English and maths consultants, among other changes. We also recognise that in this year’s national tests—not all the data are checked and in the public domain yet—pupil performance appears to have improved significantly at key stage 2. We understand that the school’s results for reading, writing and maths are the best for five years, and among the highest in Redbridge. I understand that pupil progression has improved this year, and that the number of pupils making at least two levels of progress at the end of key stage 2 will be above the local authority and national average.
Those changes, complemented by representations from the hon. Gentleman and the hon. Member for Ilford North, led us to conclude, after Ofsted had looked at the situation, that we needed to review the decision we were making. The changes led Ofsted to conclude at a monitoring inspection earlier this month that the school’s improvement plan is fit for purpose. Inspectors also commented on how leaders have made clear their expectations and ambitions for the school regaining and sustaining its former reputation as a high-achieving school. We will therefore continue to monitor the school’s progress in coming out of special measures, but, as the hon. Gentleman knows, we do not currently plan to intervene in Snaresbrook primary school to force academisation on the school.
However, we are not treating Snaresbrook differently from any other school judged inadequate by Ofsted. At all stages, we have been clear that our goal is school improvement. We will always seek to work with local authorities and schools to find solutions on which everyone can agree, as we have done successfully in many parts of the country.
Bill Esterson
I will not ask the Minister about qualified teachers today—we have done that a lot recently. On school improvement and whether academies do better than the state-maintained sector, does he accept that all the evidence—not just that from the Academies Commission —is inconclusive when comparing improvement in like-for-like schools?
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The hon. Gentleman must stick carefully to the narrow terms of the debate. I am sure the Minister will bear that in mind.
Mr Laws
I shall indeed, Madam Deputy Speaker, although I will say a word about some of the wider issues in a moment.
In all cases, a school can become an academy only after statutory consultation has taken place. That gives parents, governors and the local community the opportunity to put forward their views. These representations are always considered as part of the decision-making process.
On the point raised by the hon. Gentleman, academy status has made a big improvement in transforming underperforming schools, giving them the freedom to innovate by creating the right conditions for success. In recent years, the results of sponsored academies have gone up faster than those of other state-funded schools, and have turned around some of our worst schools. Their performance has continued to improve this year; in fact, the longer they are open, the better on average they do.
I make it clear that sponsored academies remain state schools funded by the state. All academies are run by non-profit-making charitable trusts, which sign funding agreements with the Secretary of State. They are also required by their funding agreements to follow the law and guidance on admissions, special educational needs and exclusions, as though they were maintained schools.
I hope I have made it clear today that our absolute priority is to see sustainable improvement in schools that have been underperforming for many years. Where underperformance is not being tackled effectively, the Secretary of State has the power to intervene to help ensure that standards are raised quickly, and these powers include replacing current governors with interim executive members, although this power has been used only sparingly.
I would like to reiterate my thanks to the hon. Member for Leyton and Wanstead for securing this debate, and I thank him and the hon. Member for Ilford North for their role in raising this issue. Many schools across the country are choosing to become academies, and we will continue to work with underperforming schools and their local authorities to transform the life chances of some of the most disadvantaged children in the country. I will write to the hon. Member for Leyton and Wanstead to address his detailed points.
Finally, along with all hon. Members I would like to wish Snaresbrook primary school, its leadership, teachers and pupils the very best for the future.
Question put and agreed to.
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Intelligence and Security Services
(11 years ago)
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Dr Julian Huppert (Cambridge) (LD)
It is a pleasure to serve under your chairmanship, Mrs Riordan. I thank the hon. Members for West Bromwich East (Mr Watson) and for Esher and Walton (Mr Raab) for supporting me in securing this debate. I also thank the Backbench Business Committee for finding the time for it so quickly after we submitted our bid. I hope that that shows how timely the debate is; the Committee realised that we needed to hold it at the earliest possible juncture. Although the discussion is live in America and much of Europe, Members of Parliament have been fairly mute so far and have not had the chance to discuss it thoroughly.
As technology changes and the capacity of the state and companies to collect and analyse data grows massively, we are in danger of sleepwalking into a surveillance society on a scale that peacetime Britain has never seen. It is not planned, and nor is it the actions of malevolent individuals; it is merely the natural trend of what will happen if nothing is done to stop it.
It can be argued that the definitions of war and peace are no longer the same, and that our enemies are faceless and splintered and will attack our way of life if we give them an inch—that argument is often made by Prime Ministers and Home Secretaries—but if we shape our laws solely in response to that fear, chipping away at our own liberty and privacy, those enemies have already won.
The key questions of security, privacy and liberty in a digital age will come to define the 21st century. The world is changing. All of us carry around tracking devices, in the shape of our mobile phones, wherever we go. We carry devices that can be activated and controlled remotely and that store much of our most personal information. Who can read it? Who has access to that information? How do we want to protect it? We have to agree the rules now, before we lose control completely.
Sir David Omand, former head of GCHQ, said:
“Democratic legitimacy demands that, where new methods of intelligence gathering and use are to be introduced, they should be on a firm legal basis and rest on parliamentary and public understanding of what is involved”.
In no sense do I oppose the people who work in our intelligence and security services; the work that they do is fundamental to our fight against crime and terrorism, not only in the UK but beyond our borders. Their work force make up the front line, and for the most part, they do exactly what we would expect of them, for we have given them the tools through legislation to monitor and take action against those who threaten the fabric of our society. As the Prime Minister said, they deserve to be recognised for keeping us safe while working in the shadows.
Julian Smith (Skipton and Ripon) (Con)
Does my hon. Friend agree that the very people about whom he is talking have been put under grave threat by some of the reporting, particularly by The Guardian newspaper, of the leaks?
Dr Huppert
No, I do not. I understand that the secretary who looks at the defence advisory notices has confirmed that nothing has been published in The Guardian that suggests a risk to life. The Guardian has not published photos on its website of anybody who works in the area without pixellating their faces.
Mr Ben Wallace (Wyre and Preston North) (Con)
How does the hon. Gentleman know that? He does not have complete oversight of either The Guardian’s material or the intelligence material with which it fits in. He is just assuming that what he has read in The Guardian is fine, safe and vetted by Guardian journalists. That is simply not enough to satisfy people of their personal safety.
Dr Huppert
The hon. Gentleman makes an interesting point. His argument, unfortunately, falls foul of the fact that one could say that about absolutely anything: one can never know whether some innocent revelation has been made. However, it is clear that The Guardian has been in contact with the security services and has spoken to the DA notices committee since 17 June. That is the assurance that it has had.
I think that The Guardian has been deeply responsible. It would have been irresponsible if it had refused to have any role in the matter and allowed the information to be passed out by other people who might not have the same regard for our security and staff.
Dr Huppert
I will give way to the hon. Member for Brighton, Pavilion (Caroline Lucas), but then I would like to make further progress.
Caroline Lucas (Brighton, Pavilion) (Green)
I am grateful to the hon. Gentleman for giving way, and I congratulate him on securing this debate. Does he agree that the focus on and obsession with The Guardian is extraordinary compared with what is happening in the US, where they are talking about the really important issues, such as mass surveillance and its implications for citizens’ privacy? Should we not get on with talking about that and worry rather less about what seems to have been a responsible use of data?
Dr Huppert
I agree. It is interesting that a clear effort is being made to focus on The Guardian rather than the wider issues, which affect more of us.
We must ensure that the laws and guidance available to the staff of our intelligence and security services are clear, and that we ourselves understand the framework in which we expect them to operate. President Obama put it well when he said that what they are able to do is not necessarily what they should do. He called for additional constraints on how we gather and use intelligence, and said we need to weigh the risks and rewards of activities more effectively. Our Prime Minister agreed in a European statement:
“A lack of trust could prejudice the necessary cooperation in the field of intelligence gathering”.
This is a global issue acknowledged by world leaders. We should be talking about it here.
Lorely Burt (Solihull) (LD)
I congratulate my hon. Friend on obtaining this important debate. Next week, the director general of MI5, the chief of MI6 and the director of GCHQ will all give evidence in person before a parliamentary Committee, which is welcome. In light of the reviews being carried out in America following the revelations there, does my hon. Friend agree that if the responses given by those three individuals are not entirely satisfactory, there might be a case for considering a review of accountability in the United Kingdom?
Dr Huppert
There is definitely a strong case for it. I am pleased that those people will appear in public, as there has been a long tradition of reluctance about talking about such issues. A senior Home Office civil servant has even refused to give public evidence at the Home Affairs Committee; that, fortunately, is about to change.
When the Foreign Secretary spoke at the London conference on cyberspace in 2011, he championed freedom of expression and privacy online, and he specifically criticised Governments who incorporate surveillance tools into their internet infrastructure. I agree that that is a problem. He also said at that conference that
“it is increasingly clear that countries with weak cyber defences and capabilities will find themselves exposed over the long term”.
The Foreign Secretary is right. That is why it is a problem when people break encryption systems. If anyone—whether it is the US, the UK or anybody else—puts a back door in an otherwise secure system in order to access it for intelligence purposes, that makes it easier for anybody else to break the protections, whether they are from the intelligence community or cyber-criminals. It makes no sense to argue that we should defend cyber-security and simultaneously be part of the effort to break it. If that means that we can no longer rely on the encryption of financial transactions, for example, that would be catastrophic for the global economy.
Martin Horwood (Cheltenham) (LD)
Can my hon. Friend name a single intelligence agency anywhere in the world that he thinks is not trying to break encryption systems?
Dr Huppert
My hon. Friend makes a helpful point. Of course, I do not have a list of every single intelligence service. The difference is between trying to break encryption after things have been encrypted and trying to break the entire system, leaving a back door open, which fundamentally means that anybody can access it. That is different from brute-force methods or other techniques used.
My hon. Friend makes the good point that this is an international issue. How would we feel if it were not GCHQ or the American National Security Agency but the Chinese who were involved? How would we react if the Chinese admitted that they had been tapping the Prime Minister’s phone? Would we be annoyed and concerned, or would we say, “That’s fine; that’s business as usual”? Clearly, we do not take the situation seriously enough.
For example, we allow the Chinese company Huawei to supply a lot of the equipment that makes up the core of our infrastructure. I suspect that our intelligence agents would not miss the chance to install some equipment if we were given the chance to put in the backbone of the Chinese internet, so we should not assume that the Chinese would miss such an opportunity. That was criticised by the Intelligence and Security Committee, which highlighted the disconnect between the UK’s inward investment policy and its national security. If we can understand it sometimes, we should understand it more broadly.
A change is occurring. Individual surveillance is one thing, but the mass hoovering up of information enabled by new technologies has changed the system completely. It means that suspicion no longer comes first. I think that very few people think it inappropriate to target individuals where there is a serious suspicion of wrongdoing, but in the new approach, we are all suspects whose personal histories can be foraged through if ever there is interest in us later.
The Foreign Secretary spoke at the conference of his passionate conviction that all human rights should carry full force online—not just the right to privacy, but the right to freedom of expression. I agree. How we choose to respond to the challenge will define the age that we live in. As parliamentarians and as Parliament, we must be at the heart of this debate.
In America, Dianne Feinstein, the chair of the Senate Select Committee on Intelligence, has spoken out about the revelations that America has been spying on Angela Merkel in Germany and on 34 other world leaders. She said:
“Congress needs to know exactly what our intelligence community is doing.”
She then said:
“It is abundantly clear that a total review of all intelligence programs is necessary.”
She criticised the fact that her committee was not satisfactorily informed. I have not yet heard the Chair of our Intelligence and Security Committee being so outspoken. Perhaps we will hear from him later in the debate, but would he know whether he was not being told things in the way that Dianne Feinstein was not?
There are differences in the debate between the UK and the USA. The US Constitution and Bill of Rights sets out a contract between the state and its citizens with a bias towards favouring individual liberty and privacy. Perhaps that is one of the reasons why the debate is happening so loudly in the US but not here.
In Germany, too, there is a loud debate. It is deeply concerned about what has happened. It has the history of the Stasi, which operated within the law as it then stood, but well beyond the bounds of morality and ethics. I am sure that no member of our current intelligence agencies would dream of following the Stasi’s lead; I do not suggest that for a moment. Germany is aware of what can happen when such systems go wrong.
Mr Tobias Ellwood (Bournemouth East) (Con)
The hon. Gentleman makes some interesting comparisons between what we do in this country and what is done in Germany, the United States and so forth. Obviously, we can scrutinise only what happens here. Does he agree that it is difficult to find a country where the clandestine community performs so well, but under such scrutiny within the confines of the democratic process?
Part of this debate must be about the use of technology and the internet. I express a concern that, as we rightly debate this matter, we should be careful that we do not place limitations on operations that will expose us to more danger, because of those people who choose to do us harm.
Dr Huppert
It is absolutely right that we should have that debate. We have to agree it—we cannot just give carte blanche to people. I think that view is shared by everybody here. The hon. Gentleman is right. We must be balanced. None of us wants the details of exact techniques to be publicised. None the less, we do need to have the discussion about what is okay, what is not okay and where the line is drawn.
We know that the National Security Council was not even told of the scale and scope of the surveillance on our own citizens. We have heard that there were concerns about what would happen if the public knew what was happening. It was feared that it could lead to public debate and legal challenge—well, so be it. Public debate and legal challenge are an important part of the rule of law, and to avoid accountability through secrecy is simply not the solution.
Dr Julian Lewis (New Forest East) (Con)
The hon. Gentleman is being extremely generous in taking interventions. A few moments ago, he said that he did not want detail to be released. The problem with the mass release of thousands of stolen documents is that nobody knows the detail before they release them and propagate them. Is that not rather different from whistleblowing on an individual error or abuse, when one is putting out there hundreds of thousands of documents that one has not even read oneself?
Dr Huppert
The hon. Gentleman is absolutely right to say that it would be irresponsible to publish hundreds of thousands of documents without having a look at them. That is why I am so glad that that is what The Guardian has explicitly not done. It has taken a responsible approach and managed to prevent that. We can imagine what could have happened if there had been a WikiLeaks-style publication. The hon. Gentleman should be concerned about the fact that a contractor was able to get hold of all the information, and that is a serious failure from the NSA and a great disgrace. If it cannot protect information to that level of security, it should be very worried. There are, I think, 850,000 people who could have had access to that information. Was the NSA certain that none of them would pass it on to a foreign power? Frankly, passing it on to The Guardian is probably about the safest thing that could have happened to it.
One of the functions of Parliament is to pass legislation and scrutinise the work of the Government. However, if we do not know what is happening, how can there be any scrutiny? We see legislation such as the Regulation of Investigatory Powers Act 2000 being used beyond the original intentions of the House, and that makes it impossible for Parliament to do its job. People say, “If you have done nothing wrong, you have nothing to fear.” I suggest that they say that to the green activists infiltrated by the police or to members of the Lawrence family. Human behaviour changes when people know that they are being watched. Is that the world in which we want to live?
There is also an economic issue. Our actions are hitting our own economic interests. The internet is a huge factor in business here—some £110 billion of GDP. It is a dynamic market, and it can move. If people are concerned about the privacy of their data here, whether their personal information or important company secrets, they will simply move where they store that information. Germany is already launching schemes to encourage businesses to go there instead, with e-mail systems that guarantee that no data will leave German boundaries while e-mails are being sent, so there is not the problem of information going overseas and coming back again to be looked at. That will hit us financially, regardless of anything else.
We must look at the balance between intelligence gathering and privacy. We need to have oversight. Although I am pleased that we are having the heads of the intelligence and security services coming to a public forum, it has been incredibly hard to get that to happen. Of course national security should not be taken lightly, but the public needs to understand what is being done in their name.
Hazel Blears (Salford and Eccles) (Lab)
I congratulate the hon. Gentleman on securing this debate. It is essential that parliamentarians from every part of the House debate such issues, including, where possible, classified information. He has talked about balance, which is absolutely central to this debate. It is the balance between security, liberty and privacy and the need to keep our secrets safe and to enable our agencies to do their job. He is a scientist and believes in making decisions on the basis of evidence. There is a real danger here that we have this big debate about privacy almost in a vacuum. Does he accept that virtually every operation that has foiled a terrorist plot in this country has been dependent on communications data over the past decade or so, and that it is essential for our agencies to have those powers, but obviously within a robust legal framework?
Dr Huppert
I thank the right hon. Lady for her intervention. No one is saying that we should make illegal the collection of communications data; that would be a problem. She is also right to say that we need evidence; we cannot have a vacuum. That is exactly why it is helpful to know some of what is being said. We have heard people who say that we should never publish anything that would inform this debate. I want an informed debate, and I am pleased that we can have one.
Mark Field (Cities of London and Westminster) (Con)
The hon. Gentleman refers to the Stasi and to the different cultural approach that we have here in the UK towards many of these issues. A view that is shared by people with a similar mindset—perhaps it is one that he thinks is not true—is that somehow the intelligence agencies are able to intercept at will. Will he go into some detail about precisely the protection—the amount of warranty and the legal framework—that is absolutely necessary before any internet account or telephone can be tapped?
Dr Huppert
The hon. Gentleman makes an interesting point, and there are a number of routes to that. For communications data, he will be aware that no warrant is required. He will also be aware that, with the sole exception of evidence collected by local councils under RIPA, there is no judicial oversight of any kind at any stage. I am not aware of exceptions to that, and that is a weakness. There is an internal process—I do not doubt the good intentions of the people who work on this—but there is no independent external oversight from a judicial process, which is what many of us would like to see.
Let me return to the ISC. It works extremely hard, but its reports are redacted by the security services and the Prime Minister, and it is hard to know whether that is done in the interests of national security and not just to avoid embarrassment. Sir Francis Richards, a former senior intelligence official, has said that it is
“not a very good idea”
for an ex-Minister to head it. There is the problem of people being asked to scrutinise the consequences of decisions that they made, and that makes it hard to develop the right sort of relationship.
The ISC is under-resourced and not properly accountable to Parliament. There is a real issue to understanding the detailed technological components of much of this. I am not certain whether there is enough support to ensure that members understand the consequences of fake secure socket layer certificates and how phishing or man-in-the-middle attacks work. I am sure that the right hon. Member for Salford and Eccles (Hazel Blears) will be happy to explain them when she speaks later.
We need better scrutiny generally and not just of the Intelligence and Security Committee. We keep hearing messages about the risk of “going dark”—we heard all about that in relation to the draft Communications Data Bill. It is simply not true. There is far more information available now to the intelligence and security community and to the police than at any time in the past. People now carry mobile phone devices that keep track of where they are almost constantly. I do not blame the agencies. Of course I can see the argument that there will always be for having more information, but we must provide a counterbalance. Dame Stella Rimington, former head of MI5, said:
“It’s very important for our intelligence services to have a kind of oversight which people have confidence in. I think that it may mean it is now the time to look again at the oversight.”
I agree with her.
We have seen further calls for even more information to be collected. The previous Government established the interception modernisation programme to create a vast database designed to log all details of text messages, phone calls and e-mails in the UK. In the interests of cross-party unity, I will not go on about other authoritarian measures: the drive for 90-day detention without charge, ID cards, control orders and allowing people to be forcibly relocated. They are all now things of the past, and I am pleased that that is the case.
Given such concerns, I was pleased with much of the coalition agreement. We Liberal Democrats insisted on a particular element, which was a commitment to ending
“the storage of internet and email records without good reason”.
That was accepted by both parts of the coalition. I am not sure whether the Home Secretary saw that, because she then pushed ahead with the draft Communications Data Bill, which would have required the storing of e-mail and internet records for everybody, which blows a hole through the idea of “without good reason”. It was envisaged that an extra £1.8 billion would be spent over 10 years to keep those extra records. That would have allowed the Home Secretary to require internet service providers to keep track of every website that everyone in the country goes to—everything that we do on Facebook or Google—with a huge growth in surveillance.
Dr Huppert
I want to make a little more progress. I am sure Members will want to speak later.
The Deputy Prime Minister insisted that the draft Bill be scrutinised, and the Joint Committee that did so produced a damning report. It stated that the Bill paid
“insufficient attention to the duty to respect the right to privacy, and goes much further than it need or should for the purpose of providing necessary and justifiable official access to communications data.”
The report was a unanimous cross-House report, which described information provided by the Home Office as “fanciful and misleading”. I am pleased to say that that Bill is now dead.
We said that the information was misleading before we knew that the intelligence and security services already had access to much of the information that they claimed was missing. To quote the Chair of the Joint Committee, the former Conservative Home Office Minister, Lord Blencathra:
“Some people were very economical with the actuality. I think we would have regarded this as highly, highly relevant. I personally am annoyed we were not given this information.”
The Home Office needs to be clear with Parliament when asking for new powers.
Even our current laws are incredibly broad. Although we have very welcome reassurances from the Foreign Secretary that the agencies stick to the law—I absolutely credit that—the law is vague and broad. Section 94 of the Telecommunications Act 1984, for example, allows secret directions
“of a general character”
that are
“in the interests of national security or relations with the government of a country or territory outside the United Kingdom.”
So if the US asks for something, we are supposed to provide it. The information does not have to be provided to Parliament, and it gags whoever the directions are served on.
When the Joint Committee looked at this, we had to admit that we could not find any information about how the power was being used. There was no ability to have any oversight. RIPA has drawn lots of criticism for its widespread use. It was originally introduced to take account of technological change, but it is so broad that it led to serious abuses of privacy. It allowed council officials to put children and their parents under surveillance at home and in their daily movements to find out whether they lived in a particular school catchment area. Most of us would not think that that was in the same vein as counter-terrorism. That is clearly disproportionate.
So what now? Before we even consider new powers, whether explicitly granted or acquired through new technology, we need a pause. We need a proper and full investigation into the powers already available to the intelligence and security services, and it has to be done competently and with an element of independence. We should commission independent, post-legislative scrutiny of both RIPA and the Intelligence Services Act 1994, and other related legislation, to see how they interact with each other. We would then have a clear, open understanding of where we stand now.
As Lord Carlile, the former independent reviewer of terrorism legislation said:
“the current legislation, including the Regulation of Investigatory Powers Act 2000, should be re-examined and rewritten to fit the current situation.”
That is not a radical suggestion. In the US, the Obama Administration have realised that proper and competent oversight is needed, and he has established the Privacy and Civil Liberties Oversight Board, which includes those within the Washington system and those outside it. It includes people with experience of working for not-for-profit organisations. It is citizen engagement and shows trust. We could follow that model and create such a board.
We could do much more to fix the loss of trust and confidence. We could publish, as happens in the US, the legal opinions used to underpin the surveillance framework. We could provide a clearer account of such expenditure and lift the legal restrictions on British companies publishing transparency reports about the requests that they receive. We should proactively publish information about the surveillance requests made: in bulk, the broad purpose, with no identifying details.
In the long term, we should look at signing up to the international principles on the application of human rights to communications surveillance. The 13 principles are legality, legitimate aim, necessity, adequacy, proportionality, competent judicial authority, due process, transparency, public oversight, integrity of communications, safeguards for international co-operation and safeguards against illegitimate access.
We should absolutely defend the right of our intelligence and security services to go after the bad guys, to use the powers that they have to protect us and make the UK and the world a safer place. However, it should not be at a disproportionate cost to the liberty and privacy that form the very foundations of our society.
The work that our intelligence and security services carry out on behalf of us all is valued and important, but we should not give them carte blanche. We would not want that. We need to have an open debate about what the rules are, what is acceptable and what we consider goes too far. It has taken us too long to get into this debate, but now that we are here, with so many right hon. and hon. Members, I hope we are now firmly here to stay in this discussion.
Mrs Linda Riordan (in the Chair)
Order. The Chairman of Ways and Means has given permission for me to impose a time limit. At least 12 Members wish to speak, so I intend to impose a 10-minute time limit on each speech. Will Members please keep their interventions short?
Mr Tom Watson (West Bromwich East) (Lab)
Information can be the most powerful thing in the world. It has changed everything more quickly and universally than ever before. The internet is all about information. The power of the internet is the power of information. Data can do almost anything. That is why it is so important that they do not end up in the wrong hands, and so important that our data, which we as individuals own, and which are our stake in the data galaxy, just as our vote is our stake in our democracy, are not unnecessarily taken without our consent.
I ask colleagues to remember in the rest of this debate that an individual’s data are just like his or her vote: almost insignificant by itself, privately expressed; but massively powerful when aggregated. We should no more unnecessarily tamper with our citizens’ data than we should impede their ability to vote. The capacity to deduce human behaviour and activity in the modern world of big data is impacting on our daily lives, from insurance premiums and health prevention through to online advertising and traffic management. Corporations are crunching data to learn about the way we live our lives.
At the heart of this cross-party debate today is GCHQ’s own big data programme—Tempora—and its impact on our citizens’ fundamental rights. It is a new and profoundly challenging issue for policy makers. We have to answer questions about the nature, scale and depth of surveillance that should be tolerated in our democracy. My concern about this area of public policy in the UK is that the question has not yet been put. We have avoided discussing this matter in all but whispered tones, while the legislatures of the US, Brazil and Europe have been rocked by the Snowden revelations. Yet in the UK, the main parties have paid scant attention to the issue.
The problem is this: the GCHQ Tempora programme has been mining our internet communications data without public knowledge on a colossal scale. There has been little public and parliamentary debate about whether that conforms to article 8 of the European convention on human rights, which protects the right to private and family life and correspondence. Nor has there been sufficient public or parliamentary debate on whether RIPA legally permits the mass collection of our citizens’ internet data.
Mr Watson
I can’t. I have no time.
Nor has there been sufficient public or parliamentary debate on whether Tempora is authorised by any other pieces of legislation. In fact, we only know of the existence of the Tempora programme because of the actions of Edward Snowden and The Guardian newspaper. I think that they have acted courageously in the public interest to uncover and reveal a secret Government programme that has gained access to the private communications of millions of individuals without their knowledge. A brave whistleblower and a courageous newspaper have enabled us only now to start to have a full and proper debate about whether such surveillance is proportionate and, indeed, legal under our existing legislation, treaties and agreements. That is the secret state laid bare: the Government acting without the knowledge or permission of their citizens, which is a flagrant breach of individuals’ moral and, probably, legal rights, for what they believe is the common good. Just like when they take away the votes of the misguided, the common good is not a defence. Our basic rights as individuals have to be sacrosanct.
Let us be clear. If the Minister is telling us that the law permits such fundamental abuse of liberty, the law is wrong and must be changed. I suspect that he may point to section 16 of RIPA to suggest that the Tempora programme is legal. Interpreting that section requires the unravelling of a triple-nested inversion of meanings across six cross-referenced subsections linked to a dozen other cross-linked definitions, which are all dependent on a highly ambiguous “notwithstanding.” The section is probably the single most confusing and complex drafting ever put on the statute book, and I have heard that a former GCHQ director said it was drafted in that way intentionally; it is what a computer programme would call “spaghetti code.” There is not a snowball’s chance on a hot day in Strasbourg that the section would pass the tests of foreseeability and quality of law required by the European convention on human rights. The UK already lost a critical test of the case on those grounds in 2008. One thing is abundantly clear: they are not extra safeguards, as is falsely claimed in the section heading; they are intended to allow GCHQ to trawl inside the UK, as Lord Lucas observed in another place on 12 July 2000.
This week we saw a major shift in the policy of the United States when the chair of the Senate intelligence committee, Dianne Feinstein, criticised the National Security Agency’s monitoring of the calls of world leaders. She said:
“With respect to NSA collection of intelligence on leaders of US allies—including France, Spain, Mexico…—let me state unequivocally: I am totally opposed.”
I am sure that the Prime Minister will be relieved that his phone is not the subject of surveillance by an ally, but is the Deputy Prime Minister exempt from surveillance? Will the Minister or Members who have put their necks on the block by taking part in this debate be exempt? What about their researchers or families? The assurance is not good enough for me.
We know that the “five eyes” co-operate closely and that UK data are available to the USA. Can the Minister give us any reassurance today that UK phone records are not routinely handed en masse by companies to GCHQ and, by implication, to the NSA? We know that basic internet logs are also held by Virgin, Sky, BT, TalkTalk and other internet service providers. Will the Government reassure us that those data are not routinely handed over in bulk to British intelligence and the NSA?
Parliament has a right to know what records are handed over and why. Yesterday, The Washington Post claimed that the NSA and GCHQ were tapping into the fibre-optic cables used to supply the data centres of Google and Yahoo! To achieve that, the telecoms companies that provide infrastructure to those organisations had to have knowledge of, and probably collaborated with, the procedure. Was any member of the UK Government aware of that facility?
To make it clear, The Washington Post is saying that telecoms companies have been illicitly aiding the security services to tap into data being processed by internet companies with which they have a commercial relationship. Those telecoms companies, which are the backbone of this wonderful thing called the internet that has allowed two decades of free expression and creativity to explode into the lives of our citizens, have been operating in the shadows to allow our security services to tap all of it.
The security services have clearly made the trade-off that the intelligence obtained is worth the invasion of privacy. They are judged on the quality of the intelligence they obtain and little else. Of course they are going to make that trade-off 100% of the time. I want to know whether the telecoms companies have voluntarily entered into that agreement, or whether they have been obliged to do so under UK or US law.
Before I conclude, I draw the Minister’s attention to a submission to the Select Committee on Defence—I draw hon. Members’ attention to my entry in the register—by the all-party group on drones, which I chair. The submission examines the idea of citizenship stripping in detail. The Bureau of Investigative Journalism has highlighted the uneasy relationship between the deprivation of citizenship, intelligence sharing with the US and the targeting of former British citizens in drone strikes in Somalia.
The concern is that citizenship may remove one obstacle to information sharing for the purposes of targeting British people. In particular, one former UK citizen, Berjawi, was targeted immediately following a telephone call to his wife in London, who had just given birth and was recovering in hospital. Perhaps unsurprisingly, the family allege that Berjawi and his wife’s mobile telephones were tapped and location data were shared with the CIA to target him.
David Omand, the ex-head of GCHQ, in his submission to the Select Committee on Home Affairs wrote about the likely intensification of tension between nations that unilaterally defend their interests with military means, including targeted killings, and those that seek collective security under international human rights law. He mentioned the “ethically ambiguous” position of the British public because they had benefited from the US drone programme, even though it would not be permitted in the UK. That cannot be right. The British public would surely be alarmed to hear that data collected in the UK might end up being used to implement the US targeted killing programme described as a “war crime” by Amnesty International.
I have other questions, but I must wrap up now.
Mr Dominic Raab (Esher and Walton) (Con)
It is a privilege to serve under your chairmanship for the first time, Mrs Riordan. I pay tribute to my co-sponsors, particularly the hon. Member for Cambridge (Dr Huppert).
It is right that this debate should be underpinned by cross-party support. Neither our security nor our freedoms should be the subject of partisan politics. I think we all agree that the burden of responsibility on our intelligence agencies to keep us safe is heavy, and we pay tribute to them.
I had the privilege of working with the agencies, including GCHQ, during my six years at the Foreign Office, and I know first hand that their work is vital. In his recent speech, the MI5 director general, Andrew Parker, set out the current security challenges that Britain faces, and I pay tribute to the officers who, out of the limelight, work unstintingly to protect us from those dangers.
I also pay tribute to Mr Parker for an under-reported aspect of his speech. While discussing trying to reduce the terrorist threat, he observed:
“In a free society ‘zero’ is of course impossible to achieve...A strong record of success risks creating an expectation of guaranteed prevention. There can be no such guarantee.”
As an MP and a citizen, I recognise that bitter truth. We in this House have a duty to ensure that the public grasp it, too.
Similarly, any democratic Government must be accountable to their citizens, particularly if they impinge on their citizens’ freedoms in the necessary pursuit of security. In recent years, UK surveillance of its citizens has increased exponentially, and the legal basis has sometimes, and now regularly, appeared strained at best. Oversight is frayed and legitimate debate is at risk of being drowned out by frankly untested assertions of national security.
In June, The Guardian published revelations by US National Security Agency whistleblower Edward Snowden that GCHQ was clandestinely tapping transatlantic fibre-optic cables, giving almost unfettered access to people’s phone call records, e-mails, Facebook entries and the like. The legal basis for Operation Tempora looks thin at best, and Parliament certainly had no idea of the scale of the use of those powers.
We also learned that Britain receives data from the US Prism surveillance programme, which appears to allow GCHQ to dilute—not circumvent entirely, but dilute—the safeguards that would apply if the same agencies were to gather the information themselves.
Richard Graham (Gloucester) (Con)
My hon. Friend mentions that there has recently been increased activity by the intelligence agencies. He is no doubt aware of the number of serious attempts at major acts of terrorism; there have been about two a year since 2000. Some 330 people have been convicted of serious terrorist activity, and there were four major threats in the first half of this year, including a 7/7-type attack. Twenty-four terrorists were convicted in the first half of this year alone.
Does my hon. Friend understand the extent of the frustration, particularly among those working in the Gloucestershire-based GCHQ, that such suspicions are raised against their activity when, actually, they are trying to protect British people from catastrophic terrorist attacks?
Mr Raab
My hon. Friend is shaking his head, but this is what the MI5 director-general said, so we ought to pay it some heed. There was a spike after 9/11, but it then dipped. In the most recent speech, given this month, the director-general said that the threat had not got worse.
My hon. Friend is certainly correct to pay tribute to the unstinting work of the intelligence agencies and law enforcement. In fact, however, the conviction rate for terrorist offences has reduced dramatically, which is also a real issue—the question of prosecution, rather than intelligence, if we are not only to keep track of, but to disrupt and deter, terrorist activity.
In this month’s speech, the MI5 director-general also lambasted The Guardian for handing terrorists a “gift”—he used a potent word. More recently, Ministers have claimed that the disclosures have put lives at risk. I want to take that seriously, because Mr Parker claimed that making public
“the reach and limits of GCHQ techniques”
breaches national security. To be clear about what was being discussed, the newspaper was not disclosing interception techniques—the technical aspect—or revelations of sources or operatives, which would clearly be a major source of concern, but simply revealing our intelligence “reach”. I find the assertion that was made difficult to take at face value. The contention may be true, but it cannot be taken on mere assertion.
Any serious terrorist groups assume that their phones, e-mails and internet use will be monitored. That is no secret, and learning that Western spies drain the swamp of their own citizens’ data in the process does not aid terrorists in any tangible way. If national security had been materially breached, why has no one at The Guardian been charged or even arrested since the search of its offices back in July? Why was David Miranda not arrested and bailed, following his detention for several hours at Heathrow, in August? Either UK law enforcement is surprisingly slow—given the assertions—or national security is being used as a fig leaf to muzzle disclosures that are just plain embarrassing.
I accept, by the way, that the disclosure that 850,000 contractors can access data from Project Tempora represents a security concern, but of course that vulnerability is entirely of the Government’s own making.
I am prepared to be proven wrong about all that, but Ministers and intelligence chiefs need to understand that the bald assertion of national security cannot be used to guillotine all debate. We are here to correct that understanding. Without revealing details that would prejudice the work of the security services, we need a coherent explanation of the damage to national security, not only vague and opaque assertions.
Mr Raab
I will not give way, because I am conscious of time. If I get through my speech, I will be happy for my hon. Friend to intervene.
From reports in The Guardian, we also know that the Government are concerned about the legality of the powers that they are using—fears that public debate might lead to litigation, fears about legal challenge under the Human Rights Act. Those are legitimate concerns. I recall similar ones from my own experience of working with the agencies as a Foreign Office lawyer. Those, however, are altogether more nuanced concerns than the shrill and unsubstantiated suggestion that we have somehow lost track of terrorist plotters as a result of the revelations.
The issues need to be debated in Parliament, not stifled by the blanket assertion of national security. Scrutiny is vital. In the US, as mentioned, the Democrat chair of the Senate Intelligence Committee, Dianne Feinstein, has called for a total review of NSA surveillance:
“Congress needs to know exactly what our intelligence community is doing.”
This week, on a bipartisan basis, a USA Freedom Bill was proposed in Congress, with support from more than 80 Congressmen—including, no less, the architect of the US Patriot Act, Republican Jim Sensenbrenner. The Bill would block collection of bulk data on American citizens, insert judicial oversight—something missing in this country—and increase transparency and reporting on the part of companies and Government. If that is good enough for the Americans, why here in Britain would we settle for anything less? Congress and the public in America have woken up to the scale of unfettered surveillance, and it is time that we in this House did the same.
What do we need to do next? First, we need a proper account to Parliament of the exercise of existing surveillance powers. Why and where are they deemed inadequate? Will the Minister, when he has the opportunity to speak, confirm that no MPs have been subjected to such surveillance, given that the House has not been informed of any change to the Wilson doctrine? Will Ministers clarify the extent to which GCHQ was involved in what has recently been reported about the NSA tapping Google and Yahoo! communications, without consent or any observation of the authorisation procedures agreed with those companies?
Secondly, if there are shortcomings—we need to be alive to those, on both sides of the debate—we need a clearer explanation of their impact on national security. Successive Governments have been remiss in proposing such broad data communications legislation, beyond the imperatives of national security or of access by police and the intelligence agencies, as most people and most Members of the House accept. That has undermined parliamentary and public support for the more forensic task of plugging any holes in our intelligence capabilities.
Thirdly, we need to consider any exposure of our agencies to “fishing expedition” legal challenges—I understand that concern. GCHQ has cited the Human Rights Act, a concern that I suspect stems from the expansion in the right to privacy under article 8 of the convention. If there is broader concern about the HRA, that must feed into the debate about its future.
Finally, I am not convinced that the Intelligence and Security Committee is able to provide the oversight that we need. I say that without casting any aspersion on current or former members, least of all its formidable Chair, who is present today. I do not believe, however, that the ISC has the tools or the independence to do the job properly. It is billed as a creature of Parliament, but through its appointment and accountability, and under the statutory regime, it is ultimately and really beholden to the Executive. It needs to develop into more of a Committee of the House, tailored in a bespoke way, but acquiring more of the powers and independence of normal Select Committees, if it is to deliver the kind of oversight capable of commanding public confidence.
Above all, we must take this debate forward, away from the polarised and untested assertions on either side, and place the work of those who would protect us on a firmer footing. Karl Popper said:
“We must plan for freedom, and not only for security, if for no other reason than only freedom can make security more secure.”
We need to pursue our security in a way that respects our freedoms, limits incursions to genuine cases of national security and does so under a regime that commands the rule of law. Failing to do that would be the real gift to the terrorists—a victory for everything that they believe in and a blow against everything we stand for.
Mr David Winnick (Walsall North) (Lab)
I suspect that there will be a sharp divide in the Chamber, not necessarily on party lines, as in previous debates on intelligence and security over many years, even before the agencies were put on a statutory basis. Like everyone else, I do not for one moment doubt the need for the security and intelligence agencies to work as required. That would be so even were we not faced by the threat of acute terrorism. Let no one be in doubt that I entirely accept the necessity for such activities, as other Members have said.
There have, however, been scandals in the past. During my own parliamentary career, we had the “Spycatcher” episode, in which Peter Wright and other MI5 officers acted outside the law and in a way that was a disgrace to the organisation; the Government of the day tried to ban the book that Wright wrote, but finally “Spycatcher” was published. Some in the security agencies took the view that Harold Wilson was possibly a long-time Soviet mole. In 1988, Edward Heath—as a former Prime Minister, he probably knew what he was talking about—told the Commons in a debate that if some in the security services
“saw someone reading the Daily Mirror, they would say, ‘Get after him, that is dangerous. We must find out where he bought it.’”—[Official Report, 15 January 1988; Vol. 125, c. 612.]
Some would say that that was a long time ago, which indeed it was, but to bring ourselves more up to date, in February 2010, just before the election, there was the case of Binyam Mohamed, who had been the subject of extraordinary rendition. He was tortured. He had lived in Britain for many years, but he was not a British citizen, and there was no doubt that he was tortured in Pakistan. A federal court in Washington confirmed and upheld his story that he had been severely tortured.
The then Master of the Rolls, Lord Neuberger, and his fellow judges concluded in 2010—not in the 1980s—that MI5 had misled the Intelligence and Security Committee and went on to say:
“Some Security Services officials appear to have a dubious record”
when it comes to human rights and coercive techniques. I would not have thought for one moment that when the then Master of the Rolls and his fellow judges made that comment they doubted the need for the security services. They were not in the business of trying to undermine the protection of our security against terrorism, but that was a very strong indictment, to say the least, of some officials. It was not argued that MI5 officials had been involved in torture. There have never been such allegations, but the argument was that MI5 officers were a party to it, knew what was going on and did not tell their political masters. In other words, they condoned it. So the security services have a record that we condemn.
This debate has arisen largely as a result of Edward Snowden’s disclosures and much of what has appeared in The Guardian. The general attitude of the authorities—politicians, the Government and others—is that we should not know about such matters, that The Guardian should not have published what it did, that Snowden is a traitor and that revealing what he did is not in the interests of the United States, Britain or other allies, so The Guardian has done a disservice. I could not disagree more.
Mr Adam Holloway (Gravesham) (Con)
If in the last few weeks, we had lost a city to nuclear terrorism or there had been a gigantic mass casualty, I wonder whether the hon. Gentleman’s constituents would see Edward Snowden as a trendy, cool whistleblower or as a traitor.
Mr Winnick
I do not believe for one moment that The Guardian published material that would help terrorists. There is no evidence of that. It is all very well the hon. Gentleman acting as a spokesperson for those who want to damage The Guardian, but they do not produce any evidence. They simply say, as the hon. Gentleman has just done, that if there were some atrocity, The Guardian should be held responsible. Where is the evidence, and why would The Guardian or any other newspaper want to help terrorists? The hon. Gentleman is saying that The Guardian is totally irresponsible and willing to publish something that could aid terrorism, when there is not the slightest evidence of that.
On Friday, The Guardian published information that the German Chancellor’s mobile phone had been monitored for years by the US National Security Agency. Is he suggesting that that information will help terrorists, or that the international terrorist network is now in a better position to cause harm to us or our allies as a result of that information? Should we not know that that has occurred? If the hon. Gentleman wants to respond, I will give way.
Mr Holloway
I welcome this debate. I was making a simple point about Edward Snowden and whether the hon. Gentleman’s constituents would think he was a terrorist in the event that what I described had happened. I did not even mention The Guardian.
Mr Winnick
My hon. Friend the Member for West Bromwich East (Mr Watson) spoke about the latest technology. I opposed my own Government on identity cards because I thought they would be an intrusion into civil liberties. Such documents should not be introduced, except perhaps in war time, because they would not assist in the struggle against terrorism in any way. I was pleased that they dropped the proposal, but the growth in information technology to which reference has been made several times during the debate and the amount of information that the intelligence agencies can accumulate would have been unthinkable even 10 years ago and in some ways that dwarfs the dangers posed by identity cards. That is why I take the view that it is unlikely that the parliamentary oversight that we are debating today, despite some of the changes that I am pleased about, including the additional powers that have been given to the Committee, will be effective, but oversight is essential.
Going back to The Guardian, during Monday’s debate on the Prime Minister’s statement on the European Council, he said:
“I do not want to have to use injunctions, D notices or other, tougher measures; it is much better to appeal to newspapers’ sense of social responsibility. However, if they do not demonstrate some social responsibility, it will be very difficult for the Government to stand back and not to act.”—[Official Report, 28 October 2013; Vol. 569, c. 667.]
That is the most blatant threat to the press in recent times. It says in effect, “Do as I say or the Government will take the necessary measures.” That is all the more unfortunate while we are debating a royal charter that is being described as no threat to the press. What the Prime Minister said on Monday is very much a threat to the press. I tabled a question to the Prime Minister asking what information had appeared in The Guardian on intelligence matters that the Government objected to on security grounds. The answer, which I could have given when I tabled the question, was that he had nothing to add.
Mr Wallace
I do not think the suggestion is that any newspaper should be above the law, whether it is The Guardian or a Murdoch newspaper. They are all subject to the law, as are all citizens of this country.
Mr Winnick
Indeed. No newspaper should be above the law, as I understand the position at the moment. I must be careful because something that is taking place in the courts is sub judice, but it demonstrates that newspapers are not above the law. When they break the law, they can be charged like any individual. I believe in a free press and I have mentioned the paper that is in the spotlight at the moment. If it were The Sun, the Daily Mail or The Times, I would take the same view. I do not take the view that I do because the newspaper in question happens to be The Guardian. I take it because a newspaper has the right to publish material that it believes is in the national interest. That is a free press, which I happen to be in favour of. I would have hoped that the hon. Gentleman was also in favour of that. In the argument on another subject, it has been said that we have had a free press for more than 300 years. It has had many setbacks during those 300 years, but I am keen that we should continue to have a free press and not something that is more like what happened in the past in eastern Europe.
I have two hopes about the present situation. I hope that The Guardian will not give way, and that it will demonstrate that it will continue to publish what it believes is important. It is interesting that the Prime Minister said in response to a Conservative Member that the paper had agreed not to publish certain matters, so suggestions of irresponsibility are not relevant.
I also hope that there will be sufficient parliamentary support for what the paper is doing. If we believe in a free press, and no one on the Government side or members of the Intelligence and Security Committee would disagree for one moment that there needs to be a free press, I hope that we will uphold the right of The Guardian to do what it is doing and resist the Government’s pressure and blackmail. It is absolutely essential that the information that Snowden has revealed, which is not helping the terrorists, but which we should know about—really, to a large extent, it was done in our name—should be in the public domain, and I am glad that it is.
Julian Smith (Skipton and Ripon) (Con)
It is very important during this debate to reassure the public that in Britain we have one of the best oversight regimes in the world. That has evolved not only under this Government but under Labour. There has been a great deal of consensus about how such improvements should be made.
Let us also reassure people that our intelligence services have been accused of no crime. There has been no comment in any articles in recent weeks that GCHQ or our intelligence service have behaved illegally. That is not to say that improvements do not need to be made, particularly in terms of metadata and how they are analysed. We should also consider the types of people who are commissioners. Why do we not look outwith the judiciary and start looking at, say, a retired bishop or somebody from another walk of life? However, in terms of the subject today—the oversight and framework of our intelligence services—I am afraid that the responses to the debate have been way off the mark.
I want to focus my attention on an important challenge to our security services, and that is our excellent British press. Almost every newspaper has played an important role in challenging the intelligence services over recent months with their reporting on the Snowden leaks. That is an important role, but the point that I want to make today is that one newspaper, in seeking to raise important issues, and absolutely having the right to do so, has overstepped the mark to such a degree that the very thing that our intelligence services are trying to protect—our national security—is threatened. Before I continue with my remarks, I should say that I enjoy The Guardian. I respect many journalists on the paper, and this is not an attack on the right of The Guardian to report on Snowden.
I want to raise two or three issues today. On 4 October, The Guardian reported on the Tor network—the black internet—where child pornography, drug trafficking and arms trading take place. Please look at the detail of that report. If people look at the trial, in June, of one of the most active child pornographers in Ireland, they will see that the NSA and the activities of the intelligence services were key to apprehending and hopefully—it is likely—putting him away. However, on 4 October, The Guardian went into a level of detail that the previous head of GCHQ decried as being wrong, and which many people in the police world feel will cause major issues in terms of picking up people engaged in organised crime.
Rory Stewart (Penrith and The Border) (Con)
Will my hon. Friend expand on the question whether there is a distinction between organised crime and terrorism, in terms of the kind of measures that it is reasonable for a security organisation to take, and the kind of surveillance that it can operate?
Julian Smith
I am going to push on, but it is important to say that the intelligence services are doing critical work in both categories, and we need to support that work.
On the issue of the documents that The Guardian holds, when hon. Members talk about prosecutions not happening and things not really being that bad, I ask them to look at the online discussions that Guardian editors have had. They have admitted to sending internationally the most detailed documents and underlying data about GCHQ specifically. I do not want to talk too much about David Miranda today, but his data were on a games console. Those data, in data dumps throughout the world, are still out there, and hackers claim that they have access to it. The Independent, which also had access to those documents, started reporting on them but then stopped because it realised that to do so was problematic. The issue with The Guardian is current; the data are out there and are a danger to our national security.
The third element that I want to discuss today is the fact that The Guardian is not talking to the Government. If it really was confident in its position, and I believe that there is quite a lot of tension at The Guardian on the approach it has taken, it would have a discussion with the Government, who have been very clear. Look at the witness statements for the Miranda trial. They have been so careful about ensuring that they do not interfere with The Guardian as a newspaper and with its right to report. However, The Guardian should come forward now and tell the Government what intelligence data it has overseas and where those intelligence data are. Is there identifying information about our agents in the data? What protections are there in The Guardian offices to look after that material?
Dr Huppert
I thank the hon. Gentleman for giving way. I could pick up on a lot of his points. He says that The Guardian should be talking to the Government about this. Is he aware that it has been talking to the DA notice secretary? They have been in touch for many months, talking about these things. Does he think that part of the onus should be on the Government to provide advice if they are concerned about such things? The Guardian, as I understand it, is quite happy to talk about how to make sure the data are secure, and frankly, the NSA should never have lost them in the first place.
Julian Smith
If my hon. Friend looked at witness statement 1 by Oliver Robbins, he would see the approach to the Miranda trial. He would see the approach that The Guardian has taken, which, essentially, in the first two reports in June, was not to get clearance from the Government. Following a reasonable discussion with the Government, that was just ignored and documents were sent overseas.
I urge Mr Rusbridger today to begin an open dialogue with the Government to tell them where the dumps of data are, and to come clean on whether they contain information that could lead to the identification of our security agents. I also urge Mr Rusbridger, his board and his editorial team to talk to the Government before publishing any further reports on our security services, intelligence gathering and our activity, because The Guardian, which had every right to report on the issue and has raised important topics of debate in a digital, global, interesting way, with good journalism, has threatened the security of our country, and stands guilty today, potentially, of treasonous behaviour.
Mr George Howarth (Knowsley) (Lab)
I compliment the hon. Member for Skipton and Ripon (Julian Smith) on making a measured, thoughtful speech. It is important, when we have this debate, that we are measured and thoughtful in how we approach it. I congratulate the hon. Member for Cambridge (Dr Huppert) on the timeliness of the debate. It is important that we have an opportunity to discuss these issues, although some of the hon. Gentleman’s comments might not have been as well informed as they might have been. I will come to that in a moment.
For once, I wholeheartedly agree with the hon. Member for Brighton, Pavilion (Caroline Lucas); I hope that that is not the start of a pattern. In her intervention, she said, “For goodness’ sake, can we stop concentrating entirely on The Guardian, as if it is all about The Guardian?” To get that issue out of the way, my view is that if we ask whether The Guardian was entitled to publish what it did, the answer is probably yes. If I am wrong about that, the authorities will take the necessary action. I do not believe that it has done anything wrong. However, if we ask the question, “Was it wise for it to publish what it did? Was that a responsible thing to do?”, I think that the answer is no. For the purposes of this debate, I will leave it at that as regards The Guardian.
I said that I would come back to the hon. Member for Cambridge. In an interesting exchange between him and the hon. Member for Wyre and Preston North (Mr Wallace), the latter asked, “How does he know?”, and the hon. Member for Cambridge, in a roundabout way, admitted that he did not know. In a way, that poses the dilemma of this debate, because not everyone can know. Some people have to know, and the rest of us have to take it on faith that some people know and are acting responsibly. That is the issue on which I want to concentrate in terms of the Intelligence and Security Committee, of which I have been a member for the past eight years.
The hon. Member for Cambridge did, in passing, refer to the new Act. He served on the Public Bill Committee that considered it. However, it is almost as if the Act does not exist in his speech. He does not seem to accept that the powers, resources and capabilities of the Intelligence and Security Committee have changed almost beyond recognition, in my experience on the Committee. However, we will leave that to one side. The difficulty is that because the hon. Gentleman does not know a great deal about it, he is in danger of arriving at rash judgments about what is wrong and what could be done.
Let me demonstrate that by reference to the issue that the hon. Gentleman has talked about at some length, and legitimately so. I am talking about the Prism programme—what the UK’s involvement in it was and so on. Not once during his speech, unless I missed it, did he refer to the fact that the Intelligence and Security Committee, which he considers to be inadequate, has already looked at the Prism programme and what our own agencies’, and particularly GCHQ’s, involvement in and knowledge of that was. We issued a statement—an interim statement, I might add—in July. In the course of that statement, which has not been referred to so far, we arrived at some important conclusions. The first one was:
“It has been alleged that GCHQ circumvented UK law by using the NSA’s PRISM programme to access the content of private communications. From the evidence we have seen, we have concluded that this is unfounded.”
For obvious reasons, it is impossible for me to go into detail about all the evidence that we were able to look at, but we did look in detail at very important pieces of information and we were able also to look at what authorisations were involved in the process of accessing the information, particularly the communications within it. The law has not been broken.
Mr Howarth
It was after the Guardian revelations. The hon. Member for Cambridge seems to think that that is funny. Actually, he would still be sitting here today if we had not gone and looked at this matter after the allegations emerged. He would be accusing us of being inadequate in our responsibilities.
Mr Howarth
I will give way to the hon. Gentleman, but then I must make some progress.
Rory Stewart
Will the right hon. Gentleman clarify why the Committee did not look into Prism before The Guardian published its allegations?
Mr Howarth
Let me answer the hon. Gentleman very carefully; I hope that he will forgive me for being none too specific in my answer. Part of our responsibility, which did not just emerge after the revelations about Prism, is to look at what the agencies do, what their capacities are and how they use those capacities. It is a continuous process. We have in the head of GCHQ. We take evidence. We probe what it is doing and what it is capable of doing. Therefore, it is not that we did not have any concerns or any interest in what GCHQ was capable of. That is an ongoing process, but inevitably, when something new emerges, it is appropriate that, as a Committee, we look into it.
I have answered the hon. Gentleman’s question perhaps not as accurately as he would have liked, but—I am not being evasive when I say this—if I went any further, I would be going into detail that at this stage I do not think is relevant.
I was talking about the conclusions that the Committee reached in July. The second conclusion was this:
“We have reviewed the reports that GCHQ produced on the basis of intelligence sought from the US, and we are satisfied that they conformed with GCHQ’s statutory duties. The legal authority for this is contained in the Intelligence Services Act 1994.”
The third conclusion was that
“in each case where GCHQ sought information from the US”—
this is an important conclusion—
“a warrant for interception, signed by a Minister, was already in place, in accordance with the legal safeguards contained in the Regulation of Investigatory Powers Act 2000.”
Let us be absolutely clear as regards our own agency. We were able to look in detail at how it had used the information and we were able to conclude, with a high degree of conviction, that it was not breaking the law.
Hazel Blears
My right hon. Friend is making a very thoughtful and comprehensive speech and speaks, no doubt, for many of us on the Committee. It is an essential part of the debate that the agencies were operating within the existing legal framework of British law. Whether—my right hon. Friend might want to comment on this—the existing framework needs review was also a matter considered by the Committee, and that appears to be the heart of this debate. Yes, the agencies have conformed with the existing legal framework. It is legitimate debate to say, “Is that, in this modern age, still appropriate?” But the Committee clearly also went on to consider exactly that issue.
Mr Howarth
It is almost as though my right hon. Friend read my speech in advance. With remarkably good timing, she leads me on to my next point. In our report, as she well knows, under the heading “Next Steps”, we say:
“We are therefore examining”—
this is future work to be done—
“the complex interaction between the Intelligence Services Act, the Human Rights Act and the Regulation of Investigatory Powers Act, and the policies and procedures that underpin them, further. We note that the Interception of Communications Commissioner is also considering this issue.”
In terms of who is doing their job and who is not doing their job, our Committee is doing our job; and, by the way, the commissioner is doing his job. There is, I think, a debate to be had—I cannot remember where this was raised—about the role of the commissioner.
One of the things that the right hon. and learned Member for Kensington (Sir Malcolm Rifkind), the Chair of our Committee, has brought about—it is partly to do with the legislation and, I think, partly to do with his own feelings about the way we need to act—is our becoming more outward facing as a Committee. As has been noted, we are to have the first open session, at which we will be interviewing in public the three heads of agencies, a week today.
It is important that we have made that change. It is important that when we can say what we know in public, we do so. In addition, although I would not necessarily go along with the formulation put forward, there might be a case for trying to persuade the interception commissioner to become slightly more outward facing. But that—
Mrs Linda Riordan (in the Chair)
Order. To allow all Members who have indicated that they wish to speak to do so, I intend to reduce the time limit on speeches to eight minutes.
Mr Ben Wallace (Wyre and Preston North) (Con)
I congratulate the hon. Member for Cambridge (Dr Huppert) on securing the debate. I regret that it does not address the real problem of how to rebuild trust in the work of our intelligence services, to protect our country and our spies from the many allegations that circulate around them, against which they cannot defend themselves.
Let us be clear that spies spy. That is no big revelation. Britain spies, as do other countries, to protect itself and to further its interests. If we were to discover that banks in, say, Liechtenstein were hiding British taxpayers’ money and refusing to reveal which British citizens were avoiding paying tax, I believe that it would be perfectly legitimate for British intelligence services to go there and find out who those tax avoiders were. To do so would not protect us against terrorism, but it would protect Britain’s interests.
I venture to suggest that it is right for our spies to go abroad and find out which countries are not playing by the rules—which countries are cheating and stealing our secrets—to protect British industry, British jobs and British national security. That is what spies do, and we should be proud of the fact that we do it particularly well. In fact, we do it better than most across the globe, and it gives Britain a place at the top table. That is not to be sniffed at.
I am not a member of the Intelligence and Security Committee, but I worked in intelligence in Northern Ireland before half the legislation, which the hon. Member for Cambridge seems to have missed, came into play. I also worked for QinetiQ before I first came to the House. While the hon. Gentleman was a biological scientist, I was a computer geek. I wrote COBOL from the age of seven or eight, which was about the time when he was born. The debate is often couched in a language of, “Wow, can we do that?” and people are surprised by what is possible. Already, without being a member of a security service or a Government, I can find out how every person in this room shops, where they live, when they bought their car and what their credit rating is. I can probably get hold of everybody’s details without very much effort.
Interestingly, I have heard no criticism of the fact that we do not regulate the private sector. No one has expressed fear about that or demanded that we do so. The big capitalist companies in America—the Googles and the Facebooks—harvest our data without a by-your-leave, sell it on and on through intermediaries and make billions of pounds. However, I have not yet heard anyone mention that they all keep their servers offshore to avoid tax. That is the area that needs regulating to protect people.
I am proud of the fact that our security services are regulated, and I would rather have the state than the international private sector grooming through my internet capabilities. I am aware that each of us is subject to oversight, because we are democratically elected. The Home Secretary is appointed by the Prime Minister, in a Government who are is created through a democratic process.
Additional oversight is provided by the relevant legislation. The Intelligence Services Act 1994 mentioned the intelligence services as though they were simply a normal body. The Regulation of Investigatory Powers Act 2000 attracts a lot of criticism, but I operated before it was introduced, and I did not have to sign off anything, keep a log or register with anybody the things that I wanted to do. RIPA did not give people new powers; it made them register how they use their powers. It is a good piece of legislation, not a negative one. My former colleagues still hate it, which is a good sign, because it means that they are accountable for how they use their powers.
Mr Robert Buckland (South Swindon) (Con)
To amplify the point, RIPA and the Police Act 1997, which predated it, were a response to rulings by the European Court of Human Rights that the previous regime was not compliant with the convention. They were introduced to bring the United Kingdom into compliance with the convention.
Mr Wallace
RIPA is not perfect. It has its flaws, like any legislation, but it was an attempt to put on a statutory basis what we were doing to protect our agents, our personnel and the functions that we carry out. Let us remember that spying is dangerous. It is about risk. Our men and women in Cheltenham, in Vauxhall and all over the country put their lives at risk to protect Britain, and there is a serious downside to getting it wrong. If they get it wrong, they do not get charged the wrong price, or something of the sort; if they get it wrong, people die. If that happens, constituents get very upset, and the country becomes less secure. Terrorists start to win; countries that are not our friends or allies start to win; and British industry starts to lose out. Spying has a strong role to play, but getting it wrong carries great risks.
I will not go on about The Guardian, but I will make one or two points. First, the newspaper has yet to specify any crime committed by the British Government, authorities or spies, even though that is what its public interest defence hinges on. It has yet to produce any evidence that British spies are breaking British laws. It is welcome to do so at any time, and I would be delighted to discuss that in a meeting with the editor of The Guardian. Until he publishes such evidence, however, the reports amount to saying, “Yahoo! Look how exciting technology is. Look what we can do.” That is not a public interest defence; that is an attempt to sell more newspapers.
Secondly, how do we know the whole picture? I am assured that grown-up people in The Guardian are sitting down in a sealed room and looking through all the evidence. Perhaps they could have asked for help from their former features editor, Richard Gott, who had to resign in 1994 after allegations emerged that he had taken money from the KGB. He would have been a good man to review the evidence.
Who should be the judge and jury in this case? I venture to suggest that a state with some form of oversight would be a better judge and jury than a whole load of journalists locking themselves up in a room with the evidence. Until The Guardian produces evidence of a crime that our agents are supposed to have committed, it has no public interest defence. That is all that it has to answer, and I will defend its right to publish if it produces evidence of a crime.
Mr Winnick
What sort of oversight was there in the case that I have mentioned of Binyam Mohamed, who was tortured with the knowledge of MI5 officers? I am not aware that such information was reported to the Intelligence and Security Committee, or that it took the initiative in trying to find out whether other such cases occurred. To a large extent, oversight has been defective, either because of indifference on that Committee’s part or because the security agencies have not been willing to provide the relevant information. The hon. Gentleman is putting a total gloss on the practices of the past—I hope that they are in the past—which were unacceptable to Parliament and to the British public.
Mr Wallace
I totally agree that there have been failures, which is why we introduced new legislation to give greater powers to the Intelligence and Security Committee. It does not have to take things at face value; it can appoint an investigator to go in and do what it wants to do, not what it is told to do. I recognise that there have been failures in the past, but that is why, step by step over the past 20 years, we have seen layer on layer of new legislation and new oversight. Yes, there were failures and no one is perfect, but our state has oversight and a democratic legitimacy that many of our opponents do not.
Let us remember that Mr Snowden could have gone to Switzerland—the Americans have been after Roman Polanski for decades and they have never got him back—but, no, he went to China and Russia. I am not sure whether he is a traitor, but I question his judgment about the countries to which he decided to run off. Russia, for example, is killing journalists and lawyers as we speak. We must keep in mind the motives behind that so-called whistleblower.
The world will become increasingly vulnerable to abuse of communications data, which will be used by more and more people for criminal reasons. I am conscious of the sub judice rule here, but I must point out an irony regarding communications data that is so viciously opposed by several colleagues. Should we ever, have to investigate, say, a couple of journalists exchanging e-mails, if we were to go to an internet company to ask for the e-mails between Mr A and Mr B, there is no guarantee that it will have kept that data. Internet providers currently have no obligation to keep records in the same way as mobile companies. The hon. Member for West Bromwich East (Mr Watson)may want to reflect on that.
I have issues with the way that intelligence is used as evidence by politicians. I risked my life in Northern Ireland to avoid shortcuts and the imposition of 28 or 90-day detentions without charge, which I opposed, ID cards, which were a complete waste of time, and detention without trials. Spies have risked their lives to keep us within the law. Politicians have a duty to ensure that they do not bend the law to try to cut corners on good intelligence gathering, to turn it into evidence to get a conviction in court.
[Mr Graham Brady in the Chair]
John McDonnell (Hayes and Harlington) (Lab)
I welcome what The Guardian has done. It is heroic. The publication of this information has opened up a wide debate. There is talk of treason—Michael White is here, but I want to drag him off to the Tower for being a running dog of the bourgeoisie, not for treason. This is ludicrous. Allegations of treason are being bandied about, but what has actually happened is simply an exposé of what is taking place and what we should have been informed about in terms of parliamentary procedures.
In America, there has been cross-party agreement that the status quo is unacceptable. Obama has set up a full review of surveillance activities and has established a privacy and civil liberties oversight board. The author of the Patriot Act has said that the revealed activity is
“well beyond what the Patriot Act allows.”
The chairperson of the Senate Select Committee on Intelligence has called for a total review of all intelligence programmes. That is exactly what we are calling for here. Others with experience have also commented. Lord King, the former Secretary of State for Defence and former Chair of the Intelligence and Security Committee, straightforwardly said:
“Legislation has to keep up to date with all these things and the way people use them. I think it is most important that all the legislation in this area is under regular review.”
Interestingly, he also said that a member of the Opposition should chair the ISC to give it more credibility. Lord Carlile said that
“the current legislation, including the Regulation of Investigatory Powers Act 2000, should be re- examined and rewritten to fit the current situation.”
The principles of what we are seeking were set out clearly by a former director of GCHQ, Sir David Omand, in a recent Demos report:
“Democratic legitimacy demands that where new methods of intelligence gathering and use are to be introduced they should be on a firm legal basis and rest on parliamentary and public understanding of what is involved, even if the operational details of the sources and methods used must sometimes remain secret.”
All we are asking for is a review and for structures to be put in place based on those principles. The general public also want this debate. A recent ComRes poll for Big Brother Watch found that 71% of people believe a debate about surveillance law is in the public interest. We need to respond to that public opinion, because recent revelations have undermined credibility.
I want to run through several practical suggestions proposed by some independent bodies. I have been moving amendments to the High Speed Rail (Preparation) Bill, so I came late to this debate; I am sorry if others have already mentioned them.
The legal opinions used to underpin the ongoing surveillance framework should be published, as the US Government have done. The budget and investigatory capacity of the Intelligence and Security Committee, the interception of communications commissioner and surveillance commissioners should also be published. Is it true that the ISC’s current resource is a retired Metropolitan police officer on a part-time basis?
The Investigatory Powers Tribunal should be reformed so that it is presumed that its hearings should be held in public, that it should state the reasons for reaching its decisions and that its judgments can be appealed in court. We should end the need for Secretaries of State to approve appearances of the heads of agencies before parliamentary Committees and allow agency and service heads to give evidence in public where appropriate. The legal restrictions on British companies publishing transparency reports about surveillance requests should be lifted.
Rory Stewart
I support much of what the hon. Gentleman proposes. Does he agree that, as a minimum, we should aim to meet the US standards relating to this kind of activity?
John McDonnell
That is exactly my point. Much of our intelligence services are integrated in many respects anyway, so we must ensure a common standard approach. The Americans have said that they are looking at a root-and-branch reform and we need at least to start along that pathway in order to mirror what is happening in the US.
I will be brief as others need to speak, but the other proposal is that we publish details of the use of surveillance powers broken down by agency, rather than the single UK figure currently published, including the scale of international intelligence sharing.
All those proposals are simply practical. In addition, we should enhance whistleblower protection for those who want to come forward from within the services, because that protection clearly seems inadequate at the moment.
Who will lead the reform programme? Does it have to be Parliament? To be frank, and with respect to existing members of the Intelligence and Security Committee and its Chair, having on the ISC and as its Chair former Ministers who were previously responsible for the security services leads to concerns about conflicts of interest. It could be that members are providing oversight on decisions that they made when Ministers.
There needs to be a demonstration of openness and transparency. There needs to be a fundamental review. The ISC needs to be led by those who are above all potential charges of conflicts of interest, which means, I am afraid to say, not the current members of the ISC.
One proposal suggests a discussion in Parliament about what sort of agency should be taking the issue forward and I think it should be parliamentary. The initial discussion could come through a Speaker’s Conference, in which all parties are brought together to examine the options available. The chosen option needs to have independence, resources and expertise and must be as open and as transparent as possible, while also avoiding conflicts of interest.
Mr George Howarth
I speak as a member of the Intelligence and Security Committee. Can my hon. Friend provide an example of such a conflict of interest?
John McDonnell
That is the problem. Who knows? I do not know what the Intelligence and Security Committee does half the time, because half the time it is not exposed to the public. We cannot determine whether a conflict of interest has occurred or whether—
John McDonnell
I am afraid that, as has been demonstrated previously, the ISC did not know half the things that were going on until it read The Guardian. Confidence in the way forward needs restoring and that should come through a frank discussion led by Parliament. That is why I suggest a Speaker’s Conference to bring the relevant parties together with the expertise to develop a way forward that can establish the structures, procedures and legal basis on which to rebuild the confidence in our oversight over intelligence and security in this country and some parliamentary and democratic control over it.
Martin Horwood (Cheltenham) (LD)
I congratulate my hon. Friend the Member for Cambridge (Dr Huppert) on securing the debate, which has been helpful in several ways. First, it allows us to reflect on the changing nature of communication in our society; these days, the best way of achieving secure communication is probably to send an open postcard rather than putting it on Facebook.
Secondly, the debate enables us to correct the slightly partial accounts of the current state of things such as article 8 of the European convention on human rights. The hon. Member for West Bromwich East (Mr Watson) correctly quoted the section relating to the right to private correspondence, but he left out the second half, which refers to exemptions for national security and the fighting of crime.
Thirdly, the debate allows us to correct a few of the really inaccurate assertions in the wider debate, such as the one about the presentation on “Mastering the internet” that was portrayed as some Orwellian plot to dominate cyberspace when it was actually about enabling people to use search engines better. Much nonsense has been talked in the wider debate, but the issues are serious.
I must declare an obvious constituency and family interest in this debate. My parents both worked at GCHQ and, before that, at Bletchley Park. My father, Don Horwood, was involved, under Tommy Flowers, in building Colossus, the world’s first programmable electronic computer. He was one of the people who kept it secret for decades, enabling the Americans, God help us, to take credit in the meantime for building the first electronic programmable computer.
My mother went back to Bletchley Park with me only recently, after 60 years’ absence. Only then did she reveal to me that she had not just been a linguist, as I had always thought, but had interpreted intelligence as well. The habit of keeping secret things that need to remain secret is one of the enormous debts we owe that generation of code breakers.
That continued in GCHQ during the cold war. We cannot know about all the secret victories our intelligence services won then, and are winning now, because they must, quite properly, remain secret. If we cast too much sunlight on some of these things, they stop working; it is not so much that we would always endanger agents’ lives, as that talking too much in public about precise techniques and sources makes those sources disappear and those techniques more difficult to apply. That endangers people in different ways.
I would love to think that we had entered a safe post-war world, where that level of secrecy was unnecessary, but that is simply not the case. We still face hostile states and hostile state intelligence services. Frankly, if the cyber-attacks and counter-attacks going on now took place in some physical realm, they would, in some instances, almost constitute an act of war. Some states are certainly engaged in hostile activity towards this country, but there are also the new threats of terrorist networks and organised crime.
It is not only the threats but the technology that is changing. We cannot make it childishly simple for those who would do us harm to evade surveillance. We must move with the times, and we must give our intelligence services the capability, under proper oversight, to access the communications they need to access.
Of course, much of the discussion is about when access crosses the line into surveillance. A lot is said, and a lot of allegations are made, about mass surveillance, but if it was really taking place, it would—apart from being wildly impractical—be straightforwardly illegal. In his statement to the House, the Foreign Secretary made it clear that he still regarded the situation in this way:
“To intercept the content of any individual’s communications in the UK requires a warrant signed personally by me, the Home Secretary, or by another Secretary of State…Warrants are legally required to be necessary, proportionate and carefully targeted, and we judge them on that basis.”
He added that all those authorisations were
“subject to independent review by an Intelligence Services Commissioner and an Interception of Communications Commissioner, both of whom must have held high judicial office and report directly to the Prime Minister.”—[Official Report, 10 June 2013; Vol. 564, c. 32.]
As Members have pointed out, we have a sophisticated system of democratic oversight. The Labour Government passed the Intelligence Services Act in 1994, establishing the Intelligence and Security Committee. RIPA has been referred to. The coalition’s Justice and Security Act 2013 became law only in April, further refining and defining that Committee’s responsibilities.
There is a degree of anger at GCHQ and among my constituents. People at GCHQ understand that there will inevitably be some misunderstanding of what they do, because it is not very public, and that there may be some naivety and inaccuracy. However, they find it difficult to forgive the accusations of bad faith and illegality. Their perception is that they operate under one of the most exacting sets of laws and systems of ministerial and independent oversight applied to any intelligence agency anywhere in the world.
Of course, there are things that will remain secret, and there are things that are done that would surprise us if they became public. Hon. Members have referred to the interception of Angela Merkel’s mobile phone communications by the NSA. I find that very surprising, although anyone who knows West German intelligence history will know that the Federal Chancellor’s office has not always been the most secure place. I am sure my hon. Friend the Member for Cambridge (Dr Huppert) could find similar stories of insecurity in unexpected places.
Of course, Angela Merkel’s intelligence agency—the Bundesnachrichtendienst—employs 6,000 people and has a sophisticated electronic capability, so I would be amazed if she, even with her East German background and the obvious sensitivities that go with that, was as surprised at what has been going on as she has made out in public.
John McDonnell
Would the hon. Gentleman be surprised at this morning’s reports that the Pope was bugged as well? Is that a venial or a mortal sin?
Martin Horwood
The hon. Gentleman makes a humorous point, but the activities of the Vatican bank and other things have been the subject of conspiracy theories, so who knows? Yes, of course, it is surprising that the Pope was bugged. However, the point is that we do not know the rationale for any of the intercepts, the precise thinking behind them or the precise techniques involved.
Quite apart from the overall democratic oversight, there is a sophisticated whistleblowing process, leading right up to the independent tribunals outside the intelligence services. The test for the hon. Member for Walsall North (Mr Winnick) is not whether Edward Snowden is obviously a traitor, but whether we would have thought he was a traitor if, instead of going through the medium of The Guardian, he had simply handed thousands of pages of top-secret documents directly to foreign intelligence agencies or terrorist networks, because that is, in effect, what he has done. In those circumstances, if he had not used the media as a medium, nobody would have hesitated to call him a traitor.
Mr Winnick
Does the hon. Gentleman recollect what happened in the 1970s, when Daniel Ellsberg released papers relating to the Vietnam war? He was described as a traitor at the time by some in the United States—certainly in the Nixon Administration—but he is now considered to be a hero who did a great service for his country.
Martin Horwood
Given my age at the time, I do not actually recall that. However, the principle here is that if illegality is alleged, there are methods by which people can address it. In our system, the powers of the tribunal in RIPA are very broad. It is able
“to consider and determine any reference to them by any person”.
It is
“the appropriate forum for any complaint if it is a complaint by a person who is aggrieved by any conduct falling within”
the relevant subsections
“which he believes…to have taken place in relation to him, to any of his property, to any communications sent by or to him, or intended for him, or to his use of any postal service, telecommunications service or telecommunication system; and…to have taken place in challengeable circumstances…on behalf of any of the intelligence services.”
The tribunal has a broad remit, and systems have been set up in addition to all the democratic oversight through the Intelligence and Security Committee, and the fall-back processes involving the commissioners. People can use those processes in a responsible way, rather than act in the way we have seen.
In terms of having a debate, quite properly, about whether the oversight processes are working properly, the hon. Member for Hayes and Harlington (John McDonnell) made some important points, including about whether people are overseeing decisions they made in office. There is an issue there, and perhaps there is further refinement and definition of the Intelligence and Security Committee’s work to be done. However, if we are to find needles in a haystack, we need to allow people to look at the haystack. We need to accept that there is a balance to be struck between access and surveillance, but that access is an important part of that balance.
When Winston Churchill talked about the role Bletchley Park played in the second world war, he called the staff there the geese that laid golden eggs and never cackled. We owe similar respect to the staff of GCHQ now.
Mr Michael Meacher (Oldham West and Royton) (Lab)
It is extremely welcome that Parliament is at last having a debate about the fact that a state employee can select on a computer any item about an individual—their address, phone number, mobile number, e-mail, passport number, credit card number or any of their log-ins to a web service—and thus access the content of their communications and details of who they communicate with, the full range of their internet use, their location and a great deal else. Of course, GCHQ is proud to insist that none of that is at all likely, because it always acts within the law—if only. Yes, the computer operator must provide a justification for the information that he is seeking, but that is not too hard when he is conveniently offered a drop-down menu to prompt his thoughts.
All such activity is supposed to be firmly controlled by the Regulation of Investigatory Powers Act 2000 but that Act is, I think, more about facilitating such exercises than curtailing them. RIPA is so poorly drafted—one almost wonders whether that was deliberate—and is open to such broad interpretation that it allows Government agencies such as GCHQ to do whatever they like. We are assured by the Home Office that it is concerned only with the metadata—the technical wherewithal of communications systems, rather than the documents—but the Snowden documents, as reported, tell us the truth:
“GCHQ policy is to treat it pretty much all the same whether it’s content or metadata.”
We are repeatedly given assurances that privacy is fully safeguarded, until we discover that the National Security Agency in the United States spends £250 million a year on weakening encryption. No doubt GCHQ is acting similarly on breaking commercially available security products.
The truth is, and has been for a long time, that the NSA in the States, via the Prism programme, and GCHQ in the UK, via Tempora, have acquired the capability to hoover up vast, untold quantities of personal data from the undersea cables that carry internet data on a colossal scale in and out of the UK, and to do that without any check or accountability. Does that matter? I think that it does. Tempora already allows GCHQ the capacity to collect more than 21 petabytes a day. To put that in context, it is the equivalent of sending all the data in all the books in the British Library 192 times every 24 hours. Two years ago, there were already 550 British and American analysts ploughing through the Tempora database. The balance between safeguarding personal safety and tracking down terrorism and serious crimes has unquestionably been drastically breached. The security agencies are operating under outdated law, despite the recent changes that we all know about, without a genuine public mandate.
What should be done? It was decided at the end of the previous Parliament that all Select Committees, except one, should be elected by the House, and not selected by the Whips and beholden to the party leaderships, as hitherto. The one exception was of course the Intelligence and Security Committee, which operates in a totally different way, untouched by the wave of accountability that swept through the Commons in 2009-10, in response to the revelations of the expenses scandal.
Dr Lewis
I hope that the right hon. Gentleman will—I suspect that he will—enlarge on that point, but will he mention the fact that that one Committee is different from all the others, because it is the only one that has access to highly classified material? Surely, that is the relevant point.
Mr Meacher
That is perfectly true. The real issue is whether that justifies its being outside the system of accountability of the Houses of Parliament. In my submission, it does not. Safeguards might be required, but not the construction of a different type of Committee, whose Chair and members are appointed by the Prime Minister, to replace as and when he or she wishes, and which sits in private.
Sir Malcolm Rifkind (Kensington) (Con)
The right hon. Gentleman cannot get away with that. Is he completely unaware that the Parliament of which he is a Member passed legislation providing that from now on Parliament will have the last word on who is appointed to the Intelligence and Security Committee? If Parliament does not like the names recommended by the Prime Minister it can reject them, and continue to reject them until it is satisfied with the names brought forward.
Mr Meacher
The right hon. and learned Gentleman is correct, but the question is whether that is an effective way for the legislature to make the choice. It is all very well to say that there is a provision that will work if it is used diligently and systematically by the House. I submit that it is not, and that we need to change it.
Dr Huppert
It might help the right hon. Gentleman to know that clause 1 of the Justice and Security Act 2013 states:
“A person is not eligible to become a member of the ISC unless the person…is nominated for membership by the Prime Minister, and…is not a Minister of the Crown.”
Mr Meacher
Of course, that is the point. The House can reject a name that is proposed by the Prime Minister. It cannot propose its own name, as happens with the other Select Committees.
When the Committee has completed an inquiry, often, of course, at the behest of the Prime Minister—although I am aware that it can pursue its own investigations—it sends its report directly to the Prime Minister. That is a secret back channel within the existing power structure, with no direct accountability to the public. The Prime Minister can modify the report in any way he or she chooses and then publish it without any indication of the changes, or publish it in redacted form, or not publish it at all. That is not serious scrutiny. It is a safe cover for the Prime Minister, to give the impression that a difficult and sometimes, for the Government, embarrassing issue has been properly investigated, when, in fact, MI5 or GCHQ disclose to the Committee only what they choose, and the Prime Minister reveals what he or she wants to. Genuine accountability in such matters is needed, and is long overdue.
The Intelligence and Security Committee should, like all other Select Committees, be elected by Parliament, although I think that the Government should choose the Chair. Where the security services are unwilling to disclose documents on national security grounds, the Committee should have the right to ask the Information Commissioner to review the documents and decide whether their disclosure would genuinely put national security at risk—in which case of course there would be no question of their being revealed—as opposed to merely being inconvenient to the security services or the Government, as has so often proved the case in the past. The Information Commissioner’s decision would be final, and the Committee’s report, once finalised, would be issued to the House for public consumption, not to the Prime Minister.
It will be said that we should trust the security services, which look after the nation’s safety—a vital role—and let them get on with the job. We did that, of course, and then found out, not from them but from the Snowden files, what the NSA in the US and GCHQ in Britain were really up to, including monitoring the phones of Angela Merkel and 35 other world leaders—one wonders how much else—and that all assurances about privacy were not worth the e-mails that they were written on. The Intelligence and Security Committee never found out or told us. We were assured by its current Chair—whom I greatly respect—that the security services always acted strictly in accordance with the law, that all operations were officially approved and that there was nothing to worry about. It was only later that we discovered that in fact GCHQ, through the Tempora programme, had devised a way of obviating all that.
It is high time, not for the ISC to tweak its existing work programme to respond to the global furore, as seems to be proposed, but for an independent committee of inquiry to be established to examine the issue thoroughly and systematically, taking full account of international experience, particularly in the United States, and to report to the House, not to the Prime Minister.
Sir Malcolm Rifkind (Kensington) (Con)
These are serious matters, but may I start on a slightly lighter note? It has been reported today that Mr Snowden has obtained new employment in Moscow—this is quite true—on a Russian website. We have been told that which website it is could not be revealed on the grounds of security, so there is clearly a need for a Russian whistleblower, if not Mr Snowden.
In the time available, I will concentrate on two matters. The first is that the ISC is quite willing to be criticised, but I think that all its members would prefer to be criticised by people who have taken the trouble to find out what Parliament has approved in the past 12 months and how the new ISC has been constituted.
When the current Committee came into existence at the beginning of this Parliament, our first work was to review all the existing powers. We came to the conclusion that the original 1994 Act was out of date and needed to be replaced. We put a series of recommendations to the Government, who accepted 99% of them, and the Opposition were of a similar mind.
I remind right hon. and hon. Members, or those who are apparently not aware of them, of the fundamental changes that have been made. First, under the new legislation, we now report to Parliament, not to the Prime Minister. Secondly, as I have said, Parliament has the last word on who the Committee members are. Thirdly, contrary to the suggestion by the right hon. Member for Oldham West and Royton (Mr Meacher) that the Prime Minister should continue to appoint the Chairman, the Committee will in future choose the Chairman from among its own members. That is a big change.
My second point is that the powers have been transformed. For all the years since the Committee came into existence, we could not require intelligence agencies to give us information that they did not wish to provide. We could make requests, to which they often acceded, but we could not require them to do so. The new legislation requires them to respond and give us the information we seek.
Until now, the legislation did not even mention the most important part of agencies’ activities—their operations. Any Committee involvement in operations was incidental or at the request of the Prime Minister, or it was done voluntarily when agencies were willing to co-operate. Now we have not just the opportunity but the right to demand from the agencies all information regarding nationally significant operations, including retrospectively. They cannot refuse; it is our right.
The right hon. Gentleman and other critics may not be aware of this, and perhaps there is no reason why they should be, but I must tell them that one of the changes taking place—for example, in respect to our current inquiry on Woolwich—is that, although as part of our investigations the agencies normally sent us a report with such raw material or parts of their files as they thought appropriate, we now have the right, which we are exercising, to send our staff into GCHQ, MI5 or MI6 to look at files that are relevant to our investigation and they, not the agencies, decide what the Committee might want to see. To be fair to the agencies, we are doing so with their full co-operation. It is a cultural revolution in the agencies’ work to allow people who are not even part of their staff or involved in government into their building. That transformation in the Committee’s powers ought to be borne in mind by those who say that the present Committee—not the former one—does not have the powers to do the required job.
Mr Meacher
Will the right hon. and learned Gentleman explain why the Committee did not find out about the Tempora programme when it began to operate?
Sir Malcolm Rifkind
The right hon. Gentleman does not have the faintest idea whether the Committee was aware of programmes of any kind. We are given classified information, and the whole point of an independent Committee having access to top secret information, whatever that is, is that we do not announce what such information is. If he can devise a system whereby secret information can be made available to all law-abiding British citizens, without its being simultaneously made available to the rest of the world, I am interested in hearing about it, but I do not think that he is likely to meet that requirement.
In the short time available, I want to deal with the fundamental challenge mentioned by the hon. Member for Cambridge (Dr Huppert), who secured the debate, as well as by those who have supported him. Like others, they have said that we are living in a society in which, to use their term, there is “mass surveillance”. If that means anything, it is an accusation: the implication is that all our e-mails are or will be examined by GCHQ—as it chooses and by its own methods—as though something like that was now available. They seem totally to misunderstand or not to refer to the reality of what happens with modern technology, so in the brief time available, I will share with them what they ought to know. It is not secret, but is in the public domain.
Modern computers, which can indeed digest vast amounts of e-mails or communications data, are programmed to run using certain selectors, such as an e-mail address that might belong to a terrorist or some other information relating to terrorism. They are programmed to go through millions and millions of communications and to discard, without their having been looked at—no human eye looks at any of the e-mails—all those to which selectors are not attached.
Of the totality processed by computers, perhaps 0.01% will have selectors that the computer has been programmed to look for. The communications of the other 99.99%— covering virtually every citizen of this country, bar a very small number—are never even looked at by the computer, other than in relation to a selector, such as an e-mail address. Even for the tiny minority identified by the computers as potentially relevant to terrorism, if GCHQ, MI5 or MI6 want to read the content of any of the e-mails, they have to go to the Secretary of State for permission. Under the law, only if they are given permission can the content be read.
To say that we are living in a mass surveillance society is to make a wonderful allegation that sounds vaguely sinister, but the reality is that the e-mails of pretty well everyone in the Chamber are not being intercepted or read.
Sir Malcolm Rifkind
I am happy give way to the hon. Member for West Bromwich East (Mr Watson).
Mr Watson
I understand what the right hon. Gentleman is saying about algorithmic searches and the ability to obtain lifestyle information based on metadata, but the point is that the mass analysis of those data might identify patterns of behaviour that we do not know about and so give people leverage. It is the very use of such algorithmic search terms that raises people’s fears.
Sir Malcolm Rifkind
The hon. Gentleman’s point may be a very strong one with regard to matters unrelated to national security—for example, what companies do in sharing commercial data—but I must tell him that the intelligence agencies have far more important things to do than to look at patterns of behaviour, unless they are directly relevant to a terrorist threat or serious crime. That is their function and legal duty, and if they go beyond it, they are committing a crime—even if they had the time, which they do not have, or the inclination to do so.
I am not arguing that there are no legitimate issues for public debate; I am saying, as my hon. Friends have done, that there is a legitimate public debate. The Intelligence and Security Committee has already said that it will conduct an investigation into whether the three Acts—the Human Rights Act, RIPA and the Intelligence Services Act—remain appropriate, given the dramatic changes in technology over the past few years. We will do that work, as it is right to do, to identify whether, in our view, the balance between security and privacy is appropriate.
Unlike in the past, some of the inquiry’s sessions will be in public; they cannot all be, for obvious reasons. Unprecedentedly, we will have public evidence sessions so that everyone can be part of the debate. There has been a revolution in oversight, and right hon. and hon. Members should acknowledge and recognise that fact.
It is no coincidence that, as the technological capabilities available to not just the intelligence agencies but terrorists and criminals have expanded dramatically over the past 20 years, oversight has also expanded dramatically. I say without fear of contradiction that, with the one exception of the United States—it has intelligence oversight powers that are not exactly the same in detail as ours, but are comparable to them—no other country in the world, including democratic ones, has both substantial intelligence agencies and such a degree of oversight.
Sir Malcolm Rifkind
I am sorry, but I cannot at this stage.
Given our willingness to have our first public hearing with the intelligence chiefs next week in front of the cameras, plus other public sessions, as well as the new powers we are already exercising, I ask right hon. and hon. Members to test whether we use such powers properly. They should not say that we do not have those powers in the first place, because there is not a single new power that they have suggested should be given to the Intelligence and Security Committee that we do not now have.
Sir Malcolm Rifkind
I cannot, unfortunately.
Right hon. and hon. Members should by all means scrutinise whether we use the powers properly, but they should please do so on the basis of knowledge about the Act that Parliament approved within the past 12 months.
Mr Robert Buckland (South Swindon) (Con)
It is a pleasure to serve under your chairmanship, Mr Brady, and to follow my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind), the Chair of the Intelligence and Security Committee. He is right to make important points about the Committee’s increased powers and remit. I add that the Committee now has a remit to examine not only operational issues relating to the three intelligence agencies but it can examine the Office for Security and Counter-Terrorism within the Home Office, the Ministry of Defence’s intelligence arm and the Cabinet Office. Its ambit has been radically and importantly widened.
In a nutshell, the ability to oversee operational activities for the first time is helping strike an important balance that we as legislators and politicians need. It is up to us to set strategy, and it is up to the professionals—the people whom we trust in places such as GCHQ and our other agencies—to get on with the job, but oversight is vital.
Mr Ellwood
My hon. Friend mentioned GCHQ, which has been mentioned numerous times in this debate. Does he share my concern that university syllabuses overlap by only 15% on cyber-technology? We need greater agreement on what is required if we are to create the experts needed now and in future.
Mr Buckland
My hon. Friend is right. The challenge will get ever more complex, so the skills needed will be the sort that we may not even have thought of yet. It is that type of environment. In a nutshell, the status quo will never be an option when it comes to intelligence and security, which is why I welcome warmly the Committee’s intention to consider the operation of the Regulation of Investigatory Powers Act 2000, or RIPA, as we have been calling it all afternoon.
As I said earlier in an intervention, RIPA was a response to what was seen as a deficiency in United Kingdom law in a number of cases that the Strasbourg Court considered relating to the interception of communications. RIPA was seen as an important consolidation of powers that had already been given to the police that, as we have heard, were extended to other agencies in a way that caused controversy and proper concern. The Government have done much work to roll that back, but RIPA itself is now in need of an update.
On both sides of the argument that we have heard in this debate, there is agreement that, for whatever motive, RIPA needs careful consideration. The intention behind the Government’s proposals on data retention and collection involved the need to update RIPA. Using that consensus gives us the potential to ensure that the Act is as up-to-date as possible. The challenge will be how to future-proof it. I do not have an easy answer. As we know, in the world of information technology, to use a well-worn phrase, change is the only constant.
We all know that we have moved from an era when privacy in our own homes and of our personal chattels was important into an era when our personal data are the most valuable thing that we possess. When it comes to the retention of our personal data, the right to privacy is under challenge as never before. Article 8 has been mentioned, quite properly, by several Members including, among others, the hon. Member for West Bromwich East (Mr Watson) in an eloquent speech, as we have come to expect from him.
However, it has also been rightly pointed out that that right is qualified on grounds not only of national security but of crime prevention, health protection and, lastly and importantly, protection of the rights and freedoms of others. Herein lies the passion with which my hon. Friend the Member for Wyre and Preston North (Mr Wallace) addressed the House earlier. He believes firmly and rightly that the activities of the security services are meant to guarantee the freedoms of all of us. Therefore, the qualification in article 8 is emblematic of the balance that must be struck when we come to such issues.
I will focus on one aspect of the debate on which we have not touched today. It concerns schedule 7 of the Terrorism Act 2000, which is particularly relevant in the David Miranda case. I will not dwell on that matter specifically, but I will discuss the important work of David Anderson QC, the independent reviewer of terrorism legislation, who makes important and helpful recommendations to the Government about how we can get the balance right on significant issues such as terrorism prevention and investigation measures, control orders and the use of schedule 7.
I am a member of the Joint Committee on Human Rights. We have considered carefully the Anti-social Behaviour, Crime and Policing Bill, which recommends, among other things, that schedule 7 be changed to get the balance right. We broadly welcome the Government’s intention to reduce the scope of that provision, but there is an important point to note when it comes to use of the more intrusive powers in schedule 7. Whereas reasonable suspicion must be the threshold for the police and other authorities to stop, question and search travellers, there is concern that the same threshold is necessary for the use of more intrusive powers, such as detention for up to six hours, search and seizure of personal electronic devices or the taking and retention of DNA samples or fingerprints without consent.
Our Committee’s view was that the threshold of reasonable suspicion should come into play at the point when a person is formally detained, which under the new provisions in the Bill will be one hour after questioning. That is a small but important example of the need to ensure that when powers are exercised, as they properly should be—the Committee welcomed the use in principle of those powers—we as a state use identifiable and understandable thresholds before going down the line of intrusive use of power. We urge the Government to consider that point carefully in their response to the Committee.
Much has been made of the revelations concerning Edward Snowden. The right hon. Member for Knowsley (Mr Howarth) put it well. The issue of whether The Guardian has broken the law is a moot point; the Official Secrets Act 1989 requires several thresholds. It requires the leave of the Director of Public Prosecutions or the Attorney-General before prosecutions can commence, and it requires that any disclosures be damaging.
I do not think that we can comment properly about the rights and wrongs and the weight of the evidence in this particular case, but the right hon. Gentleman was right to ask whether, in the general circumstances, the actions of The Guardian were wise. I do not think so. Newspapers, like any other part of our mosaic of a society, must balance and weigh carefully the need to be irritating and robust in their journalism with the wider responsibility to bear in mind the qualifications to the right to privacy in article 8.
I have said in the past in this place that I believe privacy should be enshrined in the law of this land, if only to show that we as legislators have the courage to take steps in an area notoriously pockmarked with legal pitfalls. That is the job of politicians, and it should be the job of parliamentarians: to be brave, to strike the right balance and to ensure that we as a society protect the innocent, properly monitor those responsible for acts of terrorism and threats to our country and prevent them from causing chaos, death and mayhem on our streets.
Mr Graham Brady (in the Chair)
To accommodate the three Members still seeking to catch my eye, I am reducing the time limit for speeches to six minutes.
Richard Graham (Gloucester) (Con)
I join this debate on the oversight of the intelligence services as a former diplomat who, on his first posting overseas, made a telephone call to a western ally embassy that was interrupted by a third party with the phrase, “Please repeat the last sentence.” I mention that to suggest that the timing of this debate seems to be driven by an element of possible hysteria and even naivety. Intelligence agencies do eavesdrop. It might well be that the motivation behind the debate of the hon. Member for Cambridge (Dr Huppert) was perhaps an overreaction to media suggestions that every e-mail is indeed read by someone in Gloucestershire. As the Foreign Secretary said, our intelligence agencies
“have neither the interest nor the capability to do so.”
The hon. Gentleman said that this was a surveillance society, that there was a natural trend towards more surveillance and that privacy in a digital era would be one of the determining questions of our age. I do not believe that that is the case, but let me tackle the oversight of the intelligence service within the time allowed.
There is of course legitimate interest in the matter in Parliament, which, as my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) rightly highlighted, is responsible for oversight of our intelligence services. The suggestion earlier on in a series of bizarre allegations from the hon. Member for Walsall North (Mr Winnick) that our intelligence agencies were responsible for the bugging of every reader of the Daily Mirror is one that we can put to one side. The intelligence agencies of course cannot answer for themselves.
The hon. Member for Cheltenham (Martin Horwood) rightly alluded to various aspects of the oversight of the intelligence service that have, of course, been strengthened in exactly the way to which the Chairman of the ISC referred. The key aspect in that is the role of the intelligence services commissioner and the interception of communications commissioner, who review all the licences approved by the Foreign Secretary, the Home Secretary and other Cabinet members. The interception of communications commissioner, who is a senior judge, said:
“It is my belief that GCHQ staff conduct themselves with the highest levels of integrity and legal compliance.”
Personally, I prefer to take his word on that issue and to reassure my constituents that I believe that those staff operate with the utmost morality, rather than to take the word of the right hon. Member for—I forget his constituency, although I know that he spends a lot of time in the Cotswolds.
Richard Graham
Alas, there is no time. The right hon. Member for Oldham West and Royton (Mr Meacher) referred to the intelligence agencies operating under outdated laws without a genuine public mandate. That is absolutely not the case.
Mr Winnick
On a point of order, Mr Brady. As I understand it, the hon. Gentleman was alleging that I said that MI5 had bugged every reader of the Daily Mirror. I said nothing of the kind. I quoted Edward Heath, who made the remark.
Mr Graham Brady (in the Chair)
The hon. Gentleman has corrected the record, which is a point of debate and not of order.
Mr Graham Brady (in the Chair)
No, they remain on the record to embarrass those who make them.
Richard Graham
After that distraction, I am delighted to continue and to hear that the hon. Member for Walsall North does not imagine that our intelligence services are interested in readers of the Daily Mirror per se. The later accusation from the right hon. Member for Oldham West and Royton was disappointing. My constituents who work for GCHQ are unable to answer back directly. We should take the word of the senior judge that they act within the highest levels of integrity and legal compliance. That is a crucial part of the oversight of the intelligence agencies, which is ultimately the responsibility of our Parliament.
My hon. Friend the Member for Esher and Walton (Mr Raab) was wrong to say that threats are diminishing. My intervention on his speech quoted directly from the recent speech of the director-general of MI5. It was quite clear from the statistics that he gave that threats have increased from an average of one or two a year for the past 10 years to four major threats in the first half of this year. On average, 33 terrorists have been convicted every year for the past 10 years, but 24 have been convicted in the first half of this year already.
The truth is that the threats are becoming more complicated and more sophisticated. They come not necessarily from states but from individuals or organisations.
Richard Graham
Alas, there is so little time. The threats include nuclear proliferation, cyber-attacks, attacks on our intellectual property, organised crime and new weapons. Although we must ensure that our laws and our ability to review the intelligence agencies are properly supervised, we should not be naive or foolish in any way about the threats to our nation. Above all, we must remember that the primary duty of any Government is the protection of their citizens. Within that, the most important new power of the ISC is its ability to hold to account the operational activities of the intelligence agencies. We should allow the ISC to use its new powers, but we must also ensure that those agencies remain able to maintain their competitive advantage against threats and to keep us safe. In the balance between protecting our freedoms and protecting the safety of our citizens, I hope that the Minister will allow the ISC to go about its business with its new powers, and Parliament should ensure that it is indeed performing its duty.
Dr Julian Lewis (New Forest East) (Con)
I genuinely congratulate my near namesake, the hon. Member for Cambridge (Dr Huppert), not only on securing this debate but on the way in which he presented his case and the exceptionally generous way in which he handled interventions. I hope that it will not damage his credibility on the left too much if I point out how very strongly I agreed with at least one of the points that he made in response to my intervention on him.
There are three questions that I want to address. First, on which the hon. Gentleman responded, why is it so easy for junior personnel to engage in mass leaking? Secondly, is it easier than before, as he suggested, to track or spy on people? Thirdly, who should rightly be regarded as a whistleblower? That is the point that I was touching on when I intervened on him. On the first question, he is absolutely right. If these secrets are so sensitive, there is something terribly wrong with the system that allows an Army private or a junior technician access to them.
Dr Lewis
I am glad to see the hon. Gentleman endorsing what I am saying. Any system that allows tens of thousands of top secret documents to be downloaded by such junior personnel in such quantity must be at risk.
In an absolutely outstanding contribution to the debate, the hon. Member for Cheltenham (Martin Horwood)—I do congratulate him on his measured and exceptionally well-informed contribution—referred to the whole business of Enigma and the ultra secret of world war two.
Colleagues might remember that in 1974 the book, “The Ultra Secret”, perhaps regrettably—historians are grateful—revealed the secret that, as a result of the development of the Enigma machine, we were decrypting codes during the war that people thought were unbreakable. The book was published. Its author was F. W. Winterbotham. If I remember correctly, his role was to be in charge of the signals liaison units, which comprised members of the special services who were involved in the distribution of the Enigma decrypts and who were spread around all parts of the military infrastructure that received that intelligence. In other words, they were crucially aware of the need to keep top secret material secure. As such, they had special security arrangements to prevent anything like the Snowden case and the Bradley Manning case from happening. There is a huge gap in the security arrangements for the handling of such material.
On whether it is easier than before to track and spy on people, as the hon. Member for Cambridge has suggested, in one sense, he is absolutely right. We have electronic devices that offer more ways in. In another sense, though, he is not quite right. The problem is that in the past, when we wanted to track or spy on someone, all we had to do was to get a court order to enable the interception of mail or telephone calls. Now, with so many new systems of communication, it is actually much harder to track and spy on people who ought to be tracked and spied upon, according to the process of law, because there are so many other ways to communicate.
Dr Huppert
I thank the hon. Gentleman for giving way and for some of his earlier comments. There is an interesting issue. Communications data are increasingly available to the police, but records of the locations where people had phones are now kept for a year. We can join the dots to find out exactly where somebody went. That information is available to the police and is used in many investigations. That would never have been available before. He is right that there are some safeguards; but 20 or 30 years ago, there would have been no way to say, “Three months ago, where was Dr Julian Lewis at any particular moment?”
Dr Lewis
I entirely accept that point, which was partly covered by the hon. Member for Cheltenham when he briefly referred to the need to hoover up haystacks to be able to search for the needles in them afterwards. The question is whether we then have access to the irrelevant parts of the haystack, or legally supervised targeted access to those needles in the haystack, which can be detected as a result of modern technology. This is all about the mass collection, mass storage and interrogation of mass data so collected and stored.
I now come back to the third question: who should rightly be regarded as a whistleblower? I would like to reach a point of agreement again with the hon. Member for Cambridge. In his defence of The Guardian newspaper, he said that it is precisely because The Guardian is not simply publishing everything that has fallen into its hands that it is acting responsibly. We can argue the finer points of that; he certainly has an arguable case. Where there can be no argument, however, is in the case of a person who steals the mass database and transmits it to other unauthorised individuals or organisations, or indeed newspapers, when he cannot possibly have read or in any way assessed whether the contents of that database had been properly collected or whether an abuse of the intelligence services’ powers had in fact taken place. That person is not acting responsibly, so the hon. Member for West Bromwich East (Mr Watson), whom I always admire, should be a little more careful before ascribing the term “brave whistleblower” to someone like Snowden.
Snowden is no more a whistleblower than someone like Julian Assange or anyone else who gets a mass of information and feels that it is right to publish it and put it into the public domain for no other reason than it is classified secret or top secret. Basically, their rationale can only be that they do not think anything should ever be classified secret or top secret. Once they admit that there is a purpose in classifying some information, and that some information ought to be kept secret, then we get into the area of who decides what should be kept secret and what should be the result of whistleblowing activities.
When I see somebody who blows the whistle on an identifiable abuse, I say, “Well done”, provided, of course, that they have used and exhausted all the right channels and were left with no alternative. But when I see someone who abuses their access to a massive database and then publishes it widely, I say that that is not whistleblowing; that is irresponsible—
Mr Tobias Ellwood (Bournemouth East) (Con)
I welcome this open-source debate, which is possibly being listened to live more than the average Westminster Hall debate. I am certainly grateful that we are debating these matters, and it is a real pleasure to follow some of the contributions that we have had today.
The debate is about the balance of individual privacy versus the collective right to security. Spying is nothing new. During Henry VIII’s time, Thomas Cromwell had a league of spies across Europe, as did Sir Francis Walsingham. Anyone visiting the Special Forces Club today can only be moved by some of the stories under the pictures there showing heroic acts that have taken place. And we must not forget the masters of intelligence gathering: the Whips. They are not present here today but no doubt are listening.
The world of the clandestine services has changed. Scrutiny of that world has also changed and we now have the Intelligence and Security Committee, formed in 1994. I am grateful for the scrutiny undertaken by the Committee. In 2002, I was sadly involved in the Bali bombing. MI5 had information to prove that an attack was going to take place. It held on to that information and did not share it. Sadly, my brother’s conference was not cancelled and he was killed. The Intelligence and Security Committee uncovered that information and exposed it. Changes have subsequently taken place to ensure that intelligence of that nature is shared with the Foreign Office and the wider public.
We can now name the heads of the clandestine agencies, which we could not do in the past. We can bring them here to Parliament and scrutinise them; I understand they are visiting next week. Our challenge today is the seismic advance in information technology, which, on the whole, is a very good thing. We must all embrace such change, particularly in social media and in its commercial aspects. Indeed, the speed at which the Arab spring took place could be attributed to the form of communications available. But technology is also harnessed by our enemies, who wish to do us harm.
It is important to pay tribute to our clandestine services. Our intelligence officers serve our country without any public recognition. Some have given their lives in the line of duty in their silent service. Their names are not known and their loved ones mourn in secret. We owe them and every intelligence officer in the country an enormous debt of gratitude.
We lost our way briefly, however, and I would say that the starting point was 9/11, which led to Guantanamo Bay, rendition, water-boarding, justification for the Iraq war, I dare say, and dodgy dossiers and so on. Members will recognise the so-called war on terror, in which we took the eye off the ball. I am pleased that the Chilcot inquiry has finally got off the ground and will report soon. It will be a testament to what went wrong. It will report on the justification for that war and how intelligence was used.
As a nation, we need to be an inspiring example of the values that we hold dear, and we must encourage others to stand up for them. Once damaged, our moral authority in the eyes of the world is very difficult to replenish. Our security services have the skills to assimilate information way beyond the reach of everyday diplomacy, filling in the blanks in our understanding of our enemies. So much of their work is unseen and therefore receives little praise. They are our early warning system against those who plot to sabotage us, steal from us, or kill us.
As I have said before, it is difficult to find a country where the clandestine community performs so well under such scrutiny within the confines of the democratic process. By and large, we sleep safe at night, oblivious to the many threats that we face, as they are dealt with by the service that we never see. So let that scrutiny continue and let us make sure that it adapts to a changing world, but let us not hamper the work that keeps us all safe.
Diana Johnson (Kingston upon Hull North) (Lab)
It is a pleasure to serve under your chairmanship, Mr Brady. I congratulate the hon. Member for Cambridge (Dr Huppert) on securing this debate. I read with interest his article in The Guardian this morning, previewing the arguments he would be putting forward. I also congratulate the co-sponsors: the hon. Member for Esher and Walton (Mr Raab) and my hon. Friend the Member for West Bromwich East (Mr Watson). They both bring an enormous amount of experience and knowledge to these matters.
Fifteen Members have spoken in this debate, which shows how important it is. It has benefited enormously from the contributions of members of the Intelligence and Security Committee—its Chair, my right hon. Friend the Member for Knowsley (Mr Howarth) and the hon. Member for New Forest East (Dr Lewis). I am sure all hon. Members would want to pay tribute to the hard work that members of the ISC undertake on our behalf.
I pay tribute to the work of the intelligence services. I am sure we all admire and respect the work that they do to keep us safe from harm every day and to protect our freedoms. It is absolutely right that we are having this debate about the oversight of the intelligence and security services.
My right hon. Friend the Member for Knowsley hit the nail on the head. We do not have access to all the information, so it is not possible for us to reach conclusions today on a number of points that have been raised. However, we must debate the investigatory procedures that Parliament has put in place and satisfy ourselves that they are fit for purpose.
Parliament has spent much of the past year debating the oversight of the intelligence services through part 1 of the Justice and Security Act 2013, which redefines the role of the Intelligence and Security Committee. I will return to that in a moment, but I concede that the part did not perhaps catch the public consciousness—given some of the comments made by hon. Members today, that is true of the House, too—in quite the same way as The Guardian’s revelations. Even the Deputy Prime Minister, given his recent comments to the media, appears to have missed the reforms that strengthened the Intelligence and Security Committee. That is surprising, considering he has 19 special advisers. I would have thought that one of them might have picked up on the reforms. Because of all that, I am pleased to have this opportunity to debate the subject.
The concept that many people have of the intelligence agencies is James Bond or, perhaps more recently, “Spooks.” The reality is that terrorists and organised criminals have been quick to adopt new technology, which means that the nature of our intelligence agencies has changed over the past few years, too. Electronic surveillance is now the key asset in the battle against terrorism. It is therefore appropriate that today’s debate has mainly focused on electronic surveillance. The key question seems to be whether the intelligence services have exceeded the powers given them under the Regulation of Investigatory Powers Act 2000.
Surveillance is covered by parts 2 and 3 of RIPA, and intrusive surveillance is described by section 26. An example of intrusive surveillance is placing a device in someone’s property, which requires a warrant from the Home Secretary, the Northern Ireland Secretary or the Foreign Secretary if conducted abroad. The relevant Secretary of State has to be convinced that the surveillance is necessary and proportionate. That form of surveillance is easily understood.
Part 1 of RIPA covers remote electronic surveillance, which is where things get a bit more complicated. Chapter 1 addresses the interception of an individual’s communications—telephone communications, e-mails and texts—and it is only under that chapter that the contents of such communications may be accessed. There are extensive safeguards on the use of chapter 1 powers. Their use must be necessary, proportionate and in the interests of protecting national security, detecting or preventing serious crime or safeguarding the UK’s economic interest. A warrant must be issued by the Home Secretary for each individual whose data are collected.
Chapter 2 of part 1 addresses the acquisition of communications data more generally, which is more about the who, the where, the what and the when, rather than the contents. The rules on that are not as stringent as for chapter 1.
Generally, I believe that RIPA is poorly understood among the general public and, I think, among Members of Parliament. Only once we understand the framework can we look to the oversight bodies to ensure that the intelligence services are staying within that framework. Probably the most important level of oversight is from Ministers. They are answerable to Parliament and the public for all the actions of the intelligence agencies.
Will the Minister assure me that he has seen no evidence that the intelligence agencies have collected information covered by RIPA part 1, chapter 1 without the necessary warrants being in place?
Of course, oversight requires much more than just a Minister. The Intelligence and Security Committee was formed in 1994 and reformed earlier this year by the Justice and Security Act. The Opposition supported those reforms. Indeed, in some key areas we would have liked to have gone further. We support the long-term aspiration that the ISC should become a Select Committee, which we believe would allow the public a clear understanding of how the Committee works and the processes it operates.
Such reform would also give clear protections to both the Committee and its witnesses. We appreciate that that may be a gradual process, and we support the changes to move the ISC towards becoming a Committee of Parliament with open proceedings. The Labour party has always said that it believes the ISC is the right body to investigate the allegations against Tempora, and we have confidence in its investigation.
I also believe that the ISC, which is composed of very senior and experienced politicians, appreciates the need to restore public confidence. Indeed, I believe that the agencies appreciate that, too. During the passage of the Justice and Security Act, I was struck by comments made in the other place by the noble Baroness Manningham-Buller, who said that public confidence is vital for the agencies because of the degree to which they rely on the public’s co-operation.
We have heard that 7 November will be a momentous day in the Committee’s history, as it will hold its first public session with the heads of the three agencies. Over the past three years, the public have started to understand Parliament a little better through things such as Rupert Murdoch’s appearance before the Select Committee on Culture, Media and Sport. I hope the public will take a keen interest in the appearance of the heads of the intelligence services before the ISC next month.
Diana Johnson
I will carry on because I have very little time and I want to give the Minister an opportunity to respond.
I hope next week’s Committee hearing will be the start of a process through which the ISC demonstrates its ability to conduct a thorough inquiry and to improve public understanding. I hope the Minister will do everything he can to reassure all hon. Members that the Government will facilitate as many public hearings as possible.
Finally, I was struck that the hon. Member for Cambridge made no comment about the important role of the two commissioners. The intelligence services commissioner oversees the performance of the agencies under parts 2 and 3 of RIPA, focusing on intrusive surveillance. His powers were widened by the Justice and Security Act.
The interception of communications commissioner considers operations under part 1 of RIPA. He produces an annual report that clearly sets out the legal framework for electronic surveillance and the way it is used by various bodies. He has oversight of all surveillance under part 1. In particular, he has access to all warrants issued under chapter 1, as well as overseeing a team of inspectors who consider the use of chapter 2 powers.
As my right hon. Friend the Member for Knowsley said, it would be good to raise the profile of the interception of communications commissioner, as he has had a relatively low profile since the revelations by The Guardian. Indeed, the commissioner wrote in a letter to The Independent:
“I am currently conducting an investigation into the various recent media reports relating to disclosures about interception attributed to Edward Snowden.”
Instead of trying to decipher what the commissioner is doing through references in a letter to a newspaper, both the commissioner and the Government should be emphasising the commissioner’s role and telling Parliament and the public how his office will be responding to the revelations in The Guardian. Will he be compiling a special report? When can we expect to receive that report? A report covering surveillance in 2012 was not published until July 2013, so if we have to wait until July 2014 for the next report, we could probably say that the commissioner is not reporting in the effective and timely manner that we all want.
I also hope the Minister is able to confirm categorically that the commissioner has been given full access to all surveillance undertaken as part of the Tempora programme, as well as, where appropriate, information acquired by the agencies from our allies.
I am pleased that we have had this opportunity to debate the intelligence and security services this afternoon, and I look forward to the Minister’s response to my points.
The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)
I congratulate the hon. Member for Cambridge (Dr Huppert) on securing this debate and on the passionate and eloquent way in which he has advanced his argument. I also pay tribute to his supporters, the hon. Member for West Bromwich East (Mr Watson) and my hon. Friend the Member for Esher and Walton (Mr Raab).
Although there have been notes of discord and disagreement this afternoon, I am sure we all agree on how essential is the work that our intelligence agencies do for us day in, day out to keep this country safe by confronting the diverse terrorist threat that this country continues to face. Generally, they are unable to make those points directly themselves, and I recognise the contributions that many right hon. and hon. Members have made in underlining the importance of our intelligence agencies’ work. It is vital that we do so.
It is also important to underline very clearly the role of scrutiny and the powerful impact that it can have. In many ways, that was brought home in a very real sense by my hon. Friend the Member for Bournemouth East (Mr Ellwood), who highlighted the work of the ISC following the Bali bombing. In doing so, he also highlighted the value and importance that scrutiny can directly offer.
However, we should also be clear about the importance of intelligence gathering to our agencies’ ability to maintain an edge in tackling terrorism and stopping criminals. While maintaining that edge is vital to our ability to ensure national security, I absolutely agree that that does not mean that the activities of the intelligence agencies can or should go unchecked. It is absolutely right that intelligence work is carried out in accordance with a strict legal and policy framework that ensures that activities are authorised, necessary and proportionate. I hope to explain why we believe that is absolutely the case.
The work of the security and intelligence agencies is carried out in accordance with a strict legal and policy framework, which ensures that their activities are authorised, necessary and proportionate, and that there is rigorous oversight, including from Secretaries of State, from the interception of communications commissioner and the intelligence services commissioner, as well as from the ISC itself. The hon. Member for Kingston upon Hull North (Diana Johnson) rightly highlighted the work of the relevant commissioners in that regard, which I will return to later in my contribution.
Oversight is absolutely essential, but much of it must necessarily take place behind closed doors to ensure that secret intelligence remains secret. That has to be a key theme in the work undertaken, because although I recognise the desire for transparency—I have heard the points about that very clearly—at the same time there has to be a role for secrets in order for our agencies to conduct the work that they do. That information should not be kept unnecessarily out of the public domain, but secrecy is essential to safeguard sensitive methods and sources, and to protect the lives of those who agree to work for us on the basis of confidentiality and anonymity.
Mr Watson
I hope that the Minister does not think that this is a semantic point, but there is a difference between transparency and scrutiny, and this debate is about scrutiny. We are talking about new technological abilities to process huge amounts of data that may not have been empowered by very old legislation, or at least are tenuously empowered by old legislation. What I hope he can explain today is why Tempora, which is a whole new raft of intelligence gathering, was not given scrutiny in Parliament, as RIPA and other pieces of legislation were?
James Brokenshire
I say to the hon. Gentleman that publicly discussing sensitive techniques and sensitive tactics of our intelligence agencies is simply not appropriate in terms of safeguarding their work. However, I can also say to him very clearly that arrangements are in place to ensure that GCHQ neither obtains nor discloses any material except so far as necessary in pursuit of its statutory functions, as defined in the Intelligence Services Act 1994, which he will be very well aware of.
As far as interception activity by GCHQ is concerned, GCHQ operates at all times in accordance with RIPA. That is not just a statement; GCHQ’s activity is overseen by the commissioners, who analyse its work in detail. They also analyse some of the codes of practice that the agencies have in place to ensure their adherence to RIPA.
Such levels of assurance are in place within our oversight regime, which I believe is very effective because our intelligence agencies’ activity is overseen by a greater variety of bodies than many other areas of Government business. At the parliamentary level, the ISC examines the policy, administration, past operations and expenditure of the intelligence agencies and parts of the wider Government intelligence community. Indeed, the ISC’s position has been strengthened by the Justice and Security Act 2013, which has only been passed into law through this House very recently.
Dr Huppert
The Minister makes the extremely good point that it is “past operations” that can be looked at, and there are constraints on what the ISC can look at; it does not have a completely free rein on operational matters. What happens if an operation lasts for many, many years? At what stage is there any sort of scrutiny of that?
James Brokenshire
To be fair to the hon. Gentleman, he took part in the consideration of the Justice and Security Act 2013, although he did not make then a number of the points that he has made this afternoon. However, we need to be very careful to ensure that scrutiny does not seek to cut across into direct, ongoing operational activity. I am quite sure that, given the robustness of the new powers that the ISC itself will hold, that consideration is very much in the forefront of the minds of the Committee members.
Sir Malcolm Rifkind
In response to the perfectly reasonable issue raised by the hon. Member for Cambridge (Dr Huppert), I must say that this point was seized on by the ISC itself. We have completed discussions with the Government, the results of which will appear in a memorandum of understanding that will be published and include details of how these matters will be dealt with. That will ensure that that consideration cannot be used as an improper way of preventing the ISC from obtaining access to operations that—by any normal, common-sense approach—could be considered as completed.
James Brokenshire
It is also important to highlight that, at a political level, the intelligence agencies are ultimately accountable to the Prime Minister, but on a day-to-day basis it is Secretaries of State—primarily my right hon. Friends the Home Secretary and Foreign Secretary—who are responsible for balancing the need to protect national security and the need to fulfil their duty to protect the British public against the potential intrusion on individuals’ rights to privacy that could be caused by intelligence activity. I know from working alongside my right hon. Friend the Home Secretary how much attention she gives to that role.
The interception of communications commissioner also has such oversight in relation to that intelligence activity, and in taking decisions about whether to authorise the use of intrusive powers—for example, to intercept communications—he must be satisfied that such measures are legal, necessary, proportionate and carefully targeted.
Mr Meacher
On the question of legality, is it not the case that the Home Secretary was extremely keen to get the Communications Bill through the House of Commons in order to legalise activities that GCHQ had been carrying out for years, notably—as we now believe—the Tempora programme?
James Brokenshire
I say clearly to the right hon. Gentleman, as the Foreign Secretary said when he responded originally on this issue, that GCHQ and our intelligence agencies act within the law, a point rightly made earlier by the hon. Member for Cheltenham (Martin Horwood).
The points about the proposals on communications data are about the changing nature of what we see, which includes ensuring that our law enforcement agencies are able to continue to do the job that they do today in bringing criminals to justice and using communications data as evidence in court. That is very different from the intelligence agencies’ roles and from GCHQ’s mission, which is external—looking outside rather than within the UK.
It is also important to note the point made by my hon. Friend the Member for South Swindon (Mr Buckland) about the role of the independent reviewer of terrorism legislation, David Anderson, who has done some very important work and continues to do so.
It is this multi-faceted oversight that complements rigorous internal controls within the agencies themselves. The agencies’ recruitment and training procedures are all designed to ensure that those operating within the ring of secrecy can be trusted to do so lawfully and ethically. A culture of compliance with both the letter and the spirit of the law pervades everything that they do.
In the short time I have left, I should quickly address some of the points that have been raised. I can obviously assure hon. Members, for example, about the resourcing of the ISC. It has raised around a 30% uplift in its resources, and when it has a full staffing complement it will have more staffing than virtually any Select Committee. It is right to highlight the important work undertaken through the ISC and the changes that have been made to it by the Justice and Security Act 2013, which have been commented on by right hon. and hon. Members. An ongoing investigation is taking place into the events in Woolwich in May, work that the ISC is conducting very carefully and with great diligence.
This has been an important debate, highlighting the strength of the scrutiny that we have and the different layers of scrutiny that operate in this country. I believe that we have every reason to be proud of those oversight arrangements and of the work of our agencies.
Question put and agreed to.
Written Statements
Company Beneficial Ownership Information (Central Registry)
The Secretary of State for Business, Innovation and Skills (Vince Cable)
Today we are setting out our intention to create a publicly accessible central registry of information about who ultimately owns and controls UK companies.
A stronger economy depends on investors, employees and the wider public having trust and confidence in companies and those that are running them.
The vast majority of companies and directors in the UK contribute productively to the economy, abide by the rules and make an enormous contribution to society. But an errant few operate in the shadows, creating ownership structures that serve to deceive. We are now shining a light on who really owns and controls companies in the UK and leading the world in this initiative.
We believe a public register, with information on those who really own and control UK companies (i.e. individuals with an interest in more than 25% of a company’s shares or voting rights, or who otherwise control the way it is run) will make the UK a better place to invest and do business. People have a right to know who controls UK companies and greater openness will help tackle tax evasion, money laundering and other crimes.
At the Lough Erne G8 summit in June the Government committed to implement a central registry of company beneficial ownership information, and to consult on whether this information should be publicly accessible.
The Department for Business, Innovation and Skills published details of its intention to create a registry in the “Transparency and Trust” discussion paper in July and invited responses on whether information in the registry should be publicly accessible. Following this call for evidence, the Government intend to implement an open, public registry.
Limited exemptions from public disclosure will be permitted—for example, in cases where it is necessary to protect individuals whose safety might otherwise be put at risk.
We will set out further detail in terms of what information should be held by the company and Companies House, and how it should be updated, in our formal response to the discussion paper. This will be published in early 2014.
In that response, we will also set out our plans to take forward other proposals in the “Transparency and Trust” discussion paper including:
to abolish bearer shares—for example, shares whose ownership is completely opaque;
to tackle the abuse of corporate directorships—one company as a director of another; and
to address situations where a front director is registered at Companies House but the control lies concealed elsewhere.
CAP Reform in England
(11 years ago)
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The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)
Today, I am publishing the consultation on the implementation of common agriculture policy (CAP) reform in England. I am seeking views on various issues relating to:
direct payments to farmers;
greening of direct payments;
the rate of transfer between the budgets for direct payments (pillar 1) and rural development programme (pillar 2);
the focus of the rural development programme; and
other associated issues.
As part of the consultation, I have also published an impact assessment for the rural development programme, an evidence paper for CAP reform covering direct payments and greening. These are supported by a scoping report on a strategic environmental assessment for rural development in England.
The CAP settlement for the next period will deliver very significant sums of money to English farmers and other CAP recipients. We need to make sure that this money is spent in the most appropriate way. The rural development programme is a major opportunity to invest over seven years in the environment, farming competitiveness and the rural economy and we need to make sure we invest resources wisely and get value for money. The consultation document seeks views on potential options for implementing CAP reform in England. It also outlines the decisions we have already taken.
These documents build on the informal consultation that has taken place over the summer with the farming industry, environmental interest groups and other interested parties. We are seeking as wide a range of views as possible to ensure that we take robust decisions on CAP implementation in England that continue to grow the rural economy and improve the environment.
The consultation runs until 28 November.
Inquests into the Deaths of Service Personnel
(11 years ago)
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The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)
The Under-Secretary of State for Defence, with responsibility for defence personnel, welfare and veterans, my hon. Friend the Member for Broxtowe (Anna Soubry), and I wish to make our latest quarterly statement to the House reporting progress with inquests into the deaths of service personnel on active service overseas. We begin by expressing once again our profound thanks and admiration to our service personnel who have served us all in the Iraq and Afghanistan operations. On behalf of the Government and the nation, we wish to pay tribute to those service personnel who have given their lives for our peace and security. Our thoughts are with all their families and loved ones.
This statement gives information about coroner investigations and inquests conducted by the senior coroner for Oxfordshire, the senior coroner for Wiltshire and Swindon and other coroners in England and Wales. The statement shows the position at 22 October 2013.
To supplement this statement, we have provided additional information about the status of all current cases in tables which we have placed in the Libraries of the Houses. The tables include information about cases where a board of inquiry or a service inquiry has been or is to be held.
As part of his powers and duties which came into force on 25 July 2013, the Chief Coroner for England and Wales has created a specialist group of 11 coroners to conduct coroner investigations and inquests into some service personnel deaths relating to active service, including preparation and training for active service. All the coroners in the group will receive further specialist training, beginning in November. The Chief Coroner and the specialist coroners will continue to work with the Ministry of Defence’s defence inquests unit, which assists coroners to complete service personnel inquests thoroughly and as quickly as possible.
The Chief Coroner has also met the Lord Advocate and they have agreed a protocol for the provisions of section 12 of the Coroners and Justice Act 2009. As we have previously reported, this section came into force last year and enables deaths of service personnel killed abroad on active duty to be investigated in Scotland where appropriate.
We offer our thanks and support to the Chief Coroner and to coroners and their staff in this work of such importance to us all. We are also grateful to all the other people who support and inform bereaved families through the inquest process.
Our two Departments have made extra funding available to the coroners in Wiltshire and Swindon and in Oxfordshire since October 2007. Most repatriations of service personnel who have died overseas have been to RAF Lyneham in Wiltshire and, currently, RAF Brize Norton in Oxfordshire. The additional resources enable those coroners to progress the service personnel inquests while still handling the caseload of the coroner area.
Current status of inquests
Since our last statement a further 20 inquests have been concluded into the deaths of service personnel on operations in Iraq or Afghanistan. In total, there have been 593 inquests into the deaths of service personnel who have died in Iraq and Afghanistan or have sadly died after returning to the UK of injuries sustained on active service. Three deaths have led to no formal inquest. Two of these deaths were taken into consideration at inquests into the deaths of other service personnel who died in the respective incidents. The third case is of a serviceman who died from his injuries in Scotland, where it was decided not to hold a fatal accident inquiry.
Open inquests
Deaths in Afghanistan
As at 22 October 2013, 25 coroner investigations are open into the deaths of service personnel in Afghanistan, and one further coroner investigation into the recent death of Lance Corporal James Brynin is due to be opened.
The senior coroner for Wiltshire and Swindon has retained nine of the open coroner investigations, while the senior coroner for Oxfordshire has retained seven. Senior coroners nearer to the next of kin have accepted jurisdiction in the remaining nine coroner investigations. Two hearing dates have been set.
Deaths of service personnel who returned home injured
There are three open coroner investigations into deaths of service personnel who returned home injured but have sadly died of their injuries. One hearing date has been set. The other two cases will be listed for inquest hearing when investigations into the deaths have been completed.
We will continue to inform the House of progress.
Immigration Enforcement
(11 years ago)
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The Minister for Immigration (Mr Mark Harper)
The Home Office’s immigration enforcement command ensures that the immigration rules are complied with and that those with no right to be in the UK are removed. It is better for both the UK taxpayer and offenders themselves if offenders leave the country voluntarily rather than in an enforced manner. Immigration compliance and enforcement teams are therefore working to identify how they can promote the visibility of enforcement operations to drive compliance and encourage more immigration offenders to leave the UK voluntarily.
A pilot operation, Operation Vaken, took place between 22 July and 22 August 2013 in six London boroughs to test whether different communications could encourage any increases in voluntary departures. It included a number of communications techniques, such as mobile billboards highlighting the risk of arrest, postcards in shop windows, adverts in newspapers and magazines, leaflets and posters advertising immigration surgeries in faith/charity group buildings.
The pilot period ceased on 22 October 2013 and a full evaluation report has now been produced, a copy of which will be placed in the Library of the House. As of 22 October, there have been 60 voluntary departures which can be directly attributed to this pilot. The report also identifies a further 65 cases that are currently being progressed towards departure.
The total cost of the pilot was £9,740. Data held by the Home Office indicate that the average cost of a voluntary removal is £1,000, and the average cost of an enforced removal is up to £15,000. The 60 voluntary removals connected to this pilot therefore represent a notional saving of approximately £830,000 compared to the costs of enforcing those removals.
The most cost-effective communications were the adverts, leaflets and posters that advertised immigration surgeries in faith and charity groups, rather than the advertising vans or other forms of advertising used in the operation. In addition, as my right hon. Friend the Home Secretary told the House of Commons on 22 October, the advertising vans in particular were too much of a blunt instrument and will not be used again.
During this period, a separate pilot was conducted in two immigration reporting centres, in Hounslow and Glasgow. These centres are principally used to ensure that those suspected of immigration offences are kept in regular contact while their case is progressed to removal. This pilot used a variety of communication materials to encourage those reporting to inquire about leaving the UK voluntarily and ceased on 4 October. The activity is being evaluated separately but there are no plans to repeat it.
The Government will continue to enforce the immigration rules and promote voluntary departure schemes to those who have no right to be in the UK—backed up with arrest, detention and enforced removal where individuals refuse to comply with the immigration rules or present a danger to the UK public.
Remploy
(11 years ago)
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The Minister of State, Department for Work and Pensions (Esther McVey)
The Remploy 2013 annual report and accounts will be published later today. I will place a copy of the Remploy 2013 annual report and accounts in the Libraries of both Houses, and electronic copies will be available on the Remploy website.
Target Description | Target | Achievement |
|---|---|---|
To live within the company’s financial means in the 2012-13 financial year and achieve: operational funding result of | £97.9 million | £97.9 million |
Factory businesses to achieve: an operating result (loss) of | £40.2 million | £32.7 million |
Employment service business to achieve: an operating result of total disabled job outcomes i. of which Work Choice job outcomes ii. of which other disabled job outcomes | £28.2 million 17,000 8,500 8,500 | £28.1 million 14,735 8,537 6,198 |
Target Description | Target | Achievement |
|---|---|---|
To live within the company’s financial means in the 2011-12 financial year and achieve: overall operational funding of modernisation of the business within a cost of | £97.7 million £5.4 million | £97.7 million £5.3 million |
Enterprise businesses to achieve: an operating result (loss) of cost per disabled employee of | £52.5 million £24,000 | £49.2 million £22,400 |
Employment service business to achieve: an operating result of total disabled job outcomes of i. of which other Work Choice job outcomes | £28.2 million 16,500 7,500 | £28.1 million 12,463 6,401 |
I have written to the chairman of Remploy formally approving the agreed 2013-14 performance and resources agreement between the Department and the company, as follows:
Target Description | Target |
|---|---|
To live within the company’s financial means in the 2012-13 financial year and achieve: operational funding result of | £67.3 million |
Factory businesses to achieve: an operating result (loss) of | £10.5 million |
Employment service business to achieve: an operating result of total disabled job outcomes i) of which Work Choice job outcomes ii) of which other disabled job outcomes | £30.3 million 16,000 8,500 7,500 |
House of Lords
Introduction: Lord Balfe
Introduction: Lord Palumbo of Southwark
Railways: Passenger Demand
(11 years ago)
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Lord Faulkner of Worcester
To ask Her Majesty’s Government what estimates they have made of the cost of upgrading the West Coast and East Coast main railway lines to bring them up to the standard likely to be required to meet passenger demand after 2020.
The Minister of State, Department for Transport (Baroness Kramer) (LD)
My Lords, the only viable option for solving problems on the west and east coast main lines beyond 2020 is HS2. The Government have looked at alternatives, including upgrading these routes. The lead alternative looks to enhance all three existing north-south main lines at a cost of £19.2 billion, £2.5 billion of which is required for the west coast and £11.5 billion for the east coast. None of these alternatives delivers the scale of benefits of HS2.
Lord Faulkner of Worcester (Lab)
My Lords, I welcome the Minister to the Dispatch Box for her first Oral Question and warmly congratulate her on that Answer. With the number of people travelling by train now higher than at any time in the history of Britain’s railways, with growth over the past five years running at 5%, does she agree with Network Rail’s assessment that a make-do-and-mend approach to the main lines built by our Victorian ancestors would require 2,770 weekend closures, endless bus substitutions and increased journey times over 14 years, and do little for economic growth for our great cities outside London?
Baroness Kramer
My Lords, I could not agree more with the noble Lord. I would also say that the benefit-cost ratio for HS2 assumes a growth in rail demand of 2.2% while, as he has said, the actual growth in demand over recent years has been much closer to 5%, which would significantly increase that cost-benefit case. Capacity is the issue; the alternatives just do not offer the scale. For example, HS2 will deliver over 13,000 peak hour seats to west coast destinations compared to just 3,000 for the alternatives.
Lord Berkeley (Lab)
My Lords, how many years of closure at weekends or at other times of the three main lines going north from London would be required to meet the demand of passengers and freight—and freight will double in the next 20 years—if that was to be a substitute for HS2? I declare an interest as chairman of the Rail Freight Group.
Baroness Kramer
My Lords, we would be looking at something like 14 years of weekend closures, which is extraordinary disruption. That assumes a very aggressive construction schedule of two simultaneous schemes on each route at any one time. If it was done in a more usual pattern, there would be even more weekends of closures. The question of freight is a serious one, because the alternatives would not add a single additional freight path on the southern section of the west coast main line, whereas, by transferring long distance passengers to HS2, there is a possibility of up to 20 additional freight paths on that same congested set of lines.
Lord Palmer (CB)
Could the Minister explain why the Government are so keen to denationalise the east coast main line when it is performing so well and contributing so generously to Treasury funds? I declare an interest as a frequent traveller on that line.
Baroness Kramer
My Lords, I shall reply only briefly, because this wanders away from the topic of the Question. The important issue is that we need significant investment in the east coast main line. The Government and DOR have done an excellent job of stabilising the service; we look to the future and to investment and growth. That is why the Government are making the decision to move ahead with the franchise, to provide a far better and improved service in future.
Lord Bradshaw (LD)
Did the Minister see the report in the Evening Standard yesterday that the noble Lord, Lord Sugar, has spent £24 million in acquiring a property the value of which is expected to rise when Crossrail is opened? The HS2 route will see significant rises in value but these are neither credited to the scheme in the economic assessment nor captured by the public purse. Is any work going on to secure some credit for such effects of these large infrastructure schemes?
Baroness Kramer
My noble friend Lord Bradshaw is right that the economic case is looked at within fairly tightly defined contours. There are many additional benefits. My noble friend Lord Deighton is working on making sure that the growth potential of HS2 is absolutely maximised. My noble friend made the point that there is an uplift in value. My goodness, we have seen that around places like King’s Cross/St Pancras, at the stations on the Jubilee line and in the benefits to Canary Wharf. That economic uplift has not traditionally been captured to help fund infrastructure. We will look closely at ways to do that in future.
Lord Snape (Lab)
My Lords, does the Minister accept that the problems on the east coast main line are due to the shoddy way in which electrification took place in the 1980s, a fact that Ministers at the time boasted about? Electrification masts were more widely spaced, and the catenary of lightweight construction means that it blows down in anything above a summer breeze. These matters have nothing to do with the train-operating companies. The Minister’s welcome response about the future of HS2 today ought to be answered by those in my own party, some of whom appear to be more interested in playing politics than worrying about the future of our railway industry.
Baroness Kramer
Again, I am afraid that the noble Lord, Lord Snape, wanders away from the subject of today, but it is crucial to understand that when HS2 goes forward, it does not mean we are stopping other transport investment on crucial lines. As he will know, in the next Parliament £73 billion has been committed to transport improvements and only £17 billion of that goes on HS2. Definite improvements are scheduled for the east coast. Since that is away from the topic, I will not pursue those today—and I cannot find them under my tab. I will write to the noble Lord in detail.
Lord Cormack (Con)
Is my noble friend aware that many do not share her enthusiasm for HS2, and believe that the points made by the noble Lord, Lord Mandelson, deserve real consideration and that the environmental cost that this nation will have to pay is really disproportionate to the benefits that might be achieved? We hope very much, even at this late stage, that common sense will prevail.
Baroness Kramer
My Lords, the Government—and I—regard HS2 as a vital project. As I said, the underlying rationale is capacity. We are out of capacity on critical lines going north out of London and those are essential for the economy. We must also continue to build the economy of the north of England rather than just constantly focus on the south. I believe that the project has found a good balance between the environmental challenges—of course, they are many—and value for money. This is an absolutely essential project and most of those in this House who specialise and focus on transport and rail will confirm the view I have just expressed.
Lord Davies of Oldham (Lab)
My Lords, why is the public operation of the east coast main line not allowed to continue or bid for the franchise when bids from the German and French state railways appear to be welcome?
Baroness Kramer
My Lords, I am delighted to find that HS2 has now become so uncontroversial that questions on other topics enter into this brief exchange. I just repeat what I said on the future of the east coast main line. It has gone through a period of being stabilised by the Government. That has meant that new investment has not come in on the scale that passengers on that route require. We wish to see a strong future for the east coast main line.
Housing: New-build Homes
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)
My Lords, this Government are building more affordable homes, helping people to buy new homes and reforming the planning system to make it easier for developers to build new homes of all types. Housing supply is at its highest since the end of the unsustainable boom in 2008, with 334,000 new homes built over the past three years. Housing starts and loans to first-time buyers are up by a third on last year.
Lord Dubs (Lab)
Will the Minister comment on two propositions? First, I am bound to say in all humility that my figures do not agree with hers. Since the coalition took office, housebuilding has been lower than under the previous years of the Labour Government. Further, if, as under the Help to Buy home ownership scheme, money is to be made more easily available for purchases but there is no significant increase in supply, prices are bound to go up without anyone benefiting. Is that not nonsense?
Baroness Stowell of Beeston
It is worth making the point in response to the noble Lord that, despite the Labour Government having a target of 240,000 new dwellings a year in England when they were in power, housebuilding across England and Wales under his Government fell to its lowest peacetime rate since 1924 by 2009-10. As for his point about the Help to Buy mortgage guarantee scheme, it is ensuring that people who are unable to fund the high deposit rates are able to buy property. Once you take out London and the south-east, house prices in most places around the UK are going down.
Baroness Gardner of Parkes (Con)
My Lords, although I welcome the Help to Buy scheme for first-time buyers, is the Minister aware that there is a great need for small units—ideally one-bedroomed units designed for people who want to leave large homes—whether they are built privately or by local authorities? It would free up a huge number of properties if more accommodation of that type was developed. Will be Government do something to encourage such development?
Baroness Stowell of Beeston
The Government’s approach is driven by need and by local communities being in charge of deciding what is built in their areas, rather than the top-down approach that has been taken in the past. During the past few years, we have been ensuring that any new development that may have been stalled but which can provide the kind of new accommodation to which my noble friend refers receives support to get that new construction under way.
Lord West of Spithead (Lab)
Is the Minister content that there are sufficient married quarters in the right places for our military? If not, are we building new ones?
Baroness Stowell of Beeston
The noble Lord moves to a specific area on which I do not have information, so I will have to write to him.
Baroness Maddock (LD)
My Lords, my noble friend will be aware that the borrowing restrictions on local authorities in the United Kingdom are far more stringent than those on local authorities in many of our neighbouring north European countries. When will the Government look seriously at altering the public sector borrowing requirement, because changes could be made that would greatly assist our local authorities in building more new affordable homes?
Baroness Stowell of Beeston
We certainly encourage local authorities to use their assets and the borrowing power that they already have. Not all councils are borrowing up to their cap, but the cap is important because it is part of our larger strategic objective, which is reducing the overall deficit, so it is not possible at this time for us to lift the cap on local authorities.
Lord McKenzie of Luton (Lab)
My Lords, the Minister will be aware of an NAO report on the new homes bonus that found that the Government had got their sums wrong. Assumptions were unreliable, unrealistic and contained a substantial arithmetical error. It found little evidence that the bonus is increasing approvals for housing. It said that the Government were not monitoring the impact of £1.3 billion of taxpayers’ money and that the new homes bonus was unfair in its distribution. The PAC has called for an urgent review of the new homes bonus. Will the Minister support that?
Baroness Stowell of Beeston
As we made clear yesterday, and as was always the case, we are already reviewing the new homes bonus scheme; that report will be published next Easter. The most important thing to say to the noble Lord is that we are disappointed in the NAO’s report because it seems to miss the point of the new homes bonus. It is there to do what is says on the tin: to reward councils that help to build more new houses. That is what we are trying to do. We want to make sure that those local areas that build more houses attract and receive the benefit of doing so in their area.
Lord Forsyth of Drumlean (Con)
My Lords, will my noble friend make sure that for those taking part in Help to Buy, particularly young people, strict criteria are applied on the affordability of the mortgages? When interest rates go up to their normal level, there is a chance not only that the value of properties will fall but that payments will rise spectacularly. Is she sure that the scheme is being run in a way that will not force youngsters into negative equity, with mortgages that they cannot pay?
Baroness Stowell of Beeston
I am very sure, as the arrangements in place are very rigorous. As my noble friend will be aware, the Bank of England will monitor the scheme and, importantly, the criteria used to judge whether somebody can afford their mortgage will be as robust as they need to be. This is an opportunity presented to people who do not have access to the bank of their parents or family and who, if they could have more help putting down a deposit, would be able to own their own homes. That is a good thing.
Ian Brady
(11 years ago)
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Lord Campbell-Savours
To ask Her Majesty’s Government whether, in the light of the amounts paid in respect of the mental health tribunal for Ian Brady, they will review the amounts payable from public funds in such cases.
The Minister of State, Ministry of Justice (Lord McNally) (LD)
My Lords, the Government currently have no plans to review the amount payable in these types of cases.
Lord Campbell-Savours (Lab)
My Lords, is it fair that in the case of Moors murderer Ian Brady, Mersey Care—in other words, the hospitals on Merseyside—had to spend £181,000 in a mental health tribunal? A further £92,000 then went to Brady’s lawyers, RMNJ Solicitors, along with thousands more to Scott-Moncrieff—more defence lawyers. Why should the taxpayer pay these exorbitant fees on a pointless appeal when law centres all over the country are being run down and CABs are being starved of resources? What are these lawyers doing for all this money?
Lord McNally
In this particular case, the entire process took almost three years and culminated in an eight-day tribunal hearing. This is a legal process and the trust had no option other than to comply; neither did the Legal Aid Agency.
Lord Thomas of Gresford (LD)
My Lords, I was present at the trial of Brady at Chester Assizes in 1966, where he was represented by my noble friend the late Lord Hooson. He did not plead insanity at his trial. Indeed, he served some 19 years in an ordinary prison. It was a decision of the prison authorities to send him to Ashworth hospital, where he tried to commit suicide by starving himself to death. He was force-fed, and the purpose of his application to be transferred back to an ordinary prison was so that he could starve himself to death without being force-fed. Since the cost in Ashworth was well over £250,000 a year, was not the money well spent even if the decision went the other way?
Lord McNally
My Lords, it is very difficult to find much sympathy for Mr Brady, although it has to be said that he has been judged to be medically ill. Our law says that in those cases the mental health review tribunal is part of the process of our legal system and that a patient is entitled to a tribunal hearing, as set out in Part V of the Mental Health Act 1983. We cannot have one law for those we find worthy and another law for those we do not like. In some ways, it is the fact that Mr Brady has the protection of the law that should give reassurance to the rest of us.
Lord Hunt of Kings Heath (Lab)
My Lords, to go back to my noble friend’s point, surely, given the size of the cost to the local mental health service, it ought to be helped out by the Department of Health.
Lord McNally
My Lords, I asked that question during the briefing. It is an almost unique case. I think that there have been only two such cases in recent times. I am speaking off brief at the moment, but it seems unfair that a single health authority should take such a disproportionate hit on something that is really a national matter. However, the rules as they now apply are that the Ministry of Justice takes the state costs through the Legal Aid Agency and the health authority concerned takes the hit with regard to costs. The noble Lord makes a valid point and I will take it back to a probably not overenthusiastic Health Minister.
Lord Patel of Bradford (Lab)
My Lords, will the Minister take another suggestion back with him as well? We have three special health authorities of which Ashworth in Merseyside is just one; we also have Rampton and Broadmoor. The potential for high-profile cases in any one of those hospitals to impact on local health trusts is enormous. It would be really helpful if there were a way for a special allocation of funding to be made that did not impact on those mental health patients who do need care and attention.
Lord McNally
That is the value of this exchange. I will take that suggestion back. This is not a responsibility of the Ministry of Justice—as I say, the Legal Aid Agency is responsible for the legal costs on that side—but, as it now stands, those three health trusts are liable. I will report back to the Health Secretary and see whether this could be looked at. I hope that this will remain an almost unique case but, as the noble Lord indicates, there is a possibility that another such case will arise so we should look at this.
Baroness Trumpington (Con)
My Lords, does the mental health review tribunal come into this picture? I was proud to be a member of that tribunal, serving regularly in sessions at Broadmoor. Surely the tribunal should come into the picture, including the financial side of things. Examining Brady could come under its financial services.
Lord McNally
I shall look at that point. However, as the rules now stand, it is the responsibility of the health authority looking after that patient. As I say, though, this exchange reveals that that may put too much of a burden on a single authority, and I shall certainly ask my right honourable friend to look at the matter.
Probation Services: Privatisation
(11 years ago)
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Lord Ramsbotham
To ask Her Majesty’s Government what is their response to the request of the Chief Executives of Probation Trusts to delay the proposed privatisation of probation services for six months in the interests of public safety.
The Minister of State, Ministry of Justice (Lord McNally) (LD)
My Lords, there is a pressing need to drive down reoffending rates, which is why we are reforming the system for the rehabilitation of offenders. Public safety is always our top priority, and the department is working closely with trusts to minimise any disruption to the work that they do to protect the public.
Lord Ramsbotham (CB)
My Lords, I thank the Minister for that reply, but letters from experienced chief executives of probation trusts directly to a Secretary of State suggest a worrying lack of trust in the system between them. Behind those letters is an understandable concern about the current timetable in which chief executives were required to start work on 28 October, three days ago, on a realignment process for their staff that has to be completed by 31 January 2014, including the confirmation of outcomes for all their staff. However, despite frequent requests, as of yesterday they had not been provided with any details of the number of posts, the workload or the resources on which they can base any assessment, let alone allocation. Apparently, much depends on a risk assessment process that has yet to be resolved. When will these details be available, and why will the Secretary of State not agree to a reasonable and sensible request for delay?
Lord McNally
Any transformation programme is difficult, and keeping to a timetable is always challenging, but I do not believe that a six-month delay would promote better or more efficient work than is now being done. Of course we will keep these matters under review and check how progress is being made. There is a campaign in some quarters against the idea of these proposals but, in the main, we are having very constructive discussions with the trusts. I am confident that we will be able to keep to the tight but achievable timetable that we have set.
Lord Beecham (Lab)
Does the Minister think that the rushed changes to the probation service, before the House of Commons has even discussed the amendment passed by this House to the Offender Rehabilitation Bill requiring parliamentary approval for such changes, will prove less of an omnishambles than NHS reorganisation, the 111 helpline, universal credit, personal independence payments, legal aid or the sale of Royal Mail?
Lord McNally
As for the idea that this is a rush, we are using 2007 legislation brought in by the last Administration and basing much our approach on the pilots in Peterborough and Doncaster which were brought in by the last Administration, so the idea that involving the private, charitable and voluntary sectors in probation work was thought up on the back of an envelope and is being pushed through in a few weeks is simply not true. We are moving in a direction that the previous Administration had already set in line. Admittedly we are making some radical changes, including bringing in a National Probation Service, which will give probation an authority and status which it has long lacked under previous schemes.
Lord Dholakia (LD)
My Lords, does my noble friend accept that in the short term there will be a considerable impact on the employment and retention prospects of probation officers? In the light of that, will he ensure that probation services are informed about job opportunities in the private sector and that the private sector gives priority to the employment of people from the probation service so that their experience is not lost to the criminal justice system?
Lord McNally
I have great confidence in the human resources work that is being done to make sure that, where work is transferred across to the private and voluntary sector, existing probation officers get good opportunities for employment. My view is that many of the new entrants into this market will want to grab the experience of existing probation officers. I also hope that we can push forward with the idea of a chartered institute of probation, which again would give probation and probation officers the status that they previously lacked in our system.
Lord Marks of Henley-on-Thames (LD)
Can my noble friend say what steps the Government are taking to ensure that the new owners of the community rehabilitation companies, when they are sold by the Ministry of Justice in the second stage of this process, will represent the diverse range of providers that he described and which the Government seek, rather than just a handful of large commercial organisations?
Lord McNally
This also is work in progress and where we have learnt, including from some past mistakes. We have put aside money to allow would-be entrants, particularly in the voluntary sector, to prepare for bids. My impression is that we are tapping into a large unused resource. Let us never lose sight of what we are bringing forward. The part of the bargain that really excites me is that we are going to be able to give help, support and rehabilitation measures to those who are sentenced to less than 12 months, the very sector which includes some of the most prolific reoffenders. This is a rehabilitation revolution. Although transfer and change are always difficult, we have this on track. However, in answer to the original Question asked by the noble Lord, Lord Ramsbotham—and I know the care with which he takes an interest in this—we will be keeping these matters under constant review and, as always, I am willing to meet him on these matters.
Lord Rooker (Lab)
On the original Question to which the Minister just referred—and I have listened with care to his answers—the noble Lord, Lord Ramsbotham, made it specifically clear that the starting gun was to be fired on 28 October. It is now 31 October. We are already three days late at the beginning. So what is the answer? When will that date and that target be met?
Lord McNally
The Question implies a kind of sprint race where there is the firing of a gun. Some of these things have been in track for months and indeed years, and will continue in progress after October, after next April and after the October after that. We are managing change in a very important sector, whereas the Question implies that public safety must be paramount. The idea that we are somehow firing a gun and everybody rushes off ignores the reality of some careful preparation which is under way.
Business of the House
(11 years ago)
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Lord Hill of Oareford
That the debate on the motion in the name of Baroness Quin set down for today shall be limited to three hours and that in the name of Baroness Prosser to two hours.
Housing: Affordability and the Underoccupancy Charge
Baroness Quin
That this House takes note of the availability of affordable housing in the United Kingdom and the impact of the underoccupancy charge.
Baroness Quin (Lab)
My Lords, I am pleased to be introducing this debate and delighted that it has attracted a good number of speakers. I am delighted but not surprised because the crisis in housing and the effects of the bedroom tax in particular have been raised repeatedly in this House in recent weeks and months, showing the deep concern that your Lordships feel about these issues. I very much look forward to listening to the maiden speech of the noble Baroness, Lady Bakewell of Hardington Mandeville—I hope that I have got that right—and of course I wish her well in her new role as a Member of your Lordships’ House.
I also add my congratulations to the Minister on her recent well deserved promotion. I am only sorry that she will no doubt be put in the position today of defending an indefensible policy, the bedroom tax, which is a policy not of her making and, indeed, one which only partly falls within her departmental responsibilities, although I recognise that many of the wider housing issues raised today fall within her remit.
Although I am the opening speaker, the themes of the debate were suggested by both me and my noble friend Lord Whitty. We were both keen to use opposition time to highlight these issues, and I therefore very much look forward to his contribution later in the debate.
My remarks will focus mainly on the bedroom tax which I have raised through Oral and Written Questions previously but which, given its pernicious effects, needs to be aired at every opportunity until, hopefully, the Government see the error of their ways. However it is important to set the bedroom tax within the wider housing and economic context, and this debate gives us the opportunity to do so. For example, it needs to be set against the overall and desperate shortage of affordable homes, which was referred to in Oral Questions today. It also needs to be set against the problems in the private rented sector at a time when private rents are soaring and there is a crying need for the sector to be better regulated, something which I know my noble friend on the Front Bench has raised on a number of occasions.
That needs to be set against the fact, recently highlighted by Shelter, that the number of families who live in emergency bed-and-breakfast accommodation is now at its highest for nearly 10 years. We have all become aware of the huge increase in homelessness and rough sleeping in recent months. We also have to consider the overall context of welfare reform and, in particular, of the cuts to local authorities and council tax increases. Finally, perhaps this debate should also be seen in the wider context of issues such as the rise in fuel costs and the difficulty so many people find in simply making ends meet. That, of course, links in to the second debate today, on the cost of living and its impact on family budgets, which my noble friend Lady Prosser will lead.
The bedroom tax has now been in operation for more than six months. This is, therefore, a good opportunity to examine, as far as we can tell, what its effects have been. Some problems with the policy were apparent from the start, but others have emerged more clearly over time. For a start, we know that the Government’s thinking behind introducing the tax was the need, as they saw it, to free up housing to allow those in overcrowded accommodation to find suitable homes. The Government made much of the figure that overall a quarter of a million people lived in overcrowded accommodation, and contrasted this with the estimated million so-called spare bedrooms. However, the problem was that there was a complete mismatch between the areas of the country where there was overcrowding and those areas where there was underoccupancy, so that this often quoted overall figure was largely meaningless and misleading. For example, the National Housing Federation pointed out from the outset that in the north of England—in the regions of the north-east, Yorkshire and Humberside, and the north-west—families affected by the bedroom tax outnumbered overcrowded families by 3:1.
Examples have flooded in from around the country about the lack of smaller properties available to those who, designated as underoccupying, signified their willingness to move. In this House the right reverend Prelate the Bishop of Ripon and Leeds quoted the example of Hull, where 6,000 people were affected by the bedroom tax while only 70 properties were available to move into. I could quote many other examples from around the UK because this is a UK issue; the situation in Scotland and Wales has been repeatedly referred to in this House. Certainly the mismatch between types of accommodation is very clear, whether you are talking about Aberdeenshire, Swansea or Birmingham, Norfolk, North Tyneside or Cornwall. No part of the UK is exempt from this mismatch, although some areas are much worse affected than others.
The lack of alternative accommodation is therefore still a key issue after six months of the tax. Of course, there is the clear unjustness of a situation where people who are willing to downsize but cannot find alternative accommodation still have to pay the tax. It is interesting—perhaps one can make an ironic comparison—that if you are a jobseeker and you show that you are available and willing to work, you get benefit. However, if you are available and willing to downsize, your benefit gets cut all the same.
There is much distressing evidence of those in arrears for the first time as a result of the introduction of the bedroom tax. Many of those people, who have previously been able to meet their bills, are I think horrified and traumatised to find themselves in an upsetting and unfamiliar situation. The sum involved in the reduction in benefit can mean the difference between keeping your head above water and sinking below the poverty line.
One striking feature of the tax as it is operated is that many of those affected are in employment. That has once again highlighted the problem of low wages and such things as zero-hours contracts. Again, it is tragic that this tax hurts the very people the Government say they want to support: those people who want to get into and stay in work. However, as a result of this charge they cannot make up the income shortfall they face and again, end up sinking into debt.
I also believe that the disabled have not been adequately protected in this legislation. Considerable efforts were made in your Lordships’ House to amend the legislation when it was going through to provide better protection for disabled people and, indeed, even to consider exempting them from the tax in the way that pensioners are exempted. In the course of conducting research for this debate I have come across many examples of disabled people who have found themselves penalised considerably as a result of the tax. I hope that the Minister will look at some of these instances.
All benefit and welfare changes are complicated, as we know, simply because of the variety of individual circumstances involved, but in this case the complexity seems to have turned into a nightmare. There are myriad personal circumstances and many particularly difficult and heartbreaking situations have arisen since the imposition of this tax. For example, children who have grown up and moved out of home, having found employment and accommodation elsewhere, but who have subsequently lost that employment then need, and want, to move back home but find that they cannot because of the bedroom tax.
As we know, couples often split up and sometimes one parent will have custody of the children but the other parent may have partial custody and will understandably want the children to stay with him or her. Such families can easily fall foul of the bedroom tax rules. Another category I have come across is that of young grandparents who are not pensioners and therefore not exempt but who play a part in looking after the family and have the grandchildren to stay with them, although not all the time. These grandparents can fall foul of the bedroom tax and its rules.
All these situations can break up families and damage community cohesion. The complexity of this issue is also adding to the costs and burdens on local authorities which are struggling to cope with it. Crucially, I believe that the tax is not saving as much money as the Government claim. Recent evidence compiled as a result of research undertaken by the University of York and a number of housing associations seemed to suggest this. I also understand that the National Housing Federation is compiling statistics on this issue. What is the Government’s current estimate of savings as a result of this measure?
Will the Minister give more details of how the Government are monitoring this situation? I was concerned by the reply I received from the Minister’s predecessor to a Question for Written Answer that I tabled. I asked what information the Government had about those who had gone into arrears for the first time since April, and what proportion of those were subject to the bedroom tax. I received this not very reassuring reply:
“The Department does not collect official statistics on how many social housing tenants were in arrears for the first time nor on any notional sub-classification based on welfare reform”.—[Official Report, 23/9/13; col. WA 450.]
It is vital for the Government to get as much information as possible from local authorities and others to see what the evidence is regarding people who have gone into arrears for the first time as a result of this measure.
The noble Lord, Lord Freud, in replying to an Oral Question, spoke of the choices people could make as a result of being affected by the tax. However, these are very unenviable choices for many people, such as trading down or “pulling in lodgers”. I do not know whether the Government have any information about how many people have taken in lodgers following the introduction of this tax but I would imagine that, for someone living on their own in accommodation that they have occupied for a very long time, taking in a complete stranger to share that home could be a daunting and upsetting experience.
A lot of people have chosen to stay put following the introduction of the measure, but their ways of doing so have often involved simply getting financial support from family or friends or cutting back, in many cases to living on the poverty line. Not surprisingly, people do not want to move away from areas where they are part of a social network, where there are support systems and where there may be valued childcare facilities or reliable friends and neighbours. Even when people agree to move, transition can take a long time and transition costs for the tenants and the local authorities, such as in reletting costs, can be considerable. So downsizing is not a cost-free option.
Something that I hope will sway the Government is the fact that according to recent polls the underoccupancy charge or bedroom tax is deeply unpopular. Although the Government may hope that some of their welfare reform measures are popular, that certainly does not seem to be the case in this instance.
In preparing for this debate I was helped by a number of organisations: the National Housing Federation, Shelter and church charities, which make grants for those in dire need and are particularly aware of the hardship that is being caused in particular parishes and communities. I am also very grateful to the council with which I have had the honour of being associated throughout my time in both Houses of Parliament, Gateshead Council, which has told me of its findings after six months of the charge. It says that the amount of the penalty applied for underoccupation of one room in a council tenancy in Gateshead is almost double the additional housing benefit that would have been paid. The impact of this weekly penalty on many tenants has been immense and has contributed to a large increase in tenancy turnover, vacant property costs and rent arrears. The impact on the council’s housing revenue account is also considerable because of the additional rent arrears, additional expenditure on relet work and the loss of rent because of vacant property.
I am running out of time and would have liked to refer to many specific instances. Perhaps I may send some of these details to the Minister. In conclusion, I should say that of course the Government have to look at ways of saving money, but not by cruelly mistreating vulnerable people who were in no way the cause of the global financial crisis and should not be penalised as a result. Just last week we heard an entertaining spat between the former Prime Minister Sir John Major and the current Secretary of State for Work and Pensions. Sir John put it well and very tellingly when he referred to the plight of the “silent have-nots” and talked of the painful choice between heating and eating. Given this debate, he might have said heating, eating and keeping a roof over your head. I was delighted when my party’s leadership gave a firm commitment to repealing this tax. I call on the Government now to follow suit before even more hardship and misery are caused as a result.
Baroness Seccombe (Con)
My Lords, I congratulate the noble Baroness, Lady Quin, and thank her for giving us the opportunity to debate this important issue today.
Any change in the law will doubtless cause concerns to those people who stand to be affected. However, I hope that this debate provides us with an opportunity to better understand the proposals. There are many issues surrounding the area of welfare. Not least is the responsibility of government to ensure that all benefits are dispensed in a way that is fair to both the taxpayer and the recipients. We can all understand the frustrations of those who rise early, work all day and find that some of their neighbours on benefits appear to live a comparatively comfortable life without any of the hassle. Any welfare system should therefore be equally fair to those who pay into it and those who receive it. The principal aim should always be to help those who are able back into work. At the moment we can all agree that this has not been working.
However, I want to concentrate on just one small point. With life expectancy increasing, many elderly, and indeed very elderly, people live alone and are able to live independent lives. This is certainly the case for many women who are more often than not the ones left behind. They have raised their families in the same home and then, when their children have flown and the hustle and bustle gone, they can find themselves living alone in a property too large for their needs. This happened to me and I was then able to buy a smaller property, cut down on bills and “downsize”. For anyone living in social housing, this can be much more difficult and the choice has simply not been there.
I want to encourage choice and I was therefore pleased to see that pensioners are not subject to the spare room charge. So, if it is their wish to continue to live in their accommodation, they may do so. However, should they prefer, councils will support social tenants who wish to downsize. There continues to be funding for an action team within the Chartered Institute of Housing, which works with all social landlords to help them to promote moves. It seems to me that for an elderly person struggling with the upkeep of surplus rooms, that could be hugely welcome. Such a scheme would not only encourage choice and make it possible for a person to move to a smaller home but it would release a property for a large family with all its needs.
I was interested to see that in action with the introduction of HomeSwap Direct, which has made it possible for councils and housing associations to tackle underoccupation. The Seaside and Country scheme is another option. It offers social housing outside London to elderly tenants living in Greater London in family-sized properties, and this must present an attractive proposition to some who are looking to get away from the mad rush of city life.
Life can be very lonely for older people. I believe that we, in this House particularly, have a duty to make the later years as enjoyable as we can. I commend the Government for ensuring that those who wish to do so are able to stay in the accommodation that they know as their precious castle but also for alerting them to other opportunities.
Baroness Hollis of Heigham (Lab)
My Lords, I thank my noble friend Lady Quin for introducing this vital debate. Like her, I will speak about the bedroom tax. I do not blame the Minister, whom we welcome to her brief; the DCLG has sensible underoccupancy standards. I blame Sir George Young. In the 1990s, as Housing Minister, he said that we should subsidise people, not property. Housing benefit, he assured us, would take the strain: too true. Housing benefit soared, social housing collapsed and the bedroom tax is the result.
The Government claim that the housing benefit bill is high because tenants occupy over-large property that should instead go to families who are overcrowded or on the waiting list, thus saving £490 million a year. That is not true—none of it. Let us unpick it. Families are overcrowded because other tenants do not trade down? False. As my noble friend said, outside London that is not a problem. The DCLG’s own statistics show that there are far fewer overcrowded families than underoccupying families by a ratio of about 1:6. The Government do not need to do this. Helping pensioners who want to downsize, but now will not be able to, would sort it.
The next claim is that the bedroom tax will help waiting lists—false. Some 80% of those on waiting lists are single people or young couples without children also requiring one-bedroomed flats. However, they will now, as the Scottish report showed, wait twice as long because underoccupiers will take priority for that accommodation. This applies similarly to the homeless—mostly single vulnerable people—and, as the noble Baroness, Lady Seccombe, rightly mentioned, pensioners. They, too, need and want the smaller properties that will be made artificially scarce because of the bedroom tax, and it will be harder to help them.
We simply do not have single-bedroomed properties, as two-bedroomed homes are far more flexible. Earlier this summer, Wolverhampton had 118 one-bedroomed properties to let but 2,500 tenants underoccupying and nearly 7,000 households on the waiting list for a one-bedroomed property. A similar situation applies in Leicester. Reports from Scotland and Wales show that it will take years for underoccupiers to trade down within the social sector. Three-bedroomed homes are now standing empty, taking 50% longer to let, and some in the north may be boarded up, while families with children or disabled families who want to live in them are forced into scarce smaller property that other people—pensioners, those on the waiting list and the homeless—want and now will not get.
“Well”, says Esther McVey brightly, “Convert three-bedroomed houses into two flats”. Double up kitchens and bathrooms, build external staircases, increase sound insulation, and provide car parking and external storage, and the cost of £70,000 or more, excluding land, outside London actually builds a new home. Further, you cannot adapt mid-terrace houses, you cannot adapt post-1960s houses as their rooms end up too small by DCLG standards, and many built before 1960s have been sold. As a policy it is, frankly, absurd.
Two-thirds of those affected, as my noble friend said, are disabled families. There are people with epilepsy, Huntington’s, Parkinson’s, severe asthma, who as couples need separate bedrooms. Their letters would break your heart. Now their carer partners will be denied an adequate night’s sleep, which will break their health as well. They have committed no offence. They have lived difficult lives, yet we are now punishing some of the poorest and most afflicted families in the land for the sin of occupying a house that their social landlord, years earlier in good faith, allocated to them.
“Oh!”, says the DWP, brightly, “Discretionary housing payments will help them”. False again. The impact analysis shows that only 40,000 of the 660,000 affected by the bedroom tax may end up on DHPs. The extra money found by the department might extend to just 60,000 or 10%. The Government insist that tenants downsize to make way for people who do not want the larger homes they have left. However, at the same time the Government hypocritically expect to make their savings precisely because 90% of underoccupying tenants do not do what the Government state—move—but do what the Government actually want: stay put and take the hit if they can, to make the savings. Make the savings, and you do not deliver the policy; deliver the policy and you do not make the savings.
The recent ALMO survey finds a 24% increase in empty property and that 65% of underoccupying tenants are in arrears, which have doubled. Many have been sent eviction notices and just 8% qualify for DHPs—so now what? I declare an interest as chair of a housing association. If we as social landlords do not evict, arrears soar, and the social landlord goes into the red and into special measures. If we do evict, where do tenants go—into our smaller accommodation? We do not have it. Perhaps into the private rented sector, where the rent of one-bedroomed flats is higher than that of the two-bedroomed flats they have left. That is if a landlord will take them, if they have the money for deposits, and the money for moving costs. With children, they may go into B&B at huge cost and distress, or if single, sofa-surf until they end up on the streets. Some tenants may return as vulnerable into hard-to-let, unwanted—guess what—three-bedroomed properties, perhaps even as squatters because that is the only property available, and the sorry cycle starts all over again.
None the less, the Government insist that the bedroom tax will produce savings of £490 million to outweigh all this misery: false again. Let us do the sums. The Government modelling for savings assume that 90% will stay and take the hit and that just 10% will move. The ALMO survey shows instead that only 60%, not 90% want to stay and pay. Let us assume that 70% stay—between the two figures, I think that that is realistic—and that 30% go, most going into higher-cost private renting. Add in the cost of voids, arrears, B&B and DHPs, and the public purse—I have done the stats—far from making savings, makes a significant loss.
Tenants, far now from enjoying a settled home, will face a “snakes and ladders” of moving up, down and across, from one-bedroomed to two-bedroomed, perhaps to three-bedroomed, properties, all in different places, and then down the snake again according to the age and gender of their children, each move bringing huge moving costs, stress and dislocation, especially to disabled families, their children and the local communities that support them. All this misery, all this cruelty, all this distress to meet housing pressures that will now worsen and to make savings that now will not happen—and we call this a housing policy. It is strong language, but I call it contemptible.
Lord Shipley (LD)
My Lords, I thank the noble Baroness, Lady Quin, for initiating this debate. I declare an interest as vice-president of the Local Government Association. I look forward particularly to the maiden speech of my noble friend Lady Bakewell of Hardington Mandeville, whose expertise will prove of enormous value to the House.
This debate is important and timely. We now have a great deal of evidence as to what is happening in house building, the affordability of housing and the impact of welfare changes. More evidence will emerge over the coming weeks and I hope that the Government will prove sufficiently fleet of foot to adapt their policies to reflect what is happening on the ground.
In summary, we have not been building enough homes for years and prices are consequently higher than they might have been. If we do not increase supply, the private rented sector will see higher rents, which are clearly rising anyway in many parts of the country. Not enough social homes for rent have been built and the impact of welfare changes, particularly the underoccupancy charge, has led to rising demand for smaller units when smaller units do not exist.
Last year saw the lowest house completion rate since 1923. In fact, since 1990 annual housing completions have never exceeded 170,000 and they have averaged 140,000, in which four out of five homes have been for owner occupation. The failure of successive Governments to replace stock sold under the right to buy has led to a lack of affordable housing for rent and we are now seeing the consequences.
There has rightly been specific criticism of the previous Government for reducing the stock of social housing by 420,000 units. This is because it is for Governments to intervene to reduce social inequalities, not the markets, which is why much of my contribution today is to urge the Government to build more homes more quickly for social rent and to think again about how the underoccupancy charge is being applied.
As to affordability, house prices are rising again and we may be at the start of yet another housing bubble in some parts of the country. Funding for lending and help to buy provides cheaper credit to boost sales, but the underlying problem is lack of supply. House building is half of what it needs to be to match the rate of household formation and this imbalance now seems likely to continue for three years at least because of the time it takes to get schemes into the ground.
In addition, important as Help to Buy is, unless the supply is increased, prices will rise further, putting home ownership out of reach of even more young people. We should be very concerned that the ratio between house prices and local earnings has returned to very high historic levels. With 1.8 million families on social housing waiting lists, it is undeniable that we need more homes for rent. Large numbers of people are not in a position to take out a mortgage nor ever will be. If interest rates rise, even fewer will.
I will now say something about the underoccupancy charge. I have always felt that it was a bad policy and nothing I have seen since April has changed my mind. The evidence of impact is now available from a variety of sources, all of it expert.
It seems that around half of all tenants are paying the increase, a quarter are paying something, and a quarter may not be paying at all. Of those paying, some may be doing so by reducing their spending on food or heating, so we should not assume that because they pay, it means that their household finances are in good shape. Of those not paying, many are simply unable to do so. We should not make poor people poorer. Yes, we should encourage people into work where there is work to do and they can do it, but if there is not, poor people should not be penalised.
We should all thank the housing associations, arm’s-length management organisations and councils, where they have retained their housing stock, for their work in helping people affected by the charge. A lot of unseen effort is going on at the individual level in supporting tenants to manage their finances more effectively and so as to keep rent arrears to a minimum. Since two-thirds of tenants want to stay in their homes and are trying to pay, every method of support should be made available to them.
That takes me on to discretionary housing payments. They are being made available, but will they suffice? Two-thirds of housing associations and ALMOs say that they will not. I hope the Government will ensure that, as we progress into 2014, they will watch very carefully what is happening to demand on the funds and take action as necessary. Many tenants who are subject to the new underoccupancy rules want to move to a smaller home, but they cannot do so because the smaller home does not exist. In my view, the charge should not apply where there is nowhere to move to.
One way forward is to give local councils greater flexibility to meet demand for smaller accommodation in their areas. To do this, the Government should see councils as part of the solution and progressively remove the housing borrowing cap imposed on local councils, relying instead on the existing prudential borrowing code under the Local Government Act 2003, which guarantees that only sustainable housing investment would get the go-ahead. Councils could raise a further £4.2 billion above their current £2.8 billion borrowing headroom and they could build up to 60,000 more homes over the next five years. It will not be enough if the only action the Government take is to give permission to pool the existing £2.8 billion headroom to make sure that it all gets spent.
Since last year, April 2012, council housing has been self-financing. The average debt on a council home is only £17,000, so there is plenty of scope for safe additional borrowing against the asset of the existing stock. In addition, we should note that across Europe, trading accounts such as these are not seen as part of a Government’s borrowing. They are not related to the deficit or to debt. The UK, for reasons that are never satisfactorily explained, uses a much wider definition of public debt than any other country in Europe. The consequence is that we are not building as much social housing as we could. The aim of making better use of the existing social housing stock, which is the aim of the Government, can be done only if sufficient numbers of smaller properties are made available for those affected to move into. ALMOs in particular are in a good position to develop small plots for one- and two-bedroomed accommodation.
Research is to be undertaken into the impact of the underoccupancy charge. I understand that it is to be done by Ipsos MORI, along with the Cambridge Centre for Housing and Planning Research and the Institute for Fiscal Studies. They will all be assessing independently what is happening with the underoccupany charge. Initial findings will be made available in 2014, although I do not know which end of 2014 that might be; earlier rather than later, I hope. There is then to be a final report late in 2015, which means that we are two years away from the final report actually being produced. I hope sincerely that we are not expected to wait for two years before anything is changed because there is enough evidence now, and into the early months of 2014 there will be even more. The picture will have become very obvious.
We want to build a stronger economy and a fairer society, enabling everyone to have a good education and get a secure job. However, that is only part of what is needed to strengthen equalities, social inclusion and that fairer society. A decent, affordable home is just as important as education and a job because they are all linked. In conclusion, I hope that the Government will start to see local councils as part of the solution in building more social homes for rent.
Lord Whitty (Lab)
My Lords, I thank my noble friend Lady Quin for initiating this debate. I will dwell largely on the broader housing side, as did the noble Lord, Lord Shipley, but wanted to say something first about the bedroom tax, spare room charge or whatever we care to call it. Some evidence that I do not think has yet been cited comes from the National Federation of ALMOs, which has done a survey of council and ALMO-run properties. It found that arrears among those affected have already almost doubled—there has been an increase of almost 27 percentage points in the numbers in arrears. Of those affected, only 13% were prepared to consider moving and only 2% have actually done so. In other words, for a policy that is supposed to free up property for more appropriate use, a very low level of achievement has been recorded. As other noble Lords have said, and as the noble Baroness, Lady Maddock, said during Question Time—I am afraid that the Minister did not give her an adequate reply—the reality is that there is no alternative accommodation for these people to move into in most parts of our country. Of those surveyed by the federation, some said it would take up to 14 years to put people in appropriate housing.
However, this is not only about the nonsense of the bedroom tax. Behind all this, there are chronic problems with housing and with affordable housing in particular. The term “affordable” is of course difficult to define. I declare an interest in that, last year, I chaired an inquiry for an organisation called Housing Voice, which produced a report to try to push housing up the political agenda. I think that we, along with others, have succeeded in doing that. The definition that we used then was,
“comfortable, secure homes in sound condition that are available to rent or buy without leaving households unable to afford their other basic needs”.
Others have been more specific, saying that it should not cost the household on median earnings more than one-third of their income.
However, the Government and the powers that be have used the word “affordable” in an entirely different way. In an affront to the meaning of the English language, the term “affordable housing” in the social housing sector is used, in Newspeak, to mean charging what are, for many social tenants, totally unaffordable rents. In more general usage, there is a chronic lack of affordability not just in the social housing sector but across all tenures of housing. Rents and prices are rising in all housing sectors and in all parts of the country—the issue affects our inner cities and our rural areas, young families seeking a mortgage for the first time, leaseholders, private tenants and those in social housing. Above all, it affects the young and those who are in the wrong kind of housing because of family circumstances.
The situation reflects a long-term failure to build housing, which as the noble Lord, Lord Shipley, said, has continued under successive Governments for many years, with new housebuilding running at less than half the rate of household formation. It is particularly acute towards the affordable end of the market and was, I am afraid to say, greatly aggravated in the early days of the coalition Government when they deliberately slashed government support for affordable social housing by nearly two-thirds. They have belatedly introduced policies to offset that, but it was a severe blow, which has meant that recovery and improvement in the total level of housebuilding is even further off.
I have to say to noble Lords opposite that, to some extent, among their ranks and in some of the coverage in the newspapers that support them, there is a deep prejudice against tenants of social housing. That has led to measures that are hitting social housing and, in particular but not exclusively, those who are on benefits. That has been compounded by aggravating and detailed interventions such as the bedroom tax. This combination of factors has already led, as noble Lords have said, to severe distress and threatens serious social and communal dislocation. Other things have affected the situation and will, in future, affect it even more, such as the move to the default position of payment to tenants rather than to landlords. Although there is some justification for that, particularly in the private rented sector, it means that housing associations’ income and creditworthiness is less assured and they are therefore less able to raise money to build new homes. In the private rented sector, the refusal to regulate private landlords is leading to soaring rents and inadequate conditions in large parts of the burgeoning private rented sector, not least here in London.
All this is, naturally, leading more people to claim housing benefit and more people to claim a larger amount of housing benefit, reflecting their housing costs. The Government are right to point to this escalating cost of housing benefit as being a major problem in the welfare bill. However, that has led them to the wrong conclusion. Instead of tackling the increase in housing benefit expenditure as a reflection of dysfunction in the housing market, they have treated it as a dysfunction of the welfare system. That has led them down exactly the opposite road to the one which they should be going down. Part of the real solution, which I have been advocating for some time in this House and elsewhere, would be for housing in central government to be placed in the hands of one Minister and the resources available for housing benefit to be put together with those available in CLG. That way, we could have a strategic approach to housing demand and supply and match them more substantially. As the noble Lord, Lord Shipley, said, the other part of this would be to give councils and local authorities the responsibility for strategic delivery of housing right across the board in their areas.
Although the Government have recognised the need to build more houses and have introduced some policies that they say are going to lead to that, nothing has yet been seen. The Public Accounts Committee, in its assessment of the new homes bonus, effectively said, “Case completely unproven”. In its actual text, there are harsher words than that. Although the Help to Buy policy has helped a number of people into the housing market, and has undoubtedly had the political effect of reassuring existing homeowners that the market value of their property is going up and giving them a warm feeling about that, there is no point pouring money into the demand side if you do not match it with policies to deliver the supply to meet that demand. All that will happen—particularly in the high-stress areas, but right across the country, as we have already seen—is that house prices will increase but there will not be an increase of any great significance in housebuilding.
Those measures are probably misplaced and they are certainly not working. We need further measures. On the planning side, we need to ensure that new housing developments include a minimum proportion of affordable housing, in whatever form of tenancy we decide should apply. Instead, councils are having their arms twisted by developers and going back on the previous policy. We must ensure, in so far as there are new right-to-buy deals, that there is a genuine one-for-one replacement of anything that goes out of the social housing system. The arithmetic that the Government have come up with on that is completely phoney.
Above all, we need to ensure, as the noble Lord, Lord Shipley, said, that housing associations and councils are able to go to the market and obtain money to build and improve housing, whether through traditional council housing, housing association stock or joint ventures with the private sector. As the noble Lord said, we are the only country in the world, or at least in Europe, which counts expenditure by municipalities and provinces to buy housing—a clear asset—as part of public expenditure generally and puts a cap on it. If that cap were raised, and preferably removed entirely, councils’ ability to borrow would go some considerable way, even if it takes us 10 years to get there, to replacing and improving the amount of housing stock available to our people. I hope that the Government take a grip on this area and come up with a strategy which will deliver just that.
Lord Howard of Rising (Con)
My Lords, I thank the noble Baroness, Lady Quin, for introducing this debate. I declare an interest as a member of a district council.
No one can possibly argue the principle that housing should be provided for those who cannot afford it. In this day and age it would be inconceivable that we should not have people housed properly and adequately. But where a house or flat is provided by taxpayers, it is clearly unfair that those who receive this benefit should be given more than they need or require. I find it inconceivable that anyone should argue against this. Why should taxpayers—many of whom are not well off, many of whom have seen a horrible drop in their standard of living, many of whom are obliged to share bedrooms—contribute to the benefit of spare rooms for those in housing that they, the taxpayers, are paying for in addition to paying for their own housing?
Where housing allowance, introduced by Labour, is given to enable those on benefits to rent accommodation in the private sector, no allowance is made for rooms over and above what is strictly necessary. You get sufficient funds to pay for what you need and no more. Yet this very fair principle—as I said, introduced by Labour—is demonised when it comes to housing provided by the state. My noble friend Lady Seccombe has already commented on the exemption for the elderly and the disabled. If the beneficiary of the spare room wishes to stay where they are presently living, they can pay for that—that is a choice. If they feel they cannot pay for it, they can take in a lodger to help. That might not be ideal but where others are subsidising, it cannot be right that they should be subsidising a surplus. I find it curious that some Members of this House have been speaking in favour of that.
Of course, the real culprit where housing is concerned is interference by government. There are planning difficulties. I know of one housebuilder that reckons on 10 years between identifying and purchasing a site and building houses. I know of another housebuilder where the planning application was half a million pages long. There are building regulations and so on and so forth. If the same government interference in housing had continued in the motor industry, we would all now be driving Allegros and Marinas. Add to that the explosion in immigration promoted by Labour, it is hardly surprising that there are housing problems.
Baroness Blackstone (Lab)
My Lords, I declare an interest as the chairman of the Orbit Group, a large housing association. Like others, I am very grateful to my noble friend Lady Quin for introducing this debate.
There can be few people in this country today who do not believe that we face a serious housing crisis, which is blighting the lives of a growing proportion of our people. The causes of the crisis are complex and previous Labour Governments must take some share of the responsibility for not addressing them adequately. Nevertheless, the present Government’s policies are actually exacerbating the situation, not improving it.
I am especially puzzled as to why the Government have attached so little priority to providing the capital for a large housebuilding programme. I very much endorse what the noble Lord, Lord Shipley, and my noble friend Lord Whitty said about this. It is particularly bewildering in a context where such an investment would help to kick-start the economy and promote the increase in economic growth that we so desperately need. Perhaps the Minister can explain why the Government have done so little in this respect.
Some key statistics illustrate the extent of the housing crisis we are experiencing and demonstrate the wider problems of affordability that many people are facing, which my noble friend Lord Whitty commented on. I will turn later to the bedroom tax but must say that I find it curious—to use the phrase of the noble Lord, Lord Howard—that he has so little sympathy with those who have been affected by it, which in some cases amounts to cruelty.
If food prices had risen at the same rate as house prices since the 1970s, the average weekly shop for a family of four would now cost £453. House prices increased from 3.6 times to 6.5 times the average salary between 1997 and 2011. The affordability problem is most pronounced in the capital. Figures from the Land Registry show that house prices in London increased by 9.3% in the 12 months to September, meaning that the average house price is now £343,000 in London—more than double the average house price for England and Wales. Taking a 3.5 house price to income ratio, a household would need to earn almost £100,000 a year to buy in London.
Home ownership is in decline. It now takes 22 years for the average low to middle-income family to save for a deposit. Most people dream of owning their own house but are denied the opportunity to do so; 1.3 million families are struggling to pay their mortgage or rent, spending more than 35% of their net income on housing costs. This number is likely to grow as average rents in the private sector are increasing four times faster than renters’ wages. In addition, 13% of people have resorted to borrowing on a credit card to help pay for their housing costs.
There are 1.8 million families on waiting lists for social housing. During the financial year 2012-13, nearly 113,000 households in England applied to their local authority for homelessness assistance—an increase of 4% on the previous year. Last autumn there were nearly 2,500 rough sleepers on any one night in England—a rise of 31% from autumn 2010.
In spite of all this evidence of housing need, housebuilding has dropped to its lowest levels since the 1920s. Housing completions in England fell from 170,610 in 2007-08 to 107,820 last year—a 37% drop. Against this, around 221,000 new households are forming annually, yet in the 12 months to June of this year housing starts totalled 110,530, only half of what is needed.
In 1975 more than 80% of public spending on housing was spent on supply-side capital funding. The composition of spending has changed greatly since then. At present, for every £1 spent on housing only 5p is spent on capital funding while 95p goes on housing benefit. This is a truly grotesque statistic and I would be grateful if the Minister would tell the House why no capital programme of any size has been put forward to reverse it.
The impact of higher housing costs is spreading to a much wider group than those who find themselves completely priced out of a home: 22% of 18 to 34 year-olds—2.9 million people—live with their parents, and 17.8 million people believe that their children or future children will not be able to afford a decent home, dashing their aspirations for a decent quality of life for their children when they grow up.
I turn to the underoccupancy charge, known as the bedroom tax. I could produce many case studies revealing the problems that this has given individual people, but I shall give only one or two. They come from the Orbit Group. Miss B had been living in her home since 1992. Because she was unable to make up the shortfall in her housing benefit as a result of the bedroom tax, she had to leave her home, in which she had raised her children. She has mental health problems, which means that she needs the support of her family and friends, who would often stay the night to make sure that she was okay. She is now living in a one-bedroomed flat with no space for visitors and has moved to an area that she does not know and where she has no support network around her.
I take a second case. Mr and Mrs M have lived in their home for nearly 20 years, but were told last year that they were underoccupying and have had their housing benefit cut. Four years ago, they both had serious health problems, which had a big impact on their daily lives. Because of their health conditions, both rely heavily on the support of their children, who live on the same street. They were initially awarded discretionary housing payment by their council, but this has now stopped, and the council has told them that they will receive no further assistance because they are not considering moving to another area. Unsurprisingly, this has caused them an enormous amount of stress, and means that they are heavily reliant on their children for financial support.
A survey of 51 housing associations conducted by the National Housing Federation found that more than one-half of the tenants affected by the underoccupation charge were pushed into arrears in the first three months of the policy. One-quarter of those affected are in arrears for the first time. This is a very unfortunate outcome of the Government’s policy. According to its own impact assessment, the DWP estimates that two-thirds of those affected by the underoccupancy charge are disabled; 100,000 of these are living in adapted properties. Many of these people, if they move, will then require adaptations to be made in a new property, which will be very costly for the taxpayer. Perhaps the Minister would like to comment on that.
The Government’s discretionary housing payment pot, designed to protect the most vulnerable, is insufficient. The Papworth Trust report showed that three in 10 disabled people are being refused a DHP; 90% of them are having to cut back on food or utility bills, and one-quarter are cutting back on medical expenses. As my noble friends Lady Quin and Lady Hollis and the noble Lord, Lord Shipley, have said, there is an enormous shortage of smaller properties for people to downsize to. Across 60 councils, a total of nearly 170,000 households are affected by the policy, while there are only 9,000 one or two-bedroomed properties available in the local authority housing stock in those areas. If all the families hit by the measure wish to move into these one and two-bedroomed homes, only 5.6% would actually be able to do so. How absurd that is.
I conclude by asking the Minister, first, whether the Government will urgently undertake a re-evaluation of this policy, and will also have the courage to abolish it in the light of the evidence that it is failing. Will the Government halt the decline in social housing and help the 5 million people on local authority waiting lists to obtain a house that they can afford with the security that they need by having a major housebuilding programme? Without this, they will not be able to obtain in the privately rented sector either security or a property that they can afford.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, it is a privilege to be able to address your Lordships’ House on a subject so dear to my heart, and I thank the noble Baroness, Lady Quin, for presenting us with the opportunity. Like many before me, I suspect, I am somewhat surprised to be here at all in the first place. I thank my sponsors, my noble friends Lady Brinton and Lord Ashdown, whom I worked with for 10 years, for their patience and continued support in helping me to settle in. Everyone who has entered this noble House in the past has commented on the warm welcome they have received and the help and directions given by the staff. I add my name to that list. I also want to place on record my gratitude to my husband, daughter and son for their tremendous support and encouragement throughout my political career.
Next year is the 40th anniversary of when I joined the Liberal Party. During my political career I have been the leader of Somerset County Council and a vice-chair of the County Councils Network. I remain involved with the Local Government Association as a trustee of the leadership centre. I am now a councillor on South Somerset District Council, leading on troubled families, and chair its strategic partnership, so I am aware of the impact of the lack of affordable housing in rural areas.
I was born in a bomb-torn Bristol after the Second World War. Returning servicemen such as my father found that there were no homes for them to buy for their growing families. My parents, like others, lived with a parent, accumulating points to move up the list to buy a house. When I was three, we moved into a road of newly built houses taken entirely by young families. Today the issues are more complex and, in Somerset, the rising demand for housing and number of waiting applicants is growing. The average house price is many times the average wage. It would be extremely helpful if the Government saw fit to introduce an improved grant regime to support further investment for those unable to afford home ownership. It is important for the planning system to be pro-housing. The economic case is proven; the contribution, regionally and nationally, brought by housing associations building new affordable homes is £6 for every £1 of government grant. These developments create jobs, skills, apprentices and support local supply chains.
The consequential impact of the additional burden of ending the spare room subsidy may not have been adequately assessed before its introduction. There has been a disproportionate focus on the out of work, when the reality is that a high proportion of those affected work in low-wage economy areas, such as south Somerset, some in part-time employment, because full time is unavailable, or on zero-hours contracts, relying on housing benefit top-up to balance their budgets. The gap between the haves and have-nots has widened. This is unacceptable in Britain in 2013.
There appears to be a misconception around the difference between a house and a home. Creating a home requires effort and investment which will be made only if there is some certainty about the future. I am sure that the Government do not wish to destroy any idea of investing in homes or communities except for those able to afford a mortgage. In April, the number of households in arrears with one of our registered social landlords was 65. This has now risen to 397 for those affected by the charge. Most have managed to make some payment, but debt and arrears are rising, as, sadly, is the demand for emergency charitable food parcels.
It is important that the DWP considers whether there is a sufficient supply of appropriately sized properties available to those wishing to downsize. Those requesting to downsize have combined with those seeking to enter the affordable housing market, creating a high demand at one and two-bedroomed level. Meanwhile, families with a comparatively low-level need are being housed in three-bedroomed properties. Where no suitable property exists, there is the option of leaving affordable housing and moving to private rented property. However, rather than reducing the housing benefit bill, this is generally leading to an increase.
Rural exception housing in our smaller villages is largely two or three-bedroomed homes to ensure this meets the long-term needs of the community. Many communities make their homes in villages for life yet now some will be required to leave if they are unable to pay for underoccupancy as children leave home. Allocation of these houses is ring-fenced to those from the community or surrounding villages. Families with two children of different sexes, say aged seven and eight, will not be eligible for a three-bedroomed property in their village and may be forced out, while the three-bedroomed property they will require in two years’ time would be allocated to a family from outside the area.
Another impending contributing factor to the housing supply is the recent, welcome announcement on Hinkley Point C. According to EDF, the construction of Hinkley Point C will involve 5,600 construction workers and a further 20,000 to 25,000 support jobs over the seven years plus of the project. Of those, 5,000 jobs will be filled by existing Somerset residents. Beyond temporary accommodation for some construction workers, a high proportion will be housed within the existing rental market and through holiday accommodation. The impact across a 90-minute travel-to-work area will be marked, as the higher wages of EDF workers impact on the local housing market. EDF’s gain could mean the collapse of the private rented market for local people. Already, rents in this area are rising and will continue to rise as the low-wage economy of the region is priced out by the high-wage economy of Hinkley Point C. I look forward to speaking to my right honourable friends the Housing Minister, Stephen Williams MP—himself a Bristolian—and to the Secretary of State for DECC, Edward Davey, to see what solutions might be found to these local issues.
I fear that I have painted a somewhat gloomy picture but felt it wise not to underestimate the issue. It is only by realistically assessing the situation that we can find suitable solutions to take us forward.
Baroness Dean of Thornton-le-Fylde (Lab)
My Lords, I am delighted to congratulate the noble Baroness, Lady Bakewell of Hardington Mandeville, on her contribution, particularly as, like me, she has a home in the West Country. Her contribution this afternoon was very thoughtful, sensitive and realistic, knowing what is happening on the ground in so many parts of our country. I welcome her and look forward to listening to many of her speeches in future.
I thank my noble friend Lady Quin for obtaining what are in fact two major debates in this one three-hour debate. They are on very important areas. I welcome, too, the Minister to her new portfolio, though I doubt she will succeed in her continued search for a George Clooney in this area. She certainly has an extremely difficult and sensitive portfolio to deal with. The issue we are debating today will not go away. It will keep coming until we sort this out.
I declare two interests. I am the president of the Abbeyfield Association, which provides homes and residential accommodation for elderly people. I am also a very new member of the board of Places for People, a large registered social landlord but with a lot of commercial activities linked with that.
In the 12 months to June this year, 110,000 homes were started in Britain. That is 40% below the number started in 2006. We need about 250,000 homes per year and if we go on at the current rate we will be 750,000 homes short for our population by 2025. That is the size of the problem. Alongside that, we have the problem that many of us could not say what the Government’s policy is on housing. They do not appear to have either a medium or long-term policy on how we will address the housing shortage in this country.
We talk about affordable housing but the make-up of people who need it today is very different from what it was 15 years ago. Then, a young couple, whether single or getting married, who were in a profession such as nursing or teaching—that whole cadre—would have thought only of buying. Today we have two countries in England. We have London and the south-east, and we have the rest of the country with regards to the housing problem. Many of those young people who would have been able to buy can no longer afford to because of the cost of housing. The average age today of a first-time buyer is 37 years of age. The number of families living in bed and breakfasts is at a 10-year high. I was reminded of something as I thought about this debate: are we ready for another “Cathy Come Home” television programme? That seared this country into doing something about homelessness. We have 4.5 million people on the housing waiting list.
For the first time in 50 years, we have more people in privately rented accommodation than in what we call social housing—a dreadful term: it is the housing of local authorities or housing associations. Yet the average rent in the social sector is £83 a week while the average in the private sector is £164 a week and a typical mortgage outside London is £141 a week. If we are to tackle the cost of housing and support, we must do it in the private rented sector in particular. Part of the problem the Government have is that they do not seem to have a flexible policy at all. We need a policy on housing. How are we to address, in the medium and longer term, the basic housing shortage we have in this country?
A number of ways would contribute to that if the Government would but listen. For instance, they could form a national housing innovation fund which could be small, with small resources, but would encourage innovation and research. There is no doubt that the answer cannot be in one policy or through one channel alone. It can be supplied only by partnerships and consortiums, and by accepting and acknowledging that the private sector has a key role to play. Starts in the private building sector fell off a cliff in 2007. I know: I was at that time and until April this year a non-executive director in Taylor Wimpey housebuilders. We could see there what was happening and we knew that the impact would not just be then but would last for years and years. It takes time to buy land and get planning permission—although we never had anyone at any time who had to wait 10 years for planning permission. We need a policy on how we deal with this issue. That cannot be on just the purely rented sector; it must be different kinds of ownerships. People for Places, for instance, has 14 different schemes, including mortgage, shared ownership and a scheme I worked on some years ago when I was chairman of the Housing Corporation and was asked by my noble friend Lord Prescott to carry out some work.
A lot has been said about the underoccupancy charge. It is a cruel policy. I would accept totally that it makes sense for housing funded through the taxpayer to be used efficiently but you are dealing with people and their lives. Just to have one policy that is almost slash and burn, irrespective of circumstance, is so wrong. We were delighted at Abbeyfield that people in retirement were not affected by the underoccupancy rule. Could the Minister confirm that there is no intention to change that current situation? If it was extended to retired people, the problems we have now would look almost nothing to the real issues we would face.
I would like to talk about the impact of underoccupancy on registered social landlords. The policy only came in from April this year but arrears are going up substantially. There is no doubt about that. Underoccupancy of one bedroom cuts housing benefit by 14% and of two bedrooms by 25%. Where do those people get the money from to fund that? They cut back, obviously—they have to—but we also see an increase in loan sharks knocking on the door on Friday nights for their money. People are getting into personal debt that they cannot or are highly unlikely to meet. We have heard a contribution about the working poor. It is true that people in underoccupied houses are not just the unemployed. They are working people, trying to look after their families, whose pay does not give them enough. Why do not the Government get behind a living wage? That would help these people. They do not want benefit; they would prefer to pay for their own accommodation.
The long-term impact will be wider than the narrow band that we are seeing at the moment. For instance, it could affect the very viability of housing associations, because the level of their arrears is part of the consideration of their financial stability. They loan money in the private sector. They have to answer to the regulator. Rising arrears is one of the factors by which they will be judged.
That will impact on housing availability, because housing associations will retreat into what they have now. They will not expand; they will not need to. They will feel that they risk their balance sheet by expanding. That will substantially impact on our housing policy. Yes, associations are trying to help people with advice about budgeting and bank accounts. If only everyone could open a bank account. The banks need to know that people with a low income need to be able to open an account. How many banks actually go along with that and support those people?
This is a wide-ranging topic, and I look forward to the Minister’s answers on whether the underoccupancy payment is to be extended to the elderly, the retired—but, more importantly, just what is the Government’s housing policy to deal with this huge issue.
Lord True (Con)
My Lords, I declare an interest as leader of a London borough council and join others in thanking the noble Baroness, Lady Quin, for bringing what is a very important debate to this House. I add my congratulations to my noble friend Lady Bakewell of Hardington Mandeville on a very distinguished maiden speech. I look forward to working with her and my other noble friends on those Benches in supporting our coalition Government—sometimes with modified degrees of rapture, but we have managed.
Many factors contribute to housing pressures, and we have heard of many of them, including population growth, immigration, changing expectations about household formation, some related to past benefit policies, and factors limiting supply to the market. I should like to follow up a few of the points made by the noble Baroness, Lady Blackstone, about the London area. Heaven knows, in London, we understand the cry for affordable housing, whether for sale or rent. It may be that we have to ask ourselves whether we can overcome those difficulties without major policy changes. We all want to sustain mixed populations, but in many areas, embedded land values and limited development land mean that the prospect of providing large-scale affordable housing for sale or rent for all who might want it is slight. My local authority has raised affordable housing performance a little above that of our Liberal Democrat predecessors, but the numbers are still small, because of the factors that I described.
In some areas, we have to ask whether it is axiomatically correct that everyone should necessarily expect to find a home in the place in which they grew up. That may have been so in the past in, say, the close fishing communities, where my ancestors lived. They cast their nets on the cold North Sea and, many, sadly, drowned but, fortunately, not before producing children—at least, fortunate for me. However, in a more varied modern economy, that will not always be the case. Some areas will always be more accessible and affordable than others. In my case, I did not form a household in the place where I was brought up. Nor did my father; nor did my grandfather; nor, it seems, will my son. The same is true in the case of my wife’s family and, no doubt, that of many other families. It is a reality in a healthy economy that as localities evolve and change people will have to travel to find convenient homes that they can rent or afford to buy. This we should facilitate.
Too many policies work the other way. I should like to touch on something not yet referred to in this country, which is the cruel impact—we have heard the word cruel—of stamp duty in south-east England. That was something piled on by Gordon Brown from his very first Budget and not yet relieved by the coalition Government, although I welcome the action of the Chancellor to address the abuse of very expensive homes being bought by corporate bodies, which is distorting the London market. In London, and not just in the wealthier parts of London, a young, first-time buyer can be asked to pay close on £10,000 in stamp duty to buy a basement flat. I hope that my right honourable friend the Chancellor will find time when he can to address that.
Points have been made about the need for varying approaches in different areas. We may need in time to look at that. Like other noble Lords, I believe that local councils have a role in that. Lower tax is a good old-fashioned benefit, as the coalition Government showed by taking low-paid households out of the income tax that they used to pay under Labour. I would be looking to break down more of the barriers that cramp both construction and investment in the housing market.
Fewer people will downsize. We have heard about the importance of downsizing. I have to say that it is not only the fault of the Government if social landlords do not have smaller homes available. Investors must choose in what size of property to invest. In the private market, few will downsize electively, liberating more affordable homes to buy for growing families, when in many areas of the south-east, stamp duty will take £30,000 or £50,000 out of their accumulated capital. Few families will trade up to a larger home, liberating smaller homes, when the £60,000 or £70,000 they would have to pay in stamp duty could go on an extension. In some areas, the young family looking to move from a one-bedroomed home to a two or three-bedroomed home to buy finds nowhere to go. The behavioural impact of reducing stamp duty is clear from recent peaks and troughs in the statistics. Excessive taxation on housing transactions has an impact at every level, including a knock-on effect on the demand for social housing.
Turning to the social housing sector, it follows from what I have said about mobility that I welcome schemes supported by the Government, local councils, including Labour ones, and social landlords to promote the exchange of homes. I am glad that we have moved on from the initial dismissal of that by Mr Dromey. Indeed, I find much that is confusing about the Opposition’s position on the policy. They have admitted that they presided over an unsustainable growth in benefit. They claim to accept the need to address it, but, as we have heard today, they oppose the means, or at least this means.
No doubt the noble Lord, Lord McKenzie of Luton, who is always so admirably clear in his remarks in this House, will say in his wind-up whether a Labour Government would commit hundreds of millions of pounds to restoring the subsidies in housing benefit for spare rooms, which have been abated by this Government as part of one of their most popular programmes, tackling the benefit bill.
As others have said, through the local housing allowance and other policies, the previous Government were ready to attack underoccupancy in the private sector. Indeed, they took pride in the action that they were taking. Why should that be a taboo subject in the social sector? Much of the rhetoric about the spare room subsidy is, of course, based on genuine concerns—we have heard some good, strong arguments in this House—but some of it is also political rhetoric. It is called the bedroom tax, although it is neither a tax nor a levy specifically on bedrooms. My noble friends on the Front Bench should not neglect the battle of language that is always so well understood on the left in politics but less readily by my own party, as the rather terrible story of the community charge—aka poll tax—demonstrates.
It is agreed across the House that there are almost 1 million underoccupied rooms being paid for under housing benefit. Yet there are over a quarter of a million households living in overcrowded accommodation who need more space, and 1.8 million in England and Wales on the waiting list. Meanwhile, our country is still borrowing £13 million an hour and is short of public finance. Can underoccupancy be ignored in such circumstances?
Like most local authorities, my own has set up systems to monitor carefully the cumulative impact of benefit changes. So far, in our case, that impact is relatively small. Out of many hundreds of households which our officers contacted in a programme to help tenants, only 15 have so far left as a direct result of changes to the local housing allowance, although we will have to wait as tenancies run out to see the full effect. In terms of the underoccupancy rules, we were offered more than £400,000 to support discretionary payments. So far, we have had to pay down only £136,000, although the second six-monthly round will provide further evidence. The number of households in receipt of housing benefit remains almost constant.
To conclude, I accept that my authority is not a bog-standard authority and that we need to see more evidence but this does not bear out the more apocalyptic statements we have heard. The coalition Government are surely right to seek to bring fairness back to the system and make better use of social housing stock. I hope that my noble friend Lady Stowell, whom I, too, warmly welcome to debates on local government matters, will stick to her course.
Baroness Turner of Camden (Lab)
My Lords, I, too, would like to contribute to this debate. I thank my noble friend Lady Quin for introducing it and for the manner in which she did so. I also take this opportunity to thank the noble Baroness, Lady Bakewell, for a most interesting and expert speech on this subject.
We have often spoken about housing in this House and about the bedroom tax, which the Minister must know is deeply unpopular. Many vulnerable people have been distressed, particularly those who are disabled. The opposition to it is widespread, including in Scotland, where housing associations report that many people are already in arrears and fearing eviction. The same applies in Wales, where there are also problems. As we have heard during the discussion this afternoon, there are many instances of extreme distress, of which I hope that the Government will take note. It really is about time that the Government reconsidered this whole policy.
This is of course part of a wider discussion of housing in general, where I fear we have rather a crisis. This is particularly true of London and the south-east. We shall no doubt be told by the Government that one cannot talk about a housing crisis without reference to the economic situation, which they will claim is set to improve. It is true that the figures show that this is so for London and the south-east but I do not think it applies in the rest of the country. Indeed, manufacturing growth seems not to have improved in areas where it was hoped that the economy would be rebalanced.
In London and the south-east, everything is no doubt very good for those who are well off. For the remainder—the majority—that is not so. Housing costs have risen dramatically and are still rising, by more than 7% in the past year. People say that it is now even more than that. Things are particularly difficult for younger people, for whom unemployment figures are still high. The area in which I live was once regarded as one of the cheaper areas of Hampstead—it is adjacent to Kilburn—but no longer. It is now really expensive. The problem for younger people can be simply stated: private rents are too high and wages too low, while there is insufficient secular housing.
The Government will no doubt claim that they are attempting to deal with the cost of living and the housing crisis by introducing the so-called Help to Buy Scheme. Yet as many have pointed out, that could merely introduce a housing bubble like that which put housing out of the reach of many in the past. People are already struggling to make ends meet and are going to find it difficult to produce the requisite deposit. The scheme is likely to benefit those already in housing. It will enable people who are already not too badly off to climb further up the housing ladder by uprating. It will not help younger people, who are often in low-paid jobs, on to the housing ladder at all.
There is a further problem. Councils are having difficulty in coping with the lists of those who need social housing. Increasingly, they are having to look outside London and the south-east to access social housing for those who need it and who have not been able to be accommodated in that area. This means that the people so housed will have the expense of commuting, if they still have jobs in London, thus adding further to the expense involved. Moreover, it risks turning London and the south-east into an area where only the well off can afford to live. If you happen to be poor but hard-working, too bad—even if you have a job.
Previous generations have often faced housing crises. Just after the war, there was a shortage of housing. There had of course been the bombing and the destruction of large parts of London and the south-east. The Government of the day took very strong measures, with a lot of public support. They built the pre-fabs: small houses put up rapidly, which housed people very quickly and which still exist. The Government also took control of the housing market. While controls were placed on what could be charged by private landlords, there were rent tribunals which made decisions in line with what people were earning. So, despite the shortages and suffering caused by the war, people realised that everything possible was being done to help them. That is not the situation today.
It is only too clear that if you have the money, you are going to be okay. If not, well, join the queue for secular housing, where you will be very lucky if you are accommodated. This is a grave and serious situation, particularly in the London and south-east area. We all need policies for more secular housing, which we have been told is planned. On the other hand, that is for the future and we have a crisis now. Measures are therefore needed to cope with that crisis. I hope that the Government realise how very severe the situation is in the London area.
Lord Greaves (LD)
My Lords, I declare my interest as a member of Pendle Borough Council and as a vice-president of the Local Government Association. I, too, thank the noble Baroness, Lady Quin, for sponsoring this important debate, which has resulted in a number of extremely important speeches. I particularly associate myself with the remarks of my noble friends Lord Shipley and Lady Bakewell of Hardington Mandeville. I very much welcome her here as another local councillor, who I hope will continue to give us the benefit of her local experience in this great Chamber, which in my view too often behaves as if it were the Westminster parish council.
The noble Lord, Lord Whitty, put his finger on an important issue: that 30 or so years ago, there was a very significant change of policy, in which support for social housing and council housing, as it mainly was then, moved away from supporting what people then called bricks and mortar to supporting people. It all sounded right and there was a general political consensus in favour of it. When I did not agree I always thought that I was little Johnny out of step, but it has been disastrous. As the noble Lord said, housing benefit is a matter not really of benefit policy but of housing policy, and the sooner that we start to debate it on those grounds, the better.
The noble Lord, Lord True, who has just left for a moment, said that some of us would support the Government in various ways, with “modified degrees of rapture”. I have to say that my degree of rapture on this subject with regard to the Government is modified. Having said that, and in saying how much I support what was said by the noble Baronesses, Lady Quin and Lady Hollis, the noble Lord, Lord Whitty, and others on the Labour Benches, I say very gently that they should remember that we had the opportunity in this House to stop the bedroom tax when it was going through. The noble Lord, Lord Best, who is not here today, moved amendments to do away with it, and we could have stopped it. Between us, we failed, so we should all remember that. However, we are where we are.
I stand here fully in support of the policy of my party, the Liberal Democrats. I remind the House that we are still, and I hope will always be, a democratic party that meets twice a year and decides our policy in open debate in a democratic way. When we met this year in Glasgow, we passed almost unanimously a resolution that had the full support from all parts of the party, from top to bottom. It said that we were, effectively, against the bedroom tax. It supported the Scottish Liberal Democrats, who had passed a motion against it, and said it believed that:
“The majority of rural and urban areas outside large cities such as London have insufficiently large, diverse and dynamic social housing markets to make moving into a smaller property locally a viable option”,
and of course we know that is true in other areas, too. It continued:
“There is lack of appreciation of the housing requirements of children and adults with disabilities and care needs … Insufficient funds are allocated to Discretionary Housing Payment Funds of Local Authorities”,
and so on. I do not have time to read it all out, but noble Lords will get the gist that it was pretty critical. It welcomed:
“Scottish Liberal Democrats passing a motion against the policy”,
and,
“reports that some councils will not evict those in arrears”,
for that reason. It encouraged the Government to have a review of the whole policy, which I believe is now taking place as a result of pressure from the Deputy Prime Minister, and called for no withdrawal of housing benefit from those who are on the waiting list for social housing that fits the current guidelines within their local area, and no reduction in housing benefit from their projected housing need for those who, for a period of less than six months, temporarily have a small housing need due to a change in their circumstances but whose need will predictably return to a higher level—for example, children who pass the age limits for separate rooms within that period. There are quite a few ameliorating measures that the Government can and should take now in order to prevent some of the cruelty that is occurring as a result of this policy. Of course many of us would like them simply to abolish the policy, but I do not think they will do that in the short run.
The other part of the motion refers to affordable rents. The problem with affordable rents is that the words have an ordinary meaning that people will assume them to have, but the way in which they are now used by the Government and the Homes and Communities Agency is as a very specific technical phrase. As some noble Lords have already said, in many places they are not really affordable, so what they are called is not an accurate description of what they are.
I have some evidence for that from my own authority in Pendle. The HCA affordable homes framework covers the period 2011-15. It introduced a new affordable rent product that replaced the previous social rent model. Registered providers therefore cannot obtain funding to develop housing for social rent now; they have to go to affordable rents, and rents for these properties can be charged at up to 80% of market rates. What is called an “affordable” rent is related very closely to market rates. This approach is designed to give providers more income to build affordable housing, as the assumption is that market rents will be significantly higher than social rents, hence borrowing capacity will be increased.
The problem in areas like the one where I live and am a councillor is that housing is relatively cheap to buy, and levels of rent in the private sector are also therefore relatively cheap. For example, for a two-bedroomed flat where the social rent might be £65.06, in the example that I have been given by my officers, the affordable rent per week—that is, 80% of the average market rent in the private sector—is £83.07. For a three-bedroomed house, the affordable rent would be £87.69 per week. These are cheap rents relative to many parts of the country. Low differentials between market rent and social rent put registered providers developing in low-value areas at a disadvantage, because the figures basically do not add up.
Coupled with the change from social rent to affordable rent is a reduction in the grant level in the current HCA programme. The average grant for an affordable rent property is now around £22,000, but for a social rent property in the previous programme it was around £50,000.
When you take into account the cost of building the property, the revenue that comes in from rents over 30 years and the management costs and assumed refurbishment costs during that time, that simply does not add up for a lot of these properties. The council puts money in, in the sense of free land for sites for these properties, but it still does not add up. Up to now the council has been able to use right-to-buy receipts that it still has in the bank to subsidise this operation, but that will not be possible in future. For pieces of land that the council owns, which are perfectly remediated and ready to build on, the figures simply do not add up to build new properties, or they are very marginal.
I was asked today to give a quote for eight new properties that have just been built for affordable renting in my own ward, built by the council’s own company for the main housing association in the area, which runs a form of council housing. We think that eight properties is a great step forward, but we are not going to help the Government very much with their targets unless the basic rules behind what we are trying to do are changed and made more favourable to us.
Lord Morris of Handsworth (Lab)
My Lords, as we have heard, the House thanks the noble Baroness, Lady Quin, for her initiative in securing this important and timely debate. I declare an interest as chairman of Midland Heart Housing Association.
This debate is driven by two negative factors: the decreasing provision of affordable housing, measured against demand, and the impact of the spare room tax on both tenants and providers. It is common ground that in England the shortage of affordable housing is now over 100,000 per year, and at the current rate of growth will shortly exceed 150,000. Demand for extra homes in England is now estimated to be over 200,000 properties a year, which means that even if housebuilding output was increased by 4.5%, it would be 2022 before we got back to 2007 figures.
As we have heard, the issue of affordability is not confined to London and the south-east but is to be found across the length and breadth of the country. In 55% of local authority areas, fewer than one in 10 available properties are affordable to a working couple on average wages with, say, two children. The Help to Buy scheme is seen as an instrument that will fuel increased demand and put up house prices but not address the fundamental issue of lack of supply. It certainly is not doing that. That is a pretty unanimous view across the board. There is only one man in the United Kingdom who cannot see the problem and that is the Chancellor. Until recently, providers of affordable housing have been focusing on building family homes and moving away from smaller units, but the impact of the bedroom tax has now set that trend in reverse.
Let me now say a few words about the underoccupancy charge. It is fair to say that few policies have been more controversial in the current Parliament than the Government’s decision to reduce the amount of housing benefit available to social housing tenants who have one or more unoccupied bedrooms. Even the name invites controversy. Campaigners like me have labelled it the bedroom tax, which is what it is, while the Government have called it a spare room subsidy, which it is not.
One of the primary criticisms against this policy is that the measure will not achieve the so-called objective of freeing underoccupied properties. Tenants are downsizing in any event not because of the effectiveness of the policy but because of pure and simple unaffordability. Frankly, there is insufficient stock of the appropriate size in the social-rented sector to meet this demand. A survey of 51 housing associations around England, carried out by the National Housing Federation, found that 51% of residents affected by the bedroom tax have been unable to pay their rent between April and June. This situation is likely to get worse as discretionary payments provided to customers hit by large charges are withdrawn. There is concern among some of these groups, including those paying in full, as the impact on their ability to pay for other essentials, such as food and fuel, leaves them with the stark choice of eating or heating.
My organisation, Midland Heart, continues to see an increase in people leaving their homes following the introduction of the welfare reform programme. Demand for one-bedroomed homes has increased, and exceeded demand for two-bedroomed homes for the first time. It is now common to have more than 200 people applying for a one-bedroomed property in cities such as Birmingham in the West Midlands. There will be a price to be paid: families forced to live in overcrowded conditions with nowhere for children to do their homework and the dignity of family life undermined.
Clearly a tension arises as the current model for delivering new affordable homes is predicated on providers increasing rents to 80% of the market rate, and that in turn puts pressure on the housing benefit bill at a time when such charges are under huge pressures. Individuals face major difficulties as they seek to make the necessary underoccupancy adjustments. The challenge is therefore to fulfil the desire to provide much needed housing while ensuring that it is affordable to the most vulnerable in our society. That is a challenge to government and to society.
Lord Stoneham of Droxford (LD)
My Lords, I declare my interest as chair of Housing 21 and offer my congratulations to my noble friend Lady Bakewell on her maiden speech. I hope that it is the first of many contributions to housing debates in the House in future.
At this stage of the debate a lot of the points have already been made, and I do not think there is much point repeating them. I shall concentrate on a few issues. I think there is common agreement that no Government in the past 30 years have had a housing record that they could be really proud of. The housing sector has been dominated by catastrophic cycles of boom and bust. We all recognise that there is a need to build more than 200,000 units annually and consistently to meet the demands of household formation, and we have failed miserably. There has been a huge problem of selling off our social housing stock: 2 million homes since 1979. As we heard from the noble Lord, Lord Shipley, the previous Government saw a net loss of 400,000 units from our social housing stock. Now we are reaping the consequences.
I shall concentrate on supply issues but first I shall make two brief comments on the spare room subsidy clawback. I do not have a problem with the principle of the policy: there is an issue of equity with the private rented sector, and a problem with the imbalance between underoccupancy and huge demand for social accommodation. However, we have warned about the transition problem that results from retrospective implementation of the clawback without the availability of sufficient smaller accommodation. We need to concentrate on the transition, but the principle is right.
Secondly, I pay tribute to the staff in the social housing sector, particularly in housing associations and local councils, who have been grappling with the issue of tenants who have had to incur significant extra expenditure when their household budgets are already tight. The information I am getting is that efforts in that direction, and the extra resources provided for that sort of advice and assistance, are helping to keep arrears at lower levels than might otherwise have been expected. It is an area that we should learn from and concentrate extra resources on.
I turn now to the longer-term issue of housing supply. The issue is how we are going to build more affordable housing in future. If we are going to advocate that, we have to say how we are going to fund it and achieve it. This Government have had to face appalling problems in the housing sector. Let us remind ourselves—I do not think that we have done it much in this debate—that, arguably, the heart attack which our economy experienced was sourced from the overindulgence, credit expansion and speculation in the housing sector. It was inevitable, certainly for the first couple of years of this Government, that confidence, finance and capacity simply fled the housing sector.
In 2009, Tony Pidgley, group chairman of Berkeley Group Holdings, said to me, “Never forget that housing is a cyclical industry and you need two to three years’ cash up your sleeve to survive the years of famine that follow the years of plenty”. In 2009 he had £300 million in cash to keep going for three years with no house sales, if he needed to. In fact he did not need to use it but he had it there. The trouble was that many other developers did not have it and, as a result, capacity has suffered. There are now fewer larger developers and self-builders and thousands of skilled workers have simply left the industry.
Nobody has mentioned the fact that the housing sector is at last showing signs of life. In the past quarter there was a 25% increase in completions, housing starts were up by a third and stamp duty revenues were up. The Government have retained their target of building 170,000 extra affordable homes by 2015. I hope the Minister will tell us what progress the Government are making on that . It is clear that there will be terrific pressure in the next two years to meet that target after a slow start. There are signs of a pick-up, however, and it is still achievable.
How will we fund and build more affordable housing? That is the issue. The first priority in the current circumstances, as the market is beginning to pick up, is to beware of house price inflation. As we know, that is a sign that everything will eventually end in tears, with unfavourable consequences for new buyers and for the cost of building new affordable housing. The Government must watch the market like a hawk and should consider adopting a regional focus for the Help to Buy scheme if there is any sign that the London and south-east property prices are getting out of hand.
The noble Baroness, Lady Blackstone, who is sadly not in her seat, mentioned that 95% of the subsidy to housing is spent on the revenue side and only 5% on capital expenditure. The current government policy of using affordable rents to fund housing for the future is, of course, more expensive in the long term. It is understandable in the short term when there are problems with the borrowing requirement, but this is not a sustainable policy in the long term if we want to have more social housing while reducing the amount spent on housing benefit.
Housing associations have limited borrowing capacity. They certainly have enough, it is said, for the next four-year cycle. However, we will need additional funding beyond this capacity and it should be the role of government to help to find it. One of the areas mentioned in this debate, particularly by my noble friend Lord Shipley, is the borrowing potential of council revenue accounts to add to our funding capacity. I will not go into the detail as I think the arguments have been well made. We simply need a review, particularly with the economy improving, to look at whether this can be done in the near future. It is absolutely essential as we need that funding capacity.
The other thing that the Government have initiated, and on which I would like to hear a progress report from the Minister, is the matter of guaranteed bonds. The scheme has had little publicity but considerable sums have been put into it. It has the potential to achieve lending facilities with lower interest rates for both housing associations and the private rented sector and could be an important tool for funding affordable homes and housing generally in the future. I hope that my noble friend can tell us what extra capacity the Government believe the scheme can provide in the next two years.
Finally, one of the paramount needs is for a long-term and focused government housing strategy. That will depend on finding new funding facilities. We will need help in opening up complicated sites, finding extra sources of land and ensuring that our technical colleges turn out trainees with the skills that the construction industry needs. I have to ask why the Government have downgraded the role of housing in government—we no longer have a Minister of State with responsibility for the subject. Surely we need somebody higher than an Under-Secretary of State to lead in this important sector if we are to improve the performance in building new houses, particularly social housing. Consistency of delivery, a consistent medium-term policy and a strong Minister are the essential requirements for a successful housing strategy.
Lord Sawyer (Lab)
My Lords, I thank the noble Baroness, Lady Quin, for initiating this debate, along with the noble Lord, Lord Whitty. I also congratulate the noble Baroness, Lady Bakewell of Hardington Mandeville, on her maiden speech, and offer congratulations on her 40th anniversary as well.
I am the last Back-Bench speaker; many people will be pleased about that. This has been a good debate and people really understand this issue about tax. I was going to speak about the tax. I now do not intend to do so because it has been said so well so many times. Instead, I will offer a few reflections on how the issue makes me feel and how it affects the life I live in the community in which I live and which I care about. My overriding feeling about the housing issue is depression. The noble Baroness, Lady Bakewell, said that her contribution was slightly in that vein. I think it is almost impossible to see it any other way. The statistics, the evidence and the experience of people who care about and need housing has been quite unsatisfactory for many years.
In a way, my generation has let our children down. The noble Baroness, Lady Turner, spoke about what happened after the war. My parents’ generation really rolled their sleeves up and did something about the housing shortage, about the bomb damage and the slum clearance; they really tackled it. For many reasons which we have heard this afternoon, we have not been able to do that. We have left our children with some awful housing problems to face.
I listen to what has been said and I hear people with vast experience speak about policy, a critique of a policy, a new policy and so on, and I do not think that is what we need. Policies are no longer enough. We have heard this afternoon about poor-quality housing, overcrowding, homelessness, soaring prices, the private rented sector boom, extortionate rents, the buy-to-let boom, brownfield sites, green-belt sites, high-rise versus low-rise and funding issues. Is that an agenda that needs another policy? I do not think so—it needs something bigger than that. It needs a much bigger vision, a strategy. It needs a strategy which cannot be brought forward by this Government because it is too short term. We really need to be looking at the contenders for the next general election and for the London Mayor and to ask them, “What is your vision? What is your strategy? What have you got to say about solving this housing crisis?”. It is that big, and that is the sort of thing that it needs.
Then I look around me at where I live and the people I care about. Part of my family is living in London now. I look at what is happening in London and at the developments which have taken place. I look at the Shard and the price of flats there, the Cheesegrater, the Walkie-Talkie, the development in Vauxhall, and I think, “My goodness me. This city is on a real roll. It is undergoing a commercial, economic and business boom the likes of which none of us has seen in our lifetime”. Then I think, “What is happening to us?”—that is, what is happening to me? What is happening to my family and to people who do not actually live or work in these places and cannot afford to live there? What is going to happen to us? That is where we get back to the bigger picture of the strategy for housing people in London.
I do not know whether noble Lords read Michael Goldfarb on London in the Observer a couple of weekends ago. I thought it was a really powerful article. He said that the property market in London is no longer about people making long-term investments and owning their own home, but a place for the world’s richest people to get a return of about 10% at an annualised rate by buying houses there. In 2012, an extraordinary £83 billion of flats were purchased in London without mortgages and no financing. He also said that with extra foreign and domestic millionaires and billionaires, it is not just the rate of return but the coalition’s tax regime. Britain has a corporate tax rate of 23%, due to come down to 20% in 2015. In Germany it is 29%. Again, while the majority of London citizens pay up to 40% or more of their incomes to maintain services in London, the rich pay taxes in small change. His answer was a mansion tax.
I can certainly indentify with this. I can see a rich person’s London which does not affect me, my family or my neighbours. That has to be addressed. There must be a way of making sure that the same attention is given to ordinary people and their housing needs as is given to big business, capital and commerce. There has to be a way of doing that. As the noble Lord, Lord Shipley, said, the responsibility to make that case rests at the door of the politicians. It will not be made by business people or commercial people; we have to make the case for as much attention for the people that we want to house as business and commerce manage to make for the people that they represent.
Those, therefore, are my thoughts on the debate. I am glad that the noble Lord, Lord True, is back in his place. He said that nobody has a right to live where they were born, and I think that that is probably accepted. However, people have a right to a home in the place where they live and work. We are not talking about everyone staying where they were born but about being able to find a job and have a home where they can easily and without too much difficulty travel to the place where they work. That is what the aim of the big picture strategy needs to be.
I was not going to speak about the bedroom tax, because it has already been covered. However, the noble Lord, Lord True, provoked me into saying that everyone calls it a bedroom tax because it feels like a tax. The amount is taken out of your benefit at source and you are left with a rent bill that is beyond your means. The Government cynically believe that the poor will find the money, but of course many cannot or they find it only because they deny themselves other basic things such as heating and food, and they may get some way forward by asking their families for help.
Data from the Notting Hill Housing Trust show that about half its affected customers pay the shortfall in full, and only one in 10 makes no effort to pay. In reality, of course, the Treasury has already banked their money, contributing millions to the Government’s cuts programme. The local authorities and housing associations have to try to get this money from the tenants on benefits, who are by definition the poorest people in Britain. It is not easy, but as has already been said today, the shortfall will be borne by social landlords and it will no longer be the Government’s problem.
It is pretty brutal for the people who are having their benefits cut. I am on their side and I have no doubt about that or problem with saying it. I am on the side of the poor, the needy and all the people who legally come to work in this country, whatever their nationality. Those people have a right to live and to eat in the same way that I have—I do not see any distinction. If I have a home and job and the wherewithal to have a decent standard of living, I expect it for everyone in this community, regardless of their origin or their birth.
Finally, I am now looking ahead, to the next Government and the next Mayor of London, to give us some hope for the future. I have been here for only 15 years—other noble Lords have been here longer than me—and I must have taken part in about 12 to 15 debates on housing, maybe more. They have not made the slightest bit of difference and none of the policies that have been tried by any Government or party has solved the problems. I therefore look to the future for something much more imaginative and engaging, which can get this nation fired up to do something about housing needs and the young people we are letting down so badly.
Lord McKenzie of Luton (Lab)
My Lords, like other noble Lords I will start by thanking my noble friend Lady Quin for leading on this first-class debate, the focus of which is the availability of affordable housing and the impact of what—the noble Lord, Lord True, notwithstanding—I shall continue to call the bedroom tax. I offer my congratulations to the noble Baroness, Lady Bakewell of Hardington Mandeville, on a very impressive maiden speech and I have no doubt that her expertise in local government will be put to good use in this House. I am sure that she is disappointed at having just missed the Local Audit and Accountability Bill, but I can promise her much more excitement in the future.
We should acknowledge, as have most noble Lords today, that we face the biggest housing crisis in a generation because of the long-term failure of successive Governments to build enough housing to meet a growing need. That issue will not go away. For many, the desire to own their own home has shifted from being difficult to being frankly impossible, with home ownership falling for the first time in a century. There are now nearly 9 million people in private rented accommodation—a largely unregulated sector—who spend on average 41% of their income on rent. There are 5 million people on the list for social housing and we know that there is an increase in homelessness and rough sleeping.
We can only begin to tackle this crisis if we build more homes of all tenures. As the noble Lord, Lord Stoneham, said, this means a long-term effort. In the past three years the number of houses built has reached its lowest level in peacetime since the 1920s, but it is welcome news that new building is picking up, albeit from a low ebb. However, we are still starting to build less than half the number of homes we need to build each year. Can the Minister say whether the Government are still guided by the 2008 household projections, which imply an overall need for new homes—affordable or otherwise—of 230,000 each year until 2033? If not, what is the new projection and what level of annual new homes provision are the Government working to?
Given the demise of regional spatial strategies, the determination of housing needs is to be driven by a bottom-up approach. Can the Minister also say how current local plans underpin the Government’s affordable housing programme, and how many local authorities have in place a strategic housing market assessment and a strategic housing land availability assessment? How do these correspond to the overall numbers the Government propose for this and the next spending round?
As we have heard, the programme for affordable housing comprises some 170,000 new homes for the period to March 2015, although 70,000 of those were commissioned by the previous Government and 165,000 back-end loaded for the period to March 2018. We will have to see what gets delivered, but that is not a step change on what has gone before.
We have heard about the previous Government’s record. They were faced with significant competing priorities for housing investment. They had in particular to deal with the stock of social rented housing which had generally been starved of funding. Rotting windows, outside toilets and poor or non-existent insulation could not have been ignored. Had we done so, the consequences today, especially with soaring energy costs, would have been distressing indeed. In 1997 the Labour Government inherited a £19 billion backlog in repairs, but brought 1.5 million social homes up to a decent standard through the Decent Homes programme. Notwithstanding that, we still built 500,000 more affordable homes during our time in office and delivered 256,000 additional affordable homes in our last five years. Between 1997 and 2010, nearly 2 million more homes were built in England.
So far as this Government are concerned, we have seen the switch in the funding model—my noble friend Lord Whitty in particular referred to this—for the provision of affordable housing from capital to revenue with the halving of grant funding, and we heard about the initial negative impact of that on delivery. Can the Minister give us any information about the numbers and spread of properties now let at “affordable” or intermediate rents, and any figures for the estimated increase in housing benefit payable as a result of social rents being payable at this higher affordable rent level?
For us, Ed Miliband has set out the ambition of building 200,000 homes a year by the end of the next Parliament—which is just a start. He and Hilary Benn have asked Sir Michael Lyons, supported by a panel of experts, to lead a new housing commission to look at the policy solutions needed to deliver the step change required to close the gap between housing demand and current levels of delivery.
At present, we know that some areas want to grow to meet local housing need but do not have the land within their local authority boundary to do so. Neighbouring authorities too often block the building of badly needed homes, particularly affordable homes. That is why we propose that local authorities should have a new “right to grow”, with bids to the Planning Inspectorate leading to the requirement that neighbouring authorities are required to draw up a joint plan. We would also like to see local authorities given strengthened compulsory powers so they can buy and assemble land which is being hoarded and is holding back development. There should be powers to charge developers who sit on land with planning permission.
The last time we faced such a big need for housing, new towns and garden cities played a big part in meeting it. We need to build new institutions and incentives to help deliver this, and we look to local authorities to engage and take this forward. Given the need for more social housing, it is surely time to look again to local councils to play a larger role. Many would welcome this and some—mostly Labour—councils are already beginning to build on a scale not seen for a generation. Of course, that would involve looking at the financing arrangements for local authorities. There is much else to say on that but time does not permit me to go into it.
There must be a fair basis for supporting those who need help with housing obligations. At the very time when there is a switch to funding affordable housing by revenue support rather than capital, we see attempts to cut back housing benefit through the bedroom tax. Working-age renters of affordable housing are the direct targets of this draconian measure. Let me be clear: we consider this a cruel, misguided attempt at behavioural economics which has already caused great hardship and distress to the vulnerable and disabled. We have heard some individual stories today and there are doubtless many more. This measure is already putting people into debt and leaving them with impossible choices regarding how they spend meagre budgets. We know that it is distorting the allocation of properties, with larger properties lying empty and pressure on rents for single-bedroomed accommodation.
As usual, Ministers have sought to justify this policy by setting one group against another—underoccupiers against those who live in overcrowded accommodation and those in the private rented sector against those in social housing. Then we get the small pot of extra discretionary money, which is supposed to cover all the problems that might arise but, of course, never does—the “loaves and fishes” money in the terms of my noble friend Lady Lister.
Noble Lords will be aware that the Government expect to save some £450 million, gross of DHP, in the first year of this programme, but this is on the assumption that tenants caught by the provisions will generally sit tight and take the hit—a cynical approach to policy-making, as my noble friend Lady Hollis touched on. However, the Centre for Housing Policy, referred to by my noble friend Lady Quin, has worked with four significant housing providers, looking at the early data to test some of the DWP assumptions on savings, and has concluded that the suggested savings are likely to be substantially lower than the impact assessment suggests. In particular, it suggests there has been an underestimate of the proportion of those underoccupying by one bedroom who will move, and of the proportion of those who move who will go to the private sector. It suggests that for some who move to housing associations at so-called affordable rents the housing benefit bill will rise, and some vacated homes will be taken up by new households claiming housing benefit for the first time.
This early study suggests that savings might be between 26% and 39% less than originally predicted—a very substantial difference. This is before taking account of the additional challenges the policy presents to providers. RSLs will doubtless invest to support their tenants and will also carry an increased burden of tenant debt which they have to manage; and this at the same time that universal credit is coming down the track, albeit slowly.
We are absolutely clear that we will abolish the bedroom tax and have given detail of how we would fund that commitment. That includes taking away some tax breaks from hedge funds and the nonsense of selling employment rights for shares. If, in doing so, we are joined by the noble Lord, Lord Shipley, and other Liberal Democrats, we would very much welcome that. However, the challenge in the mean time, before we get to do this, is for providers, support services and families to help those affected through the misery it is creating.
Lord McKenzie of Luton
I think there is great confusion in that regard, although I am not sure that there is confusion in the noble Lord’s mind. However, confusion has been spread about trying to equate those two tenures. They are completely different so the argument does not follow through to the LHA arrangements.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)
My Lords, I start by congratulating the noble Baroness, Lady Quin, on securing this debate. While we have differences of view, we all agree on the importance of affordable housing. I am grateful to the noble Baroness for giving us the opportunity to debate this important issue. I also welcome my noble friend Lady Bakewell of Hardington Mandeville and congratulate her on her maiden speech.
We have covered a huge amount of ground and I know that I will not be able to reply to all the questions that have been put to me, but I will ensure that, where I fail to do so, I follow them up in writing. I start by addressing the issue raised by my noble friend Lord Shipley, which was echoed by many noble Lords, including the noble Lords, Lord Whitty and Lord Sawyer, as regards the most important issue being that of increasing supply and the number of affordable homes available to everyone in England. That is why, because it is so important that we increase supply, we are building more of those homes. More than 150,000 new affordable homes have been delivered in England over the past three years.
Our Affordable Homes Programme is generating nearly £20 billion of public and private investment to deliver 170,000 new affordable homes between 2011 and 2015. I say to my noble friend Lord Stoneham that we have already delivered more than 80,000 of those, and around £23 billion of additional public and private funding will help deliver another 165,000 new homes over three years from 2015. All this adds up to being the fastest annual rate of building of affordable homes for at least 20 years. As the noble Lord, Lord McKenzie, and others have heard me say in other housing debates to which I have responded in the past couple of weeks, this compares with the figure under the previous Administration, where the number of affordable rented homes fell by 420,000.
I am grateful to the noble Baronesses, Lady Blackstone and Lady Dean, for their realistic assessment of the previous Government’s performance. However, the noble Baroness, Lady Blackstone, was wrong to claim that things are getting worse because if we focus specifically on council housing we see that more council housing has been built in the three years of this Government than in all the 13 years of the previous Labour Government combined. As regards the increase both in specific council housing and the affordable housing to which I have just referred, it is important to bear in mind two things. The lack of supply under the previous Government occurred during a boom period whereas we are trying to increase supply and tackle the deficit at the same time. That leads me to respond to the point which I think was first raised by the noble Lord, Lord Whitty, but was certainly echoed by the noble Baroness, Lady Blackstone, and the noble Lord, Lord McKenzie, in criticising our policies on affordable housing. It is because of them that less government capital grant is required in terms of building. This means that we can build more affordable homes for every pound of upfront government investment using affordable rent. My noble friend Lord Stoneham questioned whether this was a sustainable approach in the long term. I think that I am just over my three-week anniversary in the job so I do not feel qualified at the moment to get into a detailed debate on that. However, I say to all noble Lords that we are increasing the supply of affordable housing—all noble Lords in today’s debate seem to be united in that request—at a time when we are also dealing with the deficit, so we are having to balance those competing needs.
Noble Lords also asked whether we were using other measures to increase supply. I should say to my noble friend Lord Stoneham, who asked about guarantee bonds, that up to £3.5 billion in government-supported guarantees will be available in the affordable homes guarantees programmes, but we have yet to get the approval of the first of those.
My noble friend Lord Shipley and the noble Lord, Lord Whitty, asked about the capacity of councils to borrow more money to build more affordable housing and whether the Government could raise the borrowing cap. Because of the competing objectives of retaining or bringing down the deficit and trying to stimulate new builds in local areas we do not feel that it is right to lift that cap. However, it is important to note that not all councils are borrowing up to their cap and it is possible from self-financing for councils to have a new source of revenue that was not open to them previously.
The noble Baroness, Lady Dean, asked how innovative we are being. We are certainly looking at a range of options whereby we can provide grant funding towards building new homes, which would first be let at affordable rents but give those tenants the first option to buy. In all of this area we are trying hard to fulfil the absolutely important objective that we all share, which is increasing supply, and we are making positive inroads in that area.
I am not going to get into a lot of detail about the wider issue of housing supply beyond affordable housing, except to say that I disagree with the noble Baroness, Lady Blackstone, and others who said that our efforts are not bearing any results. Housing supply is at its highest since the end of the boom in 2008, with 334,000 new homes built over the past three years. Only last month the Chartered Institute of Purchasing and Supply said that houses are being built at the quickest rate for a decade. The latest GDP figures showed that 2.5% was from construction output and jobs in the construction industry are up 9,000 on last year. I therefore agree that this is an important area but progress is being made.
While there is pressure on us to deliver more new homes, we also have to make the most out of existing stock. We are giving landlords the freedom to do that. The noble Baroness, Lady Dean, was right to highlight how things have changed in terms of those who now need access to social housing than perhaps had been the case 15 or 20 years ago. Some people may need social housing for life but for many others it should act as a stepping stone or springboard that provides stability and support for only as long as it is needed. Councils and housing associations can now offer short, fixed-term tenancies as well as lifetime tenancies to new tenants where it makes more sense. We have made sure that councils can decide who qualifies for social housing in their area while finding alternative solutions for those who do not qualify. I was moved by what the noble Lord, Lord Sawyer, said about people having a right to a home where they work and live. I agree with him about that but our changes to the law via the Localism Act mean that councils have much greater flexibility than they had in the past in terms of their power to respond to the crucial issue that the noble Lord raised.
Before I move on I should mention something that no one has raised in this debate. An important point for us not to lose sight of is that the Audit Commission estimates that around 98,000 social homes in England are being unlawfully occupied and that social housing fraud is costing us an estimated £1.8 billion a year. To try to drive that down because we need to make strong inroads in this area we are giving £19 million over four years to local authorities to help them tackle fraud in social housing. We are also funding a team of experts at the Chartered Institute of Housing who offer free help to landlords on how to tackle fraud and underoccupation.
Let me move on to the other issue raised in our debate—the removal of the spare room subsidy. The first thing I would say is that we in this Government strongly believe that removing that subsidy returns fairness to housing benefit through levelling the playing field. People who receive housing benefit when renting privately, as we have just heard in the exchange between my noble friend Lord True and the noble Lord, Lord McKenzie, have long been entitled to benefit for the number of bedrooms that they need. The Opposition have said that they will reintroduce the spare room subsidy for social housing, but if I understood correctly the point that the noble Lord, Lord McKenzie, was making in his exchange with my noble friend it is the Opposition’s position that they will not extend the reintroduction of that subsidy to those who are in receipt of benefit but in the private rented sector.
Lord McKenzie of Luton
Usually the questions go the other way but let me be clear. We see these two types of tenure as being quite different. My noble friend Lady Hollis stressed this point. A person’s council house tenancy is allocated at the time on the basis of their needs. If their need changes over time a change is made. It is different from short-term tenancies in the private sector where there is a much higher turnover. We do not see the two as being the same.
Baroness Stowell of Beeston
I am grateful to the noble Lord for that clarification. I understand the point that he and the noble Baroness, Lady Hollis, have made, but what I have been trying to outline regarding the use of existing stock and more innovative ways to address the need for social housing of all kinds—particularly in relation to the point made by the noble Baroness, Lady Dean—is that we need to ensure there is a level playing field in the way we deal with different people.
Lord McKenzie of Luton
If that is the proposition, how is there a level playing field when someone who is supposedly underoccupying has no effective means of downsizing within any reasonable space of time or to any reasonable geographic location?
Baroness Stowell of Beeston
I will come on in a moment to transitional arrangements and what is in place to support people affected by the removal of the spare room subsidy.
As my noble friend Lady Seccombe reminded us, pensioners are not affected by this measure, and I am happy to reassure the noble Baroness, Lady Dean, that there is no question of that position changing. The focus is on working-age people who are better able to improve their financial position and make up any shortfalls, and there are a number of other exemptions in addition to pensioners.
Baroness Hollis of Heigham
The noble Baroness implied that working-age people are able to work but she will know that two-thirds of those affected are disabled families for whom the option of increasing their income is minimal.
Baroness Stowell of Beeston
If I may, I will move on in a moment to how we are helping those who require special support.
Removal of the spare room subsidy is also in part helping us get to grips with the housing benefit bill, which has grown to £24 billion this year and nearly doubled under the previous Government. I promise that I will come back to the remarks of the noble Baronesses, Lady Hollis and Lady Quin, on savings estimates. While it gives me no pleasure to say this, given the spiralling housing benefit bill it cannot be right, as my noble friend Lord Howard of Rising said, that the taxpayer should continue to pay for homes that are too large for the household’s needs. Before we made the change, up to 1 million spare bedrooms in working-age households in England were being paid for by housing benefit.
As I have acknowledged, we are in a transitional period, with both landlords and tenants facing change. The Government are investing heavily in new affordable homes and we have to get that supply coming through. Over time we think that there will be more efficient use of social homes, with the spread of accommodation being more appropriate for the area as a result of the measures we are introducing. However, getting there will take time, which is why we have made available £405 million of discretionary housing payments over this spending review period. The noble Baroness, Lady Blackstone, said that that is not enough, but we have trebled the DHP budget to £190 million this year. I think that it was my noble friend Lord True who talked about how his council is drawing on that fund and how other areas are adjusting to the new situation.
It is early days but I can report in general terms that councils are using the fund to give awards where it is clear that the claimant is unable to make up the shortfall. This includes longer-term awards, including, as the noble Baroness mentioned, to disabled claimants living in significantly adapted homes, and short-term support—for example, to help people who have been off work due to illness but are due to return soon, and people engaging with their landlord in attempting to downsize.
However, many people are of course already managing the change. Among those who are out of work, some are finding work for the first time, some people already in work are able to increase their hours and others are able to move to smaller accommodation. In the two and a half years between the policy being announced and it being implemented, local authorities, landlords and tenants in some areas started to prepare for this change. Because time is limited I shall not go into the detail but Westminster, for example, has used a scheme to ensure that support is available for those who want to downsize. Likewise, the council in Salford is running schemes to help to bring together tenants who may be interested in swapping their homes. My noble friend Lady Seccombe referred to HomeSwap Direct. Through this scheme, for the first time, social tenants who want to swap their homes can now see every available property, thus boosting their chances of moving. More than 10 million searches have been made on that website since it was launched a couple of years ago.
My noble friend Lady Seccombe mentioned some other schemes which support pensioners who, although they are not required to move, might want to downsize. My noble friend Lord Stoneham made an important point when he highlighted the effort made by some responsible local authorities and housing associations to advise tenants on financial management to avoid getting into arrears.
We are taking proper steps to make sure that we understand how the removal of the spare room subsidy is working. We have commissioned extensive research, which will provide evidence of how this and other welfare reforms are working in practice. I can reassure my noble friend Lord Shipley that the interim evidence on the removal of the spare room subsidy is due to be published next spring. In the mean time—I mean this absolutely sincerely—I acknowledge that it is inevitable that we will hear stories, which, albeit anecdotal, will be concerning and upsetting, about whether this is a policy that we support in principle or oppose. However, we believe that it is too early to draw conclusive evidence from the emerging data on how the policy is operating at the moment. We want to make sure that sufficient time is allowed to pass so that we can reach a fully informed view on the impacts on both landlords and claimants. As I have said already, I make it clear that we are committed to giving proper consideration to all that evidence. We will publish it, and be held to account for it, next year.
In conclusion, as I said at the start, this Government are committed to building more new affordable housing and we have made a strong start in putting right the previous decline. We are committed to making the best use of the existing stock of housing and have changed the law so that local authorities and housing associations have more freedom. We are also committed to supporting people who are not yet able to buy or rent on the open market but who, in time and with the kind of support that we are offering across the board, could realise their aspiration to do so.
As always, I have learnt a great deal today. The noble Lord is about to stand up and ask me a question, so before I sit down I shall give way.
Lord McKenzie of Luton
I have a very simple question. Obviously in the time available the Minister has not been able to answer all the questions that have been put to her. Will she undertake to look at the record and write to noble Lords where appropriate?
Baroness Stowell of Beeston
Absolutely. I said right at the beginning that I would do so and I am happy to repeat that. I shall ensure that I write as quickly as possible to all those who have contributed today and place a copy in the Library.
Baroness Quin
My Lords, given the list of speakers, I expected that we would have a well informed debate and I certainly have not been disappointed. Many important contributions have been made during the past three hours.
I add my own congratulations to the noble Baroness, Lady Bakewell, on her excellent maiden speech. It was very good that she chose to make it in this debate, where her experience at local government level was highly relevant.
A great deal has been said about the bedroom tax and what we should call it. The noble Lord, Lord Greaves, reminded us of earlier debates on the subject in this House, including the amendments put forward by the noble Lord, Lord Best, who I think is credited with coining the expression “bedroom tax”, so perhaps we can see this as a Cross-Bench initiative.
The impact of the tax has been referred to by many people and, not surprisingly, there have been different experiences. The noble Lord, Lord True, spoke of his experience in Richmond upon Thames, which, I think, after the City of London is the wealthiest area in London in terms of average household income. My noble friend Lady Turner also spoke, in a very interesting and well informed speech, about the London situation. She made points that we should certainly consider. However, other areas around the country were also mentioned: Birmingham; the north-east, which is my area along with the noble Lord, Lord Shipley; the south-west; and, indeed, East Anglia.
I am glad that issues wider than the bedroom tax were also raised, particularly by my noble friend on the Front Bench.
We expected the Minister to give a robust speech and she did. She said that the policy will be better evaluated over time. Even so, I would ask her to look very seriously at all the current evidence about the people who are obviously losing out in a very distressing way. I think that there is a lot of evidence and I hope that she will carry our concerns about this very important issue to her ministerial colleagues across government.
Meanwhile, once again, I thank everyone who has participated in this debate.
Armed Forces: Redundancies
(11 years ago)
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Lord Touhig
To ask Her Majesty’s Government, in the light of the recent comments by General Sir Nick Houghton, Chief of the Defence Staff, what assessment they have made of the impact of redundancies on the armed forces.
Lord Touhig (Lab)
My Lords, recently General Sir Nick Houghton, the Chief of the Defence Staff, spoke of the huge challenges faced by our Armed Forces. Those challenges are being compounded by the Government’s policy of Armed Forces redundancies. The recent unjust treatment of soldiers made compulsorily redundant shortly before their full pension date is a reprehensible scandal. I raised this issue in the House on 22 July. In reply, the Minister declared:
“When selecting personnel of the Armed Forces for compulsory redundancy, no consideration was given to the proximity of the immediate pension point”.—[Official Report, 22/7/13; col. 1041.]
The Government’s lack of consideration has seen servicemen made redundant just short of qualifying for their full pension and consequently losing out on around £100,000 to £200,000 in income. Representations made by Pension Justice for Troops have revealed the shocking impact of this mean-spirited action on soldiers who are often called the “warrior generation”. One example is Major Braithwaite, who served in the Balkans, Iraq and Afghanistan and was made redundant just 87 days short of reaching his full pension. Another is Sergeant Anderson, who enlisted at the age of 16 and was made compulsorily redundant just three days short of reaching his full pension entitlement. They had completed 98% of their service contract, yet are now to receive just 40% of the value of their pensions. This is a gross injustice, which has fundamentally altered the futures of these men. Indeed, Sergeant Anderson’s wife, Jolene, has spoken about how they feel, and said that, “financial security has now been cruelly snatched away”.
The couple had planned to use the pension to secure a mortgage on leaving Army accommodation. The pension exists to help our brave soldiers move with dignity to civilian life and it is unfair when just a few extra days’ service would have resulted in a pension 50% higher. The shameful treatment is a dereliction of the military covenant. I have in my possession a Ministry of Defence memo, in which a number of questions about the compulsory selection process are asked and answered. Two questions jump off this piece of paper. The first is: “At what point in the redundancy selection process were the outcomes for service personnel and their families considered against the values and standards of the Army?”. The answer: “At no point”. Another question is: “At what point in the redundancy selection process were the outcomes for service personnel and their families considered against the letter and the spirit of the Armed Forces covenant?”. Again the answer is: “At no point”.
I understand that the standards and values of the Army and of the Armed Forces covenant must be taken into account in these circumstances. Indeed, Queen’s Regulations say that they should, yet the Government have ignored that. This piece of paper reveals a lack of consideration that effectively renders the covenant a toothless document, with no real value to servicemen when it comes to their terms and conditions of service.
Last December the external covenant reference group, consisting of highly respected veterans’ agencies commenting on the Government’s own first annual covenant report on soldiers made redundant days before they qualified for their full pension declared that it was a betrayal of the spirit of the covenant. It is even more appalling that out of 11,000 Armed Forces redundancies, only around 130 soldiers have been victims of this sleight of hand. Robbing these men of their full pension saves the Ministry of Defence an inconsequential sum of money, but the impact on the lives of those affected and those who serve or are considering serving in the Armed Forces, is dramatic. Not since the notorious crook, Robert Maxwell, plundered his employees’ pensions have we seen an employer—in this case Her Majesty’s Government—so contrive a redundancy package to deny a small group of people, who have put their lives on the line for Britain, their rightful pension.
Under the previous Government full pensions were protected. That was done by reducing the length of service required to gain a full pension by four years. I am sure that the whole House will join me in asking the Government to think again and to look again at what they have done to this small group of loyal men and pay them their full pension. I ask them not to shame our country any more by neglecting their duty to our soldiers. This treatment of long-serving soldiers is having an indisputably negative impact on the morale of the Armed Forces. According to the Armed Forces Continuous Attitude survey published in July, one in three—30%—said that morale was low. This figure is twice what it was when the Government came to power. The current policy of redundancies is having a highly damaging impact on the morale of those who so dutifully and selflessly devote their lives to the service of our country. Last December, General Sir Peter Wall, Chief of the General Staff, told the Defence Select Committee that the issue of redundancies close to qualification for full pension was having a “disproportionate impact” on morale. These recent redundancies have not simply had an adverse affect on today’s soldiers but have damaged recruitment.
A leaked Ministry of Defence report, dated 6 August this year, highlighted the serious difficulties being experienced in recruitment. It shows that the Army is on course to recruit only half the reservists in 2013-14 necessary to fulfil the Government’s target. The report declares that there currently exists a “hostile recruiting environment”. One of the chief reasons for this environment is, in the words of the report, “redundancy downsizing”. It is no wonder that people are unwilling to enter the Armed Forces if at the end of a long and dutiful service the Government abandon their commitment to care for them.
The entire policy of restructuring the Army was predicated on the reserves being able to complement the Regular Forces. It is becoming clear that the Government’s policy of redundancies is undermining this very ability to expand the Reserve Forces, and is jeopardising the Government’s entire approach towards the Armed Forces. This policy increasingly seems based on pleasing the Treasury. The extent of this capitulation has been revealed in recent reports in the Daily Telegraph in which senior officers and Ministry of Defence officials have revealed that the Ministry failed to spend £2 billion of its budget. The detail shows that £200 million, earmarked for wages, has gone unspent due to more servicemen than expected choosing to quit. This cash pile, amassed by the MoD could maintain six infantry battalions—3,900 soldiers—for an entire decade. In Opposition the Prime Minister told BBC Scotland that he wanted to see the British Army increase in size. It now appears that his policy is entirely contrary, based solely on the consideration of costs.
An ill conceived approach has resulted in the shameful treatment of soldiers, an abject failure to uphold the military covenant and serious damage to morale within the Armed Forces. The policy of redundancies appears crafted entirely by financial considerations and a desire to please the Treasury, not military strategy. The Government need seriously to look again at the implementation of redundancies, especially ahead of further redundancies expected in the new year, and before our Armed Forces are damaged even more.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the noble Lord, Lord Touhig, for putting this important topical item down for debate. This is a subject that he and I have been raising for some time, and I will try not to repeat his words.
The Government’s defence review has been in place now for some three years, having been announced in October 2010. They are three years in which significant redundancies have taken place. Most have been voluntary redundancies. In fact the proportion of voluntary redundancies has been increasing over time. So as we look to the end of 2013, we will have seen more than 10,000 serving forces personnel ending their service careers. We debated back in June of this year the impact on those selected for redundancy who were close to pensionable age. Now the noble Lord, Lord Touhig, broadens and repeats questions that we raised at the time. He asks about the overall impact of the redundancies and in particular, what the Chief of Defence Staff considers the impact to be.
I will thus also return to a question that I have asked on earlier occasions in your Lordships’ House, which is whether the fact that redundancies are in many cases voluntary means a lowering of morale in our Armed Forces? I am also concerned as to whether those leaving the Army, navy and air force are the ones whom we want to leave. Are we losing the skills that are essential for any enterprise? Has the MoD assessed what trades and skills are going by voluntary and compulsory redundancies?
I welcome the words of the Chief of the Defence Staff, General Sir Nick Houghton, when he wrote about his vision for our Armed Forces as recently as August this year. His determination to lead our forces through these times of austerity demonstrates his clear commitment to professional, effective and more efficient forces. His realistic recognition of the challenge he faces in delivering the changes set out in the 2010 defence review should command respect across this House. He was again pressed more recently on the question of withdrawal from Afghanistan, redundancies and reservist recruitment. He seemed resolute in his mission when he said as recently as 21 October:
“In terms of morale, it’s not about individual happiness. It is about the ability to endure in times of real austerity, endure through times of hostility, in times of pressure ... And I think if anything has demonstrated the resilience of the morale of the British armed forces, it is the last couple of years—and the fact they still continue to perform, and are one of our nation’s unique selling points”.
I look forward to hearing from the Minister how he interprets the Chief of the Defence Staff’s words. Does it mean that our forces will have the resilience of their morale being severely tested?
There are additional points on which I hope the Minister might offer your Lordships’ House clarification. So far, there have been three tranches of redundancies and yet the total number of redundancies is only a little over half of that set out in the defence review. There is, I fear, uncertainty as to how the redundancy programme will proceed. What proportion will come from voluntary redundancy? What spread of skills and experience will be lost? Are those taking voluntary redundancy the people we want to lose? These are important questions, not least to enable the Government to demonstrate that our Armed Forces retain the necessary skills, experience and morale, but to clarify the question of recruitment to the Regular and Reserve Forces.
Turning to the Reserve Forces, those who have heard my thoughts on the defence review before will know that I have a real interest in ensuring that our Reserve Forces, newly expanded and updated, will be effective and able to fulfil the role the defence review set out for them. The increase from 19,000 to 30,000 reservists is a vital component of the review and essential in ensuring the overall capacity of the remaining 82,000 Army, RAF and Royal Navy Regular Forces that are planned.
There are continuing questions about this increase in the size of our reserves. How will we recruit the right people? Will there be sufficient numbers with the right skills and experience? How do we ensure that they see deployment that engages their talents and commands their loyalty? We must also give real thought to working with employers so that they both understand the importance of employees giving such service and are able to plan for sometimes lengthy absences of perhaps integral staff.
The issue on which I would press the Minister today is that of the success of recruitment to the reserves, a point touched on by the noble Lord, Lord Touhig. This key issue was put to the Chief of the Defence Staff. He seemed enthusiastic at the prospect of increased numbers of reserves when he said:
“We have produced a good offer. We’ve got to get out the message that people who join now are joining something that is exciting, will give them all sorts of rewards and has a very, very strong future”.
However, the question for me is whether this recruitment is working. We read that reserve recruitment is falling significantly below target—and that is before we begin to ask what vital skills and experiences are missing. If the overall targets are undershot, are we correct to close local TA centres? Is our new outsourced recruitment—again touched on by the noble Lord, Lord Touhig—the best way to fulfil our duty to defend the UK?
I shall not repeat the comments made by the noble Lord about people nearly reaching pensionable age and being made redundant but I have had correspondence with the Minister on the subject. As to the 1.2%, or approximately 130 soldiers, how much would it cost to play the decent Government by that number of people? The answer I got was, “Where do you draw the line?”. That is a problem. However, we know where the line has been drawn, and it affects 100 to 130 soldiers.
In conclusion, I welcome and commend the Chief of the Defence Staff for his determined and judicious language in assessing the progress of the defence review. I have no doubt that our reduced forces will cope in times of peace, but could they cope with another Afghanistan? Could they cope if there were two such conflicts at the same time?
Lord Ramsbotham (CB)
My Lords, I join others in thanking the noble Lord, Lord Touhig, for obtaining this important debate. I am sure that those thanks will be reflected by members of the Armed Forces because, like him, I deplore the stories I am hearing about people being discharged and made redundant before they achieve their pensionable age, sometimes by ridiculously small amounts of time.
I was the Adjutant-General, the director of personnel in the Army, at the time of the Options for Change exercise after the Cold War, when we were required to reduce the size and shape of the Army by a third over three years. Therefore, what I am about to say is inevitably coloured by that experience because that kind of reduction could not have been achieved without the redundancies that accompanied the number of people who left voluntarily.
At the time I was extremely fortunate that in the Treasury I was faced with a deputy secretary who was extremely tough but very fair—Mrs Jack Straw. I was always grateful to her, not only for her toughness and thoroughness, which meant that we had to do our sums in presenting cases, but for the humanity she showed when we suggested to her that among the casualties of this reduction were the children of people being declared redundant who were at school on boarding school allowance. She allowed boarding school allowance to be continued through until the next stage of a child’s schooling so that they could complete the examination on which they were currently embarked. The reason I mention that is because that good sense and humanity is in stark contrast to the way in which this current exercise is being conducted.
Inevitably, when you are looking at reductions in size—particularly of personnel—in the services, one word always dominates your thinking, and that is “sustainability”. Whatever you are going to do, you are bound to have to do it over a period of time and therefore the size and shape of the Armed Force—it does not matter whether it is Army, Navy or Air Force—must allow you to maintain whatever you have been required to do operationally for a period of time.
At the time we were conducting Options for Change, the aim was to make certain that people did not go on unaccompanied operational tours at an interval of less than once every two years so that they would have a chance to remain with their families and be trained to develop their service careers. At the time, because of the pressures, we were faced with the problem that some specialists had only 11 months between tours, which was ravaging their family lives, quite apart from their other development.
What worries me about what has been going on in the strategic defence review, followed by other reviews, followed by Army 2020, is that overall it is said that the proposals in the strategic defence review would be realisable only if the money was available in 2015. We know from looking at the books that the extra money to provide that will not be available in 2015, so there is more to come. The fact that there is more to come is obviously worrying to those who have done their sums to produce what they think is the sustainable Armed Force the country requires, but particularly worrying for the people in it.
It is here that I come to the word “trust”. The mutual trust between the top and the bottom of an organisation is absolutely crucial. The regiment that I joined, the Rifle Brigade, had the motto given to it by my ancestor, Sir John Moore, which was based on a mutual bond of trust and affection which the officers had to earn. I thought that they were wise words because there is no doubt that the trust of the Armed Forces in their political and military masters has to be earned; it is not automatic. What worries me about the impact was clearly put by the Chief of the General Staff last December and repeated by General Sir Nick Houghton: the trust has been damaged by the way this has been handled.
It is not only about the damage that has been done to the internal workings of the Armed Forces and their members, but to the families and on down to potential recruits. Armed Forces are living organisations, so that even while you are reducing in size you have to recruit to be certain that you will have that sustainability tomorrow. In 1990, I remember having great difficulty persuading civil servants that it was not like shutting a garage door. You could not just chop something off because you had to think about the future. Looking back on those years, I was hugely impressed by the care that was taken over every single redundancy. Each one was planned with care and pension issues were taken into account. That is why some people were put into tranches 2 and 3 as opposed to tranche 1. If it was possible then with the much larger numbers involved, I fail to see why it is not possible today.
If I was a member of the Government, I would be seriously worried about the damage that is being done to trust in the system which is responsible for committing our Armed Forces to war. I know that this may go beyond the immediate issue of redundancy, but redundancy is the cause of the distrust. The way in which a redundancy round is conducted is hugely important and I hope that more attention will be paid to the effects of not getting it right, as well as to the experience of doing it differently in the past.
Baroness Dean of Thornton-le-Fylde (Lab)
My Lords, I thank my noble friend Lord Touhig for tabling this debate. He has followed and pressed this issue assiduously and he is to be congratulated on that. It is not a closed book as far as he, and indeed a number of us, are concerned. I listened with shock to the two quotations he repeated from the memo from the Ministry of Defence, which I have not seen. However, equally shocking was a response given by the Minister on 22 July, a response that I would not normally associate with him, given his commitment to our Armed Forces. He said that no consideration was given to the proximity of the immediate pension point, as referred to by my noble friend Lord Touhig.
I worked in industrial relations for many years, and apart from Robert Maxwell, who I regarded as a crook—I certainly would not put the MoD in the same tent, I would hope—I never came across a situation of compulsory redundancy, as opposed to voluntary redundancy, where there was a complete disregard for the impact on the individual. That has not been taken into account and pragmatically applied. What makes it worse is that we are not talking about an individual employee in a company who can stay in their own home and who have not been prepared to give their life for their country. Armed Forces personnel generally do not own their homes and commit their lives to military service. What has been done by the MoD to a small number of people in this case has not been done in my name as a citizen of this country. It is not something that I can condone in any way.
It has been criticised by members of the coalition in both Houses and by the commission that reviewed the military covenant—a covenant that this House put into law not too long ago. Last December the commission, in looking at how the covenant was being applied, asked the Government to review their approach to compulsory redundancies and how they were treating the personnel who were affected. The words “a feeling of betrayal” were used by members of the Armed Forces, who also asked for a review. However, the Government chose to ignore that request.
Who speaks for Armed Forces personnel? They cannot join a trade union or federation that has any authority to negotiate for them. Although we have the Armed Forces Pay Review Body, it is not its position to deal with situations like this. It therefore has to come down to the Ministry of Defence and the Government. The Government have a responsibility in this. I want to ask the Minister: are the Government prepared to review their position? We have heard that more redundancies may be declared in January of next year. Will the Government’s position be the same as it was on this redundancy round? We are told that the new reserves need to be up to number by 2018 because it is a five-year policy, yet the redundancies will be completed by 2015. I accept that people have to be recruited into the Armed Forces even at a time when redundancies are being made because you want to be sure that you have people in place for the officer cadre at the appropriate time. In my view, you would not go about making a big change such as this in any business in Britain. First, you would not get away with it and, more importantly, you would want to make sure that you could deliver on your operational requirements, whether for a company making products or for the Armed Forces. This has not been staged in a way that you would expect: “We will make so many redundancies, then let’s get up to the requirement we need, and then take it to the next stage”.
The whole exercise will leave a very bad taste among members of the Armed Forces. It will affect recruitment and it will certainly affect morale. Last year, for the first time that I can remember, the Armed Forces Pay Review Body referred to the issue of low morale as a result of the questions that had been put to its members when it went out to meet personnel. I have the utmost respect for the Minister, but I ask him this: will the Government please review their position? It is not something that any of us who are concerned about this issue either feel contented about or are prepared to leave where it is.
Baroness Garden of Frognal (LD)
My Lords, I join in thanking the noble Lord, Lord Touhig, for introducing this debate. He has long been a doughty champion of the Armed Forces. All three services have experienced redundancies in recent months. The numbers within the Royal Navy and the Royal Air Force are considerably smaller than for the Army, but we should bear in mind that for each of the individuals involved, there will have been the stress and disturbance, and hopefully the excitement, of a fundamental change of lifestyle.
The Army redundancies are still ongoing, so this debate has focused on the Army, with its planned reduction of some 20,000 troops. The more limited the redundancy programme, the more feasible it is to tailor transition facilities for each individual to find new opportunities. But the impact of any redundancies has an unsettling effect far wider than for those directly affected. Uncertainty spreads among colleagues, families and friends. In any walk of life, the prospect of losing jobs is challenging. For the Armed Forces there are additional elements seldom present in civilian employment. Military service is not just a job, it is a way of life, as the noble Baroness, Lady Dean, has just indicated. Many of those facing redundancy will be living in service accommodation, which they will have to leave. At a difficult time in the market, they will face having to buy or rent scarce and expensive housing. In addition, it is a lifestyle where friends and social life often centre on military people and activities. Some of those who have signed up to put their life on the line in the service of their country may now be facing the loss of job, home and community.
I shall focus my remarks on the impact as it affects the welfare aspects of troop reductions and consider the measures being taken to help with those three elements: jobs, housing and community. Despite the reservations expressed by the noble Lord, Lord Touhig, the military covenant is a welcome development in raising the profile of the Government’s duty of care towards the Armed Forces. I start with employment. We have come a long way in recent years in enabling service people to be accredited with civilian qualifications that reflect their experience and competence. This was certainly not always the case. Indeed, sometimes it was positively the reverse as commanders did not wish their troops to be particularly well qualified lest they seek employment elsewhere. Luckily, our thoughts on that have now changed. Military personnel are now positively encouraged to work towards academic and vocational qualifications that will be recognised by civilian employers in their job applications.
We welcome the work of the Career Transition Partnership, the CTP, which offers training courses, careers advice and transition workshops as well as help with writing CVs—an art in itself—and with looking for suitable employment. Can the Minister update the House on how well that is working and what the CTP’s success rate is? The latest round of redundancies was oversubscribed, as my noble friend Lord Palmer indicated. Does that show that personnel are finding that the job market is offering attractive options outside the military?
What about housing? The nomadic military life does not lend itself to families identifying a part of the country as home or one where they would be considered to have a local entitlement to social housing. For those who already have a foot in the housing market, the problem will be less urgent than for those whose service lives have been spent entirely in service accommodation. Will the Minister indicate what sort of assistance is being offered to help with rehousing those who have to leave service accommodation on redundancy?
Finally, there is the impact of moving away from the camaraderie and social side of military life, with its own inbuilt systems of mutual support. A recent study by the Forces in Mind Trust has shown how difficulties in the transition to civilian life take their toll in alcohol abuse, mental illness and family breakdown. The study gives much food for thought. It estimates a cost to taxpayers and charities of £114 million in 2012 and an estimated rise to £122 million this year with the increase in those leaving under the Armed Forces redundancy programme. That makes sorry reading. I note that the noble and gallant Lord, Lord Craig of Radley, has a debate next week which will explore this report in more detail.
Inspiring and essential work is undertaken by military charities, welfare organisations and benevolent funds. At this time of year, we think particularly of the Royal British Legion. Combat Stress specialises in the treatment and support of British Armed Forces veterans who have mental health problems and has great expertise in the affliction of post-traumatic stress disorder. There are so many others. What preventive steps can be taken earlier in the process to ensure that those serving and those leaving service are made aware of all the organisations which can assist with welfare issues before they become problems?
There are many positive stories to be told of those who channel the skills and knowledge acquired in military service into much needed areas of civilian life. Teaching, training and working with young people—whether through the cadets, sporting activities, music or drama—can all give a new purpose and provide a new circle of friends. Membership of a church or other faith group, or the pursuit of a sporting interest or hobby, are also ways to become an integrated part of a community and to make civilian life more meaningful. We trust that the transition package will carry ideas and information to signpost those leaving the service to the various options that might suit them.
I hope that the Minister will be able to give assurances that the Government recognise that the impact of redundancies calls for enhanced measures to ease the transition into civilian life. Those with military experience have much to offer to society. We shall all benefit if the resources and support are in place to ensure that they are welcomed into new work, new homes and new communities.
Lord West of Spithead (Lab)
My Lords, I had not expected to speak today but, having heard some very good speeches and feeling as strongly about this issue as I do, I had to say something. Our men and women in the forces are amazingly resilient and strong, and put up with all sort of things being thrown at them. Morale in the front line is amazingly high when one bears in mind all the vicissitudes they suffer. There is a crucial element, which the noble Lord, Lord Ramsbotham, touched on: trust. I am sure that the Minister—for whom I have great respect—knows this and I am sure that when he was a subaltern, he would not have dreamt of not looking after his people first. It is imbued in all of us in the military that you look after your people first. That responsibility goes right to the top of the MoD or wherever.
I am afraid that this treatment—particularly of this small group but also more generally with some of these redundancies—is shabby and not what one expects of the MoD and our military. It will have an impact on people, which is extremely worrying. We cannot afford to have that impact put on our people when they are under so many other pressures. We have heard how good some people think the military covenant is, but it makes a nonsense of that covenant if we are willing to do something like this. I hope that the Minister will be able to come up with some form of words and say that something can be done to look at this. I am well aware of where you draw the line and all those difficulties. I have been involved in similar situations. We have done these things in the past and it really is too important just to brush under the carpet.
Lord Rosser (Lab)
My Lords, I congratulate my noble friend Lord Touhig on securing this debate on an issue that appears to be causing as much concern within our Armed Forces as it is in your Lordships’ House and elsewhere. Speaking for the Government, the Minister said in this Chamber on 22 July that there was,
“no evidence that morale in the Armed Forces has been adversely affected by the redundancy programme”.—[Official Report, 22/7/13; col. 1042.]
The Government’s view appears to be that despite the fact that the last round of redundancies was 84% voluntary and, unlike previous rounds, heavily oversubscribed, that was not an indicator of the state of morale because the Army had deliberately set out to maximise applications. I have to say that that assertion sounds just about as convincing as the claim once made by one of our major train operating companies that an increase in the number of complaints received did not indicate a rise in levels of dissatisfaction, because it had been encouraging its customers to make complaints.
I do not wish to suggest that the views of one or two individuals, however senior, are conclusive, but they rather call into question the Government’s assertion on 22 July that there was no evidence of morale being adversely affected by the redundancy programme. General Sir Nick Houghton, the Chief of the Defence Staff, was described by the Daily Telegraph in August as having told a Ministry of Defence in-house magazine that,
“one of his main concerns is that the ‘transformation’ of the Armed Forces has been poorly communicated to personnel, leaving many feeling left out and let down”.
The newspaper directly quoted him as having said:
“I think we’ve risked people becoming cynical and detached from what defence is trying to do”.
The Daily Telegraph article went on to say:
“Figures released last month showed the proportion of personnel rating overall morale as ‘low’ has risen from 24 per cent in 2010 to 55 per cent this year. The number of soldiers saying they are satisfied with service life has fallen from 62 per cent in 2010 to 48 per cent this year. The fall is steeper in the Army than in the Navy or RAF”.
Maybe the article is wrong; in which case, I am sure that is what the Minister will say when he responds. However, if it is at least broadly accurate, it certainly does not square with the Government’s assertion on 22 July about there being “no evidence”; nor does the Government’s assertion on 22 July square with a statement by a Ministry of Defence spokesman quoted in the Daily Telegraph four days later, who said:
“With any period of change there is bound to be uncertainty surrounding the future of personnel and their families which will inevitably have an impact on morale”.
My noble friend Lord Touhig referred to the Armed Forces Continuous Attitude Survey and quoted different figures on morale from those in the newspaper articles to which I have referred. But these survey figures again show a doubling since 2010 in the number of service personnel describing their morale as low, with the number of personnel stating their morale was high falling for a third successive year. What is of concern is that the Government do not appear willing to recognise that the way in which they have handled the redundancy situation and the changes in the structure of our Armed Forces has had an adverse impact on morale. After all, you cannot address a problem if you are in a state of denial that it even exists. The 2010 strategic defence and security review was rushed and a cost-cutting exercise, but morale was not helped when the reductions in personnel were subsequently substantially increased beyond those set out in the SDSR.
My noble friend Lord Touhig has been assiduous in raising the treatment of soldiers made compulsorily redundant shortly before reaching their immediate pension point. He has mentioned it again today, citing specific examples of where it has led to significant pension entitlement loss. He last raised it before today in this Chamber on 22 July. On that occasion the Government’s response was not well received and the Minister implied in his final response that he would ask his department to reflect on the unhappy reaction there had been. What further consideration have the Government given to this issue since 22 July, and has their position changed? Surely the Government recognise that this issue and the manner in which a relatively small number of people have been treated in a compulsory redundancy situation is hardly in line with the military covenant, does nothing to enhance morale and has an impact that extends way beyond the “only”—to use the Minister’s word—1.2% of those made redundant who are affected.
It appears that serious difficulties are being encountered in recruiting the significantly increased number of reservists, with a Ministry of Defence report referring to a “hostile recruiting environment” resulting from,
“redundancy downsizing, drawdown in Afghanistan and a reported (if unproven) increase in mental health issues”.
I hardly think that what is happening now over the recruitment or non-recruitment of reservists is exactly assisting morale. The morale of our Armed Forces can hardly be enhanced when the Government are in effect saying that while the policy—which we support—is for an expanded, more heavily integrated role for the reserves alongside regulars, the number of regulars will be reduced irrespective of whether we have recruited the many thousands of additional reservists who are needed to play a vital part in delivering our intended future defence capabilities.
Earlier this month the previous Defence Secretary, Dr Liam Fox, was quoted as saying:
“When I was secretary of state, I said we would only decrease the numbers of regulars when we had guarantees that we would be able to get the numbers—training and equipping up of the reserves—to match”.
That no longer appears to be the policy. When was the policy changed, by whom and for what reason? I hope the Minister will be able to give us answers because we still have not had a satisfactory answer from the Government as to why the rate of cuts in the Regular Army manpower is not dependent on the required projected rate of increase in the number of reservists being achieved. I again invite the Minister to give such a commitment. Apart from putting at risk our ability to deliver our future intended defence capabilities, failure to give such a commitment devalues the importance of the role that the reservists will play in future, which will have an impact on recruitment and in the way in which the role of reservists is regarded both by members of the Regular Armed Forces and the community at large.
This debate has drawn attention to how the Government’s approach to implementing policy, not least over the rundown in the size of our Regular Armed Forces and the associated redundancies, is contributing significantly to the downturn in morale registered in the Ministry of Defence’s own reports and surveys. What makes the situation even more difficult is the apparent government view that there is not even a problem. Our Armed Forces continue to put their lives on the line in defence of our country’s interests and on behalf of us all. The fact that they do so, and will continue to do so, with professionalism, courage and commitment should not obscure the issues over morale and trust that should now be properly addressed by the Government as a priority.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)
My Lords, I add my congratulations to the noble Lord, Lord Touhig, on securing this short debate. I know that this is an emotive issue, about which the noble Lord is particularly well informed, having served as the Minister for Veterans in the previous Government. I agree with my noble friend Lady Garden that the noble Lord is a doughty fighter on behalf of the Armed Forces. It is clear that the whole House recognises the importance that we as a nation rightly continue to place on supporting and valuing the extraordinary service offered by our Armed Forces.
The redundancy programme is a consequence of the size of the Armed Forces being delivered under Future Force 2020 and, as such, there are no implications for the UK’s defence capabilities. However, we do not underestimate the task at hand, and the Chief of the Defence Staff was right to reiterate the scale and complexity of what we are asking of our Armed Forces. I do not need to remind this House that the MoD is engaged in the challenging task of reducing our Armed Forces by some 33,000, or 19%, by 2020 across the whole rank structure and, in tandem, reducing the civilian workforce by some 32,000, or 38%. Every single redundancy is regrettable.
I firmly believe we were right to step up to the plate to commission the long-overdue 2010 strategic defence and security review and to set about reconfiguring our Armed Forces to make them better able to meet the threats of the future. I am confident that our efforts to transform defence through the Future Force 2020 programme will deliver, within budget, the battle-winning forces that we need to reach across the world, operating across the full spectrum of defence activity.
There is no plan B. The redundancies are regrettable, but they are necessary. We have been clear all along that, to maintain balanced force structures for the future, an element of these reductions would need to be made through a redundancy programme. For some, they represent an opportunity. Selection principles through all three tranches of the redundancy programme have, therefore, sought to maximise the number of voluntary applications from all personnel who meet the published criteria. For others, I am fully aware that redundancy has been unwelcome news. In both cases, we have done, and will continue to do, all we can to manage the human element of these changes in the best possible way.
In the first instance, those selected for redundancy are encouraged to apply for a transfer to other areas of the Armed Forces, if they meet the selection criteria and a manning shortfall is forecast in the future. Of course, this is not always possible. All those who are ultimately selected for redundancy receive financial compensation and a comprehensive resettlement package to help them to find a job and transition to life outside the Armed Forces. This is the same resettlement package that they would have received had they completed the whole of their service commitment. In most cases, this will comprise a training grant; travel and subsistence; 35 days of paid resettlement training; career transition workshops; a job-finding service; curriculum vitae writing; interview skills; and access to training courses. Additionally, all redundees will have access to housing and financial management briefings and personal career consultancy for up to two years after leaving. Those who have enrolled for enhanced learning credits will have access to academic courses up to 10 years after leaving.
My noble friend Lady Garden asked me to provide an update on the work of the Career Transition Partnership, or CTP. The CTP is a partnering arrangement between the Ministry of Defence and Right Management Ltd, a leading outplacement company. It delivers the suite of training and employment support that I mentioned a moment ago, which is no small undertaking. In total, the number of Armed Forces personnel who have left service and taken part in the CTP programme over the last 24 months to the end of the first quarter of 2012-13 is some 20,800. Over this 24-month period, some 85% of former participants in the Career Transition Programme found employment within six months of leaving service. This is particularly notable when compared to an employment rate of 70% in the general UK population. I am clear that these measures to ensure a smooth transition to civilian life are working. Evidence provided by service leavers indicates that our resettlement provision is consistently to a high standard and that the services that they provide do assist with a successful transition to civilian life.
My noble friend also raised the matter of housing for those who leave service on redundancy terms. The Government are committed to ensuring that service personnel and their families have access to appropriate accommodation when they leave the Armed Forces. Protections have already been put in place through secondary legislation, which means that members of the Regular Armed Forces, their bereaved spouses and civil partners, and seriously injured reservists, must not be subject to disqualification through a requirement for a local connection. Additionally, following parliamentary approval, local authorities are required to frame their allocation schemes to give additional preference to service leavers who have urgent housing needs. When looking for civilian housing, personnel can take advice from the Joint Service Housing Advice Office, a dedicated team that provides advice on civilian housing options. This service also operates a referral scheme to place personnel in available housing association properties. Service leavers are entitled to remain in MoD accommodation initially for 93 days after the termination of their service, extended by a further 93 days when compassionate grounds require it. Where surplus accommodation is available, recently retired or redundant service personnel can also be offered accommodation for six months on payment of the market rate.
My noble friend Lord Palmer and the noble Lord, Lord Rosser, raised the very important issue of morale. It would be wrong of me to suggest that headcount reductions and pay restraint have not impacted adversely on morale. In quantitative terms, the principal means of monitoring changes in morale within the services is the Armed Forces Continuous Attitude Survey, AFCAS, which noble Lords mentioned. The findings of AFCAS are used extensively in shaping policy for terms and conditions of service. Although the 2013 survey shows that over 70% of military personnel described their morale as either “high” at 39% or “neutral” at 32%, the fact remains that 29% describe it as low. We are aware that we have work to do on that. The key point here is one made recently by the Chief of the Defence Staff: the Armed Forces have demonstrated extraordinary resilience and continued professionalism despite the understandable fall in morale in some quarters. That ability to set aside individual happiness and demonstrate true courage and endurance in times of real austerity is something that each and every person in this nation should be rightly thankful for.
The Government understand that there is concern about the reduction in numbers of regulars before we have recruited and trained the increased number of reserves we require—a point made by the noble Lord, Lord Rosser. However, I urge patience. The Future Reserve 2020 programme has created what we believe is a good offer, and, to paraphrase General Houghton, we have to get the message out that people who join the reserves now are joining something exciting and with a strong future. At the same time as growing and transforming the reserve, we are changing the way that we recruit for both regulars and reserve, which includes partners in commerce. These are two large-scale change programmes which are yet to reach full maturity. I assure the House that, at the highest level, the MoD is now working with the relevant contractors—Capita and ATLAS—and all MoD stakeholders to identify the growing pains, iron them out, mature the programmes and deliver as committed.
I must stress that we are now only four months into a five-year plan to grow the reserves and the recruitment campaigns only began in the autumn. The key target is an Army Reserve at a trained strength of 30,000 by the end of 2018. We must not lose sight of the fact that we already have around 19,000 trained, which means we are already two-thirds of the way there. We do not dispute that it is a challenging target, but the Government agree with the assessment of our senior military leaders: it is a plan that can work.
I understand that there is also concern that Armed Forces redundancies will result in a diminution of our ability to conduct operations. I can assure the House that the redundancy programme has not, and will not, impact adversely on current operations in Afghanistan. Throughout the process, we have been at pains to ensure that we preserve the capabilities that our Armed Forces require to meet the challenges of the future. Our commitments were re-evaluated during the strategic defence and security review and we have ensured that, as we build to our new force structure in 2020, we will retain the flexibility to meet them.
The noble Lords, Lord Touhig and Lord Ramsbotham, the noble Baroness, Lady Dean, and my noble friend Lord Palmer all raised the issue of personnel being made redundant before qualifying for the pension point. I want to assure the noble Lords and the House that we take this issue very seriously in the Ministry of Defence. I quote from the website of the Forces Pension Society:
“The view of the Ministry of Defence is that this is most unfortunate, but that any cut-off dates before IPP or EDPP would invariably leave some Service men and women just outside the bracket. This is unavoidable and adjusting the rules, after their agreement and promulgation would only cause further hardship. Any adjustment of the rules once the redundancies had started would have been very unfair to others who had gone before. After much discussion with the most senior Service authorities the Forces Pension Society reluctantly accepts that that is correct”.
To exempt individuals from redundancy solely to enable them to reach their immediate pension point, subsequently selecting other individuals in their stead, would undermine that principle and is not considered fair. The Ministry of Defence also worked hard to ensure that many more individuals received immediate income for which they would otherwise not have qualified. For other ranks on Armed Forces Pension Scheme 75, the normal requirement to serve for 22 years before receiving immediate income is reduced to 18 years on redundancy. That is a concession of four years. Other ranks made redundant just before the 18-year point are not considered to be pensionable, as they are in fact more than four years away from their original immediate pension point.
Officers on Armed Forces Pension Scheme 75 will still qualify for an immediate income after 16 years. Personnel on Armed Forces Pension Scheme 05 will continue to receive early departure payments after serving for 18 years, provided that they have reached the age of 40. The Armed Forces’ redundancy schemes recognise those who miss out immediate incomes by paying them specifically enhanced tax relief. Under redundancy compensation schemes, where people leave before the qualification point, any pension rights earned will also give them preserved pensions and future further tax-free lump sums, which they will receive at age 60 or 65, depending on the pension scheme they are on.
Finally, the noble Lord mentioned a memo from the Ministry of Defence. If he will let me have sight of it, I undertake to look into the matter.
Families: Cost of Living
(11 years ago)
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Baroness Prosser
That this House takes note of the current cost of living and its impact on family budgets.
Baroness Prosser (Lab)
My Lords, I am privileged and pleased to be able to introduce this debate on the cost of living and its impact on family budgets. It would be disingenuous to pretend that the issues encompassed in the title are easy to deal with or to put right, but I will try to set out the ideas and proposals from these Benches which, we believe, would in the short term ease the pain currently suffered by so many ordinary, “get up and out in the morning” individuals and families and, in the longer term, strengthen our economy to the benefit of all players.
Let me start by setting out the major changes and events that have taken place in the UK in recent history which have contributed to today’s imbalance in our society. First, the world of work for many in this country has been turned on its head. An industrial revolution has taken place whereby thousands and thousands of decently paid but largely unskilled, mostly manual, full-time jobs mostly done by men have gone for good. They have been replaced with jobs in the service sector which are lower paid, requiring very different skills, and often part time. In part, that has come about because of the extraordinary and rapid growth in technology, often replacing many hands with one worker and a computer screen; but let us not forget that that change also came about because thousands of jobs went overseas in the 1980s chasing the cheapest dollar and encouraged by the Government of the day. Some may say that that is no longer relevant because it was a long time ago, but that decimation of our manufacturing base and the skilled workforce that went with it has had long-term deleterious effects on our economy and on the livelihoods of many working people, still felt to this day.
Secondly on the big picture, we must take account of the 2008 banking crisis, a global collapse of confidence in financial institutions and a requirement for the Labour Government of the day to use millions of pounds of government money to save us from complete and utter catastrophe. We are of course aware that those events have led to a very difficult financial situation, with the need to curtail capital expenditure. Whether or not that justifies the current austerity regime is a matter of political opinion and fierce debate, which will no doubt run and run. However, it has been well documented that those on the bottom rungs and those in the middle of society have been the hardest hit by the Government’s actions, leading to a widening of the gap between the haves and the have-nots.
The final big picture point which needs to be mentioned is the opening up of European borders to some of the new members of the EU, enabling their citizens to come here to live and work. Many employees rely on EU labour, and most speak highly of the work ethic which those workers bring with them. Some, however, have, frankly, abused European Union labour, taking advantage of workers’ lack of knowledge of the legal protection available to them and often paying them below the rate offered to the indigenous workforce. That is not only wrong in itself but has introduced a “them and us” culture into workplaces and local areas which is divisive and unhelpful.
What comes out of all this? What is needed to bring greater equality back to our society, so that people can feel that they have a stake in the future and that not all the rewards are reserved for those at the top? The coalition Government appear to have only one string to their collective bow when determining priorities for both expenditure and the cuts: more and more austerity and more and more in the name of “We can’t afford it”, to roll back the role of the state. I am not alone in thinking that the first point is there in large part to disguise the desire for the second. Is the Tea Party alive and well in No. 11?
I would argue, and I believe most of the general public would agree, that in a civilised society the role of the state in ensuring well-being and fairness, in providing essential services and physical infrastructure and in controlling the excesses of private companies and individuals is not only important but key to social cohesion and the long-term well-being of the nation as a whole. What we have at the moment is, of course, a disinclination on the part of the Government to do any of these things.
I start with incomes. According to the Government’s own Social Mobility and Child Poverty Commission, the UK has one of the highest rates of low pay in the developed world. The national minimum wage is now worth £1,000 less in real terms than in 2008. Average wages have fallen in 38 of the 39 months since David Cameron came to power and, only last week, official figures showed that working people are now £1,500 a year worse off since the 2010 general election. The Joseph Rowntree Foundation maintains that minimum income standards have been hit by 4% inflation; the Government declare that it is 2.4%, as measured by the CPI. Wages have risen by 1% overall; as Mr Micawber would say, “Misery”.
A future Labour Government will tackle low pay by strengthening the minimum wage. Moves are already afoot to investigate the role and powers of the Low Pay Commission to see that they are strengthened and extended, including consideration of where certain employers could pay more than the minimum. The Low Pay Commission will continue to make balanced decisions on these matters, taking into account the need for wage growth versus the possible impact on employment. Increasing pay would reduce the numbers of people reliant on benefit subsidies and therefore help the taxpayer and the nation’s coffers. It surely cannot be right that taxpayers generally are supporting low-paid workers while, in many cases, their employers make very large profits and often record their own accounts in such a way that reduces their corporate tax liability. The great British public are a bit fed up with that wheeze.
A future Labour Government will also be ready to help families back into work by assisting with the high cost of childcare. In particular, many women are deterred from participating in paid employment because the cost of childcare is far from affordable on the kinds of salaries that they can command. An extra 10 hours of free childcare will be available, on top of the 15 hours early years entitlement, and given to households with three and four year-olds where single parents or couple households are all in work. The cost of this extra provision will be met by increasing the bank levy rate to raise an extra £800 million a year.
I turn to housing, the costs of which are a reflection of supply and demand. Lack of supply has sent the cost rocketing. It is estimated that, today, it would take 22 years for the average family to save for a deposit. Effectively, that means no house. Rental prices have risen to an average of 41% of gross income for the 9 million people who rent privately. Our Prime Minister has presided over the lowest level of homebuilding of any PM in peacetime since the 1920s. The gimmick of providing guaranteed home loans will do nothing to increase the numbers of homes available and is therefore not capable of denting the current crisis. A Labour Government would provide a number of policy initiatives which will be key in helping to resolve this problem, including powers to tackle landholding; the development of new towns and garden cities; local authority access to fast-track planning processes to ease differences between neighbouring authorities; and ensuring that communities receive a greater share of the benefits of developments.
I turn to the major cost-of-living topic of our times: the rising cost of energy. What was supposed to be a move to install competition and efficiency—that is, the privatisation of the utilities back in the 1980s—has turned into what some of us always knew it would, a monopoly in all but name, with seriously hefty profits for those at the top and for dividend-holders. Just this week, Ofgem issued figures regarding the ups and downs of average wholesale electricity costs, showing categorically that the recently announced increases in consumer bills far outstrip anything that has had to be paid on the wholesale market.
A Guardian article on 29 October, a few days ago, cited Npower as having increased consumer prices by 7.2% and 9.1% in the years 2011 and 2012, despite the wholesale price reducing by 4% in 2011 and rising by less than 2% in 2012. As the article pointed out, running an electricity supply business is about more than wholesale and retail prices. However, complaints by the various companies that the network and environmental costs are a key factor appear to be rather dented by Ofgem’s assertions that network costs have risen by £10 in each of the past four years, with green costs rising by a similar amount.
The story of gas supply is a similar one, with recently announced gas prices ranging between 8.4% to about 10%. Meanwhile, the CEO of Centrica, owner of British Gas, enjoyed a pay packet last year of £4.97 million. He will not be turning down the thermostat or putting on an extra jumper.
This shameful state of affairs has even spurred Sir John Major to speak out, calling for the Government to recognise the unacceptably high profit margins by introducing a windfall tax on the industry. Neither the Prime Minister nor the Chancellor has responded positively to that proposal, preferring instead to continue their hopeless advice to be choosy and to change suppliers. Given that there is nothing to choose between suppliers, it is hard to know what benefit such an exercise would bring.
It is of course well known that the leader of the Labour Party, Ed Miliband, has committed to introducing a fuel price freeze, a proposal very much welcomed by the fuel-poor; when the choice is between heating and eating, any help is welcome. It is, I would say, a national disgrace that we have such a situation in this country. We may have something of a cash-flow problem at the moment but we cannot by any stretch of the imagination profess to be a poor country, and to have our citizens reduced to turning off the heating and/or lining up at food banks should be a matter of national embarrassment.
I started my contribution today by recognising that the financial difficulties that we face are very real and not easily overcome. I hope, however, that I have been able to persuade noble Lords that positive actions have to be taken if we are to get through this period with all our citizens on board. I hope also that I have been able to point out that it is unfair and unacceptable to expect those who have the least to carry the burden for those who have the most. I beg to move.
Baroness Dean of Thornton-le-Fylde (Lab)
My Lords, I thank my noble friend Lady Prosser for arranging this debate today and for the detail that she went into in her presentation. A recent YouGov poll reported that one-half of the working population believe that the coalition’s economic policies are making them feel less secure. That is not a revelation; I think that most of us would understand that from going around and reading the press. A Which? report this month says that consumers have less money to spend than they did a year ago; that more than one in four have cut back on essential spending; that women between 30 and 49, and those earning least, have been hardest hit by the austerity measures; and that basics such as the cost of fuel, energy and food were the biggest worry that households had—the three key factors that help keep a household together. One in five households had no savings at all to give them a barrier against these challenges. The Joseph Rowntree Foundation found that families with children were feeling particularly squeezed.
One of the areas they are squeezed on is related to the debate we had earlier on welfare cutbacks. If we look at the way the Government have applied housing policy—I do not expect the Minister to answer on this as it is not his portfolio—and consider underoccupancy, the Government have introduced the discretionary housing payment. That sounds good. The problem is that 200 local authorities are applying it in different ways. In one authority, you may get support for 12 months; in another, you may get it for three months. It is a postcode lottery. That is helping make people feel insecure.
Provident Financial, which is, I gather, the largest loan company in the country and is based in Leeds, said that rising food, fuel and utility bills are now the biggest reasons for people taking loans. It has 1.7 million customers, and debt levels are rising, which should concern us all. People are resorting to food banks. In April this year, we heard reports that the number doing so had trebled since last year. Last year, 113,000 people were relying on them; this year, there are 356,000 people, of whom 120,000 are children. I read in a newspaper—I cannot remember which—that one response was, “There are more food banks, so of course more people are using them”. What an arrogant, unthoughtful statement to make.
Reports indicate that we have growth, which is good news. I hope it will pick up momentum. Even so, the economy is still 2.5% smaller than it was before the recession, manufacturing is 8.9% lower and construction is even lower. Last Friday, the Daily Mail—yes, the Daily Mail—reported that workers expect a fifth successive year of below-inflation pay rises, and many have had no pay rise for four years. Working families are reading that and are reading about, for instance, the chief executive of Serco who is going because he has failed, but going with £9 million in his back pocket. He will not have any problems. They are reading about the enormous increase in dividends. Of course, I accept that savers need dividends, but it is almost telling people that we live in two different worlds running in parallel: the world of the working poor, where two in a family working cannot bring in enough income to look after the family, and the other world of people who are exceptionally and enormously well paid. The subterranean world of working families did not create the problems this country has, yet they are taking the brunt of the austerity measures.
The recent report from the Government’s Social Mobility and Child Poverty Commission, chaired by Alan Milburn, a former Labour Minister, reported that the working poor are bearing the brunt of the coalition’s deficit reduction. That is quite a statement and quite an indictment, too. What is the Government’s answer? It is not good enough to say, “We have this debt problem”. There is no need to repeat that mantra that it is the Labour Government’s fault. That does not wash any more. It cannot wash; it never did. What is the Government’s intention? One thing that would help would be for the Government to adopt the living wage. That would give some hope because it is quite clear that the minimum wage is now not meeting what families need to live independently. We do not want working people to be dependent on welfare benefits, and they do not want that, either. A living wage would certainly help.
This is an issue that we need to address. I congratulate my noble friend on achieving this debate.
Baroness Tyler of Enfield (LD)
My Lords, I, too, congratulate the noble Baroness, Lady Prosser, on securing this critically important debate. Living standards are the most pressing issue facing this country, despite the recent and of course welcome signs of economic recovery and the preliminary estimate of gross domestic product, just published, indicating that output will grow by 0.8% during the three months to September. Nevertheless, real anxiety over the cost of living is the day-to-day reality of many British families, particularly those on low incomes. The stark fact is that living standards have been stagnating. The economic review published yesterday by the Office for National Statistics shows that households in Britain have seen their living standards stagnate for the past four years and are spending an increased share of their income on essentials such as food, fuel and housing.
As has been referred to, the Which? Quarterly Consumer Report for this October found that just 24% of people surveyed believed that they were able to live comfortably on their earnings, and 52% in the lowest income group are still cutting back on essential spending. Furthermore, the Institute of Fiscal Studies has pointed out that real average earnings continued to fall in 2012-13, and this trend is expected to continue into next year. The time for action on the cost of living is now.
As other noble Lords have already pointed out, the Social Mobility and Child Poverty Commission has done important work in drawing to our attention the problem of in-work poverty in Britain. As it has already been referred to, I will not repeat what was said, but this focus on children living in poverty in households where at least one adult works forces us to abandon for good the long-held prejudice that poverty is the preserve of the workshy. It is simply not the case.
Before addressing what needs to be done, I want to recognise that the coalition Government have a genuine commitment to easing the burden on lower and middle earners, and to acknowledge the welcome measures already taken. I particularly mention the raising of the tax-free allowance to £10,000—a flagship Liberal Democrat policy that has given a £700 tax cut to more than 20 million working people and lifted some 2.7 million of the poorest paid out of income tax altogether. We have also seen the freezing of council tax and fuel duty, expanded childcare and an increase in the state pension. Of course, these efforts to ease the pressure on household budgets are laudable, but more simply must be done, and quickly, if we are to tackle the looming cost-of-living crisis.
Because of my usual areas of interest, I wanted to talk about childcare and the living wage—but, this week of all weeks, I felt that I could not begin without saying something on energy prices. Like many other noble Lords in this House—and, I am sure, in common with many people up and down the country—the ever-rising price of energy, way above the rise in wholesale prices, makes my blood boil. It simply feels as if we are being held to ransom for a basic essential of life. I am no expert in this field, so my thoughts are those of a lay person. I certainly do not speak for my party on energy policy; others far more expert than I do that. However, the antics of the big six companies—which seem to operate as a price-fixing cartel—tell me that privatisation in this case has created an energy market that is simply not working in the public interest. Otherwise, why would prices be going up sharply when wholesale prices, which are by far the biggest element of energy costs, are relatively stable?
In recent weeks there have been many suggestions across the political divide about how to do something about a situation which is fast becoming intolerable; the noble Baroness, Lady Prosser, referred to some of them. They include a price freeze on energy, a windfall tax, far greater transparency over profits, the simplification of tariffs, a competition review, more focus on consumer power through things like collective switching, and switching green levies away from energy bills to general taxation. Personally, I think that anything which could feasibly and realistically bring down prices, and quickly, deserves further investigation to test its workability and impact. I hope that this does not simply turn into a political football match. The stakes are too high, with winter approaching.
I am fully committed to protecting the environment, investing in renewable energy resources and safeguarding our green energy and jobs. However, we must help those in fuel poverty. That is why I strongly support shifting some of the costs of green levies from individual energy bills to general taxation, which is more progressive in nature. In simple terms, it prevents the cost of vital energy efficiency measures such as insulation and new boilers for households in fuel poverty from falling disproportionately on poor households. For reasons of social justice, those with the broadest shoulders need to bear a bigger load.
That is why I strongly support the call made at the weekend by my honourable friend Simon Hughes, who called for the Autumn Statement to contain a rebate on energy bills that would help the poorest most, and bring immediate relief this year. Of course, we all understand that money is very tight and that George Osborne has many competing priorities to consider when he draws up the Autumn Statement. My message is simple. If the choice is between doing something to reduce energy bills and introducing tax breaks for married couples, the former gets my vote, and I suspect that the same could be said for many up and down the country.
On low pay, I contend that the living wage has a valuable role to play in the fight to raise living standards. As the Institute for Fiscal Studies’ recent report, Living Standards, Poverty and Inequality in the UK, concisely expressed it,
“it is low hourly wages rather than low hours of work that are most strongly linked to being in poverty”.
Encouraging employers to pay a wage that allows workers to have an acceptable standard of living without recourse to benefits is not just about fairness but makes sound economic sense. According to figures by the Resolution Foundation, savings of up to £3.6 billion could be made by the Treasury if employers paid the living wage, which would end the current situation whereby tax credits to low earners are used to top up wages—essentially, to be honest, subsiding some employers who could afford to pay more.
A much more empowering approach would be if people were able to maintain or improve their standard of life through earning their own money, rather than through complicated tax credits whose take-up rate is only 65%. I know that some will argue that this will lead to a loss of jobs, to which I would respond that the same thing was said when the national minimum wage was introduced, and it simply did not materialise.
That is why I am delighted that at our party conference in September, the Liberal Democrats decided to adopt in principle the living wage as party policy and to create a commission to establish an official living wage with a view to a gradual rollout across sectors and employers who can afford to do so. I hope that this will also help stimulate a debate about how a fixed pot of pay is distributed more fairly between those at the top and at those the bottom.
My final point is about childcare and the need to tackle its cost and availability, which again has already been referred to by other noble Lords. Much has already been done in this area thanks to Liberal Democrat Ministers who have pushed for this to be a priority. Lack of access to affordable and good-quality childcare prevents many women from returning to work following childbirth, denying their skills and the potential tax take to the economy, and is proving a major squeeze on the household budgets of those that do return.
The Institute of Fiscal Studies, yet again, has shown that female employment has been the key driver for increased income among low to middle-income families over the past 50 years. Of course, the current provision of 15 hours a week of free childcare for all three to four year-olds, and 20% of two year-olds from the most deprived backgrounds, rising to 40% next year, is hugely welcome. However, the cost of additional hours of care has been rising rapidly and squeezing the living standards of working parents.
Again, that is why I am so pleased that Liberal Democrat party policy is now to extend the number of free childcare hours on a stepped basis, starting with 10 hours of free care for babies between the ages of one and two, and culminating in 25 hours for four to five year-olds. That fills the gap between the end of parental leave and the existing free entitlement for two years. At a time when we all recognise that public finances are still very hard pressed, these are the sorts of measures designed to alleviate the pressure on living standards that I would like to see given clear priority in 2015 and beyond.
Lord Monks (Lab)
My Lords, I, too, thank my noble friend Lady Prosser for initiating this very timely debate, which inevitably will be at the centre of the national conversations and debates as we come up to the next general election.
It is usually very nice to be part of an organisation that is top of the league. However, on this occasion it does not feel very comfortable to know that the UK is currently the EU’s inflation champion. Our rate last month of 2.7% was more than double the EU rate as a whole. In the wider OECD only three top us—Turkey, Mexico and Iceland. It is worth asking why we are in this uncomfortable position of being the EU inflation champion. Several factors have clearly played their part. One might be quantitative easing which boosts asset prices and thus favours the people who own the assets who are already wealthy, and in turn contributes to further rising inequality. It does nothing for most wage and salary earners who are the main source of effective demand and spending power. As the noble Lord, Lord Skidelsky, put it recently in the House, the winners are not the have-nots but “the have-yachts”.
What about the other factors behind inflation? Devaluation of sterling has certainly been a factor. The big fall in the pound in 2008 has probably mostly worked its way through now but there was a very strong inflationary effect, as one would expect given that we are a major importing economy.
The contrast with Ireland is stark. Ireland has had a very bad recession but it has also had some good things going for it. Whereas we have had a 20.7% increase in consumer prices over six years, Ireland’s rise was 3.2%. Food and drink prices have gone up by a hefty 35.9% in the UK in the past six years, but the Irish rise is 1%. The energy comparison is nearly as stark. The Irish rise is half ours and they do not have North Sea oil and indigenous sources such as we have.
I make it absolutely clear that I would not have liked the UK’s property bust to have been as severe as the Irish one has been. However, periodic devaluations have imposed big costs on us whereas that has not been the case with the euro. That is not a debate for today and I do not believe that the British economy was strong enough to hold its place in the euro in recent years. However, that situation shows that there is a cost to not belonging to a currency from which the Irish have benefited, at least as far as inflation is concerned.
My other concern is about pay, which other noble Lords have mentioned. Average real pay is down by 7.5% since 2008. Higher paid public sector jobs have been replaced with lower paid private sector jobs, which in turn have depressed demand. This problem was faced by many people before the recession, not just during it. Even when growth was healthy average wages barely grew and were negative for the lowest earners. Only the top 5% experienced faster earnings growth. The poorest half of the population has borne the brunt of the shrinking wage pie—a 25% drop since the late 1970s—with the winner being the increased share of profits in that pie. If profits had been ploughed back into investment, and therefore into growth, that might have been justifiable. However, that is not the case because the low rate of investment is another area where Britain is vying for top place in league tables in the European Union.
What can we do about all this? I know that the Minister thinks about these matters and I listen to his comments with great interest. However, can we not think about doing something about the following? What about the business culture in this country? The bonus system gives executives the incentive to use cash to buy back shares or to sell assets rather than invest in new capital and equipment. Bumping up the share price prompts executives to push up prices to keep profit margins high even when demand is weak and even though in the longer term the business is made rather anorexic. The bonus culture as it is creates an inbuilt bias against investment in new machinery, training and things that look like immediate costs but are benefits in the long term, and contributes towards inflation. This is not an insoluble problem. In Germany, after all, bonuses are tied not just to shareholder value but to growing market share, to organic growth. There is another factor in the bonus system and that is not the case in most outfits in this country.
How can we make an overdue change in that direction? The fact is that Britain needs a pay rise, as has just been said from across the House. Stagnating pay packets only depress demand and fuel borrowing on credit, and we have had too much of that in Britain in recent years. It also means reduced tax receipts and so intensifies our economic malaise. How about raising the minimum wage at least to its original real value? I know that the Government are beginning to look at this but can they accelerate that process and act on it urgently?
How about encouraging a new interest in the revival of collective bargaining in the private sector to help ensure that workers get a fair share—a fairer share than they are getting at the moment? One thing we do know is that inflation is not being wage-driven, which might have been the case in the 1970s but is certainly not the case now. As others have said, can we establish a mechanism involving collective bargaining for introducing the living wage concept? Trade union weakness has undoubtedly been a factor in the declining share of pay in the national income and in the growth of some undesirable things in the modern labour market such as zero-hours contracts, too much use of temps and agency staff, the ease of outsourcing and so on. The flexible labour market was supposed to generate faster growth and higher productivity. Does the Minister agree that it is now actually holding back growth, curbing demand, depressing purchasing power and making the economy go rather slower than it should be going in the right direction?
These are complex matters and I do not argue with that. They have been going for a long time and I do not argue with that either. I look forward to the Minister’s reply and hearing whether the Government are able to think strategically about what we do about a totally unsatisfactory situation.
Lord Horam (Con)
I, too, congratulate the noble Baroness on having brought about this debate. She made a thoughtful speech because she acknowledged in her introduction that these are global trends. Whether you look at America, Canada or this side of the Atlantic in Germany, France or Britain, inequality has increased over the past 10 years. People on low incomes and middle incomes have been squeezed and in many instances their standard of living has reduced over long periods. The noble Lord, Lord Monks, also made an issue of the balance between profit and labour. That has in many cases gone the wrong way. I agree that there would have been a reason for that if investment had been as high as we would have liked it to be but obviously that has not happened, and that changing balance is an important part of what has gone wrong in the past few years for all sorts of reasons.
However, as the noble Baroness, Lady Prosser, said, tackling these big issues is difficult for any Government, whether they are Labour, Conservative or coalition. None the less, we have to be positive. There is no point in sitting back and letting all this flow over our heads. We have to do what we can. In that respect, the initiative by the leader of the Opposition, Mr Miliband, at his party conference was notable and certainly made a big political impact, if nothing else. Sadly, I am afraid that such an initiative is unlikely to bring the relief to ordinary people that they would hope for. In particular, the truth is that if there were to be a 20-month freeze it would be easy for companies to get around that, either by increasing their prices in anticipation of the freeze or, if it happened, looking at their situation and increasing their prices afterwards by more than they would otherwise have done. So the net effect over quite a short period may not be much different from what it would have been anyway. I am afraid that that is the difficulty of introducing freezes of that kind.
I heard what my noble friend Lady Tyler said. I prefer to look at the green subsidies, but not because we want to change them in any way. All three parties have, quite rightly, had a part to play in bringing in green subsidies to produce decarbonisation and to contribute to dealing with climate change. However, as my noble friend rightly pointed out, the way they are now weighted on gas and electricity prices means that they hit the poorest hardest, because those prices are regressive, whereas taxation is progressive. If a way could be found of shifting some of that burden from prices to taxes, we would make progress. I have no knowledge of what the Government may do but I know that not only Simon Hughes but the Prime Minister made a point about this. Much though I like my right honourable friend Mr Hughes, I think it is more important that the Prime Minister takes this on board and I am glad that he has. I hope that some progress can be made in this very delicate area.
When it comes to looking at the sustained effect on gas and electricity prices, one should also look at a well regulated competitive situation. I stress good regulation, as well as good competition, as both together are needed. I think that it was the managing director of Ovo Energy, Mr Fitzpatrick, who said precisely that to the Select Committee in the other place—that sometimes the “six”, as they are called, look like a rather cosy cartel which is immune to competitive good practice. People coming into the industry need to have that competitive good practice so as to make the energy companies bring down their costs and thus their prices. Those two arguments should be looked at by the Government, as we want to make a sustained impact on this problem.
I would point out to the Opposition that the Government, as my noble friend Lady Tyler said, have done quite a lot to keep down prices and costs for ordinary people. For example, mortgages have been at their lowest ever rates. The average bill for energy prices is £1,500 a year—a very high level for the average household—but mortgages are obviously even higher. They are a huge cost in many people’s budgets, and keeping them down has been a massive achievement by this Government.
Council tax has been frozen. My own borough of Hammersmith and Fulham has brought down its council tax charges three years in a row without any reduction in the quality of public services. That is a huge achievement by a Conservative council. The Government have also cancelled planned rises in fuel duty three years in a row. Fuel duty now stands at 13p per litre less than it would otherwise have been. The noble Baroness, Lady Tyler, mentioned childcare. That has been something on which the Government have honed in, and I am glad to say that the Labour Party is also talking about it. As a grandfather who occasionally looks after five grandchildren, I am aware that the cost of childcare is a real issue. I think that we should pay attention to that and be glad that the Government are doing so.
As was said earlier, we have also raised the tax threshold and are in the course of raising it further, so there will be help from April onwards. The lowest point of the threshold will be £10,000 a year, bringing a saving of about £705 to the average family. Frankly, that is a terrific saving. Therefore, there is help, and I am glad about that.
Again, I make the point to the Opposition that, as a result of all these measures that have been brought in under the coalition Government, inequality has in fact reduced. The fall in the income of the top 20% of the population has been 6.8%, whereas the income of the bottom 20% of the population has risen by 6.9%, I am talking about income, not living standards, and I accept that prices have gone up even more. The noble Lord, Lord Davies of Oldham—a good friend of mine—made the point the other day in Question Time that inequality was in the DNA of the Conservative Party. I am afraid that inequality was in the DNA of the Labour Party when it was in power: the Gini coefficient, which is the acknowledged measure of inequality, reached its highest point ever in our history under a Labour Government. Now, we are becoming more equal because of the measures that a Conservative Government are taking. I do not think that we will take any lectures from him or anybody else on inequality. In practice, the Labour Party talks a lot about equality but the Conservative Party has delivered more equality than the Labour Government ever did.
Obviously there is a big political battle going on but I will close by saying that we need to be positive, as the noble Baroness said, and do what we can to help low-paid families and people facing tough times at the moment. I agree with all those, including the noble Lord, Lord Monks, who said that there should be strenuous efforts to make the Low Pay Commission work effectively. A lot of work needs to be done in that area. The minimum wage is £6.31 and the London living wage is £8.55; there is a big gap between the two. I am talking about London only at the moment. We need to home in on this issue and make sure that people’s cost of living is reduced by as much as possible and that they have the income to cover it. There is hope but we must be positive. I am pleased that this debate has taken place as it has raised an issue that is important to every family in the land.
Baroness Donaghy (Lab)
I thank my noble friend Lady Prosser for introducing this debate. I think that it is very appropriate that we are having this debate on Halloween, described in the dictionary as the “eve of All Saints Day”, which is observed by dressing up in disguise, party turns, et cetera.
The noble Lord, Lord Newby, will be responding to the debate, no doubt in his usual balanced and intelligent way, and he will be the treat. Unfortunately, he will also be the disguise for some extremely nasty tricks from the majority in the coalition Government. The key test for any Government is the resilience of families to withstand the hard times. I maintain that we have a higher proportion of people in the UK who have no safety margin in the hard times, or even in the good times. I want to focus my contribution on inequality and low pay—in particular its impact on women.
Women have been clobbered by this Government—not surprising as they have been virtually barred from the Cabinet. On female employment, the UK performance ranks 15th in the Organisation for Economic Co-operation and Development. The Commission on Living Standards said that this,
“underperformance stems from a toxic mix of unusually high childcare costs, a lack of high quality part-time work and a poorly designed tax and benefit system”.
It continues,
“patchy and inadequate social care prevents many over 55s from working, as they care for elderly parents or partners”.
The report concludes:
“Compared with the best performing economies, around 1 million women are missing from the UK workplace”.
If policies do not change, a typical low-income household in 2020 will have 15% lower income than the equivalent household in 2008. I am not saying that solutions are easy, but this prediction is avoidable. We need to be far more active in promoting increased wages, employment and working hours in low to middle-income households. Today’s workplace is polarised, with employment growing in highly skilled jobs and in low-skilled, low-status service sector roles, but declining in middle-skilled jobs. While it is only part of the solution, we need massive investment in intermediate skills in tackling basic literacy and numeracy levels.
Let me turn, as other noble Lords have, to the issue of low pay. I am proud to be a founder member of the Low Pay Commission. It is 14 years since we set the first statutory national minimum wage of £3.60 but more importantly, its framework, which has stood the test of time. The figure was very modest because we wanted to establish a national minimum wage safely and securely.
The adult rate has increased by 72% since its introduction in April 1999. I am aware that the Low Pay Commission works within tight constraints and the fact that the hourly rate has increased by more than the increases in average earnings or prices is commendable. However, despite the increase this month to £6.31 an hour, it still means that the national minimum wage has not even doubled in 14 years. This is no criticism of the Low Pay Commission. It should have a wider remit, as has been said, and I welcome the statement by the Secretary of State, Vince Cable, that he is inviting the LPC to extend its expertise in this area. Let us hope it will come to something.
We need not only to extend its remit but to be much tougher on compliance. Research commissioned by the Low Pay Commission showed that around 6% of the bottom decile of adult earners in the UK were not receiving their entitlement to the national minimum wage. Areas of non-compliance are found in apprenticeships and internships; among those on work experience; in social care, especially domiciliary social care; and among hotel cleaners and home workers. The LPC recommended that more needs to be done to ensure that all available tools are fully utilised. It expresses disappointment that after two years only one non-compliant business has been publicly named.
Let me give a couple of examples of non-compliance. A company can show in its books that it pays the national minimum wage to its employees, but they then work substantial amounts of overtime at a lower rate off the books, bringing the total earnings to below the statutory minimum. We met complainants but they were not willing to raise the matter with their employer; they knew they would never get another job in the industry because of the close communications within it. We met home workers who were being paid 50p per pleated skirt whose circumstances prevented them going out to work. They were reluctant to complain because they knew that there was a huge queue of women waiting to take on the work.
One way to assist compliance is to have effective, clear and accessible guidance on all aspects of the minimum wage. However, the Government replaced the guidance which previously existed with a website which lacks the depth and breadth of that which appeared on the previous Government’s sites—the LPC’s words, not mine. Although the Government accepted the LPC’s recommendation about an improved information site, unfortunately it has not been implemented. There is no point in beefing up the national minimum wage if no one knows about it. Stakeholders have confirmed that the existing site does not meet their needs.
We should not forget that the floor provided by the national minimum wage is not intended to be a substitute for a low pay strategy—the two are entirely different. Too many employers rely on low pay rather than a skilled workforce and the taxpayer foots the bill for low pay. In-work benefits have been slashed by the Government, making the prospects for low-paid families far worse and saving money only in the short term. However, low pay will still be a cost to taxpayers because of the absence of savings and pensions to cushion any rises in the cost of living—not least because of increased debt, arrears and homelessness—which will eventually cost the Exchequer.
According to a Which? survey, 28% of men say that they are living comfortably on their incomes, but only 19% of women say they are. The gap between wealth and poverty continues to be obscene. When it comes to total disposable income, 45% is enjoyed by the highest earning fifth of the population and a mere 5% by the bottom fifth. The irony is that there has been a reduction in income inequality because of the recession but, as the Institute for Fiscal Studies has said, it is a temporary phenomenon.
I wonder how many in government have a clue about how difficult life is for those on low incomes. They seem to be invisible to this Government. It is a hand-to-mouth existence and includes people running from low-paid job to low-paid job, probably consuming gas and electricity via meter, the most expensive way, and being told they have a spare bedroom, which gives them either less money or less flexibility in managing their family life. Crocodile tears from the Liberal Democrats do not wash when they consistently troop through government Lobbies, cutting health services, health and safety, and welfare. I ask the Minister: when will his Government stop wagging their finger at the low paid and start to actually do something about it?
The Lord Bishop of Derby
My Lords, I, too, congratulate the noble Baroness, Lady Prosser, on securing this debate and on setting such a good framework in her introduction. I want to look particularly at the human cost of this issue and at the family budgets of those who are at the sharp end of the struggle in trying to deal with rising living costs. I shall begin with the big picture. Earlier this year I organised a hunger summit in Derby. We looked at food poverty in what we call the developing countries, but we also looked at food poverty in our own city. We took the opportunity to launch a remodelled food bank system to provide a more comprehensive service to meet the growing food poverty that we are finding in our own back yard. That is the context in which we should begin to look at the pressure on family budgets. We were supported by the Fair Share Trust. Indeed, the noble Lord, Lord Newby, was in the House earlier this week when there was a Question about food waste, and I hope that one of the things we can do with excess food is redirect some of it towards organisations such as the Fair Share Trust so that it can be used to supplement those families whose budgets are so stretched that they cannot afford to eat properly.
Over the past 12 months in the city of Derby, we have seen a 100% increase in the use of food banks. The point I want to make in this debate is that the shift has been away from the normal suspects, who are, tragically, homeless people, towards families who are housed, but whose incomes are so low that they cannot feed themselves seven days a week. The increased demand has been seen among occasional users who pitch up several times a week in order to secure a proper meal for the family that day.
It is the same situation with treats. Today, many people are living on such stringent budgets that they cannot afford any treats. St Peter’s Church in the middle of Derby runs something called “Christmas Lunch on Jesus”. The project has some 400 volunteers who send a meal out on Christmas Day. Last year the meals were sent to 1,500 families, and this year the project is budgeting for 2,000 families. People do not have the wherewithal even to celebrate Christmas in the way most of us would take for granted. There is a real issue here.
I want to comment briefly on three areas of complexity. The first is work and income, the second concerns lifestyle, and the third concerns the role of the state and other support. I turn first to work and income. Recently, a family with one child turned up at one of our churches. They had got out of work and into debt. It took 15 weeks of debt counselling, providing food and childcare support—all the normal things—to turn the family around and get them back into work. The person concerned is now contributing food to the local food bank. My point is that work for many people is very insecure. It does not plough on and on and it is not just about getting a living wage. The experience of trying to be in work is insecure for many people. It is not untypical to tip out of work, get into debt because of having been living at a certain pace, and to run out of food. Churches and other groups try to pick these people up again. The problem, however, is that churches and the volunteer sector are struggling with the increased number of people in this situation and finding it harder to make that kind of generous response. When we talk about work and a living wage, we have to remember how insecure that is for so many people. Whatever the system is that underlies it, an enormous amount of energy and good will is required of volunteers to help people to cope. As other noble Lords have said, we need a more systematic approach to the provision and security of work.
My second point is about the sheer complexity of lifestyles and the difficulty around interpreting the phrase “family budgets”. Perhaps I may share another story. Two weeks ago, a family turned up at one of our city centre churches comprising a mother who was eight and a half months pregnant and five other children. They were running away from domestic violence. By the way, the woman has successfully had her sixth child. They pitched up at the church, a strange place to them, with no support systems. The children had been out of school for six months. The church has worked hard to place the children in local schools, getting them bus passes and school uniforms in order to help this woman through the trauma of the birth of her sixth child. Her benefits have been stopped because she has not replied to a letter from the DWP, but that is because she is no longer at home, having run away from domestic violence.
There is no easy answer for that story but it is not untypical of the very complex lifestyles that many people have. These are not normal families that you can just put in a box or bureaucracy, or find a welfare system for. There is a certain chaos and unpredictability about many people’s lifestyles. We therefore need to invest more in agencies with the sensitivity to pick up people who do not fit into the boxes, help them negotiate with the system, and discover what benefits and housing might be available. As family budgets are under such pressure, we really need to invest in those who can help people negotiate with the system.
My third point is about the role of the state. The big word is cuts: cuts in family budgets, in local authority budgets and in government expenditure. I encourage noble Lords to think that there is a potentially more positive side to this negative mantra of cuts in terms of the reshaping of welfare provision in our times, which is a challenge to all of us. Clearly, Government and local government are taking various decisions about the role of the state and public authorities, and we are having a political debate at the moment as to whether they are the right decisions. However, there is a very interesting role for not just the voluntary sector, which I have been talking about, but business. In the city of Derby, we are working quite closely with local businesses to see how they can support the management and leadership of schools, support the development of work opportunities for young people and raise aspirations for children in certain educational environments.
My experience is that many local businesses have a genuine desire to be part of a new ecology of trying to reach out and help people understand what work is about, to access it and be part of growing up to make a positive contribution. As the Minister looks at the big macroeconomic and social issues that have, rightly, been raised, I hope that there might be some response on how we can properly encourage a role for the voluntary and faith sectors in this interface between those who are crushed in terms of family budgets and those systems designed to support them, and on how we can try to grow a different ecology of welfare and mutuality where society uses local resources and local businesses, and the state, in a different kind of partnership. There is lots of talk about it but, for those of us on the ground, not a lot of action and few encouraging signs.
We are, of course, approaching the liturgical seasons of All Souls and All Saints. They are wonderfully inclusive notions—you could not be more inclusive than All Souls. I hope, whatever our political divisions, that we would be united in a genuine passion and concern for all souls, particularly those whose family budgets are most pressed, most chaotic and most under pressure. I hope that there could be a positive line across all parties of the House about creating a new ecology for welfare and care that could be very appropriate for the future.
Baroness Drake (Lab)
My Lords, I, too, thank my noble friend Lady Prosser for securing this debate. “Making work pay” in a world where,
“those who aspire to work hard and do the right thing are rewarded”,
is a challenging aspiration to achieve. Recent figures not only confirm the squeeze on living standards for low to middle-income households but also that it will be longer and deeper than previously projected. Despite job growth in the private sector, wages have fallen in real terms, many work fewer hours than they would like and the impact of changes to benefits and tax credits are all putting further downward pressure on those households. Although tax credits now make a smaller contribution to income for workers in the bottom half, it is still a significant contribution, and I speculate that deeper cuts to come in the welfare spend will be on in-work benefits.
To some extent, all families have been affected since the recession but households in work, on low and middle incomes, especially those with children, start with far less than the better-off, making the squeeze even harder to bear. They spend a greater proportion of their income on essentials such as food, fuel and transport, the costs of which have risen much faster than overall inflation, leaving them facing falling wages and an “inflation premium”. It is not surprising that calls to constrain energy bills have such resonance with the public. In addition, modest-income households are more prone to debt. According to the Resolution Foundation, among all households with some form of debt in the bottom half of the income distribution, 30% can be considered “debt-loaded”: their repayments account for more than a quarter of their gross household income.
The causes of the pressure on household budgets are both structural and cyclical, exacerbated no doubt by the events and policies of recent years. As my noble friend Lord Monks identified, it is also evident that many households benefited less from previous economic growth, when the wages of ordinary full-time workers barely grew and were negative for the lowest earners. Looking back even further, inequality increased at all points in the income distribution from 1979 to 1997.
The challenge for the Government is to ensure that the benefits of future growth are shared more equitably. To quote from the Commission on Living Standards’ Gaining from Growth report, only 12% of every £1 of UK GDP now goes to wages in the bottom half, down 25% in the past three decades. Polarisation of incomes is not unique to the UK but it is greater here than in most other developed countries, and so is the extent of low pay. To make up the ground left by the recession, wages for the low to middle-income groups have to grow by 1.1% a year in real terms over the next decade. That is without taking into account the reduced expenditure on tax credits and benefits. As my noble friend Lady Prosser said, that challenge has to make us consider how we can build on the current role of the Low Pay Commission and strengthen and broaden the contribution of the national minimum wage.
The factors contributing to low UK productivity are several and complex but they are neither new nor recent. Comparatively low labour productivity, low investment, lesser management skills and low company expenditure on training have been evident for decades, as has an institutional and cultural set-up that encourages many employers to seek low-paid low-skill routes to business success. Labour productivity has fallen further in the past three years.
A broad strategy to reduce the UK’s reliance on low pay must include a national minimum wage but setting that wage so as to avoid any perceived undue impact on employment and at a very modest level has not constrained growing income polarisation. There is a real danger that unless the national minimum wage is raised significantly, some firms will not need to be or become more innovative and more productive in absorbing higher wage costs. Those that are productive and could absorb the higher costs will simply continue to pay lower wages because they can.
Increased productivity is absolutely essential for sustainable rises in living standards but if we do not take a more radical approach to the national minimum wage and the role of the Low Pay Commission, we risk accepting that either the taxpayer must subsidise the wage bill of UK companies with low productivity with in-work benefits or, if in-work benefits are reduced, family budgets will become even more polarised. People who do the right thing will not be rewarded. Just over half of low to middle-income households have no savings at all, and two-thirds have less than a month’s income in savings. Yet the Government want people to save for their retirement and be less dependent on the state in so many ways. On the other side of that equation is that government must address the squeeze on living standards that is the reciprocal responsibility of government on a call to its citizens to accept that level of responsibility in return.
Time constrains my comments on employment levels and working hours as the driver of living standards, but I shall make a quick point. Yes, dual earnings act as an important source of protection for household budgets, but figures reveal that female employment has plateaued in recent years. Comparatively, the UK is distinguished by underperformance of women with children in their 30s and women over 50 due to the combination of intolerably high childcare costs, the lack of high-quality part-time work and the design of the tax and benefits system.
I refer to the point made by the noble Lord, Lord Horam, on the Gini coefficient, which is a measure of inequality, a statistical measure of which I am particularly fond, as it borrows my name. We need to be careful how we interpret statistics. If poverty is expressed as a percentage of earnings, and if earnings fall, there is a perception of there being a reduction in poverty, but the poor are still very poor. Although there has been a decline in the highest earnings, that will not be sustained, but the pressure on low to middle incomes will, because the fundamentals delivering income polarisation are still there—they are not the same as what comes to play in the rise of the highest levels of earnings.
The market alone will not address income polarisation. It requires intrusion by Governments with labour market policies. Economic policy that ensures not only steady growth but that those in the bottom half receive a fair share of the benefits of that growth will be one of the biggest challenges for all political parties and Governments in the following decade.
Baroness Pitkeathley (Lab)
My Lords, I congratulate my noble friend on securing this debate and on her excellent speech setting out the problems relating to the rising cost of living. There is very little to add at this stage, and my two main points are the same ones that many noble Lords have put forward.
First, it is not so much cost of living that is the problem, but the level of income. When we go to Scandinavia, we find the cost of living there tremendously high, but it is not a major problem for them, because their incomes are adequate and sufficient. For most people, incomes in this country are both inadequate and static.
The other major issue which has been referred to several times today is that this is not a problem for everybody; we are definitely not all in this together. The disparity between those who are barely coping and those who seem to be more prosperous than ever is what rankles. This was encapsulated by what was overheard in a north London supermarket: “Darling, do we need parmesan for both houses?”. This is not the big society about which we were promised so much; this is not even a halfway decent society.
The Joseph Rowntree Foundation study, which has updated the minimum income standards first published in 2008 to this year, shows that the continuation of several trends has made it harder for households to make ends meet. Increasing prices, especially in childcare, social rents and public transport, as well as in food and energy, have pushed the minimum cost of living up faster than the average cost of living. These increases show no sign of abating, while cuts in benefit entitlements both to those in and out of work are going to continue. We must remember that so many benefit recipients—some surveys say the majority—are actually in work. These discrepancies will continue; the report concludes that the minimum amount that households without children need to earn rose about in line with inflation, but for families with children this amount continued to rise more steeply. The people for whom rising prices for food and fuel are the problem are those whose wages are static or whose benefits have been cut. These people literally have to make that decision which I never thought I would see again in our supposedly decent society: whether to have food or the means of keeping warm.
Nowhere is this more acute than with those who are disabled and living—through no fault of their own—on benefits. Let me give a specific example. Beverley Smith is 47 and severely disabled.
“She’s tetraplegic and largely bed-bound. Most of her £174-a-week benefits income goes straight into her social care costs, leaving her with £71 a week for food, bills and any other expenses. In April this dropped to £55 when she had to make up a £16.55-a-week housing benefit shortfall as a result of the bedroom tax … Because of her condition she needs the heating on constantly, all year round, at a cost of around £108 a month. Two years ago it was around £80 a month. Her basic income has barely gone up since then, but now, she says, her gas supplier thinks she should pay £120 a month. ‘I can’t afford it now. How am I going to pay that?’”.
She has had to ask for help from a charity and gets food parcels from a local food bank. I join with others in condemning the Minister’s contention that people go to food banks because they are there. Beverley’s friends help out occasionally but she says,
“I miss out meals. Some days I might have some … toast, and some porridge, and that’s it”.
Beverley is one of hundreds of thousands of vulnerable people—particularly older people, people with a disability or families of low income—who face that heat or eat dilemma. Imminent energy price rises, soaring food bills and shrinking or static incomes have played havoc with budgets that were already tight. Many people are really in fear of what the winter will bring.
When we consider the difficulties such individuals and families now face, we must not forget that they are not only strapped for cash at present but also building up poverty for the future since they can make no possible provision for pensions from their current budgets. As our population ages, this will become more of a problem. I sincerely hope that the Government’s consultation on the deferred costs for care will clarify the position about how much in the way of resources you can have and still be eligible for the scheme. If the cap stays at its current level, the coalition’s much trumpeted reforms of care will mean very little to those in need of it.
One more issue, mentioned by the right reverend Prelate, is the effect of rising prices, especially of fuel, on community groups. Our local village hall in Herefordshire, a community hub if ever there was one, is a centre of not just leisure activities but vital links and social contacts, especially for the older people in the village who without it would be socially isolated. It is struggling to pay its heating bills, maintain the building and keep the rates for the breakfasts and lunches it provides at an affordable level for those who need it so much. This story will be repeated throughout our country, in towns and cities as well as villages. We often do not value such community hubs until they disappear but we should try to remember how vital they are in maintaining links and contacts. Such organisations and charities always work as hard as they can to ensure their services continue, often via the personal sacrifice of the volunteers in charge. Helping them invest in fuel-efficient heating, insulation, solar panels and so on can be useful not only now but as insurance for the future. We simply cannot afford to let such services close. We should remember that although volunteers are very good value, they are not cost-free.
So what must we do about it? First, as we have heard, we must enable people to maximise their incomes. Better access to benefits and no bedroom tax would be a good start. We forget, in the stigmatising of benefit claimants which seems to be de rigueur now, that huge amounts of benefits actually go unclaimed. We must also strengthen the powers of the Low Pay Commission, and I endorse what others said about the living wage. Better childcare and support for carers would also enable many who wish to undertake paid work but are currently prevented from doing so.
Secondly, we must ensure that instead of focusing on fraud in the benefit system—which is a tiny amount of the whole budget—we focus on fraud of all kinds in the tax system to target the rich as well as the poor. We must also do better with controlling prices of food and fuel. I hope that the Minister will not just say that the Government take those issues seriously but indicate what action they are committed to in order to address those most pressing problems.
Lord Davies of Oldham (Lab)
My Lords, this has been an excellent debate, and we owe a debt of gratitude to my noble friend Lady Prosser for both securing the debate and introducing it in such an expansive and perceptive way that it gave all other contributors some substance on which to cohere. She reflected on the changes in our economy and society over the past three decades, and the change in the nature of work. We have moved from a much more substantial manufacturing base 30 years ago and lost our capacity to make cars, unless the Japanese are employing British workers; all our companies apart from Jaguar Land Rover went down. The movement from the manufacturing industry to the services industry has produced a change for workers, with much greater part-time work; the emergence of the concept of zero-hours, which seems such an offence to the dignity of people presenting themselves for work; and the reduction in the bargaining power of the workforce.
The Government are represented today by a single voice from the Back Benches, the noble Lord, Lord Horam, who introduced some challenging concepts on which, if he will forgive me, I will not dwell too much on this occasion, because my noble friend Lady Drake raised the whole issue of how much the reduction of equality leads to the impoverishment of society, and what that means to those at the bottom end.
I am very grateful to the right reverend Prelate for identifying the community and local dimension of difficulty in acute economic circumstances, where a whole neighbourhood is beset by poverty among so many households. My noble friends have been concerned to emphasise the sheer blatant facts of the failure of wages to maintain the level of inflation. For wages to be stagnant over a decade when the inflation rate is more than 2.5% throughout that period is a reduction in the resources of working people. That is to say nothing about the level of unemployment, which also means that very many do not have work at all. Those in work have also suffered greatly in that period, at a time when on all sides we have been beset by the concept of the bonus culture and the “get rich quick” dimension of the City.
If we are talking about inequality, let us talk not just about inequality between groups but between regions. The real desperation of our nation at present is a ridiculous concentration of resources in London, which distorts the whole perspective of national statistics, but is reflected in the fact that ordinary Londoners are less able to get homes than people in other parts of the country. I was very grateful to the noble Baroness, Lady Tyler of Enfield, for her reflections on that point. She also raised the crucial question of energy. Let me emphasise that as we approach the depths of winter, the anxiety of people faced by the increase in energy bills at present is profound. Added to the insecurity which they suffer about the world of work, they are now facing circumstances in which the increasing bills will thrust many of them into considerable debt and, in order to avoid debt, into taking risks with keeping the household warm.
I know that there has been an element of dismissiveness about Ed Miliband’s proposal for a price freeze. However, that freeze is to do two things: first, to protect people in this crucial period of need so that further increases do not take place and, secondly, because we are concerned to restructure this imperfect market represented by energy. Of course, that means looking at the structure of Ofgem and its failure to avoid a situation in which our energy is overwhelmingly run by a group of six in a cartel, which play follow my neighbour in enriching themselves at the expense of ordinary members of the public.
One dimension that has not come into this debate but which is also of great significance to people on low incomes is the increasing cost of transport. I emphasise the cost of buses. Poor people do not travel a great deal by train, although those people who do become poor because of the massive increases in fares that the rail companies are able to perpetrate. Poor people travel on buses and are continually seeing those fares increase by more than double the rate of inflation. Travel costs are a very great concern for the person with a part-time job, and limited opportunities to work, who has to travel. That is so even for the person with a full-time job who has to travel. It is also true for our young people. How are they meant to get to their colleges and engage in education in circumstances where travel costs are so great?
I emphasise also a fact which my noble friends have covered very fully, as they have all aspects of this debate. There is a real issue of the pressure on housing. A very large percentage of our population are now in the private rented sector, and we all know the rate at which rents are increasing. Nothing is more disturbing to a family or to individuals than to feel that their housing costs are running out of control. As for whether one can get into the housing market with a purchase in London, unless a family is earning £100,000 a year its entry into the housing market is very difficult indeed. We all know the particular approach of the Government in their limited position with regard to 5% mortgages. The anxiety about that is obvious enough: that it will stimulate a housing bubble which will put us back to 2007-08, unless we are very careful.
In this debate, my noble friend Lady Prosser engaged with the fundamental issues of how people protect themselves and achieve security in a society in which so many issues are stacked heavily against them. She was followed by contributions from all parts of the House, but overwhelmingly from my own Benches, which have identified just where the Government need to act. It is a tough agenda that we have set for the Government, but the Minister has already been identified as our treat, so let us listen to him.
Lord Newby (LD)
My Lords, I thank the noble Baroness, Lady Prosser, for initiating this debate. I agree with many noble Lords, specifically the noble Baroness, Lady Drake, that what we have been discussing today is arguably the biggest challenge that we face with regard to economic policy—how we deal fairly with the bottom 50% of the workforce in terms of their earnings. I agree with the noble Baroness, Lady Prosser, that putting the current situation right is extremely challenging.
I agree very much with the noble Baroness’s analysis of the issues that are central to that challenge. Some of them, like the labour market changes that she and other noble Lords described, are very long-term challenges, while some have been exacerbated by the banking crisis. With regard to labour market changes, I agree with the noble Baroness, Lady Donaghy, who said that there is a real challenge because of, as it were, the hollowing out of the middle and the problem that people with intermediate skills have found their real wages squeezed. One of the reasons why we are keen to have a much higher level not just of apprenticeships but of advanced apprenticeships is to upskill many more people in that middle band so that they are more able to earn a higher income than they are at the moment.
I will talk later about low pay, but there has been quite sensible interest in and concern about what has been happening as part of a long-term trend on high pay. I was a member of the High Pay Commission, which looked at this whole issue. It has been very striking how over a couple of decades pay at the top has virtually lost touch with the reality of everything else and gone into the stratosphere. The Government are in the process of implementing the majority of the recommendations of the High Pay Commission, not least in giving shareholders a greater say in the pay of senior executives. It is a fact that bonuses have fallen by 85% since the peak year 2007-08, so something has happened in a way that we would all think was beneficial. However, I do not think anyone believes that we have gone as far as we should.
With regard to financial services, the remuneration code, which is in the process of being strengthened, will tie earnings much more closely to performance and lead to a much greater degree of deferred payment, which will not stop people being paid a lot of money but to a far greater extent will tie those earnings to what they have actually achieved. That, combined with greater shareholder control of earnings, will make some difference at the top end.
Fixing the economy is the Government’s first priority because this will raise everyone’s living standards. We are also keen to oversee a fairer tax system to ensure that jobs are created across the country and that those who make the most pay the most. However, we understand the immediate financial pressures that have been the main subject of today’s debate. I shall do my best to respond to as many of the issues that have been raised as possible—first, by looking at the way in which the Government’s economic policy is helping to keep employment as high as possible and interest rates low; secondly, by discussing the action that we have taken to protect standards of living; and, thirdly, by discussing our commitment to ensure that the impacts of our policies are as fair as possible.
First, on economic policy, we know, and have been discussing, the extent to which times are difficult. However, our view is that the only way to deliver a sustained improvement in living standards is to tackle the economy’s problems head-on and deliver a recovery that works for everyone. The Government’s economic plan is designed to equip the UK to secure a stronger economy and a fairer society and to help people who aspire to work hard and get on. The economy is turning a corner. Third-quarter GDP grew by 0.8%. This growth was broad-based across all sectors of the economy, and surveys of future intentions suggest that the growth will be sustained. This does not mean that we have eliminated all risks, but by cutting the deficit significantly, we have helped to secure near-record low interest rates which, as a result of the Bank of England’s forward guidance, are not likely to rise significantly in the short term. These low interest rates have supported hard-working families’ living standards, especially those families which have mortgages to pay. If mortgage interest rates rose by 1%, we would see average mortgage bills increasing by around £1,000 a year. It has been a central tenet of this Government’s policy to have a credible deficit reduction plan so that we can sustain low interest rates, and in this central aim, the Government have been successful.
Our economic policies are also helping people across the country get into work. There is obviously no better way to increase standards of living than by making sure that people are in work and securing a reasonable wage. There are now more people in employment than ever before: 1.4 million private sector jobs have been created over the past three years and 155,000 have been created over the past three months. It is pleasing that of the groups about which we have most concern the number of NEETs has fallen for the past five quarters. It has not fallen far enough, but there has been progress.
Last year, real household disposable incomes grew by 1.6% on average above inflation despite the squeeze, which was the fastest for three years, and according to the OBR, next year total earnings will increase above inflation and by 2015, they will be more than double the rise in inflation.
I realise that in the mean time pay, earnings and disposable income have been squeezed significantly, but one element of the issues that we face, which the noble Baroness, Lady Prosser, did not highlight, was that when this Government took office, there was no money left. This has been the leitmotif throughout all the policies we have had to adopt in order to get the deficit down and to keep interest rates down. We are also taking steps wherever we can directly to protect standards of living by pursuing measures that will keep cash in the pockets of hard-working people up and down the country. Noble Lords will be pleased to know that I am not going to list everything, but I shall mention the key points.
First, we are increasing the tax-free personal allowance to £10,000 by April next year. Taken together, this Government’s increases to the personal allowance will put £700 back into the pocket of each and every average taxpayer and will have taken around 2.7 million people on low incomes out of income tax altogether. We believe this is the most effective way to support those on low and middle incomes because it enables people to keep more of the money they earn. Achieving this in times of plenty would have been hard enough, but doing it under the economic circumstances we inherited makes it even more important. As a result of the changes that we have made, nine out of 10 working households will on average be almost £300 a year better off as a result of tax and benefits changes that took effect this year.
We are also taking a series of actions to keep consumers’ energy bills down. Although I agree that there is quite a row—to put it mildly—about what is happening to energy prices, and there is some suggestion that they are not actually rising very much, the wholesale price of gas this winter will be 8% higher than the price last year, according to Ofgem. That is the background ground to the price increases that we are seeing at the moment. The steps we are taking on energy bills include 2 million households getting help under the warm home discount, including well over a million of the poorest pensioners who will receive £135 off their electricity bill. Under the winter fuel payment, between £100 and £300 is available tax-free to those over 61 to help them pay their heating bills. A £900,000 Big Energy Saving Network will help the most vulnerable get the best deal for them. We are legislating through the Energy Bill to ensure that suppliers place all customers on the cheapest tariff that meets their preferences. We are making energy bills simpler, clearer and fairer, helping the 84% who do not switch and could be missing out on savings of up to £158. It simply is not the case that all electricity companies charge the same. There are savings to be made.
We are going further. The Prime Minister has announced there will be an annual review into the state of the competition in the market. This review will be led by the OFT, Ofgem and the new Competition and Markets Authority, when it comes into existence, to report by next year. Further measures on energy will be announced shortly by my noble friend Lady Verma when she gives the annual energy Statement. I recommend that all noble Lords stay for that.
In addition to announcements today, last week the Prime Minister announced a review of green levies on energy bills and more details on that will be announced by the time of the Autumn Statement.
Finally on energy, I completely endorse the comments of my noble friend Lord Horam on Labour Party policy in this area. It is simply incredible to believe that a temporary price freeze would have the effect for which the Labour Party hopes. I suspect that that is why the majority of people, when polled about this last weekend, said that they did not believe that it would work. We have also helped local authorities to freeze council tax, and we have frozen fuel duties. All these measures help to reduce the day-to-day cost of living for millions of people up and down the country.
I turn to redistribution and the distribution of income more generally. Before the fiscal consolidation we are now implementing, the richest 20% contributed three and a half times as much in tax as they received from public spending. This has now increased to around four times as much. As noble Lords have already discussed, there has been a fall in income inequality to the lowest level since 1986. There may be a number of caveats around that, but it is the case that income inequality is at the lowest level since 1986. For those of us who wish to see less income inequality, that is something to be pleased about. We have also taken steps to ensure that the most vulnerable low-income groups have been protected against the effects of economic circumstances.
Not least are the measures that we have taken for pensioners. It is interesting that not a single noble Lord has mentioned pensioners in the debate. I suspect that the reason is that the Government have treated pensioners, if not overgenerously, then certainly very fairly over the past three years. Pensioners have seen above-inflation increases to the state pension. The triple lock means that the basic state pension is higher by £6.85 a week than if it had been increased by earnings only. The average person reaching state pension age in 2013 with a full basic state pension can expect to receive an additional £12,000 in basic state pension over their retirement. In April this year, following a 2.5% increase, the basic state pension was estimated to be almost 18% of average earnings, the highest it has been in any year since 1992. In times of austerity, this is a significant achievement.
The noble Baroness, Lady Tyler, and others talked about improved childcare for people on low incomes. She referred to the fact that we are doubling the number of disadvantaged two year-olds receiving 15 hours of free childcare a week to 260,000 by September next year. We have also implemented 15 hours a week for all three and four year-olds and have announced free school meals for all children in their first three years of primary school.
Almost every noble Lord who has spoken in the debate has talked about low pay, which is clearly a very significant issue. The problems we now face are in part the result of long-term trends in unemployment. For example, the noble Lord, Lord Monks, pointed out that many people moving from the public to the private sector have taken a cut in pay because, on average, public sector wages have become somewhat higher than private sector wages. We have had a big shift from public to private, which has obviously had an impact on many people’s wages. The Government agree with the analysis of the Milburn review in this area. Its conclusion was that,
“the taxpayer alone can no longer bridge the gap between earnings and prices”,
and that employers,
“need to step up to the plate by providing higher minimum levels of pay and better career prospects, enabled by better skills”.
On the minimum wage, as noble Lords have pointed out, my colleague Vince Cable has asked the Low Pay Commission to look at the scope for increasing the minimum wage without having detrimental effects on the level of employment. We hope very much that that will lead to a greater increase in the minimum wage. However, the minimum wage is the minimum, and the living wage is a level that the Government support and encourage employers to follow. As a number of noble Lords pointed out, when the minimum wage was introduced there was a lot of scaremongering about the employment costs, which proved to be completely false. It has been estimated that the living wage might cost 160,000 jobs if implemented overall. I do not know whether that is a realistic assessment, but certainly the work that we have asked the Low Pay Commission to do to increase the minimum wage will begin to tease that out.
My Lords, the noble Baroness, Lady Donaghy, called me something I have never been called in your Lordships’ Chamber—a “treat”, which is impressive given that yesterday in particular I was called quite a lot of things, all of which were extremely derogatory. It is a great pleasure to hear what I think is an undeserved accolade. The noble Baroness talked about compliance. When the minimum wage was going through, I remember expressing some concerns that the legislation seemed to have very little in it about compliance. Although I understand that greater arrears have been identified in the past year than there were a couple of years ago, more needs to be done. I will take up the point she raised about the website with BIS, as we ought to be able to do something about that.
I am extremely sorry that I have been unable to deal with many of the questions and points raised by noble Lords in today’s debate, but I am out of time. Again, I thank the noble Baroness, Lady Prosser, for tabling the Motion. If we do not try our very hardest to improve the quality of life for the hard-working people of the UK, then we are not doing our jobs properly. I can assure noble Lords that we understand the financial pressures that hard-working families are facing, and that we are taking and will continue to take what we believe are the right steps to help them.
Baroness Prosser
My Lords, I thank all noble Lords for their contributions to the debate and particularly thank the Minister for his detailed response. I should like to single out the noble Lord, Lord Horam, for putting forward a different point of view and keeping us all on our toes. However, I find it difficult to understand the point that he and the Minister made about the narrowing of inequality. It rather reminds me of the “lies, damned lies and statistics” statement with which we are all familiar. How is inequality being narrowed when we have seen such a huge increase in the number of people using food banks and those in rent arrears? That phrase does not mean the same thing out there on the street. I urge the Minister, as the representative of the Government, to take the arguments back to other members of the Government and to remind them that the word “govern” is a verb—it is a doing word. I, on behalf of these Benches, expect there to be rather more doing than talking because the consequences of not dealing with the major widening of inequality in our society will be hugely dangerous for our country in the future. I once again thank noble Lords for their contributions.
Energy
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, with the leave of the House, I will now repeat a Statement made earlier in another place by my right honourable friend the Secretary of State for Energy and Climate Change. The Statement is as follows.
“Today I am laying before the House the annual energy statement, alongside the statutory security of supply report. This coalition Government are putting in place the most coherent, sustainable energy policy the United Kingdom has ever had, creating one of the most competitive and attractive electricity investment markets in the world, improving our energy security, boosting home-grown clean energy and providing jobs and economic growth in the process.
This ambitious energy and climate change policy is vital so that Britain can meet our significant challenges. The coalition Government inherited from the previous Administration an energy future with a huge, multibillion pound black hole at its heart, the result of years of underinvestment, dithering and delay, so this Government are having to take the tough decisions others have ducked to make sure Britain’s lights stay on. Everything we are doing has to ensure that we drive investment into the system, not scare it off or freeze it out. But as I will make clear in this Statement, energy security must go hand in hand with affordability.
So let me set out the robust plans we have to deliver affordable energy security. To deal with the problem of tightening electricity margins up to 2018, the Government have been working with the national grid and Ofgem to develop existing safeguards to have more electricity available for the grid at peak times, including, if needed, the use of power plants currently mothballed. We are introducing to Britain a capacity market to ensure we attract the investment we need in new power stations. The first capacity market auction will take place next year for delivery from the winter of 2018.
In addition to these measures to keep the lights on, Britain now has a long-term strategy encapsulated in the Energy Bill. Over the summer we published draft strike prices for renewable electricity under contracts for difference. Detailed proposals for the implementation of electricity market reform were published this month. The fruits of bringing this greater predictability and certainty to investment are already showing. Latest estimates suggest that at least £35 billion has been invested in new electricity infrastructure since 2010, and much more is in the pipeline. In the past 12 months alone, we have provided consent for seven major energy infrastructure applications worth around £20 billion with the capacity to generate electricity to more than 6 million homes, including, of course, last week’s announcement that we have reached key commercial terms with EDF for the first new nuclear power station in a generation at Hinkley Point C.
And there is more. Through the Energy Bill’s final investment decision-enabling programme, 23 applications for 26 investment contracts are currently being evaluated by the Department of Energy and Climate Change for a broad range of renewable technologies, including offshore wind, onshore wind and biomass projects.
Even though British households pay some of the lowest prices for gas and electricity in Europe, such facts are scant comfort to those who have seen prices rise considerably over the past 10 years. The main driver of these energy price rises has been rising wholesale energy costs, not social and environmental policy. But apportioning blame is also scant comfort to people who are struggling to make ends meet. That is why we have been taking action to help people and businesses struggling with their energy bills.
We have already introduced some help that is immediate. Two million vulnerable households will get £135 off their energy bills this winter, thanks to the Government’s warm home discount. Around 12.5 million pensioners will get the winter fuel payment—£200 for the under-80s and £300 for those over 80. And of course there are cold weather payments if needed, which last year delivered over £146 million to help cut bills for the most vulnerable.
This year we have added to these policies with more direct action. Our new Big Energy Saving Network is training 500 volunteers to go out into communities to help people get better deals from energy suppliers and reduce their energy bills. These volunteers will be fully supported. We know how much people in communities across the country rely on the post office network, so we will be working with the Post Office to raise the profile of the Big Energy Saving Network so that it can make the links with the elderly, the vulnerable and other cost-conscious families trying to make their budgets go further.
We have also brought together in one place all the advice from across government—from DECC and DWP—and from charities such as Age Concern and Citizens Advice. Today, I am writing to all Members of this House with information about this new guide so that they can share it with their constituents to make sure they are getting all the help that they are entitled to.
But while such immediate help for consumers and companies is important, we need more permanent change if we are to keep bills down, not just for 20 months but for 20 years and beyond. The energy company obligation is delivering such permanent change by modernising our housing stock and making it cheaper to heat our homes. Some 230,000 low-income households will be warmer this winter thanks to energy efficiency measures installed through the ECO.
Energy efficiency remains a central part of our strategy both to help the fuel poor and to deliver permanent energy savings, but the permanent energy change we seek also needs more competitive markets. This, however, is not something that the party opposite understands, for the previous Government created the big six, and their irresponsible policies would help only the big six. In contrast, from day one, this coalition Government have been determined, with the stick of competition, to take on the big six for consumers. We have done a lot but, as I will set out, we need to do more.
Already our measures to deregulate have seen a major growth in the number and size of independent energy suppliers. In 2011 there was no independent supplier with a customer base greater than 50,000. Now we have three independents with more than 100,000 customers, and a further eight companies have entered the market since May 2010. We have delivered a doubling of the number of independent energy suppliers offering competition to Labour’s big six, and already hundreds of thousands of people are benefiting, but we are doing more. We are backing Ofgem’s reforms to help consumers get better deals—market reforms to make sure that customers are on the lowest tariffs for them, are moved off poor-value dead tariffs and no longer face the complex web of hundreds of tariffs designed more to confuse than to compete.
Our reforms are making sure that people are given clearer, more personalised information on their energy bills so that they can compare tariffs more easily and switch more easily to save money. We are promoting collective switching, particularly aiming to ensure that the more vulnerable get to benefit from the best deals on the market.
But today I am challenging the industry to deliver faster switching. If you can change your broadband provider with a few clicks of the mouse, why should you not be able to do the same with your gas or electricity? It should not take five weeks for the change to take effect; 24-hour switching is my ambition.
First Utility has been out in front with its target of reaching 24-hour switching. Now, E.ON, SSE, ScottishPower and a number of independent suppliers, including Good Energy, Ovo Energy and Co-operative Energy, have accepted my invitation for urgent talks over the next month on how we can dramatically speed up switching. I want five-week switching to come down to one-week switching, and then I want to go faster still. Let us be clear that it will not happen overnight. We could announce 24-hour switching and then suppliers would say, “Okay, we will put our prices up to cover the cost”. That cannot and will not happen.
So I want to talk to suppliers who can agree and deliver a plan to speed up switching down to 24 hours, without increasing bills. Any company interested in making things easier for customers to switch, in addition to those that have already agreed, is invited to come and see me. Our preference is to do this jointly with suppliers, building on the good work of Energy UK, which has raised the ambition on this issue across the industry. But we are prepared to take action, if required, to compel those who drag their heels.
I have also written to energy companies about direct debits. I share concerns that they may be holding on to significant credit balances where customers have overpaid through direct debits. I expect all suppliers to make every effort to return money to customers with closed accounts. I accept that sometimes that will not be possible but, when it is not, my strong view is that credits should be directly applied to help the fuel poor and other vulnerable customers. My right honourable friend the Member for Bexhill and Battle will be meeting energy suppliers next week to discuss this question, and the question of the level of credit balances that energy companies are holding on to.
In our debates on energy bills, many have understandably been asking whether competition is working in our energy markets. While this coalition has already done a great deal to promote competition, we are ready to do more. As the Prime Minister announced last week, we now propose to introduce annual reviews of the state of competition in the energy markets. The first of these new competition assessments will be delivered by spring next year. The assessment will be undertaken by Ofgem, working closely with the Office of Fair Trading and the Competition and Markets Authority, when it comes into being.
The exact metrics for the review will be a matter for the regulators but I will be asking them to look in depth and across the energy sector at profits and prices, barriers to entry and consumer engagement. This Government have equipped the regulators with strong powers to deal with unjustified barriers to competition. If abuses are found, they must be addressed.
We also need to make sure that the energy suppliers are open and honest about the profits they are making, so I have also asked Ofgem to deliver—again, by spring next year—a full report on the transparency of the financial accounts of the energy companies and the ways this could be improved, building on the work already completed from accountancy firm BDO. Ofgem will be publishing its consultation on financial transparency this afternoon.
The public need to know that our reforms will have teeth—that companies that play outside the rules will be penalised and fined. With our Energy Bill, Ofgem now has powers to require energy companies to make compensation payments directly to consumers who have lost out. But today I want to go further. That is why I intend to consult on the introduction of criminal sanctions for anyone found manipulating energy markets and harming the consumer interest.
So, ours is a record of action and delivery. As set out in the annual energy statement, the Government are acting to help those most in need to keep warm this winter and to make sure that everybody will get a better deal from the energy companies. We are acting to deal with Labour’s energy crunch, filling in its energy black hole with more cleaner, home-grown energy, bringing stability and certainty to drive investment. This is our strategy for affordable energy security—a strategy to power the country and protect the planet, and to help keep bills affordable. I commend this Statement to the House”.
Baroness Worthington (Lab)
My Lords, I am grateful to the Minister for repeating the annual energy Statement in this House. I have listened to the content carefully twice now, and I am disappointed to say the least.
There are many important questions about the future direction of our energy sector that this Government are simply failing to clarify. One of the biggest, which was referred to in the debate that we had on Monday, is the degree to which this Government are still committed to decarbonising our electricity sector, yet there was no mention of this in the Statement. The Prime Minister has indicated that he wants to roll back green support mechanisms, without stating which ones. This is bound to decrease investor confidence across the board and increase the cost of borrowing. Just this morning the Leader of the House in the other place wrongly said that it was only Labour that wanted a decarbonisation target and that had we won the vote on Monday, this would have added £125 to consumer bills. Has there been a change of policy? Are the Government no longer committed to setting a decarbonisation target? Are the first few clauses of the Energy Bill now redundant? If so, we need to be told. Will the Minister please confirm that the official estimate of the cost of adding the decarbonisation target is £20, not the £125 which is being repeatedly trotted out by government claims that that is what the target would add to bills.
The other reason why I was disappointed was that the Secretary of State appeared, quite wrongly, to be trying to blame the situation in the energy market today on the previous Labour Government. Let us be clear, under Labour, 26 gigawatts of new capacity was added to the grid—19 gigawatts of non-renewable capacity and seven of renewables. Since then we have seen a hiatus in investment, with reports that renewable energy investment has now halved under this Government. The Statement says that £20 billion-worth of new infrastructure projects have been consented, but does not list what they are. To consent a project is nowhere near the same as having one delivered, built and providing electricity to the grid. We know this because there are many gigawatts of consented gas stations sitting by with absolutely no movement towards bringing them on to the grid. Will the Minister state clearly how much capacity has been added under this Government—not what is proposed or under construction, but what has been added?
We support a few things in the Statement. The most important is the Secretary of State’s statement that the main driver of energy price rises has been wholesale energy costs, not social and environmental policy. We know that they contribute less than 10% of the increase in bills that we have seen in recent years, and that many of them are precisely the measures we need to insulate ourselves against higher prices in the future, and to help the poorest and most vulnerable in making their homes more energy efficient. I am delighted that he made that very clear statement, and I hope that that could be reiterated by government across the board.
Sadly, to return to things that disappointed me, clearly the weakest part of the Statement is the Secretary of State’s claim that he is standing up to the big six. That is very hard to believe. The Government have given everything to the big six that they have asked for. They wanted a rollback in green and social measures, so the Prime Minister says that that will happen. They wanted a review of competition, and the Secretary of State has said today that that is what he will do. We do not need any more reviews; there have been 17 investigations into energy market competition since 2001. What has the regulator been doing all these years? Why do we still not have a competitive market either in generation or retail? We do not need another review. What we need is another approach and another Government; we need to split the big six generation companies from the supply companies to open up that market forcing them to sell their product through an open and transparent market in which everyone can compete fairly; and we need a new regulator. This is what Labour is committed to and what it will deliver.
On security of supply to the UK energy system—of course, there has been another statement today on this issue—the Government are failing to face up to the fact that the greatest uncertainty in security of supply of electricity at the moment is what will happen to our coal-fired power stations. Twelve such stations remain on the system. Built in the 1960s, they are ageing relics and have twice the emissions of gas-fired stations; they are old and they are prone to break down. There is no indication in the Statement that the Government are interested in finding out what these stations intend to do. As long as we do not know what they will do, we cannot move forward with investment in new infrastructure. The longer the coal-fired stations stay on the system, the less there is a clear incentive for investors to bring old gas-fired stations back into the market and to invest in new gas capacity. This is the big question on security of supply but the Government do not have an answer. We need to seek clarity, and soon.
It is welcome that the Secretary of State will be introducing new measures to bring the cost of bills down—we all want to see wholesale prices coming down—but this Government have not got to grips with the scale or the nub of the problem. Labour has a clear plan—we have been crystal clear on what we will do—but the Government simply do not have an answer. They do not even have a consistent message across the department and across government as a whole. The Statement is sadly lacking, but that is not surprising given where the Secretary of State finds himself these days.
Baroness Verma
My Lords, I have listened carefully to the noble Baroness. Of course, she would say what she has just said; it was the kind of speech that her colleague gave in the House of Commons.
We have laid out quite clearly in the Statement all the measures that we have taken. The noble Baroness has asked me a range of questions, to which I will try to respond in the time I am allowed, but she should be aware that continually saying that Labour will freeze energy prices will raise prices before and after any such action. These wonderful jingoistic statements do not mean very much. They might be populist but, at the end of the day, will they make a difference to the consumer? I doubt it very much.
It would be interesting to know whether the noble Baroness knows where her own leader’s electricity supply comes from because that particular company has already stated that energy freezes will cause hardship for investors and threaten the survival of some of the smaller independent generators. She should bear that in mind when talking about energy price freezes.
The noble Baroness asked whether we were still serious about decarbonisation. As I said in the debate on Monday, the Government are absolutely committed to meeting their decarbonisation targets. Legal requirements are in place in the Climate Change Act 2008 and we have commitments to our European partners. We have always stated that the best time to set a decarbonisation target would be in 2016 with the fifth carbon budget, taking advice from the Climate Change Committee. We must consider the whole economy and not only parts of it because we need to know what condition it will be in at that point. We also need to consider any action against the backdrop of what our partners in Europe and more globally are doing. We do not want to disadvantage ourselves competitively either.
The noble Baroness can rest assured that we are as committed as she is to decarbonising the energy sector, but we need to do so at a time when we know what the whole economy looks like, not in 2014 or earlier, when we will not have that analysis at our fingertips. This will take detailed work, and of course the noble Baroness is aware of that.
The noble Baroness asked about the rollback of our support for the green agenda. That is absolutely not the case. It is an important agenda for us all. We believe that we need a much cleaner, greener energy sector, so of course we are signed up to it. Within that, however, we have to recognise that a sensible Government can see what is working well, how it is working and how it is impacting on consumers, and are able to take stock of where the measures are.
The noble Baroness asked about investment. Since 2010, we have seen £35 billion-worth of investment, £20 billion of which has been made in the renewables sector. We have not put people off investing in Great Britain. It is wonderful to realise that people are very confident about coming to this great nation to invest, and we need to talk that up. I hope that the noble Baroness will join me in making sure that people go on wanting to come here and invest. This is a great place for investment and I would hate the conversation to lead to anything other than that.
The noble Baroness went on to point out that 17 investigations have been conducted since 2001. I would just like to remind the noble Baroness that her party was in government until 2010. If her party thinks that Ofgem is the toothless regulator it is making it out to be, why did it do not do something about it then? Why are the Opposition now planning on putting more costs on to the consumer by trying to develop a new regulator? What we want to do is ensure that the regulator we have in place, under new leadership, has the powers and the means to do the job it needs to do. That job is to go out there and make sure that the energy market is performing to the best of its ability for the consumer.
Lord Jenkin of Roding (Con)
My Lords, I thank my noble friend for what she has said, but might I press her a little further on the point with which she ended her reply to the noble Baroness, Lady Worthington? I refer to the question of the competition reviews. The Statement says that although much has already been done, the Government are ready to do more, and then goes into detail about annual reviews of the state of competition in the sector. If, as seems entirely possible, one of the results of a review is that the regulator, Ofgem, for example—I agree with my noble friend that we need to build on what is already in place and not try to create something entirely new—needs strengthened powers to make competition more effective, how might Ministers expect to deal with that? As the Secretary of State said in his Statement:
“If abuses are found, they must be addressed”.
Would it not be wise to take powers now in order to avoid having to introduce fresh primary legislation? Interestingly, EDF has come out in only the past few minutes to say that it would welcome a review, because that will help to restore trust in the system. If that is indeed likely to be the result, would it not be a good idea to act fairly quickly?
Baroness Verma
My noble friend is absolutely right. The purpose of the review is to enable the regulators, led by Ofgem, to see what needs to happen in order to strengthen competition. They should be able to look carefully at whether there is transparency or not and accountability or not. What we need to do is wait for the competition review to take place, conduct a consultation on the review, feed into the review and then comment on it. It would be wrong for the Government to comment at this moment in time. It is right to get the competition review under way by having all three regulators look at the position carefully. They have the expertise and they know what they are looking for. If they need extra powers, it is for the Government to ensure that we support them by ensuring that those extra powers are put in place.
Lord Teverson (LD)
My Lords, with this kind of Statement, we get rather infected with the way of doing things and the mood of the House of Commons. I welcome the fact that the Statement concentrates on competition. We have to keep it absolutely focused there. Is there an easy answer to this and is anybody offering one? No, there is not, but we need to keep working at it. I have a particular question for the Minister on that point, which I will ask in a minute, but first let me say that I welcome the security of supply report that came with this Statement. It is one of the clearest and most interesting documents that has come out of DECC for some time and includes things such as the electricity diversity diagram and report. I particularly welcome the move to make switching much easier and quicker; that is clearly important both for consumer power and for competition. I also particularly welcome the market manipulation pledges that have come from my right honourable friend the Secretary of State. We certainly expect that when it comes to other types of asset and other financial instruments, which is effectively what energy is nowadays, and we should have it now in this case.
My question was about the proportion of the wholesale supply that the Government intend should go through a market and be auctioned. Where is the government thinking on that? My own wish is that we start to expand the proportion of the market that has to go out there and is traded between the supply side and distribution to customers. One issue that came out in our consideration of the Energy Bill was the transparency of those actions. I know that that is a priority for the Government and would like to understand how that is moving forward.
My last point is about energy prices. We are told time and again that electricity prices very much rely on and follow wholesale gas prices, but we are questioning how much wholesale prices have gone up in reality over the past year. We are now engaged in greater questioning of the big six. Given that electricity generation is now dominated by much cheaper coal, can the Minister tell me where that extra margin from the cheaper fuel input has gone? It has certainly not gone to consumers. That is an area that the Minister would do well to pursue.
Baroness Verma
My noble friend is of course absolutely right. All the questions that he asks are poignant, as are the remarks that he made around switching and making sure that we have the security of supply that we require. As my noble friend is aware, in the short term we have measures in place. However, in the longer term we have to look at a range of measures and mechanisms. I know that my noble friend is very keen on demand-side reduction, which of course is part of that and another measure that we are seriously looking at piloting through the Energy Bill.
My noble friend also raised the issue of manipulation. The Secretary of State has said that we need to look at stronger measures. If we do not see action on greater transparency and accountability, we may have to look beyond just financial penalties at criminal sanctions. We are undertaking a range of measures. My noble friend is absolutely right that we are of course debating many of the questions that he has asked today in relation to the Energy Bill. There are further debates to be had and I hope that my noble friend will be reassured that we are undertaking very much the sort of action that he expects us to as a responsible Government.
Lord Horam (Con)
I have a further question about the security of supply. Along with the noble Lord, Lord Teverson, I very much welcome the strength of the Statement when it comes to security of supply. It is a very important issue, which people are concerned about. If there is any possibility of—to use the rather dramatic phrase—the lights being turned off, do I understand the Minister to be saying that mothballed capacity will be available and brought into action should that eventuality arise?
Baroness Verma
I reassure my noble friend that, yes, we have measures in place that will ensure that we have enough capacity to keep the lights on.
Lord Grade of Yarmouth (Con)
I, too, thank my noble friend for repeating the Statement. It was comprehensive, intellectually rigorous and resistant of soundbites, which is to be welcomed. My question relates to the regulator. The question of consumers switching between utilities is not a new concept. In the telecoms sector, Ofcom was quick to address the question of switching from one mobile phone provider to another. Was it a failure of the regulator or of the statutory powers and remit of the regulator that meant that this question was not addressed earlier?
Baroness Verma
My Lords, it is a failure of energy companies ensuring that consumers have easy-to-understand information. That has been a big part of the problem, as well as the fact that we have not pushed enough to get energy companies to be more transparent and accountable. First Utility has been one of the first companies to come forward, with E.ON, Scottish Power and SSE, to say that it will be leading the charge to try to make switching quicker and easier. We are inviting more energy companies to come forward to join us. The Secretary of State has made it very clear: we want to talk with all energy companies and we are keen to see their consumers’ bills go down. It will become apparent that those energy companies that do not want to do this will end up losing customers to those suppliers that are at the front of the game.
High Speed Rail (Preparation) Bill
Overseas Territories
Baroness Hooper
To ask Her Majesty’s Government what plans they have to support economic diversification in the Overseas Territories.
Baroness Hooper (Con)
My Lords, since our last debate on the theme of the overseas territories in 2011, there have been a number of significant developments, not least the Government’s White Paper, The Overseas Territories: Security, Success and Sustainability, on which wide consultations have taken place. This was followed by the communiqué of the Overseas Territories Joint Ministerial Council meeting, issued in December last year, which committed the political leaders and representatives of the UK and overseas territories to,
“a modern relationship based on partnership and shared values”,
and to,
“the principle and right of self-determination”.
I welcome this approach and look forward to the outcome of this year’s joint ministerial council meeting, which is due, I believe, next month and which I understand will continue the dialogue on constitutional issues, the commitment to growth and jobs, the environment and the relationship of the overseas territories with other international organisations, especially the Commonwealth, among other things.
Today’s debate is intended to concentrate on economic developments but it cannot pass without a reference to the increasingly politically charged atmosphere affecting Gibraltar and the Falkland Islands. I was fortunate in being able to join colleagues from both Houses of Parliament and many Chief Ministers and representatives of the overseas territories—including one from the Pitcairn Islands, which, as your Lordships know, has a population of 52 people—for the celebration of Gibraltar’s National Day in September. It was the tercentenary of the signing of the Treaty of Utrecht and there had been increased tension and disruption from the Spanish authorities at the border all through the long, hot summer. But the National Day celebrations went with a swing and there was no doubting the will and determination of the people as well as the politicians of Gibraltar to remain British.
Gibraltar also hosted the pre-joint ministerial council meeting, hence the presence of the representatives of other overseas territories. Those meetings were well attended and fruitful.
The economy of Gibraltar as a financial centre is clearly booming, and tourism flourishes in spite of the border difficulties; sadly, the situation continues to deteriorate in that regard. I was particularly saddened to learn that only yesterday there was a serious incident when a Guardia Civil patrol boat had a slight collision with a royal naval supply ship in British territorial waters and guns were pointed at each other. Can my noble friend the Minister inform us of any steps that the Government may have taken about this incident? Could he also give us, in relation to Gibraltar, any information on the eagerly awaited report from the European Union inspectors who have looked at the border situation?
I turn to the Falkland Islands, where there is sadly no abatement in difficulties being raised by Argentina, exacerbated last year on the 30th anniversary of the Falklands War. Again, this does not appear to have affected the economic development of the islands, which flourishes. It is the Falkland Islands Government, almost exclusively, who, like the Gibraltar Government, devise their economic diversification strategy and implements it. Her Majesty’s Government are involved in certain areas, notably in negotiations with the European Union development aid budget on behalf of the overseas territories. The Falkland Islands will receive some £3.5 million over the next three years from that source. Can my noble friend give us any further information about this and on the building of a new port facility in Stanley?
I believe that we can approach the general issue of economic development under three broad headings: diversification, tourism and financial services. On diversification, which is a common goal throughout the territories, a robust, long-term economic strategy needs to be worked out on a territory by territory basis. Some will need more help than others; each is a unique and different place. To give an example, Tristan da Cunha—which is heavily reliant on its one leading export, gourmet-quality lobster—needs to take advantage of new technology and upgrade its techniques, for example for buying and selling products online. Tristan is also looking to develop its tourism in line with its globally significant biodiversity and produce more high-quality, tourist-related products. Will the UK Government support this?
Another example that I can quote is that of Anguilla, where the economy is heavily reliant on tourism, which is currently suffering in the present economic climate. They have a small financial services sector, which is under challenge, and are seeking support for diversification in developing a fishing strategy, for example, to clear the waters to the north of the island of third-country, mainly Asian, trawlers, to enable local fishermen to fish and put a conservation policy in place. It must be said that Anguilla has particular constitutional issues that affect the relationship between the governor and the elected Government, which they claim is too complex and commercially based and not sufficiently clear to encourage sorely needed investment.
Both those examples, and the many others that I do not have time to quote, underline the need for a proactive rather than a reactive partnership plan between the United Kingdom and the relevant overseas territories. They also emphasise the importance of links in the field of education, training and skills, particularly at tertiary level, between UK institutions and the overseas territories. It is clearly important, not to say vital, for overseas territories to have well diversified economies, not only to enable them to become sustainable but to allow them to flourish with continually growing resilient economies and increasingly affluent societies. I look forward to my noble friend’s comments on this. In this respect, too, I welcome the fact that the Foreign Office will host a business forum for overseas territories during the week of the next joint ministerial conference specifically to introduce UK businesses to opportunities in the overseas territories.
To varying degrees, tourism affects all overseas territories. I have already made reference to some of them. The unique and isolated locations of many territories, treasure trove of biodiversity and improving communications all go to make tourism a high value source of income for those territories. Even Bermuda, now the largest of the overseas territories, acknowledges that tourism is its second-largest industry, providing 6% of its GDP. Perhaps the most exciting development, after years of campaigning, is the building of the airport on St Helena. This will have a huge impact, with journey times to the island reduced from five days at sea to five hours by plane. The UK Government’s involvement in the airport, as well as some ongoing DfID funding to infrastructure and capacity-building initiatives to support the airport investment, is to be welcomed. I hope the Minister will be able to tell us that the UK Government intend to follow on from and build upon the large upfront investment they have made in the airport.
My third theme is financial services. I shall try to speak briefly on this as I know that others will major on the overseas territories active in this area. First, it is important to recognise that, for example in a territory such as Bermuda—which provides a global service centre in the insurance remittance, private equity and asset management fields, with the knock-on effect of 100,000 jobs in the UK—we are talking about activities with an important added value of expertise. However, the eyes of the world, especially through the prism of the OECD, are focusing very much on money-laundering and tax-washing—I think that is the expression now. It seems that blacklists can be issued on a unilateral basis, which can have an unfair impact. Nevertheless, the OECD estimated that developing countries lose three times as much money to tax havens as they receive annually in aid. It is therefore essential that our Government do all they can to ensure openness, transparency and high standards of probity. Can my noble friend comment on the signing up by overseas territories to the multilateral Convention on Mutual Administrative Assistance in Tax Matters? Could he also tell us whether the Prime Minister’s announcement this morning of the Government’s decision to create a new public register of the ownership of some 2.5 million companies applies equally to companies registered in the overseas territories?
In conclusion, in the nearly 30 years that I have been a Member of your Lordships’ House, I have had the privilege and pleasure of introducing a number of debates on issues affecting the 14 overseas territories and their dependencies. Today’s debate is the least well attended. I feel sure that it is a case of quality rather than quantity and I am most grateful to those who are participating in the debate. I have received apologies from some who know and take a great interest in various overseas territories but are not able to be here. It is a sad reflection on the present composition of your Lordships’ House that, although people complain that we now have too many Members and nowhere to sit, so few take an interest in the fascinating, diverse and tiny overseas territories.
Lord Boateng (Lab)
My Lords, this House and the overseas territories themselves owe the noble Baroness, Lady Hooper, a debt of gratitude for the fortitude and determination that she has displayed over the years in pursuit of their interests in this House and more widely.
I well recall as Chief Secretary being asked to reflect on the airport in St Helena. The noble Baroness’s name came up then, all that time ago. It is to this Government’s credit that they have gone ahead with that long overdue project. That addresses the central issue which we are asked to look at tonight about the diversification of the economies of our overseas territories. The need to diversify those economies to achieve the Government’s stated objective of successful and resilient economies in the overseas territories is clear. Without diversification, there is no way that those small economies will withstand the shocks that they are bound to experience from time to time because of events in the global economy. At the moment, they are experiencing those shocks in tourism and the financial services industry.
Of course, success is a relative term. The financial services industries in the overseas territories have been, on one measure, a real success. They have, in some instances, developed interesting and significant markets—for instance in reinsurance and hedge funds. However, that success has come at a cost. I fear that the cost has all too often been paid by economies that are themselves struggling to develop.
It is not without significance, I submit, that the Africa Progress Panel—which is supported by the Department for International Development, our Government, as well as by the Governments of many emerging market economies in Africa—stated:
“The governance vacuum surrounding companies operating from offshore centres is undermining reform in Africa itself”,
and that,
“African governments and citizens … have no recourse to information about the operations of these companies”.
That is true, and why it is so important that the Government answer the Question asked by the noble Baroness, Lady Hooper, about their position on urging the overseas territories to sign up fully at the Joint Ministerial Council to the multilateral convention on mutual assistance for the administration of tax matters. No one wants the financial services sector to go down in the overseas territories. Without it, in a number of instances, they would be in serious difficulty, but that should not be at the expense of other developing economies and markets elsewhere in the world, particularly in developing markets and economies where the poorest of the poor can least afford the consequences of the failure to promote transparency, accountability and good governance in the financial services sectors. We await the Answer to that Question with interest.
Tourism, too, has suffered as a result of the recent global downturn. It is to one particular economy in one of our overseas territories, that of Anguilla, that I ask the Minister to address his mind and the activity of the Government. Anguilla is a small island whose dependence on tourism has come at a very high cost. According to the ECCB figures of September this year, there was negative growth in Anguilla for 2012—minus 2.61%—and, for 2013, growth is projected at 0.93%. Frankly, the margin of error there is such that the economy has effectively stalled.
The consequences of that in terms of unemployment and poverty on the island are real. It is now seeing growing levels of poverty, an increasing reliance on food banks, and one in 10 homes are without electricity. There is real human suffering in Anguilla and we have a responsibility to address it. The Government have said that where there is need, the overseas territories will have first call on DfID’s budget. We have not yet seen that materialise in fact, and we need to hear from the Minister what plans DfID has to step in to support Anguilla at this difficult time.
This is not one of those occasions when it will be open to DfID to say, “They do not meet our eligibility criteria”, because the fact of the matter is that they do. If we look at the criteria for overseas development assistance or at the OECD’s development assistance co-operation list, which defines the poorest countries in the world, Anguilla is among them. We need to hear what the Government propose to do to give some reality to the aspirations contained in the highly laudable White Paper of 2012.
There is a concern that Montserrat and Anguilla have somehow fallen into the twilight zone of policy that affects the Caribbean, so far as the operations of Her Majesty’s Government are concerned. Despite its middle-income status in some instances, the Caribbean generally has within it real instances of poverty. They are driving a situation in which there are fragile states exposed to the dangers and vagaries of international and domestic gangsterism, and in which women are forced to become mules for drug runners because of their own dire poverty. Yet because these pockets exist within “middle-income countries”, DfID is unable or unwilling to do anything. We need to revisit policy in relation to the Caribbean generally, but our focus this evening is on our overseas territories—those territories for which we are responsible. Surely, Montserrat and Anguilla are entitled to the benefit of DfID’s active engagement.
I know that DfID is supposed to be working in Montserrat in ways that promote private-public partnership responses to the needs of that island, which is all very interesting. There is a real opportunity to develop the volcano that was responsible for so much of the damage and harm done to Montserrat as a highly effective energy source. Yet despite DfID’s best endeavours, and despite what I am told is the express willingness of a number of private sector operators to become involved, there does not seem to have been any particular progress in attracting private sector engagement for Montserrat. We really need to see some action in this area.
Perhaps what we need to see is a greater degree of engagement on the part of Her Majesty’s Government with the ACP in Brussels, which has a brief in this area and which also has resources paid for by the British taxpayer. We should see what it can do to promote diversification across the piece, throughout our overseas territories. These territories are a responsibility that we have inherited. We should not see them as some sort of embarrassment or vestige of a colonial past that we no longer want to talk about. They are part and parcel of our history. We owe them a debt of gratitude for the role that they played strategically over many years in our island story. We owe them, too, a moral responsibility to deliver to them at this time of real need in so many of these territories.
Lord Blencathra (Con)
My Lords, I am pleased to declare an interest. I am the representative of the Cayman Islands Government in the United Kingdom, a remunerated post. I have never spoken or asked a question on behalf of Cayman in this House, and do not intend to do so today. Rather, I shall talk about all the British Overseas Territories.
I congratulate my noble friend on her speech. She has a notable track record of support for the territories and is a stalwart defender of them, as has been said by the noble Lord, Lord Boateng. However, that is my first point: why should we have to defend the territories? They are an incredible success story—and a great British success story, as the noble Lord, Lord Boateng, has just said.
Like your Lordships’ House, we would not invent them if we were starting from scratch today, but over hundreds of years they have worked and they still work today—even more so, I submit. They work because they are democracies with parliamentary assemblies based on the Westminster Parliament; because they have the rule of law and the security provided by the Crown; because they have the right to self-determination but have always voted to stay British; and because they are innovative and make the best of scarce resources. They are good for Britain because they, and the Crown dependencies closer by, put a lot more in than they take out.
Recently, I think I heard the Premier of Montserrat, which was completely devastated by the volcano in 1995, say, “If you’re served a lemon then you may as well make lemonade. And please tell the noble Lord, Lord Boateng, that we’ve drilled down the side of a volcano, got geothermal energy and are selling off some of the rich volcanic rock and ash that covered our capital to a depth of 12 metres”. That is innovation and diversification in action and, with the additional help that the noble Lord called for, they could do so much more.
This debate is about economic diversification, and the word “diverse” certainly applies to the overseas territories. Every single one is different. From Pitcairn—I can tell the House today that 4% of its population are visiting Parliament; that is, two of them—to the Falkland Islands, Anguilla, Bermuda and Tristan da Cunha, they are all small islands, except Gibraltar, which is almost an island, and, as has been said, each requires different solutions for economic growth.
Before I move on from the word “diverse”, I want to mention biodiversity. Some 90% of the biodiversity of the United Kingdom is not in the United Kingdom at all; it is in the British Overseas Territories. What native species do we have left in the UK that have not been lost? Soon we might have no red squirrels left, and even hedgehogs are becoming an endangered species. However, the overseas territories are packed with wildlife on land, in the air and in the sea. In the overseas territories we have some of the best marine parks in the world, and most of our coral reefs are still intact. Of course they are under pressure and too many species are on the red list, but at least we still have them and we have to ensure that we never lose any more.
Could the Minister please press his colleagues in the Foreign Office to look favourably on the Pitcairn bid to create the largest marine reserve in the world around the islands—836,000 square kilometres of pristine ocean? I understand that there is a concern that if we declare it we cannot enforce it, but they have suggestions for that in the excellent booklet that they have produced on the bid. We often cannot fully enforce our own fishing grounds but that does not stop us declaring that they are our waters. We should do the same for Pitcairn.
It does not require mega-investment to diversify the economy of many of these territories. Ecotourism is a natural area for economic diversification, and that could work in nearly all the territories. Tristan da Cunha has made a breakthrough with its gourmet lobster and exports 40 tonnes per annum to the EU, having fought for years for the right to do so with that mere 40 tonnes. It is also hoping to go upmarket with its island-produced knitwear, and if it improved its harbour then a lot of diversification would automatically follow.
Now that the airport is under construction in St Helena, I am certain that, with the drive and ingenuity of the St Helenians, we will see diversification there, too, and a huge boost to sustainable tourism.
Of course, tourism would be boosted in most of the territories if they were not discriminated against in air passenger duty. It cannot be right that it is cheaper to fly to San Francisco than to Turks and Caicos or the British Virgin Islands. The territories are not asking for APD to be scrapped but for it to be rebanded simply to remove the grossly unfair advantage given to most of the United States, which is 2,000 miles further away.
As my noble friend said, the Government are to be congratulated on their robust defence of the Falkland Islands and Gibraltar. Oil companies continue to explore in the Falklands because they have the assurance that the UK will support the right of the islanders to self-determination. I welcome the similar support offered to Gibraltar. Of course, Gibraltar diversified into online gaming, but the Treasury did not like it. We live in a global online world, and if the Treasury stamps out online gaming in Gibraltar because it fears loss of revenue, it will pop up in another less well regulated and non-British jurisdiction, and the Treasury will still have lost the revenue.
We all know that one size does not fit all in policies for diversification in the overseas territories. However, at very little cost the British Government can assist, and I, too, congratulate the Foreign Office on the initiatives it is taking in encouraging the territories to collaborate with other government departments and county councils to learn best practice. The business event it is organising for the JMC is totally focused on economic diversification. It is a first, and even if it is only half successful, it will be far better than nothing and better than what went before.
The territories have their own laws in place on human rights, equality and diversity and proper procurement procedures et cetera, but I worry at times that the UK Government may foist too many regulatory burdens on them which may make them uncompetitive. I think Bermuda has the largest population with 65,000 people, Pitcairn has just 48 or 52 people—it is about there—and the average is about 23,000 people. We cannot keep territories of that size competitive if we overburden them with all the quangos and authorities that we have in a country of 55 million people.
It is on competitiveness that I wish to close my remarks. Some of the territories and Crown dependencies are top financial centres and are rated alongside the Londons, Hong Kongs and New Yorks of this world. They contribute billions to the UK economy. The Michael Foot review, set up under the previous Government, showed conclusively that they did not cause the economic crisis of 2008. In July, Jersey published a report, Jersey’s Value to Britain, which showed that £1 in every £20 of money invested by foreign individuals and companies in assets located in Britain reaches the UK via Jersey, and each year Jersey banks send around £120 billion of their deposits to parent operations in the UK. The same goes for most of the other overseas territory and Crown dependency financial centres. A recent World Bank report—I think it was in April—showed that massive investment routed through the financial centres of the world is pouring into the eight African countries that have economies growing at more than 10%. British financial centres are putting money into developing infrastructure projects in the UK and emerging nations, not taking it out. Two days ago the Premier of Bermuda spoke at the Islamic finance conference and said that Bermuda would seek to diversify into Islamic banking. That is diversification of a kind, but still within the umbrella of international finance.
These financial centres cannot diversify into something totally different, and nor should they. I deplore the neo-colonial attitude of some activists who say that they should be closed down and get overseas aid instead. These territories are a source for good in the world, and I thank the Prime Minister for his robust declaration that they are no longer tax havens and that we should look at much larger nations which are not as well regulated as the territories. He is absolutely right. Professor Sharman’s report showed how easy it is to set up a shell company in some states of the USA, with no checks whatever. If the NSA is looking for sources of terrorist financing, it should spend less time looking into Angela Merkel’s and the Pope’s phone messages 5,000 miles away and look 50 miles down the road at 1209 Orange Street, Delaware, where a little two-storey block has more than 200,000 companies registered. No questions are asked and nobody knows who owns them.
The overseas territories are well regulated, as the Prime Minister has now acknowledged. We all support the principle of a global level playing field and therefore welcome the action being taken to secure this through the development of new international standards for automatic exchange of information that will have global application. Business is global and regulation must also be global and apply to all. If all territories and countries are treated equally under international regulation, as they must be, I am absolutely certain that the British Overseas Territories will still be the world-class jurisdictions of choice, and places of which we can all remain proud.
Baroness Howells of St Davids (Lab)
My Lords, I am grateful for the opportunity of speaking in the gap. I add my thanks to the noble Baroness, Lady Hooper, for initiating the debate. I have decided to concentrate on Anguilla, although it has been mentioned by every previous speaker.
Anguilla previously experienced strong growth during the period 2004-07. Its GDP stood at 12%. Now recession and the dreaded APD tax have hit the country. It relies heavily on its tourism sector. This has created a very worrying time for the island, with high unemployment, home foreclosures, and growing levels of poverty and business failures.
While it is accepted that there is the need to diversify—agriculture, fisheries, finance services and ICT are cited as possibilities—it takes a lot of time to diversify on tiny islands. Consequently, there is a need to invest in the facilities and infrastructure, which will improve access to Anguilla and enable the island to benefit more from tourism while diversification takes place.
We know that Anguilla is ready for overseas development assistance, according to the OECD’s co-operation list which defines the poorest countries in the world. However, DfID has not provided any development assistance to Anguilla for many years. In the 2012 White Paper, the coalition Government set out a vision to support all the overseas territories in order to make them flourish and be free from financial dependence. Overseas territories also have “the first call” on DfID’s budget.
Despite these facts, DfID does not provide any direct funding to Anguilla and does not have the machinery to re-evaluate the economic status of a territory once it decides that the territory should not get any support. This means that, despite six successive years of economic decline, DfID has been unwilling to entertain any conversations about re-evaluating Anguilla’s status for DfID support, despite the fact that Anguilla remains very much in need of help by official development assistance. The UK Government are committed to contributing 0.7% of their national income in aid, but it appears to be without regard for the overseas territories.
The Government of Anguilla are keen to diversify its economic base, but to do so at this time requires effective long-term thinking. While the economy remains in a negative state, it is difficult for the Government to focus human resources on this task. DfID has yet to offer effective assistance to facilitate that process. I ask the Minister to address these concerns and to give a reassurance as to what assistance will be afforded this small island, which is profoundly loyal to the British Government.
Lord Brooke of Sutton Mandeville (Con)
My Lords, with the leave of the House—I have also spoken to the spokesman for the Opposition—I have a very brief and indeed personal point to make in the gap, which relates to a single territory.
The island of St Helena is now awaiting the arrival of its airport and is hoping for tourists. Tourists like to see sights. St Helena has Georgian architecture; not always in the best of shape, but Georgian. Conservation is therefore important. For personal reasons I am interested in making a charitable financial contribution.
My personal reasons are that one of my forebears was governor, and a good one, between 1787 and 1801. Perhaps nepotistically, he brought out his nephew to be his secretary. The latter remained on the island in this capacity until 1834, publishing a book on the island’s history in 1808. A second edition was published in 1822, which added two chapters—we Brookes are of few words—to cover the residence of Napoleon Bonaparte.
The years 1787 to 1834 spanned many Georgian years. Every time I have an opportunity, like a regular meeting of the St Helena All-Party Group, or an ad hoc one, when someone germane is either going to St Helena or returning, I ask for details of the way to help the conservation programme. Every time I am promised the details, but answer comes there none. The CPA even put me on a CPA visit to St Helena one summer which was then cancelled, but with a written promise to send me on a substitute visit in the new year. The new year came, the visit went, with no word to me, and a substitute sent in my place, but not from my party.
I intend it as a compliment to my noble friend who will shortly be at the Dispatch Box to ask him to absorb what seems a reasonably simple request and get someone to send me in writing the details I seek, preferably with a letterhead or e-mail address to which I can respond if necessary. If there are other territories beside St Helena which have the same needs, I shall be happy to support them too, perhaps with others following suit.
Lord Bach (Lab)
My Lords, I hope that the Minister listened carefully to what the noble Lord, Lord Brooke, has just argued. In many ways, of all the questions that he will be asked this evening, that is one that he must answer tonight.
I will also start by congratulating the noble Baroness, Lady Hooper, on securing this debate. It is an important and timely debate, with the forthcoming 2013 Joint Ministerial Council about to start. I agree with her that it is a shame that there are not more speakers. Perhaps one of the reasons is that this debate has commenced after 6 pm on a Thursday evening in the autumn/winter, on, of all nights, Halloween. I wonder whether that has been a factor in keeping noble Lords away.
I have had the pleasure of working very closely with the noble Baroness in a number of fields over a number of years, perhaps most significantly as joint officers of the British Council All-Party Group. If I need to, I declare an interest as chairman. The whole House admires and has long admired the noble Baroness’s unrivalled knowledge and expertise in the field of foreign affairs generally, as well as the overseas territories, and her practical skill in getting things done. She does not just talk, but acts as well.
I am delighted that the noble Lord, Lord Ahmad of Wimbledon, is to answer this debate. Many of us on these Benches—can I let him into this secret?—admire his performances at the Dispatch Box. I have certainly enjoyed our jousts on the subject of legal aid. However, I have to tell him that there will be little jousting between the Front Benches tonight. To use the words of the noble Baroness, Lady Hooper, in the previous debate that she instigated on the territories:
“This debate is not … political. Indeed, I think that it is probably the least contentious … of government policy”.—[Official Report, 10/3/11; col. 1797.]
I agree but that is not to say that the Opposition do not have questions they would like answered. We agree with the comment of the noble Lord, Lord Howell of Guildford, in that debate, namely:
“This is a complex and wide-ranging portfolio”.—[Official Report, 10/3/2011; col. 1796.]
We are united in our commitment to the principle of self-determination whether it concerns Gibraltar, the Falkland Islands or any of the other overseas territories. It is for the peoples of the territories to decide their own future.
The Government’s White Paper, published in June 2012, builds on work done by the previous Government. Noble Lords should not simply take that from me; that generous comment was made by the Minister, Mark Simmonds, who used that phrase in a debate in another place on 11 December 2012. The Labour Government’s 1999 White Paper strongly influenced their policy during their time in office and, I venture to suggest, influenced the present Government when they produced their own White Paper last year.
Mr Simmonds also said in another place:
“I see the focus of the UK Government in the year ahead as assisting the territories with their priorities, rather than what we think their priorities should be”.—[Official Report, Commons, 11/12/2012; col. 15WH.]
We agree with that sentiment, as we do with the words of the communiqué that was issued following last year’s Joint Ministerial Council. Part of that communiqué was read out by the noble Baroness, Lady Hooper, a few minutes ago. It states:
“We are committed to a modern relationship based on partnership and shared values. We share a commitment to the principle and right of self-determination. The people of each Territory have the right to choose whether or not their Territory should remain a British Overseas Territory. Any decision to sever the constitutional link between the UK and a Territory should be on the basis of the clear and constitutionally expressed wish of the people of the Territory”.
We agree with that.
It has been obvious for a long time that some of the overseas territories are poorer than others. Not only are they situated around the world but their natural resources, histories and the forces that have moulded them are very different. The economic typhoon that has gone round the planet has affected the overseas territories, particularly those which are less well off. In our view the British Government have a duty to assist those territories that are feeling the effects of that economic typhoon most severely. I hope that the Minister agrees.
The subject of tonight’s debate—economic diversification in the overseas territories—may be key to gaining or recovering financial health. Many of the overseas territories are situated in beautiful and environmentally compelling parts of the world, and thus have built up and sustained a tourist industry that can be particularly vulnerable to downturns and recessions in larger, more industrialised, countries from where the tourists come. Sometimes tourism has taken the place of indigenous industries such as fishing or farming. When income from tourism falls, trouble may loom unless alternatives are found. Some of those alternatives have been mentioned in tonight’s excellent debate. Given that background, what is Her Majesty’s Government’s policy in terms of giving aid and assistance to overseas territories that may require them? I believe that the answer to that question is at the heart of this debate.
Much has been said about Anguilla and I am not going to repeat it, but I ask the Minister to answer those questions about the role of the Department for International Development and say whether some help can be given to that country, which clearly needs it. Many of us have received representations over the past 24 hours and it is important that the Government come up with answers.
Air passenger duty was mentioned in particular by the noble Lord, Lord Blencathra, in his excellent speech. Will the Minister answer the question posed by the noble Lord? It is a crucial question and it looks on the face of it as if the operation of the system is unfair.
The issue of financial transparency is obviously important—one that the Government should take seriously, and I have no reason to believe that they do not. I ask the same question that my noble friend Lord Boateng asked: ahead of the Overseas Territories Joint Ministerial Council in London on 26 November. Will the Government ensure that as part of efforts towards economic diversification overseas territories take steps to ensure greater financial transparency? Specifically, will all overseas territories sign up to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters? That is an important question to which many outside this House would like an answer.
In conclusion, this has been an excellent debate. I very much welcome the fact that it has taken place and we all look forward to hearing what the Minister has to say.
Lord Ahmad of Wimbledon (Con)
My Lords, I join other noble Lords in congratulating and paying tribute to my noble friend Lady Hooper, who has—as I recently found out, I confess—done incredible work in this area. She continues to represent the case for the overseas territories with great passion and vigour. I pay tribute to her efforts in this regard. The noble Lord, Lord Bach, was kind in his opening remarks and perhaps I may reiterate the sentiment he expressed about quality over quantity in terms of participation.
Economic diversification in the overseas territories is an important area. I will take the opportunity also to comment on what the Government are doing to improve trade and investment opportunities, about which all noble Lords asked. Mention was made of when my noble friend Lord Howell of Guildford responded to a previous debate on this subject. I share his sentiments and comments. Certainly from the Dispatch Box he, too, demonstrated Her Majesty’s Government’s commitment to the overseas territories.
The Government set out our vision for the overseas territories in last year’s White Paper. My noble friend Lady Hooper referred to it in her introduction. The Prime Minister described them as,
“an integral part of Britain’s life and history”,
and said:
“We want to see our communities flourish in partnership, with strong and sustainable local economies”.
As the noble Lord, Lord Bach, said, as we progress on this issue, there is no difference in the sentiment, emotion and determination to protect and defend the territories’ sovereign integrity that we share across the Chamber and the political divide.
The territories are constitutionally separate from the United Kingdom and have their own Governments and laws. The elected Governments of the territories are responsible for developing their economies but, as we said in the White Paper last year, the UK Government will continue to work with the territories to help them in this area. We have made significant strides but recognise that there is more to do. As several noble Lords outlined, the territories have particular challenges, such as their geographical isolation, small communities—only 52 in one case, as we heard—and the fact that at times they face hostility from their nearest neighbours. They have a narrow economic base and limited natural resources, and few have a manufacturing industry.
Many territory economies are based on the twin pillars of financial services and tourism, both of which are vulnerable to shifts in the global economy. Territory leaders recognise the need for diversification, but their scope to do so is limited. The Falkland Islands, for example, are actively developing their natural resources for their economic benefit. Anguilla, which was mentioned by the noble Baroness, Lady Howells, and others, is looking to develop a sustainable fishing industry, which is to be welcomed.
Renewable energy—another source of diversification —is another area that some Caribbean territories, such as Montserrat, are taking forward. They have an abundance of natural energy sources that can reduce reliance on imported fuels, help create jobs and of course improve balance sheets.
I will set out for noble Lords the work that we have been doing across government to support the territories in order to help them to diversify their economies. At last year’s Overseas Territories Joint Ministerial Council, the Government and territory leaders agreed to work together to promote trade and investment between the territories and the United Kingdom; to support territories in overcoming obstacles to trading with third countries; to support the development of entrepreneurship and the growth of small business in the territories; and to organise a business forum in 2013 involving the territories.
In July this year, we gave instructions to our overseas missions to assist bona fide territory companies and territory government/business delegations in accessing overseas markets. FCO and UKTI staff will also give a range of assistance across three fronts: first, assisting territory delegations visiting their markets; secondly, assisting territory companies experiencing market access difficulties; and, thirdly, assisting territory Governments and trade promotion agencies wanting to establish a presence in a market. We have also introduced a light-touch buddy system so that territories can call on expert UKTI advice in their respective regions.
We work in different ways across the territories, but I will highlight some specific examples where they have received assistance from the Government. Last year, the FCO launched the jubilee fund to help develop the capacity of the public services across all the territories. The fund, which this financial year is worth approximately £500,000, has been used to support secondments of territory officials to UK counterpart departments and agencies, as well as visits to territories by UK experts. This work assists the territories to reach high standards in governance, financial management and economic planning. Such standards allow the territories to present themselves as trustworthy and transparent partners in business, and excellent places in which to invest.
As several noble Lords have acknowledged, in 2011 the UK Government agreed to provide funding of more than £246 million to design, build and operate an airport on St Helena. I note the comments made by the noble Lord, Lord Boateng, and my noble friend Lady Hooper in this regard. I assure my noble friend Lord Brooke that I shall ask for a written response to him, enclosing both a name and an e-mail address to which he will be able to respond accordingly.
Earlier this year, the British Virgin Islands established an office in Hong Kong to help promote their financial services and tourism industry. They did so with the full support of the British consulate-general, who provided logistical help and identified the key players to ensure that the launch of the office was a success.
The Government support Montserrat in implementing its plan for sustainable economic development of the island. This includes exploiting geothermal power, improving telecommunications and upgrading transport links. We are also helping the Government of Montserrat implement reforms aimed at improving the environment for business. As the noble Lord, Lord Boateng, mentioned, diversification is an important part of the economy, and the Government are seeking to play their part.
Growth and jobs will be the focus of our discussions at this year’s Overseas Territories Joint Ministerial Council. Territory leaders will have the opportunity to discuss the issues with a number of high-level speakers from across government and industry. When it comes to issues of governance, Her Majesty’s Government are encouraging full participation, not just by the Foreign Office or DfID but by departments across the board.
In addition, we are facilitating a business event in the same week as the Joint Ministerial Council, which my noble friend Lady Hooper mentioned in her opening remarks. This will go further than a round-table discussion. We are working closely with the territories to ensure that they gain maximum benefit from it. We want them to showcase what they have to offer and to scope out the possibilities for the UK—territory, trade and investment.
I shall now turn to some of the questions asked, and if I am unable to answer all of them because of pressure of time, I will write to noble Lords. Gibraltar is close to my heart. The name Gibraltar in Arabic is Gibral Tariq, and means the mountain of Tariq, so I suppose I have a personal territorial claim. Gibraltar is the only overseas territory in the EU and European law applies to Gibraltar, with some exceptions. Our team in Brussels works closely with and on behalf of the Government of Gibraltar, alerting them to forthcoming EU measures, negotiating on their behalf, and ensuring that they are able to benefit from access to EU markets. I thank all noble Lords who raised the issue of sovereignty in both the Falklands and Gibraltar. Let me make Her Majesty’s position absolutely clear.
On the Falklands, the UK has no doubt about its sovereignty over the islands. The principle of self-determination underlines this. There can be no negotiation on sovereignty unless and until the islanders so wish. Our position on sovereignty in Gibraltar is also clear. The UK will never enter into arrangements under which the people of Gibraltar would pass under the sovereignty of another state. I assure my noble friend Lady Hooper that this will never happen against their freely and democratically expressed wishes. The relationship with the EU is also important for the other territories, and I am pleased to inform the House that only last week we reached the successful conclusion of the negotiations on the new overseas association decision.
I shall now turn to some of the questions asked, particularly in the area of financial services, which were raised by my noble friend Lady Hooper and the noble Lord, Lord Boateng. The noble Lord, Lord Bach, also raised several questions in this regard. The territories continue to meet their international standards. They have responded speedily to our G8 tax and transparency agenda, and the Prime Minister has commended the progress made by all overseas territories, as my noble friend Lord Blencathra acknowledged in his comments. Most have now had the multilateral convention on mutual administrative assistance on tax matters extended. They have all published action plans on beneficial ownership and agreed to play an active part in the new pilot initiative on multilateral automatic tax information exchange.
Turning to the incident which my noble friend mentioned in her opening remarks on Gibraltar, I will write to her in this respect with the full facts and, of course, place a copy in the Library.
As to the register of company beneficial ownership, we are strongly encouraging all territories to ensure that their consultations or assessment also include the question of whether the register of company beneficial ownership should be made public.
Some questions on taxation and Anguilla were raised by the noble Baroness, Lady Howell, and the noble Lord, Lord Boateng. I can assure them that I note and recognise the challenges that have been outlined. I, too, received a briefing from the Anguilla Government. I shall certainly be passing those comments back to my colleagues at the Foreign and Commonwealth Office. We are looking to support Anguilla through the promotion of public and private partnerships but I appreciate and fully understand the challenges it has gone through recently.
Turning to the comments of my noble friend Lord Blencathra on air passenger duty, for now I can say that no change is intended. However, again, his comments have been noted and I am sure will be shared. He also raised the issue of the gaming industry in Gibraltar. We believe that the Government’s reforms to the gambling tax will provide a fairer basis for competition between remote gambling supplied from the UK and that from overseas.
In conclusion, our relationship with the overseas territories is very strong. I am encouraged by, and welcome the warmth and support for, the Government’s position across the Chamber. We all recognise that the overseas territories are an important part of what constitutes our relationship with them and our valued partners. As I have already said, all government departments are committed to supporting the territories in their area of expertise. Despite all the challenges that we have, we are encouraging them and we regard them as partners; we are not there to interfere in areas of responsibility devolved to them. Our aim is simple: through the work that I have described, it is ultimately for them to be able to help themselves.