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Duncan Hames (Chippenham) (LD)
1. What steps he is taking to improve signposting to support and information for carers by health bodies and local authorities.
The Minister of State, Department of Health (Norman Lamb)
The Care Bill will require local authorities to ensure that information and advice is available to their local populations, including carers, and to co-operate with health bodies in fulfilling this function. The Bill will extend carers’ rights to an assessment of their needs so that carers receive appropriate support and signposting to local services.
Duncan Hames
I welcome those measures in the Care Bill to support carers, but for them to benefit from that support, they first need to be identified. It is estimated that only one in 20 carers of people with cancer, for example, receives a carer’s assessment. How does the Minister propose to get local authorities to work with the NHS and other health bodies to identify carers and ensure that their needs do not go unnoticed?
Norman Lamb
The Care Bill will introduce a right to an assessment for all carers, which I think is an incredibly important advance for them. We are also giving money—£1.5 million—to the Royal College of General Practitioners and other bodies, including nursing bodies, to raise awareness of the vital role of carers in working with GPs to improve the care of those who need it.
Barbara Keeley (Worsley and Eccles South) (Lab)
I think the Minister is missing the point, though, in that carers of people with cancer do not have contact with local authorities. Macmillan Cancer Support found that half of those carers are not getting any support at all and do not know where to go for it. They do have contact, however, with GPs and hospital doctors, so what is the Minister going to do to make sure that GPs and hospital doctors identify carers and make sure that they get that support and advice?
Norman Lamb
First, I pay tribute to the work of Macmillan. It does brilliant work, and this is a really important campaign because it will raise awareness. I do not think I am missing the point, because raising awareness among front-line professionals is critical, and local authorities will also have a duty through the Care Bill to co-operate with the health service and, of course, to integrate or join up care, all of which is in the interests of carers.
Alison McGovern (Wirral South) (Lab)
Carers—and, I hope, the Minister—local authorities and GPs will be distressed by this week’s report of care companies being investigated by Her Majesty’s Revenue and Customs, almost half of which were found not to be paying the minimum wage. How does tackling that problem at the heart of our care system fit into the Minister’s plans to help support carers?
Norman Lamb
I completely share the hon. Lady’s concern about care companies that do not pay the minimum wage. All care companies should meet their obligations in law to pay the minimum wage. HMRC has done a lot of work, focusing on the care sector, and I have been absolutely clear that there is an obligation for those care companies to meet their requirements under the national minimum wage legislation. We cannot get good care on the back of exploiting low-paid workers.
Alec Shelbrooke (Elmet and Rothwell) (Con)
2. What steps he is taking to ensure that compassionate care is at the heart of the NHS.
The Secretary of State for Health (Mr Jeremy Hunt)
Last week, we published a full response to the Mid-Staffs public inquiry and set out our ambition to transform the quality of compassionate care in the NHS. We have already put in place a robust new inspection regime and measures to make it easier for doctors and nurses to speak out when they are concerned about standards of care or safety.
Alec Shelbrooke
Compassionate care goes right through from surgeons to GPs. Will my right hon. Friend comment on evidence that epileptic women of child-bearing age are not being shown the compassion necessary during pregnancy from their GPs or neurologists and are not having the risks of taking their epilepsy medication outlined to them? To date, such medication has caused more than 20,000 birth defects.
Mr Hunt
I thank my hon. Friend for highlighting this important issue. The Medicines and Healthcare products Regulatory Agency regularly reviews the evidence relating to anti-epileptic drug use, particularly sodium valproate products, and we check what information is available to doctors so that it can be passed on to patients. I am concerned about the issue my hon. Friend raises, so I have asked NHS England’s national director of patient safety, Dr Mike Durkin, to look into it carefully and get back to me.
Nick Smith (Blaenau Gwent) (Lab)
New York has raised the age for buying tobacco products to 21. As a public health care policy, has the Department considered that matter?
Mr Hunt
As the hon. Gentleman will know, we are constantly reviewing all policies that could reduce tobacco use among young people. Smoking is the No. 1 killer, so dealing with it would be the best way of reducing this country’s premature mortality rates, which are far too high.
Jonathan Lord (Woking) (Con)
23. Does the Secretary of State agree that transparency is critical in improving hospital standards and that, following the Government’s latest measures in response to the Francis report, the health cover-ups by the previous Government will never be allowed to happen again?
Mr Hunt
The Labour party does not like to hear this, but the reality is that micro-managing the NHS through top-down targets failed to deal with the problems of compassionate care. My hon. Friend is absolutely right that the best way to deal with this is through total transparency, so that when we are sure there is a problem, the public find out about it quickly and it is dealt with quickly.
Jim Shannon (Strangford) (DUP)
Compassionate care must be central to the NHS. The Health Minister in Northern Ireland has launched “Quality 2020”, a strategy that is intended to improve care in Northern Ireland. What discussions has the Secretary of State had with the Northern Ireland Assembly and the Health Minister about this issue?
Mr Hunt
We are in close touch with all the devolved Administrations about the changes that we are making in the NHS in England, and, interestingly, we are experiencing different levels of engagement. We have had very good discussions with the Northern Ireland Health Minister about some of the changes, but those in Wales are still refusing to commission a Keogh report on excess deaths, which I think shows that Labour in Wales has not learnt the lessons of transparency.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
3. What steps he is taking to train and retain more accident and emergency health specialists in the UK.
The Secretary of State for Health (Mr Jeremy Hunt)
I have asked Health Education England to consider how we can improve the structure and skill mix of the emergency medicine work force to deal with long-standing shortages in staff at both consultant and trainee levels. Along with the Emergency Medicine Taskforce, we are considering a number of options, such as increasing the non-doctor work force and the number of emergency nurse practitioners.
Mr Sheerman
Just what is going on in medical education in this country? We train doctors, but some never work as doctors, and others move abroad. Calderdale and Huddersfield NHS Foundation Trust has advertised and advertised again, but it cannot recruit accident and emergency staff. It certainly cannot recruit any who have been trained in this country, or who have been trained in paediatrics. What is going wrong with medical education here?
Mr Hunt
The hon. Gentleman has raised some important issues. We do face big challenges. We have increased the number of doctors in the NHS by 6,600 over the last three years, but it is still very difficult to attract as many people as we need to disciplines such as A and E.
I know that Calderdale and Huddersfield NHS Foundation Trust is especially concerned about A and E staffing. I had a very good meeting with representatives of the College of Emergency Medicine last week to discuss A and E consultants’ terms and conditions and, in particular, their antisocial working hours. We are giving the matter close consideration, but I agree with the hon. Gentleman that we need to do better in this regard.
Mr Philip Hollobone (Kettering) (Con)
While it is important to recruit and retain more A and E specialists, part of the problem is that a third of the patients who are dealt with in A and E departments could receive better treatment closer to their homes. What can the Secretary of State do to encourage that?
Mr Hunt
My hon. Friend is absolutely right. One of the biggest mistakes made in health care over the past decade was the introduction of the disastrous changes in the GP contract in 2004, which broke the personal link between GPs and their patients. Hard-pressed A and E departments, including the one at Kettering hospital, say that one of the things that will make the biggest difference to them is the provision of a named GP for the over-75s, so that they know that someone is responsible for those people when they are not in hospital.
Fiona Mactaggart (Slough) (Lab)
Is it not the chaotic and overstretched nature of many A and E departments that makes A and E an unattractive discipline for people to work in? Ever since the closure of the A and E department at Wycombe general hospital in my constituency, Wexham Park hospital has been unable to cope. What will the Secretary of State do about that?
Mr Hunt
We have gained more than 600 additional A and E doctors over the last three years, so the numbers are rising. However, the best thing that we can do for A and E staff is to give them a sense that we are addressing the long-term challenges that they face. The issues of integration with social care and delayed discharges are being addressed through the health and social care integration transformation fund, but we must also ensure that there are better primary care alternatives. The named GP for the over-75s will make a big difference in that regard.
Margot James (Stourbridge) (Con)
My local hospital, Russells Hall, is experiencing considerable difficulty in recruiting A and E consultants. Would not a good alternative approach be to train more paramedics to serve on ambulances and provide more effective and robust triage at emergency centres, so that patients can be redirected when necessary?
Mr Hunt
As ever, my hon. Friend speaks very wisely about this subject. In his review of A and E services, which was published a couple of weeks ago, Professor Keogh said that paramedics could deal with 50% of 999 calls on the spot, without taking people to hospital. I think that there is a big role for ambulance services that are prepared to upskill. It is also important for us to ensure that they have the necessary information. One of the main changes that we intend to make next year will ensure that they have access to the GP records of the people whom they pick up, so that they can give those people the care that they need in their own homes.
Mr Jamie Reed (Copeland) (Lab)
The president of the College of Emergency Medicine has said that the Government’s reorganisation has made A and E recruitment worse; the chief executive of the NHS Confederation has said that A and E pressures have been compounded by three years of structural reforms; yesterday, we learnt that the number of nurses choosing to leave their profession had jumped by more than one quarter under this Government; and the Health Secretary himself admits he is worried by the fall in nurse numbers on this Prime Minister’s watch. I hope he listens carefully so that he can answer precisely: will he today give the House a guarantee that every A and E in the country will have enough nurses this winter?
Mr Hunt
Will the hon. Gentleman think about what he has said? He said he was against a reorganisation that got rid of 8,000 managers and put 6,600 doctors on to the front line. That is why we are doing nearly a million more operations every year and why waiting times for longer waits are shorter than they were under Labour. We are recruiting more doctors because we are putting money into the front line.
Miss Anne McIntosh (Thirsk and Malton) (Con)
It takes seven years to train a doctor, but, for whatever reason, the new GP contract is looking to end seniority pay in six years. Is my right hon. Friend not concerned that that will lead to a mass retirement of doctors at the end of that six-year period in 2020?
Mr Hunt
We have to make the GP profession attractive to younger GPs as well. The money we save from getting rid of seniority pay will go back into practices, but it should not be given to people just for length of service; it should be related to quality of service too, which will make the GP profession much more attractive.
Rosie Cooper (West Lancashire) (Lab)
5. What recent assessment he has made of ambulance handover times at accident and emergency departments.
The Minister of State, Department of Health (Norman Lamb)
Patient handover is a key part of delivering good emergency care. Systems are in place to ensure efficient handover, but we recognise that it sometimes takes longer than the recommended 15 minutes, particularly during peaks of demand. We are taking the issue of handover delay seriously, which is why we have introduced financial sanctions for unacceptable delay.
Rosie Cooper
Southport and Ormskirk hospital in my constituency has one of the longest handover times in the north-west, with ambulances queuing outside the hospital and patients lying on stretchers for hours. How does that offer the patient-centred care and dignity that the Government keep promising but failing to deliver? What can the Minister do to make it better for my constituents?
Norman Lamb
That sort of experience is not acceptable and has to be addressed, and I am sure the hon. Lady will welcome the encouraging news that the sanctions in the national contracts that clinical commissioning groups enter into with hospitals have resulted in a 38% reduction in delays, comparing the first two weeks of last November with the first two weeks of this November, which is the first period during which we measure winter pressures on handovers. That sign of a significant increase is to be welcomed.
Mr Simon Burns (Chelmsford) (Con)
As an east of England MP, the Minister will be aware of the problems with the East of England ambulance service and handover times at Broomfield hospital. While I warmly welcome the initiative, through the contract, to bring pressure to bear to reduce handover times to 15 minutes, will he join me in paying tribute to the new management of the ambulance service for what it is doing, through its assessments and monitoring, to deal with this problem?
Norman Lamb
I have had a similar experience at the Norfolk and Norwich hospital. It is clear that the number of delays in the east of England has reduced substantially, and I pay tribute to everyone involved. Getting urgent care right requires collaboration between ambulance trusts, acute care and GPs and social care workers on the ground. Significant improvements have been made in the east of England, as well as across the rest of the country.
Andrew Gwynne (Denton and Reddish) (Lab)
The Minister surely knows that deteriorating ambulance handover times are just one of a growing number of signs highlighting what is going wrong with A and E on this Government’s watch. Now we see the Secretary of State and his Ministers in full panic mode after denying for months that there was a problem. The question is: why was the Health Secretary the last person in the entire NHS to realise that there was an A and E crisis?
Norman Lamb
It seems as if Labour is always desperately in search of a crisis, even if there is none to be found. If the hon. Gentleman had listened to the answer that I gave to the hon. Member for West Lancashire (Rosie Cooper), he would have heard me say that there had been a 38% improvement in waiting times for ambulance handovers between last November and this November. I am sure that he will welcome that.
George Freeman (Mid Norfolk) (Con)
I congratulate the Minister and the Government on the work that is being done to integrate social and NHS care. Does my hon. Friend agree that, for the many elderly patients moving between hospital care and community social care, integrated patient records across the two areas will significantly improve elderly care? Will he meet me and campaigners following Health questions to discuss my ten-minute rule Bill?
Norman Lamb
My hon. Friend deserves credit for that one. Of course I would be happy to have a chat with him. He makes a point about integrated care records. We should be focusing on ensuring that we do much more to keep frail and elderly people out of hospital in the first place. The system that we have inherited is dysfunctional, and the shift towards integrated care is exactly what needs to be done.
Mark Menzies (Fylde) (Con)
6. What progress his Department has made on improving out-of-hospital care for frail elderly people.
Sir Tony Baldry (Banbury) (Con)
13. What progress his Department has made on improving out-of-hospital care for frail elderly people.
Nick de Bois (Enfield North) (Con)
17. What progress his Department has made on improving out-of-hospital care for frail elderly people.
The Secretary of State for Health (Mr Jeremy Hunt)
Improving the quality of out-of-hospital care is the biggest strategic long-term change that we need to make in the NHS. It will help to make the NHS sustainable. Reforming the GP contract is the first step, but we also need to make major progress on integrating the health and social care systems.
Mark Menzies
I welcome the Government’s announcement of named GPs for older people. What does the Secretary of State envisage that will mean for my older constituents?
Mr Hunt
My hon. Friend is not the only person to welcome that change. After months of telling the House that this was nothing to do with the A and E problems, the shadow Health Secretary said on the “Today” programme that he welcomed the change and that it would make a difference to A and E. So I welcome the return of the prodigal son with great pride and pleasure. For my hon. Friend’s constituents, this will mean that there will be someone in the NHS who is responsible for ensuring that they get the care package that they need. That is incredibly important, because when people are discharged from hospitals, the hospitals worry about whose care they will be under. This change will provide that crucial link and make a real difference.
Sir Tony Baldry
Does my right hon. Friend agree that the 2004 GP contract did enormous damage to the relationship between GPs and their patients, and that the recent changes agreed with GPs should ensure much more proactive care of our most vulnerable constituents and ease pressure on A and E departments?
Mr Hunt
I agree with my hon. Friend, and I am pleased that the shadow Health Secretary also agrees with him in welcoming the reversal of that disastrous contract. The personal relationship between doctor and patient is at the heart of what the NHS stands for, and at the heart of that is a responsibility to ensure that people get the care they need. That is what we need to get back, and I think that the change will make a big difference to my hon. Friend’s constituents.
Nick de Bois
Enfield CCG is working closely with Enfield council to try to deliver integrated health and social care, particularly for the elderly and the frail. Noting our higher-than-average elderly age demographic in the borough, will the Secretary of State take steps to ensure that those efforts are supported with extra funding?
Mr Hunt
My hon. Friend knows that the funding arrangements are decided independently of the Government, by NHS England, which will make its decision at a board meeting before Christmas. He is absolutely right to suggest that the funding formula should reflect not only social deprivation but the age profile of constituents, because the oldest people are of course the heaviest users of the NHS.
Liz Kendall (Leicester West) (Lab)
The Health Secretary claims that he wants the NHS to be the best in the world at looking after the elderly. Nice rhetoric, but the reality is that we now have the highest-ever number of elderly people trapped in hospitals because they cannot get the health and social care they need at home. We now have the equivalent of five hospitals full of elderly people who do not want to be there, and that is costing the taxpayer £20 million a month. Is not the truth that care of the elderly is getting worse, not better, on his watch?
Mr Hunt
The truth is that the previous Government had 13 years to integrate the health and social care systems, but they failed. We are doing that, and we are also providing named GPs to the most vulnerable people, so that, hopefully, they do not have to go to hospital in the first place. That is doing a lot more for older people than the hon. Lady’s Government ever did.
Mr Stephen Dorrell (Charnwood) (Con)
Does my right hon. Friend agree that successive Governments over 30 years have talked about the importance of joining up the different bits of the health care system and joining that up with social care? Is not the difference between this Government and their predecessors that, through health and wellbeing boards, the integrated care fund, named GPs and the pioneers programme that he has announced, this Government are actually doing it, rather than just talking about it?
Mr Hunt
I have to pay tribute to my right hon. Friend, because he has been talking about the integration of health and social care for a lot longer than I have, and he is absolutely right. I would add to his list one other really important thing we are doing: we are making sure that whatever part of the system someone is in, doctors can access their GP medical record—with their permission—because that information is vital in showing their allergies, medical history and previous admissions. Breaking down the barriers that prevent that from happening is one of the things that has not been picked up but is in the GP contract.
Graham Evans (Weaver Vale) (Con)
7. What steps his Department has taken to ease the short and long-term impact of winter pressures on NHS services.
The Secretary of State for Health (Mr Jeremy Hunt)
In the short term, a record £400 million has been assigned to help the NHS cope with winter pressures this winter, with £250 million announced in August—much earlier than before. For the long term, we will provide better out-of-hospital care for the frail elderly, by restoring the link between GPs and older patients, and looking to integrate the health and social care systems.
Graham Evans
Will my right hon. Friend join me in praising the outstanding work of Age UK and, in particular, Age UK Cheshire, which serves my constituency? It is raising older people’s awareness of seasonal impacts on health and offering support to prevent unnecessary pressures on the health service.
Mr Hunt
I am delighted to do that. As these are the last Health questions before Christmas, all of us would want to pay tribute to the voluntary organisations that do an extraordinary job of making sure that vulnerable older people do not get lonely over the Christmas period. It is heroic what they do—when we are with our families, they are looking after other people—and we should salute them all.
Valerie Vaz (Walsall South) (Lab)
22. One way to ease the pressure on the NHS is by not handing the £2.2 billion underspend back to the Treasury. Will the Secretary of State consider using it for the NHS?
Steve Baker (Wycombe) (Con)
Along with county colleagues, I wrote to the Secretary of State on this subject, because Buckinghamshire Healthcare NHS Trust is relatively underfunded compared with the rest of the country and it is in special measures following the Keogh review. Further to the answer that he gave to the earlier question, when can we expect the NHS England funding settlement to reflect more equitably the age of the public?
Mr Hunt
I commend my hon. Friend for the campaigning he does for high standards in his local trust. That has not been easy because, as he says, there have been a lot of problems there, although I hope he thinks that we are beginning to turn a corner. The decision on the funding allocations will be made by NHS England before Christmas, and the things that he says will, of course, be taken into account.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Yesterday we learned that the number of people suffering from hypothermia has soared by almost 40% on this Government’s watch. This morning the Office for National Statistics revealed that the number of older and vulnerable people who died unnecessarily last winter jumped by 29%. For every person who tragically loses their life over the winter months, eight more are admitted to hospital, putting huge strains on our crisis-ridden accident and emergency services. Will the Secretary of State please tell us what he is going to do about it?
Mr Hunt
I do not think I have yet answered a question across the Dispatch Box from the hon. Lady, so I welcome her to her post. I just say that she should be careful what she chooses to turn into a political football, because hypothermia admissions, as Public Health England said in August, are very closely linked to the number of cold days over a winter and the length of that winter. We had a particularly difficult winter last year, but the number of winter deaths was nearly 20% higher under the previous Government, when the right hon. Member for Leigh (Andy Burnham) was Health Secretary.
Mrs Mary Glindon (North Tyneside) (Lab)
8. What assessment he has made of the effects of social care budget changes on attendances at accident and emergency departments.
The Minister of State, Department of Health (Norman Lamb)
Joining up health and social care is an absolute priority for this Government. The NHS will provide £900 million this year and £1.1 billion next year to support social care services with a health benefit and to promote joint working. In 2015-16, we will introduce a £3.8 billion pooled budget for health and social care. The number of bed days lost because of delays attributable to social care was nearly 50,000 lower in 2012-13 than it was in 2011-12.
Mrs Glindon
In the first two years of this Government, there was a frightening 66% increase in the number of people aged 90 and over coming into accident and emergency in a blue-light ambulance. When will the Minister accept that cuts to elderly care have increased pressure on the NHS, and are a major cause of the A and E crisis?
Norman Lamb
First, it is worth us all recognising that there is an increase in the number of frail elderly people in our society living with chronic conditions and that that is putting additional pressure on accident and emergency departments. The numbers have increased by over a million a year since 2010. However, the fact that there has been a reduction of 50,000 in the number of delayed discharges demonstrates that the social care system is doing incredibly well, and we should pay tribute to social care workers across the system who are doing so well to ensure that that improvement is taking place.[Official Report, 4 December 2013, Vol. 571, c. 13MC.]
Andrew George (St Ives) (LD)
Bottlenecks in A and E are certainly not new, and they are not aided by the mantra that acute hospitals should be able to manage with fewer acute beds. On my hon. Friend’s point about shared and integrated planning, is he prepared to go further and push the Government in the direction of shared and integrated budgets as between health and social care?
Norman Lamb
I thank my hon. Friend for that question. We are creating a pooled budget in 2015-16 with this £3.8 billion fund. I can remember in opposition frequently making the case for integrated care and not really getting much of a positive response from the then Government. As the Chair of the Select Committee, my right hon. Friend the Member for Charnwood (Mr Dorrell), said, the great thing is that this Government are actually doing it.
John Glen (Salisbury) (Con)
9. What steps his Department is taking to improve the health of veterans.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
We have made excellent progress in improving the health care of our veterans by investing £22 million to support their physical and mental health. The Government have also made available £35 million of the LIBOR bank fines to support veterans and armed forces projects.
John Glen
I thank the Minister for that response. Will he outline the steps being taken to ensure that there is a co-ordinated approach between those commissioning services for veterans, including Salisbury district hospital, which does so much to service the veterans in Wiltshire, so that that they get the right revenue at the right time and do not go into deficit?
Dr Poulter
My hon. Friend is right to highlight the importance of co-ordinating veterans services, and getting the continuity of care right between a soldier or a member of the armed forces leaving the armed forces and being looked after by the NHS. I hope he will be reassured to hear that in terms of specially commissioned services, we now have nine super-prosthetic centres available for veterans who have lost limbs, 10 specialist mental health teams looking after veterans, a 24-hour mental health support line for veterans and many other measures. We are also making IVF available to veterans who have lost genitalia as a result of combat injuries.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Given that health is a devolved matter, is the Minister satisfied that the Administrations in Wales, Scotland and Northern Ireland are providing similarly sufficient services for our veterans?
Dr Poulter
Obviously, we work closely with the devolved Administrations on all such matters. We have UK armed forces, and with health being a devolved responsibility, it comes to each part of the United Kingdom to put in place the right support. On the whole, that is done very well, but I am particularly proud of the efforts the Government have made on veterans’ mental health and on specialist prosthetic centres, which can be commissioned by the devolved Administrations if they wish to make such facilities available.
Penny Mordaunt (Portsmouth North) (Con)
Many veterans are young men and women, and I know from my own constituency case work that a tremendous burden is often placed on elderly parents in caring for them, especially if they are suffering from post-traumatic stress disorder. Does the Minister agree that better integration between medical services in the armed forces and the NHS will benefit those families as well as the veterans themselves?
Dr Poulter
My hon. Friend speaks with considerable knowledge of the subject from her tradition and strong record of service. She will know that an important aspect of providing proper support for veterans is ensuring that we give their families the right support. We are working very closely with armed forces families and services charities to ensure that we do exactly that. That is why we have also put in place mental health first aid support for the families of servicemen and women to ensure that families know how to support veterans when they run into difficulties with post-traumatic stress disorder.
Stephen Gilbert (St Austell and Newquay) (LD)
10. What assessment he has made of the effectiveness of section 64 grants in supporting children’s hospices.
The Minister of State, Department of Health (Norman Lamb)
We are aware how vital the annual grant of more than £10 million is to children’s hospices and we have pledged to continue it while we work with hospices to develop a per patient funding system to ensure that hospice services from 2015 can be funded locally and on an equitable and transparent basis.
Stephen Gilbert
I am grateful to my hon. Friend for that answer. Since the introduction of the grant in 2006, children’s hospices now reach 75% more children and families and provide vital services. Can he assure me that the funding agreement will be in place by 2015?
Norman Lamb
Let me first pay tribute to the amazing work of so many children’s hospices around the country. I know that Little Harbour in St Austell in my hon. Friend’s constituency has benefited from the grant and, indeed, from the increase in the grant last year. It is absolutely the intention both to work with hospices to get this right and to introduce the new system in 2015.
Mr Andrew Turner (Isle of Wight) (Con)
Will the Minister join me in sending condolences to Gemma and Aaron Rolf and Jack, the parents and brother of six-year-old Sophie Rolf, who had an inoperable brain tumour and died, sadly, yesterday? Sophie and her family raised thousands of pounds to bring children’s facilities to the Earl Mountbatten hospice on the island. Those facilities were recently opened and will be a lasting tribute to a very special little girl.
Norman Lamb
Absolutely. I offer my condolences to the family of Sophie. The remarkable selfless fundraising done by such families does much to provide care for others and that will be a remarkable legacy for a fine young girl.
Glyn Davies (Montgomeryshire) (Con)
11. What discussions he has had with NHS hospital trusts on taking account of the interests of patients in Wales who depend on hospitals in England.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
As my hon. Friend knows, officials from NHS England frequently meet the Welsh Government to discuss the issue of health care provided in England for Welsh patients. He will know that NHS England has a duty to consider the likely impact of any commissioning decision it makes on people who reside in an area of Wales that is close to the border.
Glyn Davies
Does my hon. Friend agree that when commissioners for NHS hospital trusts in Shropshire are considering where to locate services, account must be taken of the needs of patients in Montgomeryshire, the vast majority of whom are dependent on Shropshire hospitals, particularly the Royal Shrewsbury hospital?
Jane Ellison
My hon. Friend is absolutely right to highlight the fact that cross-border health care is an area of great concern. There is a requirement to take note, as he says. The work is ongoing and I am happy to have those discussions with him.
Hywel Williams (Arfon) (PC)
It is not only patients local to the border who access treatment in England. Patients from as much as 90 or 100 miles away in the west of Wales—for example, young babies—access treatment on the Wirral. However, does the Minister agree that it is in the interests of hospital trusts in England to take patients from Wales, as it has been demonstrated that they often make the difference between a viable and non-viable service?
Jane Ellison
Of course, it is possible, depending on clinical need, for clinicians to recommend treatment in England. The hon. Gentleman knows that there are ongoing discussions, some of which are quite difficult, but the intention is obviously to ensure that we get the best health care for everyone. I would urge the Welsh Government, in particular, to consider ways in which they can review how arrangements are made in Wales. There have been calls for a review of hospitals in Wales, not least the one today from the Royal College of Surgeons.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
Hospitals such as the Royal Shrewsbury hospital, dealing with patients from both sides of the border, have historically incurred additional administration costs in dealing with the two separate authorities. What work is the Minister doing to find out what the costs are and whether she can help meet them in the future?
Jane Ellison
We are aware of those additional costs, and I know that my hon. Friend recently met my right hon. and noble Friend the Under-Secretary of State for Health. We are very conscious of those costs and of the difficult decisions. It is the subject of ongoing negotiation between the Welsh Government and NHS England.
Andrew Selous (South West Bedfordshire) (Con)
12. What lessons he has learnt from the findings of the report of Professor Timothy Briggs on improving the orthopaedic surgery published in September 2012, entitled “Getting it right first time”.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
In 2012 Ministers welcomed the publication of the report and acknowledged that its recommendations could help build on improvements in orthopaedic care. I believe that my right hon. Friend the Secretary of State met Professor Briggs.
NHS England is now responsible for securing high-quality outcomes. Peter Kay, the national clinical director for musculoskeletal services, is also supportive of the report’s findings.
Andrew Selous
Growing numbers of orthopaedic consultants accept that collaboration across networks of hospitals could improve the quality of orthopaedic care, which frankly has not always been good enough in the past. Will my hon. Friend accept the recommendations of the “Getting it right first time” report?
Jane Ellison
We know that NHS England has welcomed Professor Briggs’ recommendations. They are contributing to a substantial body of work on orthopaedics, with the sole objective of improving outcomes for patients. I am sure that my hon. Friend will welcome the fact that this year for the first time data about surgical outcomes have been published at both hospital and consultant level, with the objective of driving up quality and supporting patient choice.
Paul Burstow (Sutton and Cheam) (LD)
14. What steps he has taken in response to the findings of the report by the Chief Medical Officer, “Our Children Deserve Better: Prevention Pays”, published in October 2013.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
The chief medical officer’s report warmly welcomes the Government’s commitment to increasing health visitor numbers and support in the early years, and I shall be working with the children and young people’s outcomes forum to inform future improvements in children’s health.
Paul Burstow
My hon. Friend the Minister will know that about half the burden of mental health disease can first be identified during the teenage years. In her report, the CMO says that our information about the prevalence of childhood mental health problems and the level of under-diagnosis of mental health problems among that population is out of date. When will the Government commission the next survey? The last one was done in 2004. Is it not time to do another?
Dr Poulter
My right hon. Friend raises important issues. I should like to pay tribute to the work that he did in expanding children’s talking therapies and IAPT—improving access to psychological therapies—services to make better provision for mental health support. He is right to highlight, as the CMO did, the fact that we do not have enough data on children’s mental health. That has been a historical problem, and we are looking at ways to improve the data so that we can use them to improve health outcomes in mental as well as physical health.
Dr Sarah Wollaston (Totnes) (Con)
In Devon and Cornwall since the beginning of this year there have been three occasions when children as young as 12 and 13 with acute mental illness have been detained in police cells instead of an appropriate place of safety, and 25 occasions when children of 17 and under have been so detained. Will the Minister meet me to discuss how we can end this appalling situation and make sure that all children who are detained under section 136 are seen in an appropriate location?
Dr Poulter
My hon. Friend is right to highlight this problem, which is unacceptable. My hon. Friend the Minister of State is looking into it. A lot of anecdotal evidence is stacking up that this practice is happening. We do not find it acceptable, and I or my hon. Friend will be happy to meet her to discuss the matter further and ensure that it is stopped.
Karl Turner (Kingston upon Hull East) (Lab)
15. How many NHS walk-in centres have (a) closed and (b) restricted their opening hours since May 2010.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
The information is no longer collected centrally. Since 2007, under the changes introduced by the previous Government, the local NHS has been responsible for walk-in-centres, and it is for local commissioners to decide on the availability of these services.
Karl Turner
Official NHS figures show that attendances at accident and emergency departments have increased more than three times faster under the Tory-led Government than under the Labour Government. Does the Minister regret allowing so many walk-in centres to close?
Dr Poulter
As I outlined, there are not any official figures, because the data are now held locally. Monitor carried out a survey of some trusts, but that is not a measure of all trusts. The hon. Gentleman wants to look at the reasons why there have been changes to walk-in centres. There was a reduction in central funding of over 90% under the previous Government. I believe that the right hon. Member for Leigh (Andy Burnham) was a Minister at the time; if the hon. Member for Kingston upon Hull East (Karl Turner) wants to look at the reasons for that, he should perhaps ask his right hon. Friend why he reduced central funding for walk-in centres by 90%.
Henry Smith (Crawley) (Con)
In 2005, under the Labour Government, Crawley hospital had its accident and emergency department closed. Now we have an urgent treatment centre that has increased its operating hours and the services that it provides. What advice can the Department give to clinical commissioners about how we can expand urgent treatment centres?
Dr Poulter
My hon. Friend is absolutely right to highlight that these are local decisions that need to be made by local commissioners, because what looks good in Crawley will be very different from the needs in Bradford. That was the very reason that underpinned the previous Government’s decision to transfer responsibility for these services to local commissioners, but we often need more co-located services, because the Monitor survey picked up the fact that in the past, far too often, walk-in centres were isolated in the community; people did not know how to access them, or when they could do so. Monitor also recognised that there was duplication of effort, and sometimes patients who needed to be seen in accident and emergency were treated, inappropriately, in walk-in centres.
Mr Speaker
I am deeply obliged to the Minister, but we must leave time for Mr Mowat.
David Mowat (Warrington South) (Con)
16. What recent consideration he has given to banning the use of NHS funds for provision of alternative therapies.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
As my hon. Friend will know, the provision of alternative and complementary therapies is decided by clinical commissioning groups, which obviously must take into account local health needs and priorities.
David Mowat
I thank the Minister for that answer. Many parts of the NHS are under intense, relentless financial pressure, so how can it be right that we spend millions of pounds a year on remedies that have no scientific basis, other than through their placebo effect?
Jane Ellison
My hon. Friend is quite right to highlight that value for money is very important. It is for local commissioners, not the Department, to decide how funding is spent to meet the needs of the populations whom they serve, but crucially, clinical commissioning groups are responsible for achieving value for money as regards the services that they commission, as well as for delivering improvements in the quality of care, and better outcomes for patients.
Simon Danczuk (Rochdale) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Health (Mr Jeremy Hunt)
I need to correct the record. In the House on 30 October, I said that it took 21 minutes longer for the average person to be seen in A and E under the previous Government—a figure that was repeated by the Prime Minister in Prime Minister’s questions. My Department made a statistical mistake: it turns out that under Labour, the average person took not 21 but 44 minutes longer to be seen. I apologise for underestimating the improvements made under this Government.
Simon Danczuk
When people have mental health problems, waiting too long for talking therapies can lead to poor recovery, relationships falling apart, and job loss. What progress has the Minister made in establishing and delivering maximum waiting times for talking therapies?
Mr Hunt
The hon. Gentleman is absolutely right: this is a big priority for the Government. We are a big fan of talking therapies. We have taken huge strides in improving take-up, but there is still a long way to go, and we are looking at introducing access standards, so that there is a maximum time beyond which no one has to wait.
John Pugh (Southport) (LD)
T3. What measurable progress is being made in improving data sharing, not just between hospitals and general practitioners, but between the NHS and social services, to avoid bureaucracy and additional cost?
Mr Hunt
My hon. Friend has taken a great interest in this topic, and he is absolutely right to do so, because if we are to give integrated, joined-up care, in which people deal with NHS professionals who know about them, their medical history, their allergies and all the other important things, it is vital that, if they give their consent, their medical record can be accessed. That needs to be from GP surgery to hospital to social care system. Under the named GP policy that we have announced, there is a big opportunity for care homes to access GP records and keep them updated daily, so that GPs are kept in daily contact with how some of the most vulnerable people are doing.
Andy Burnham (Leigh) (Lab)
Today I want to put to the Secretary of State new evidence that the A and E crisis is deepening, and having a serious knock-on effect on ambulance services. Information from police forces reveals that cases in which police cars have to ferry patients to A and E are far more widespread than people realise; in some areas, it happens on a daily basis. One ambulance service is now using retained firefighters to attend calls, and—this is how bad things have got—another ambulance service has seen a 350% increase in the number of 999 calls attended by taxis. Does the Secretary of State think that it is ever acceptable that when a patient dials 999, a taxi turns up?
Mr Hunt
I am afraid that that is utterly irresponsible. We are hitting our A and E target, and we are hitting our ambulance standard. When the right hon. Gentleman was Health Secretary he missed the ambulance standard for October, November, December and January. He is trying to talk up a crisis that is not happening. He should think about people on the front line and, just for once, put patients before politics.
Andy Burnham
The country will have heard the complacency from the Secretary of State. He needs to explain why he spent Friday afternoon making panicked phone calls to hospitals up and down the country that were missing their A and E target. He did not condemn the use of taxis, which is unacceptable but is happening on his watch because ambulances are trapped at A and E, unable to hand over patients. That means that 999 response times have got worse and large swathes of the country, right now, are without adequate ambulance cover. Is it not time that the Secretary of State was honest with the public and admitted the scale of the crisis facing the NHS this winter, and took action now to prevent it from engulfing other emergency services?
Mr Hunt
We will take no lessons in complacency from the party that did so little to sort out excess deaths in hospitals such as Mid Staffordshire, Morecambe bay, Basildon and Colchester, and many other hospitals. The truth is that, compared with when he was Health Secretary, we see nearly 2,000 more people every single day within the four-hour standard. We are doing much, much better: we have more A and E doctors, and the NHS is doing extremely well. I know that for him it is always politics first and patients second but, for once, he should be responsible and think about the people on the front line.
Neil Carmichael (Stroud) (Con)
T4. In contrast to the previous Government’s lack of focus, what have this Government done about hospital infection control, with particular reference to data management systems?
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
My hon. Friend makes an important point, and I hope that he will be reassured that under the current Government, clostridium difficile and MRSA rates are both about 50% lower than they were under the previous Government. We will continue to make sure that we reduce unacceptable hospital infections.
Rosie Cooper (West Lancashire) (Lab)
T2. Following Francis and Keogh, and in creating a more open and accountable NHS, will the Secretary of State, in the spirit of total transparency that he favours, order foundation trusts to publish all their board papers, have exactly the same publishing requirements as non-FTs, and hold all their board meetings in public?
Mr Jeremy Hunt
I absolutely encourage that transparency. In fairness, the hon. Lady will accept that this Government have done more to improve transparency in the NHS than any Government have ever done. I would encourage all FTs to be transparent about their board meetings, but they are independent organisations, and we have learned—[Interruption.] Well, this was legislation that her Government introduced, and we have learned that it is important to give people autonomy and independence, because they deliver a better service for patients.
Dr Julian Huppert (Cambridge) (LD)
T6. Cambridgeshire and Peterborough clinical commissioning group receives one of the lowest amounts of funding per head in the country. The Government’s own fair shares formula, which takes account of factors such as population, age and deprivation, says that we should have £46.5 million more each year. I know that it is not his decision, but does the Minister think that the new formula should be implemented?
Dr Poulter
My hon. Friend makes some important points about the funding formula. He will know that for the first time this year, it will be set independently by NHS England, and I am sure that it will take on board the points that he has made. He will recognise, however, that there are many other determinants of the funding formula, such as deprivation, which it will want to look at and take into account.
Caroline Lucas (Brighton, Pavilion) (Green)
T5. The last time I asked the Secretary of State about the £30 million-worth of cuts forced on hospitals in Brighton and Sussex, he said that it was all down to local discretion. Does he admit that behind his rhetoric about protecting the NHS budget there still lies a real 4% cut to the centrally dictated national tariff? Does he acknowledge, therefore, that hard-working nurses and doctors have to do more with less money while patients suffer? Will he reverse those cuts?
Mr Jeremy Hunt
Can I explain to the hon. Lady that the reason for the 4% efficiency savings is that, although we protected the budget in real terms, demand for NHS services has gone up by 4% year in, year out, so we need to find those efficiencies? Within that, it is incredibly important that we do not make false economies in relation to the number of nursing staff, which is why last week’s announcement on our response to the Francis report will make a big difference, and we have already begun to see more nurses.
Jonathan Evans (Cardiff North) (Con)
T7. Given the more than 30% increase in the past five years in the cost to the NHS of prescribing stoma appliances, what action is the Minister taking to promote training for stoma patients in alternative management techniques, such as colostomy irrigation?
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
My hon. Friend may know that specialist NHS stoma nurses offer a range of support and advice to help patients adapt to life with a colostomy, and this advice can cover colostomy irrigation, if appropriate. This is supplemented with patient literature on colostomy, which is widely available in the NHS.
John Cryer (Leyton and Wanstead) (Lab)
Further to question 15, I understand that responsibility for walk-in centres has been devolved. Why does that necessarily prevent central Government from collecting those figures centrally? It is pretty staggering that a Minister should turn up and say, “Well, the decisions are made locally so we just don’t bother finding out.”
Dr Poulter
That is a question that the hon. Gentleman had much better address to his own Front Bench, who made the decisions to devolve these responsibilities locally. When it comes to commissioning health services, we believe it is down to doctors and nurses, who are now leading clinical commissioning on the front line, to determine which services are appropriate in local areas. There were clearly concerns about the way that urgent care centres had previously been commissioned. That is why so many of them are now being relocated and co-located in accident and emergency departments.
Mr John Baron (Basildon and Billericay) (Con)
T8. The Secretary of State is well aware that the all-party group on cancer has campaigned long and hard for the monitoring of one and five-year survival rates as a means of promoting earlier diagnosis, cancer’s magic key. Is he confident, though, that the mechanisms are sufficient to ensure that those clinical commissioning groups that are underperforming in relation to their one and five-year survival rates will face concrete action to improve earlier diagnosis, given the recent OECD report suggesting that 10,000 lives a year could be saved in this country if we matched European average survival rates?
Jane Ellison
My hon. Friend is right to champion early diagnosis and he has raised these issues in the House on many occasions and with me. Improving cancer survival is a key priority for this Government. We aim to save an additional 5,000 lives each year by 2014-15. Clinical commissioning groups have a duty on early diagnosis. It is part of their crucial outcomes indicators set, and they will be held to account for that because we cannot deliver those improvements in cancer outcomes without early diagnosis.
Helen Jones (Warrington North) (Lab)
When the Government decided to slash council budgets and, therefore, adult social services, did they know what effect that would have on hospitals, particularly A and E, and decide to carry on anyway, in which case they are too callous to be running the NHS, or did they not know, in which case they are too stupid to be running the NHS?
The Minister of State, Department of Health (Norman Lamb)
Throughout this Parliament we have ensured that extra funding has gone into social care to recognise the fact that council budgets have been under strain. The point that I made earlier—that there has been a 50,000 reduction in delayed discharges to social care—demonstrates just how well they are doing under significant pressure.
Andrew Stephenson (Pendle) (Con)
T9. What progress have the Government made in driving up standards and transparency in hospitals, social care and general practice?
Norman Lamb
The Government’s response to the Francis report demonstrated that openness and transparency are critical. As a result of the steps that we have proposed, this will be the most open health system anywhere in the world. That is something we should be very proud of.
Robert Flello (Stoke-on-Trent South) (Lab)
I need to press the Minister on this. Does he really expect people to believe that cutting £1.8 billion from local authority care budgets—Stoke-on-Trent has lost a third of its overall funding—will have no impact on the A and E crisis?
Norman Lamb
Labour still seems to be in complete denial about the crisis in public finances that we inherited in 2010 owing to failures by the Government whom the hon. Gentleman supported in managing public finances. What we are doing is introducing a £3.8 billion fund to pool health and social care. It amounts to a substantial shift of resources to preventing ill health and it will do exactly what we need to do for social care.
David Morris (Morecambe and Lunesdale) (Con)
May I thank the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), for recently opening a walk-in centre in Morecambe? May I also set the record straight, because the centre had been closed under the previous Government? Does he not think that it is a shocking indictment that in 2006 the NHS was cut by 9% in the region—
Mr Speaker
Order. First, topical questions are supposed to be brief. Secondly, the Minister is not responsible for what happened in 2006. We will have a very brief reply and then perhaps we can move on.
Dr Poulter
It was a great pleasure to open the walk-in centre in Morecambe, which was led by local commissioners to meet local clinical need.
John Healey (Wentworth and Dearne) (Lab)
The European Union has just agreed a trade deal with Canada that excludes health care, so will the Secretary of State ensure that the proposed EU trade and investment agreement with the US also excludes health care?
Mr Jeremy Hunt
We are looking at that very closely. We are big supporters of having a free trade deal between the EU and the US, but we do not want to do anything that would affect the fundamental principles, values and practices of the NHS.
Stuart Andrew (Pudsey) (Con)
The new review into children’s heart units feels very different, and I am pleased that everything is on the table. However, I was concerned to learn that the task and finish group has decided to meet in private. Given the group’s importance in decision making, and remembering the experience of the Safe and Sustainable review, does my hon. Friend agree that, in the interests of openness and confidence, the group should meet in public?
Jane Ellison
My hon. Friend has been a great and sustained champion of that cause in this House and in speaking up for his local hospital and his constituents. NHS England is clear that all substantive decisions on the new review on congenital heart disease will be made by its full board, which meets in public, so there is no question of a major decision being taken in private. With regard to the sub-groups, including the one he mentioned, their papers and minutes are all published, but for practical reasons none of them meets in public, and that is normal practice. However, all major decisions will be taken in public by the full board.
Steve McCabe (Birmingham, Selly Oak) (Lab)
The Minister will know that following the neuromuscular services review an explicit commitment was made to fund a care adviser and paediatric consultant post for the west midlands. Is he willing to meet me, patients and representatives of the Muscular Dystrophy Campaign to discuss the service and that commitment?
Norman Lamb
I would be happy to do so. I understand that NHS England is scheduling a meeting with Birmingham Children’s Hospital NHS Foundation Trust, which I hope will make some progress in ensuring that there is sufficient co-ordinated care for people with muscular dystrophy in the west midlands.
Mr Speaker
I fear that this will almost certainly be the last question. Karen Lumley.
Karen Lumley (Redditch) (Con)
In the past two weeks I have had to visit accident and emergency units in Redditch and in north Wales, unfortunately with members of my family. Although health is a devolved matter in Wales, will my right hon. Friend the Secretary of State invite his counterpart in Wales to spend some time at the great A and E unit in Redditch to see for himself the stark differences between the two services?
Mr Jeremy Hunt
I would be delighted to do so. He will see the impact of not cutting the NHS by 8%, which is what Labour has done in Wales, which means that in this country we are hitting our A and E targets and in Wales they have not hit them since 2009.
Mr Speaker
I am sorry to disappoint colleagues, but we must move on. Demand usually outstrips supply.
Electronic Patient Records (Continuity of Care)
(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
George Freeman (Mid Norfolk) (Con)
I beg to move,
That leave be given to bring in a Bill to allow patients access to and ownership of their own electronic patient records; to require medical professionals to maintain and share electronic patient records as part of individual care plans; and for connected purposes.
Mr Speaker, do you know your NHS health number? How many colleagues in the House know theirs? I ask because it is an important little number, for reasons I want to expand on, a number that opens a door on to a whole new world. It is the world of personalised medicine and patient empowerment.
As you are aware, Mr Speaker, from your support for medical research charities, medicine and health care are being transformed by an explosion of new technologies around the world. We are living through a biomedical revolution every bit as profound as the agricultural and industrial revolutions that came before us. Health care is moving from being something done to us by Government to something we do for ourselves. It is a revolution that is transforming the traditional world of drug discovery, in which I worked before coming to the House.
The UK is pioneering a new model of patient-centred biomedical research. Across the world, the life sciences industry is radically reconstituting itself around what everybody is coming to recognise as the most important asset of all—the ability to work with patients and their clinicians, and with biopsies, patient records and data, to design a new generation of targeted and personalised medicines.
This model of targeted medicine unlocks the biggest prize of all—a new model of reimbursement where, instead of sitting in smoke-filled rooms every five years to negotiate prices for one-size-fits-all blockbuster drugs which neither we nor the industry can afford, we get to be the country getting drugs at reduced prices, reflecting the value we have delivered through our NHS infrastructure. That is why the Prime Minister’s leadership in grasping this opportunity through the life sciences strategy matters so much, as do the vision and the measures contained within it—the £1 billion a year investment in the National Institute for Health Research, the catalyst fund, the patent box, the NHS open data initiatives, and now the £100 million Genomics England project. Ultimately, linking clinical and genomic data and using the power of modern computing provides the opportunity to turn the NHS from a major driver of the structural deficit into a major driver of growth in life sciences and a catalyst for public sector innovation, reform, and patient and citizen empowerment. This really matters.
But there is a problem—in fact, a series of problems. The data are not yet integrated. Connecting for Health was a disaster. The landscape is getting better, but it is still very patchy. The best GPs are streets ahead of the worst. Hospital records are very fragmented. There is almost no proper integration of patient records with the care system. Electronic patient records are not yet mainstream in our health or care sectors for patients nor clinicians. This matters, not just because it is holding back our ability to lead in research, but here today for patients too. We need only look at Mid Staffs and Winterbourne View to see that our inability properly to monitor patient treatment and care is having a profound impact on patients.
The Bill has two simple provisions. Clause 1 would provide for ownership of and access to our patient records and health data to empower patients in everyday health care and in research. Clause 2 would create a new statutory duty of care on NHS professionals to use and update the information and to ensure that the next professional on the patient’s care pathway is using properly maintained patient records.
The Bill is intended to have a number of key effects. First, it would reassure patients by establishing in law that ultimate control lies with us, the patients—that these are our data and we are clear that they belong to and are controlled by us, not the Government or the European Union, whose latest data protection laws risk holding back this revolution in medicine. We need to raise awareness of the power of patients to access our own data. We need to change the culture inside the NHS so that patients who request data are not sneered at or resented as troublesome but treated as enlightened health care citizens taking an interest in and responsibility for our own or our loved ones’ life prospects.
The Bill would allow us to log on and check our medical histories, including prescriptions, dates of when we saw who, and key medical information—or to check for a loved one using their NHS number—and to check and submit any changes or additional information, any side effects or symptoms, and our compliance. This is crucial information lying at the heart of modern medicine. We could use our EPR—electronic patient record—to plug into the exploding world of online health apps, which are transforming health care with devices such as in-house diagnostics and watchstrap heart and blood pressure monitors that can automatically upload data to our electronic health record and transmit it to our clinician. We could use the EPR to give permission for our data to be used in any NHS medical research and/or to enter clinical trials. Ninety-nine per cent. of patients say, when asked, that they would not only be happy for their data to be used in trials but are amazed that they are not already.
On the health care side, the Bill would mean that every health care professional would have a duty to use the EPR system and keep our records up to date, and to record treatment and ensure that the records are passed on to the next person on the care pathway. Thus the EPR becomes not a boring chore but the central tool for ensuring continuity of care. If a person or their loved one, or a constituent, passes from GP to hospital to community care sector and back again, as do an increasing number of elderly patients, in particular, it would be easy for them, their loved ones and their doctors and carers instantly to track and monitor their status, condition, diagnosis and treatment, and whose care they are in.
In a few years’ time it will be unimaginable to think of health records and patient monitoring as it is today, with paper records, cardboard boxes, partial digitisation, fragmentation across hospitals, and community care a black hole. It will be as unimaginable as the world of banking before electronic and telephone banking empowered millions of banking consumers to take more responsibility for their finances. The same revolution is happening in health care. Of course, there are a number of issues, challenges and things to get right as regards the sharing of data. I am aware of those and I am working on them with opinion leaders as we draft the Bill to make sure that we get this right.
Without the measures in this Bill there is a clear and present risk of the UK—far from leading in this world of personalised medicine; far from winning in the global race for investment; and far from the NHS pioneering new models of health care and productivity and patient empowerment—becoming a backwater and talking the talk but not walking the walk.
In the past two weeks since I made public the Bill’s aims, it has already secured extraordinary support from a wide range of key opinion leaders in the field, including more than 50 medical research charities, leading professor clinicians at the front line of UK research medicine, the NHS data commissioner and the Ethical Medicines Industry Group, which is not big pharma, but small, emerging companies pioneering the new treatments and diagnostics that are all too often locked out by our current system of NHS innovation rationing.
Most important of all is the support of patients, whose data, NHS and health care we are discussing. Patients have had to be patient for too long. They include Graham Hampson Silk, who has told me that this revolution in research-based medicine saved his life. Ten years ago, he was given six months to live—yes, Members heard me correctly. His life has been saved by the team of clinicians and NHS staff at Birmingham royal infirmary and the Institute of Translational Medicine, led by the inspiring Professor Charlie Craddock, who is here today. He found a drug in development in the USA, raised money through local fundraising to fund a trial for Graham and is now pioneering personalised cancer treatment here in the NHS with NHS patients and their data, so that every patient becomes a research patient, helping prevent the next generation from suffering unnecessarily.
I commend this Bill to the House.
Question put and agreed to
Ordered,
That George Freeman, Charlotte Leslie, Dr Phillip Lee, Mr Dominic Raab, Jesse Norman, Geoffrey Clifton-Brown, Damian Hinds, Dr Sarah Wollaston, Nick de Bois, John Glen, Dr Julian Huppert, Rosie Cooper and Natascha Engel present the Bill.
George Freeman accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 17 January 2014, and to be printed (Bill 134).
Gambling (Licensing and Advertising) Bill
(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
14:39 - The House divided: - Ayes: 213 / Noes: 271 - Question accordingly negatived.
14:53 - The House divided: - Ayes: 223 / Noes: 283 - Question accordingly negatived.
James Duddridge (Rochford and Southend East) (Con)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
New clause 2—Licence compliance, stipulations and control—
‘(1) Notwithstanding the regulation of spread betting by the Financial Conduct Authority, operators licensed for remote gambling by the Gambling Commission shall, to ensure their continued fitness as such, be obliged to comply with Condition 15.1 of the Consolidated Licensing Conditions and Codes of Practice 2011 (or its equivalent from time to time) in relation to all areas of their gambling operations, including spread betting and any other operations not within the jurisdiction of the Gambling Commission.
(2) In the event of any breach of subsection (1) which the Gambling Commission believes calls into question the fitness of the relevant operator, the Gambling Commission may require the operator to provide an explanation of such breach within one month and may, if not satisfied with such explanation, revoke the operator‘s licence.’.
New clause 3—Kite mark—
‘(1) The Gambling Commission shall require all licensed online gambling operators to display a standard kite mark on all their promotional materials, websites and webpages, to indicate that such operators are licensed by the United Kingdom Gambling Commission.
(2) The Gambling Commission shall design and determine the form of the kite mark, which will provide a link to information and advice on its website for customers.’.
New clause 4—Remote gambling licensees and customer protection—
‘Holders of licences for remote gambling operations shall be required to participate in a programme of research into and treatment of problem gambling in accordance with arrangements to be determined by the Secretary of State in regulations in the form of a statutory instrument approved by both Houses of Parliament, and a levy for that purpose may be imposed under section 123 of the Gambling Act 2005.’.
New clause 5—Reporting of suspicious activities and power to obtain financial information—
‘(1) In order to promote consistency of sports betting regulation, regulation of remote sports spread betting operators and of all sports spread betting as defined herein shall be transferred from the Financial Conduct Authority to the Gambling Commission, which shall thereupon—
(a) have power to require and obtain from its licensees including spread betting organisations information concerning actual or potential suspicious activities in relation to sporting events, and to share such information with the relevant sports governing body;
(b) have power to require and obtain information on financial transactions by licensees which it reasonably suspects might be germane to the investigation of suspicious betting activity, money laundering or other criminal activities, or the protection of vulnerable individuals.’.
(2) “Sports spread betting” shall for this purpose mean spread bets in relation to sports as governed under Schedule 6, Part 3 of the Gambling Act 2005.’.
New clause 6—Consultation on self-exclusion—
‘Having regard to the significance of the remote gambling market in relation to potential problem gambling, the Secretary of State shall consult on a system of standardised self-exclusion for the gambling industry, to include means of addressing exclusion from remote gambling access in the context of other gambling media.’.
New clause 7—Dormant accounts—
‘(1) The Secretary of State shall consult on appropriate ways to require licensed remote gambling operators to disclose (as a condition of their licence) the amounts held by them by way of—
(a) winnings of UK customers unclaimed for a period of more than one calendar year; and
(b) sums in dormant accounts of UK customers.
(2) A dormant account shall for this purpose be an account which has been inactive for at least one calendar year.’.
New clause 8—Discussions between gambling regulatory bodies and sports governing bodies—
‘The Secretary of State shall have power to make regulations, to be laid before and approved by both Houses of Parliament, stipulating the manner and time of regular meetings between any and all of the gambling regulatory bodies and sports governing bodies.’.
New clause 9—Advertising watershed—
‘The Secretary of State shall consult on the current regulatory position concerning advertising of gambling before the nine o‘clock watershed and shall lay before the House a report of the findings not later than the final sitting day before the summer recess 2014.’.
New clause 10—Application of the horserace betting levy—
‘In article 2 of the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159, for paragraph 3 substitute—
“(3) Subject to paragraph (4), expressions used in sections 24 to 30 of the 1963 Act shall have the meanings given to them by section 55(1) of the 1963 Act (as that provision had effect immediately before 1st September 2007).
(4) For the purposes of paragraph (3), the definition of ‘bookmaker’ as set out in section 55(1) of the 1963 Act (as that provision had effect immediately before 1st September 2007) shall be modified by—
(a) replacing the comma at the end of paragraph (b) of the definition of ‘bookmaker’ with ‘; or’; and
(b) after paragraph (b) of the definition of ‘bookmaker’ inserting—
‘(c) holds a remote gambling operating licence under the Gambling Act 2005 which authorises that person to provide facilities for betting,’.”.’.
New clause 11—Power to extend the horserace betting levy to overseas bookmakers—
‘(1) The Secretary of State may by regulations amend any provision or provisions of the Betting, Gaming and Lotteries Act 1963 (c 2) (at a time when the provisions listed in section 15(1)(a) to (c) of the Horserace Betting and Olympic Lottery Act 2004 (horserace betting levy system) have not been entirely repealed by order under that section), the Gambling Act 2005 and/or the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159 for the purposes of ensuring that each person who holds a remote gambling operating licence under the Gambling Act 2005 which authorises that person to provide facilities for betting shall be—
(a) liable to pay the bookmakers’ levy payable under section 27 of the Betting, Gaming and Lotteries Act 1963 (c 2); and
(b) subject to the provisions of section 120 of the Gambling Act 2005 (as modified in accordance with the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159) if that person is in default of such bookmakers’ levy.
(2) Regulations under this section must be made by statutory instrument.
(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.’.
New clause 12—Financial blocking—
‘After section 122 (information) of the Gambling Act 2005, insert—
“122A (1) The Commission may give a direction under this section if the Commission reasonably believes that a person or organisation who does not hold a remote gambling licence is providing remote gambling services in the United Kingdom.
(2) A direction under this section may be given to—
(a) a particular person operating in the financial sector;
(b) any description of persons operating in that sector; or
(c) all persons operating in that sector.
(3) A direction under section (1) may require a relevant person not to enter into or continue to participate in—
(a) a specified transaction or business relationship with a designated person;
(b) a specified description of transactions or business relationships with a designated person; or
(c) any transaction or business relationship with a designated person.
(4) Any reference in this section to a person operating in the financial sector is to a credit or financial institution that—
(a) is a United Kingdom person; or
(b) is acting in the course of a business carried on by it in the United Kingdom.
(5) In this section—
“credit institution” and “financial institution” have the meanings given in Schedule 7, paragraph 5 of the Counter-Terrorism Act 2008;
“designated person”, in relation to a direction, means any of the persons in relation to whom the direction is given;
“relevant person”, in relation to a direction, means any of the persons to whom the direction is given.”.’.
This New Clause allows the Gambling Commission to prevent a person or organisation without a remote gambling licence from accessing the UK market by financial transaction blocking.
New clause 13—Comparison of codes and technical standards in white listed jurisdiction with UK—
‘(1) The Commission shall review the social responsibility provisions of the codes of practice and technical standards of—
(a) EEA states; and
(b) the places to which section 331(2) of the Gambling Act 2005 has applied.
(2) The Commission shall amend the codes of practice and technical standards issued in pursuance of section 24(2) of the Gambling Act 2005 so that the code and technical standards reflects the strongest social responsibility provisions identified in subsection (1).
(3) In this section “social responsibility provisions” means a provision of the code identified as—
(a) ensuring that gambling is conducted in a fair and open way.
(b) protecting children and other vulnerable persons from being harmed or exploited by gambling; and
(c) making assistance available to persons who are or may be affected by problems related to gambling.’.
This New Clause requires the Gambling Commission to review the codes of white listed jurisdictions to establish which has the most comprehensive and sophisticated provisions to protect problem gamblers and to ensure that the UK codes and technical standards provide as robust standards for consumer protection.
New clause 14—Self-exclusion for remote gambling—
‘After section 89(1) (remote operating licence) of the Gambling Act 2005, insert—
“( ) The Commission shall hold a list of persons who have registered to be excluded from remote gambling.
( ) It shall be a condition of a remote operating licence that an operator must exclude any person who has registered for self-exclusion with the Commission.”.’.
This New Clause would give the power for the Commission to hold a list of those who wish to self-exclude. It would be a condition of a remote operating licence that individuals on the list must be excluded.
Amendment 1, in clause 1, page 2, line 11, at end add—
‘(8) The Secretary of State shall publish a report to Parliament one year after the commencement of this Act, and annually thereafter, on the enforcement activity of the Gambling Commission in respect of unlicensed operators attempting to provide facilities for gambling in the UK.’.
James Duddridge
New clause 1 seeks to allow online as well as offline gambling in casinos. In other words, it seeks for casinos to be able to provide people with the type of gambling offered by smartphones and tablets.
I think in all candour that the Department for Culture, Media and Sport has an old-fashioned view of the world—one that was once true and where there was a clear division between on and offline gaming. I suspect there is also an element of divide and rule involved. The gambling industry is a powerful body and it would be attractive to regulate both forms of gaming separately and get them to compete actively against one another.
The reality is different: online and physical provision of services have been merged in many industries. It is possible to order a product online from Asda and then collect it from a bricks-and-mortar store. It is possible to visit the clothing department at Marks & Spencer and order boxer shorts online for delivery. The on and offline worlds have merged in a number of environments. I hope that my examples are not an advertisement for those two institutions.
Mr Speaker
I would not accuse the hon. Gentleman of advertising for one moment. It is always of great interest to the House to learn about his personal arrangements.
James Duddridge
Thank you, Mr Speaker. For a moment, I feared that I was getting my knickers in a twist.
My constituency of Rochford and Southend East is home to three, soon to be four, casinos, which are bricks- and-mortar or physical ones. Such establishments employ thousands of people nationally. Locally, 277 people are employed in the existing three casinos, which will go up to about 400 when the fourth casino is launched. About 80% of the staff have been issued with personal licences by the Gambling Commission, while 100% of them receive annual training in responsible gambling, so they are well qualified.
Reports, such as an excellent one from GamCare, have outlined the details of the significant work that the industry is already doing, with much greater protection of vulnerable individuals being provided in casinos than online. I do not necessarily want more gambling, but I want more of the existing gambling to take place in such licensed and heavily regulated environments.
I am glad to say that new clause 1 is supported by my hon. Friend the Member for Maldon (Mr Whittingdale), the Chair of the Select Committee on Culture, Media and Sport, who did an awful lot of work with the Committee on pre-legislative scrutiny of the Bill; by the hon. Member for Bradford South (Mr Sutcliffe), an ex-Minister with responsibility for gambling, who is well respected, particularly in relation to gambling problems and the care of those with such problems; by the hon. Member for Manchester, Withington (Mr Leech), which shows that all parties support this cross-party issue; and by my hon. Friend the Member for Shipley (Philip Davies), who is a guru of all things gambling.
Bricks-and-mortar casinos are highly regulated. They are at the top of the regulatory pyramid in gambling. They are one of the safest places to be in Southend because of the security; they are certainly one of the safest places in which to gamble. I therefore find it hard to understand why casinos are restricted from offering a full range of products to their customers.
A bricks-and-mortar casino can advertise online products inside its premises, but it is not allowed to provide a remote gaming machine for customers to play inside its walls. That anomaly certainly needs to be corrected. Bizarrely, if it had a small area outside, customers—rather like having a fag at the back of a pub—would be able to gamble there, but they cannot do so inside.
Mr David Nuttall (Bury North) (Con)
Given that the Government have told us that the Bill’s whole rationale is to protect gamblers, can my hon. Friend think of any reason why they would not want to support his new clause?
James Duddridge
In an ideal world, I would hope that the Government supported new clause 1, or tabled a suitable amendment in the House of Lords or, in the broadest sense, took note. The argument against the new clause is one made against several others in the group, which is that it will add complexity when, for good reason, we want to move quickly. New clause 1 is quite tightly worded, however, and for a little complexity, it would give a lot of benefit.
Some people have been critical of my speech on Second Reading and my contributions in Committee, fearful that I was promoting irresponsible gambling, but that is a lazy and incorrect interpretation of my view and new clause. I am not attempting to liberalise regulation within casinos—that could not be further from the truth—but to get a level playing field to allow online customers to play online games in casinos with proper protection.
Mr John Leech (Manchester, Withington) (LD)
I pay tribute to the hon. Gentleman for tabling the new clause. Does he agree that making online gambling available in casinos is far better than people spending hours and hours in the completely uncontrolled environment of their own bedrooms?
James Duddridge
I could not agree more with the hon. Gentleman, who makes his point eloquently. That arrangement is better for those who have a developing problem, because they have the support of professionals who are there to monitor their behaviour. There is nothing to stop someone sitting in their bedroom and gambling away a fortune while drinking half a bottle of Scotch, but that would not be allowed at a roulette table. Under my new clause, someone gambling in that way would be stopped by staff within the casino, so the hon. Gentleman’s point is absolutely true.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
We have tried to avoid complexity in the Bill because there is the prospect that it might be challenged. However, it will not be challenged on the grounds that it clears up a simple anomaly, which is what new clause 1 would do. I thoroughly support the new clause. Does the hon. Gentleman agree that it is odd that we have gone through extensive pre-legislative scrutiny, but the Government have ignored this central recommendation of the Culture, Media and Sport Committee?
James Duddridge
I agree with the hon. Gentleman. It is disappointing that more has not been taken on from the pre-legislative scrutiny. Otherwise, what is the point of having it? However, the Government have been right to resist the obvious temptation to tag too many things on to the Bill. There is a balancing act to be done, but some kind of enabling legislation in the Bill would allow the tinkering to take place later and with more consultation.
Customers should be allowed to choose what they want to do and where they want to do it. Customer choice is moving in favour of gambling in casinos and the legislation should not stand in the way of that. In many ways, the new clause is deregulatory.
Robert Neill (Bromley and Chislehurst) (Con)
My hon. Friend is making a powerful case. I hope that the Minister listens to it sympathetically. His experience corresponds to my experience of speaking to organisations in my constituency that deal with the problem of gambling. It is much better if gambling happens in a regulated environment. Does he agree that his approach is consistent with the approach that the Government have adopted in promoting drinking in pubs because they are a safe and controlled environment in which to indulge in a practice that is lawful, but that can be abused? It is better to do such things in a controlled environment than at home.
James Duddridge
My hon. Friend draws a strong parallel and teases out the point that if something is done in the open in society, there is greater protection than if it is done in private, whether it be drinking or gambling.
The Minister has been exceptional in listening to the concerns that have been raised. There has been a strong dialogue with the industry and the Culture, Media and Sport Committee. I hope that she reflects on the debate and is able to assist us. The ideal response would be for her to say that new clause 1 is absolutely perfect and fabulously crafted, that there are no errors whatsoever, and that the Government are desperately thankful for all our work and will accept it immediately. I suspect that that will not be the case. It is not normal practice for a lowly Back Bencher to craft a perfect amendment that takes all points into consideration.
If the new clause is flawed, perhaps the Minister will consider bringing forward a consultation on the issue and setting a time scale for it. It would be unsatisfactory if consultation was offered, but it did not happen for several years and the report sat on the shelf for several months afterwards. In addition to considering a timed consultation, will she go into a bit more detail about what will happen if the consultation shows that the substance of the new clause is needed? We will not have another gambling Bill in the next couple of years, so if primary legislation is required, it needs to go into this Bill. That might not happen today, but it could happen in another place. There is significant concern in the industry that there is no mechanism for making this change through secondary legislation if a consultation shows that it is the right change to make.
I look forward to hearing the Minister’s comments. I will be happy if she restricts herself to commenting on the Bill, rather than my shopping habits. I thank hon. Members for their help in drafting the clause and for their support.
Mr Gerry Sutcliffe (Bradford South) (Lab)
I will speak in support of new clause 1 and other new clauses in the group. I refer colleagues to my declaration in the Register of Members’ Financial Interests, which states that I am a trustee of the Responsible Gambling Trust.
I support new clause 1 for the reasons set out so ably by the hon. Member for Rochford and Southend East (James Duddridge). The Culture, Media and Sport Committee discovered that the Gambling Act 2005 had been the first piece of legislation on this matter for more than 40 years. It was controversial to say the least. The provisions on the casino industry were messed about with a bit in the final stages of the passage of that Act. I have always felt that there has been a problem with how casinos have been treated. The former Minister for Sport, Richard Caborn, admitted in evidence to the Select Committee that we did not get everything quite right in the casino legislation. That was a brave thing for him to say, but he was right.
As the hon. Member for Rochford and Southend East has said, we are unlikely to see another gambling Bill in the next two years or even longer. It has taken three years for this small Bill to reach this stage. Although I accept that the Government do not want to widen the Bill’s remit, it is important to put things right that have been wrong. The Government want better regulation and to help businesses to create more jobs. The hon. Gentleman was right to point to the impact that the casino industry and the gambling industry in general have on the economy and on jobs. Gambling is an important industry, but it attracts unwelcome attention from the likes of the Daily Mail, who do not want to see people enjoying gambling. Gambling is an integral part of our way of life. One need only look at the people who bet on the national lottery and at how people enjoy horse racing and sports betting in general.
New clause 1 sets out what needs to happen in casinos. Casinos are the most regulated and, I would argue, the safest environments in the gambling sector. I hope that the all-party support for new clause 1 will give the Minister some cover in arguing elsewhere that it is important to put this anomaly right. The hon. Member for Rochford and Southend East said that we might not press the new clause today, but there is a strong feeling among Members that something must happen during the passage of the Bill. That is a strong message for the Minister. I hope that she will hear it and support the proposal. We look forward to hearing what she has to say about the timetable of meetings that she will have with the casino industry and what she intends to do during the passage of the Bill through the other place.
I will briefly mention some of the other new clauses. The purpose of the Bill is consumer protection. I fully agree that it is important that there is consumer protection. There is a school of thought which says that the Bill is about raising tax revenues. I hope that that is not the case. I know that the hon. Member for Shipley (Philip Davies) will speak about tax revenues and what would be a fair rate of tax.
There is an important relationship between sports and the betting industry. That is why I support new clause 5, which was tabled by my hon. Friend the Member for Eltham (Clive Efford). It relates to the reporting of suspicious activity and the power to obtain financial information. The relationship between sports and gambling is unique. The problem is that there is no sports betting right. Sports governing bodies have no control over the bets that gambling companies offer on their sports. For instance, in football, there might be betting on the number of times the ball goes out of play or on the number of corners. The concern is that such bets can lead to match fixing and betting irregularities. The Government need to consider this issue, with regard to the scandals in cricket and football that have emerged in recent months and years.
New clause 7 relates to dormant accounts. The Minister heard people’s feelings on that matter loudly and clearly in Committee. There is money on the table that could go into sports or into research, education and treatment. I look forward to hearing what she has to say about that.
I also wish to consider the advertising watershed. I was the Minister responsible for introducing the clauses on advertising and advice about betting and gambling, and our view was that such advertising would be shown around horse races and sports matches. We did not envisage so much advertising for sports betting before the 9 pm watershed. As I said in Committee, I am a big fan of Ray Winstone, but he almost pressures people into betting in those adverts. There is a need to consider advertising in terms of the watershed and gambling, as in new clause 9.
Philip Davies (Shipley) (Con)
As ever, it is a pleasure to follow the hon. Member for Bradford South (Mr Sutcliffe) who, as people have said, is an expert in these matters and did an excellent job when he was the Minister responsible for them. I agree with his comments about new clause 1, although I think he was characteristically —and perhaps unnecessarily—generous to his Front-Bench colleague, the hon. Member for Eltham (Clive Efford), about his new clauses.
Before I go any further I refer Members to my entry in the Register of Members’ Financial Interests. I congratulate my hon. Friend the Member for Rochford and Southend East (James Duddridge) on new clause 1, which is absolutely spot on and follows the conclusions we reached in the Culture, Media and Sport Committee during pre-legislative scrutiny. His point about the clear anomaly in this area is right. It seems ridiculous that somebody can play on a tablet or remote machine three paces outside the door of a casino, but is not allowed to do so three paces inside that door. It is about time legislation in that area caught up with modern technology. We cannot allow the law to be so behind the times; some of us may be considered luddites, but the law should not exist to protect luddites in such a way.
Paul Farrelly
Before the hon. Gentleman goes on to being under-generous to the shadow Minister, does he agree that throughout this debate, the Government have yet to give a reason for why they are rejecting a provision such as new clause 1 to remove that anomaly?
Philip Davies
I agree with the hon. Gentleman; he is absolutely right and I am sure we all look forward to the Minister’s response. I hope we can look forward to hearing her accept new clause 1. It seems that Governments often refuse to accept amendments and new clauses simply because they have been tabled by a Back Bencher rather than the Government. It would be to the Government’s credit if they were to accept that the new clause is sensible and has cross-party support and support from the Select Committee that scrutinised it. The new clause does not add a great deal of complexity to the Bill; it is fairly straightforward and would be easy to implement. When the Minister responds, I hope she will say that she has listened to the argument and realised that we should pursue this sensible measure.
Mr Nuttall
I am grateful to my hon. Friend for giving way on that point. Clause 5 provides that
“Section 1(4) to (7)…come into force on the day on which this Act is passed…The other provisions of this Act come into force”
on whatever day the Secretary of State determines by way of statutory instrument. Does my hon. Friend agree that there is therefore no reason why the new clause could not be inserted in the Bill and the Secretary of State could trigger it at some point in the future?
Philip Davies
My hon. Friend is right and if the Minister felt it necessary, she would be able to do that. The other point that has been well made is that we are not likely to have another suitable Bill in the foreseeable future to deal with this issue. To be honest, it would be unacceptable for the Minister simply to give the House some warm words and agree to look into it at some future date, as that would, in effect, be kicking it into the long grass for an indeterminate time. If we are going to implement this measure, as seems sensible, there seems to be no reason why we cannot just crack on and do it now. I support new clause 1, and if the Minister will not accept it, I encourage my hon. Friend the Member for Rochford and Southend East to push it to a vote. I think he will see that the new clause finds a great deal of favour in the House, although I hope it does not come to that.
The next group of new clauses are tabled by the hon. Member for Eltham and I consider them a combination of the unnecessary and the undesirable. I will attempt a quick canter round the course for each of them. I do not intend to delay proceedings for long, but it is worth setting out why I would not agree to any of the new clauses, and why I hope that the Minister will follow suit.
New clause 2 on licence, compliance, stipulations and control of spread betting seems completely unnecessary, and I hope the Minister will reject it on those grounds. New clause 3 has an interesting idea about ensuring there is a kitemark on all licensed and legitimate websites. I understand why some might think that idea superficially attractive, but my view is that the new clause is completely pointless. A kitemark does not attract people to a particular gambling website or company—it tends to be the odds being offered that attract people to those websites or companies. I admire the naivety, I suppose, of the shadow Minister who thinks that if we put a kitemark on the bottom of every licensed website, every punter in the country will ignore all better odds available and just bet blindly because of the kitemark. It would be nice if the world worked that way, but that is cloud cuckoo land. It is completely naive and unnecessary.
New clause 4 concerns remote gambling licensees, customer protection and making sure licensees participate in a programme of research into and treatment of problem gambling. I do not have a problem with that; it is quite desirable that all of those companies participate in providing finance to research problem gambling and to provide treatment. The issue with the new clause putting that into statute is that it is already happening on a voluntary basis by the gambling industry. The hon. Member for Bradford South knows all about this because he was involved in it.
Mr Sutcliffe
The hon. Gentleman is quite right that this would provide statutory underpinning. One of the difficulties is that it is a voluntary arrangement. A large percentage of the companies contribute, but there are a few notable exceptions. One thing that might flow from the clause is that the Minister might be able to support the Responsible Gambling Trust in getting those companies that do not contribute to do so.
Philip Davies
I take his point and, as Minister, he basically got the gambling companies to agree to the voluntary levy, which raises around £5 million or £6 million a year. It was he who said that if they did not do it voluntarily, he would legislate to ensure that they did it. How voluntary that would have made it is a different matter; we can debate the definition of “voluntary”. The upshot is that the companies are doing this and are doing so on a voluntary basis. The hon. Gentleman is absolutely right; not every single gambling company contributes and it relies on some of the larger ones—such as Ladbrokes and William Hill—to make what might be considered a disproportionate contribution to raise the required amount. But the money that is being requested is being raised each year. We do not really need new clause 4; the money that people are seeking, properly, for the treatment of problem gamblers and research into problem gambling is already being raised. New clause 4 is unnecessary. If the money were not being raised, I could see the point.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
Does my hon. Friend agree that the percentage of gamblers who could be called “problem gamblers” is very small? It is important that they have the proper treatment and that establishments are aware of the problem and have active policies. However, the vast majority of gamblers are controlled.
Philip Davies
My hon. Friend is absolutely right. The proportion of gamblers who are problem gamblers is 0.9 per cent, according to the latest research. Obviously it is right that anyone who has an addiction to or a problem with gambling has treatment made available to them to try to help them. That is what we should be focusing on and the gambling industry is contributing to ensure that that is the case. It is a small number, but that does not detract from the problems it causes for those individuals and their families. That is why it is right that that finance is provided.
The gambling industry provides finance to people who have a problem with gambling in a way that other industries do not; for example, for alcoholics or for people with an addition to tobacco. I do not notice the cream cake industry producing a voluntary levy to deal with the problem of obesity. The gambling industry, to its credit, does make this contribution and we should recognise that it does, even if it is for a small number of people.
New clause 5 is about the reporting of suspicious activities and the power to obtain financial information by the Gambling Commission. I do not think that this is necessary. As far as I am aware from all the evidence that we have had from the Gambling Commission, it gets the information that it requests from gambling companies, so I do not see that there is a problem. It seems to be a solution looking for a problem. I have not heard evidence from the Gambling Commission that it has not been able to access the relevant information from the people that it regulates and licences.
On the issue of match fixing and sports betting there are two points that make the new clause undesirable as well. The first thing, which never comes out, is that bookmakers are the victims of match fixing, not the cause of it. It is usually people involved in a particular sport, or referees or umpires, who conspire in effect to defraud bookmakers. On the principle that the polluter should pay, it seems bizarre to say that the bookmakers are being ripped off by people involved in sport and that we should therefore penalise bookmakers for being the victims of the crime. The people who should be paying to clean up their sports are the sports. It is the participants, umpires or referees who are causing the problem and causing a cost to the bookmaker.
Mr Sutcliffe
I am with the hon. Gentleman most of the way, but part of the problem is that the sports are not in control of the types of bet that can be put on their sport. That is how players—particularly young players—can be corrupted. There is an issue in terms of the relationship between betting and sports and it would be better if the sports had control over what could be bet upon.
Philip Davies
I never like disagreeing with the hon. Gentleman, not least because he is a constituent of mine and it might jeopardise my chances of him voting for me at the next election. But to say that bookmakers offer products that therefore encourage sportsmen to fix matches is like blaming retailers for shoplifting by putting products on display. It is a bizarre way of looking at things and it is certainly not the way I look at it.
The other point on match fixing—for example, all the issues recently in cricket, with no-balls being bowled and issues related to the Pakistan team—is that much of the money gambled was not with legitimate bookmakers in the UK but with illegal bookmakers in the far east. All the proposals in new clause 5 will not make a blind bit of difference because much of the activity is not taking place with legitimate bookmakers. It is completely pointless and I hope for that reason the Minister will reject it.
New clauses 6, 7 and 9 in effect ask the Government to legislate to be able to consult on something. It seems bizarre that we would put into law a requirement on the Government to consult. The Government can consult on all these issues without legislating to do so. I suspect that, as all these issues are important, the Minister will be consulting the industry and others on an ongoing basis. It is rather bizarre that these new clauses should seek to put into a Bill a statutory obligation for the Minister to consult. If we started going down that line and placing in Acts of Parliament requirements on Ministers to consult, legislation would look very bizarre in this place. I hope that my hon. Friend the Minister will reject all those new clauses, too.
It is sad that the Labour party is once again resorting to its nanny state instincts on the advertising watershed. This ludicrous idea of a watershed for advertising is a complete nonsense particularly when children are not even allowed to gamble. If the issue is that children are gambling, the best way to deal with it is to enforce the existing law that prevents children from gambling. I am wholly opposed to children gambling. I am one of the few Members who believe that it is wrong for 16-year-olds to play the national lottery; I think it should not be played until people are 18, which is the right age for people to be allowed to gamble. If the issue that the hon. Member for Eltham is trying to address is one of children gambling, we should make sure that the law as it stands is enforced.
I have heard the argument that we need to deal with “marketing grooming”—the idea that people are subjected to adverts when they are very young, so that when they become adults, they are addicted to the product before they have even started. I used to work in marketing for Asda, and the idea that any company would spend its marketing budget to try to get a new customer eight years down the line is one of the most ridiculous things I have ever heard in my entire life. I would like to meet anyone working for any marketing department that has that as its strategy, as I have never encountered any such person. Most business organisations cannot see beyond the end of their nose; they certainly cannot see beyond the end of the financial year in which they are operating. The idea that they would use marketing on TV to boost their sales in five or eight years’ time is absolutely ridiculous. New clause 9, therefore, is not only unnecessary; it is completely ridiculous.
New clauses 10 and 11 relate to a horse racing levy. I spoke on that on Second Reading, but given that most of my speeches—or probably all of them—are not memorable, I will briefly repeat for the benefit of Members why I think these provisions are unnecessary. First, I think the Minister will confirm that extending the Bill to include a levy would introduce a legal problem, or certainly a complication, that might scupper the Bill in its entirety. It is not worth risking the Bill as a whole to introduce the levy.
As I mentioned on Second Reading, it seems to me as an onlooker that what tends to happen if any Government have to determine the levy—let us hope that we keep the current position of an agreement being reached between bookmakers and the racing industry without the intervention of Ministers—is that they look to produce a certain figure that they think should be raised by the gambling industry to pay towards the levy. Most Ministers would think £75 million was a roughly appropriate sum. The formula for the levy is then worked out to generate the £75 that the Government think should go to the industry.
All that will happen by forcing through these new clauses is that the Government will still come to the conclusion that the gambling industry should pay about £75 million, and will adjust the formula accordingly to make sure that that amount is raised in this way rather than in another way. The new clauses are completely unnecessary and I do not think they will generate an extra penny piece for racing and the racing industry. To risk legally scuppering the whole Bill to put in a provision that will not make any difference is pointless.
Mr Sutcliffe
Will the hon. Gentleman go through what he believes the legal impediments are? If he is referring to the European Union, it appears that the French have overcome any problems emanating from that. Is he arguing that the advice of the DCMS lawyers is inappropriate?
Philip Davies
As the hon. Gentleman knows, I am no lawyer and no legal expert. I am regurgitating the Government’s position when they said that this might cause a legal problem. We have seen in the past how legal decisions taken by the European Court of Justice on gambling issues related to the levy came as a great surprise to all concerned at the time. We are not in a position to be clear about what the result of any legal challenge would be. All we could be clear about is that there would be a legal challenge, at which point the result would become uncertain. I do not see any great gain—to be honest, I do not see any gain—in precipitating such a legal challenge. For that reason, I hope that new clauses 10 and 11 will be rejected.
New clause 12 is about financial blocking for illegal sites. Superficially, it seems attractive that measures should be taken to try to stop people gambling through sites that are not properly licensed or illegal. The problem with new clause 12, however, is that other countries have shown that financial blocking does not work. Other countries have tried to restrict online gambling and tried to make licences available only to a few operators, but this has failed in every single country that has tried it. It fails because there are ways around financial blocking—by using PayPal and other methods, for example, which cannot be blocked by the banks. It does not work. New clause 12 is well meaning, and I understand why the shadow Minister wishes to pursue it, but it is pointless because it simply will not work.
New clause 13—the last of the new clauses proposed by the hon. Member for Eltham—is also unnecessary, so I hope that the Minister will reject all the shadow Minister’s new clauses. Although I do not doubt his motives in bringing them forward—the motives are good—I think that they are either unnecessary or undesirable.
New clause 14 was tabled by the hon. Member for Strangford (Jim Shannon), who represents the Democratic Unionist party. Again, I think it has much to commend it on a superficial level and I understand exactly what he is trying to do and why he is trying to do it. Again, too, the motives are very good. I doubt whether many people would disagree with the principle of what is suggested. The hon. Gentleman wants to make sure that there is a register of people who should be self-excluded. The self-exclusion is done through the Gambling Commission and would then apply to every operator who had a licence with it. If someone is self-excluded once, they are self-excluded with everybody. We would like to get to that scenario.
The problem with putting this provision into statute is that it will put many gambling operators in a very difficult position. Once someone who has self-excluded goes on to gamble, the gambling operator would be breaking the law, but the new clause does not provide for a sufficient “due diligence defence”. If someone self-excludes and tries to use different names, different addresses, different bank accounts and slips through the net in that way, my worry would be that, through no fault of their own, they will be in breach of the law.
If we are to go down the line of the new clause—as I say, I have no problem with the principle and view it as a desirable outcome for someone self-excluded from one operator to be self-excluded across the industry—without some kind of due diligence defence, it could put gambling operators in an impossible position. We would be asking them to do something that would be impossible to achieve if someone were determined to get round it. Perhaps the other place could consider the problem and I would be happy for the Minister to look further at it. As the new clause stands, however, I cannot support it.
I would like to think that, unusually for me, my amendment 1 is non-controversial and could easily be accepted by the whole House. It simply requests:
“The Secretary of State shall publish a report to Parliament one year after the commencement of this Act, and annually thereafter, on the enforcement activity of the Gambling Commission in respect of unlicensed operators attempting to provide facilities for gambling in the UK.”
One of my concerns about the Bill—certainly one I expressed on Second Reading—is that it might lead to an increase in the number of people gambling with unlicensed operators, with the tax bill encouraging some companies to go outside of the licensing regime. The Treasury forecast of how much tax will be collected—about 20%—seems to confirm the danger that 20% of gambling will take place with unlicensed operators. If we are to go down the route suggested by the Bill, we need to focus the Gambling Commission’s attention on stopping gambling with unlicensed operators.
Justin Tomlinson (North Swindon) (Con)
May I suggest to my hon. Friend—who is making a characteristically powerful speech—that it is a question not just of tax, but of advancing technology? Who would have thought, a few years ago, that there would be such a big growth in online gambling? There will always be something new coming forward, and this just helps to sharpen the mind.
Philip Davies
I agree with my hon. Friend, and I take it from what he has said that he agrees with my amendment. The fear has been expressed, both in the Treasury’s forecast and during the debate, that the number of people gambling with unlicensed operators could increase. I therefore think it only right for the Government to present a report to the House once a year—it need not be an oral report; it could be in written form—to update us on what the Gambling Commission has been doing and how successful it has been, so that we can decide whether it is dealing properly with a problem that we all fear may arise.
Paul Farrelly
The hon. Gentleman said that the report need not be in written form, but the amendment says:
“The Secretary of State shall publish a report to Parliament”.
That implies that it should indeed be a written report. Will the hon. Gentleman provide some guidance for the Government and the Gambling Commission by saying a few words about what he expects to be its form and content?
Philip Davies
I think that the hon. Gentleman misheard me. I actually said that the report need not be oral, and could be written. The amendment is worded as it is because otherwise there could simply be a written report with no accompanying oral statement.
I should like the Gambling Commission to explain, in its own words, exactly what actions it has taken to try to close down unlicensed operators in order to prevent people from gambling with them; to update us on how successful it has been; and to give us an idea of how big the issue remains each year. That will enable us to decide whether the legislation that we have passed has succeeded, or whether we need to revisit it. If we are to proceed with the Bill, all of us will want to ensure that people gamble only with properly licensed legal operators, and any measure that focuses the minds of the Gambling Commission and the Government on that can only be a good thing.
Paul Farrelly
Does the hon. Gentleman think it advisable for the Gambling Commission to give us an annual running commentary on its estimate of the percentage of the market that is captured by licensed operators and the percentage that is lost to unlicensed operators? That might help the Treasury to determine the amount of the necessary tax levy, which will clearly be crucial in the context of how much of the gambling market is captured by licensed operators in the future.
Philip Davies
I am not entirely sure whether an annual report constitutes a “running commentary”, but if it does, then yes, I do want a running commentary on the steps that the Gambling Commission is taking, how effective those steps are proving to be, and how big the market is. Only if we know that will we know whether the Bill has been successful or whether we need to change it in some way.
When I table an amendment, I can often understand why the Government would not accept it, but I genuinely cannot understand why they would not accept this amendment, which is modest and which goes to the heart of some of the concerns that have been expressed about the Bill. On that basis, I hope that the Minister will accept my amendment and new clause 1, but will reject the new clauses tabled by Opposition Members.
Jim Shannon (Strangford) (DUP)
I am very pleased to have an opportunity to speak about new clause 14, and, indeed, about the other new clauses.
Some Members have suggested that the Government’s basic objective is to close a tax loophole that led numerous online gambling companies to relocate from the United Kingdom to white-listed or European economic area jurisdictions back in 2007. However, the Government have made clear that that is not the case, arguing that the Bill is actually all about consumer protection, and I am very pleased that they are focusing on that issue.
On the face of it, the Bill requires all online gambling providers that are located beyond the UK but are accessed by the UK market to have UK licences. That too is good news, but it seems to me that the Government’s good intention breaks down on two bases. It is all very well to have good intentions, but those good intentions must be translated into specific rules and legislation if we are to help problem gamblers, who are vulnerable people. I had the impression in Committee that both Government and Opposition were in favour of that, and I therefore think that all Members should feel able to support new clause 14.
First, as has been said in earlier debates, although the Bill presents companies outside the UK with a carrot in the form of the offer of advertising, it does not provide any kind of stick. There is nothing to prevent companies without licences from continuing to access the UK market; they just cannot advertise. That first failing feeds directly into the second. If there is nothing to prevent companies without licences from accessing the UK market, the primary practical implication of the Bill will be that there is more advertising for online gambling, which has increased hugely in recent years in any event. There is a risk that a Bill that was supposed to be about better consumer protection will quickly become, to a significant extent, the “Liberalisation of Gambling Advertising Bill”, although I am sure that that is not the intention.
The prospect of further advertising liberalisation for online gambling is particularly worrying, because online gambling has one of the highest “problem prevalence” figures. To understand the basis for public concern about that prospect, we need to have an understanding of the very real issue of problem gambling, which is a profoundly destructive addiction that ruins lives and, on occasion, ends in suicide. According to the gambling prevalence survey of 2010, there are approximately 450,000 problem gamblers in the UK today. However, if we are to understand that problem fully, we must remember that no man—or woman—is an island, and that each of those people is likely to be connected to family members who feel the destructive impact of problem gambling on their lives as well. Problem gambling goes beyond the problem gamblers themselves; it affects their families too, which means that the 450,000 figure can quickly increase to some 2 million.
In Committee, the hon. Member for Bradford South (Mr Sutcliffe) expressed concern about those with gambling addictions, and suggested that the Secretary of State for Health should look into the possibility of money from the gambling profession being set aside to help people with addictions. I am sure that many of us agree with that valuable suggestion, which served as another indication of the concern about the Bill that was felt by all members of the Committee. When we focus on remote gambling, we discover that while the average problem prevalence figure is 0.9%, the figure relating to online slot machines is over 9%. On a monthly basis, it shoots up even further, to over 17%. That problem will continue unless we establish robust legislation to deal with it.
Before the Bill was published, concern had already been expressed about discrimination in the provision of less credible care for online problem gamblers than for terrestrial online gamblers with respect to “self-exclusion”, which is one of the key measures to help problem gamblers. Problem gamblers have the option of going to a gambling provider and excluding themselves from the services of that provider for a fixed period such as six months. That works in practice, because, as with other addictions, while people have weak days, they also have strong days. On a strong day, problem gamblers will be able to get around the five betting shops in their town to exclude themselves and thus ensure that they are protected from accessing gambling from the place where they live for a full six months, during which time they can build up their defences, obtain help, and decide what they want to do when the self-imposed period of exclusion ends.
What is the problem with that? The key problem is that, while in an offline context there is a credible opportunity for problem gamblers to benefit from a key tool that has been developed for them, there is no such credible opportunity online. As I have said, it is quite possible for a problem gambler to self-exclude from all five betting shops in his town on a strong day, but the same is not true online. The problem gambler could self-exclude from five online gambling sites that he can access from his or her bedroom, but could still have access to hundreds of other sites from that bedroom. It would be physically impossible for the online gambler to self-exclude from all online gambling opportunities that are accessible to him in his bedroom.
In short, we offer the offline problem gambler a credible form of protection through self-exclusion, but deny it to the online gambler. I believe that that anomaly must be addressed, because it is not just at a time when providing a credible one-stop shop is technologically possible. A one-stop shop self-exclusion mechanism, as set out in new clause 14, would mean that people have only to self-exclude from online gambling once by registering with the Gambling Commission. The commission would keep a list of all those who had self-excluded, and all those in receipt of an online gambling licence from the commission would be required to respect the list. This idea, which has been backed by many academics, was discussed in Committee, but is worth repeating today.
Dr Sally Gainsbury, author of “Internet Gambling: Current Research Findings and Implications”, published by Springer in its SpringerBriefs in Behavioral Medicine, series 2012, states that “a significant limitation” of self-exclusion
“is the lack of collaboration between different online gambling sites and venues, so that excluded individuals may find it easy to gamble at another site or venue.”
She argues that the technology is available and points to its feasibility, particularly in the UK, owing to the current existing licensing conditions and code of conduct upheld by the Gambling Commission. In demonstrating that the provision of a one-stop shop facility is technologically possible, Dr Gainsbury highlights a program called VeriPlay.com, developed by Bet Buddy, which allows the secure exchange of anonymous data and has been successful in some parts of the world.
The hon. Member for Shipley (Philip Davies) referred to due diligence and the support across the House on this subject. I believe we have to start somewhere, and we should start here today. The bones might come from the House of Lords, but new clause 14 would give this House the opportunity to decide in what direction we want to go, and if we want to go in the direction of helping these problem gamblers and vulnerable people, new clause 14 would be a step in the right direction. The Bet Buddy system enables operators to check whether someone is on a centralised list of players who have self-excluded. Dr Gainsbury argues that collaborative efforts would help strengthen self-exclusion, and research presented to the Canadian-based Responsible Gambling Council in 2011 by British-based GamCare and the university of Salford, along with Bet Buddy, endorsed the proposal—further examples of support from within the gambling sector and also, I hope, from the Gambling Commission.
The arguments I have made for a one-stop shop in terms of non-discrimination hold at the moment, but with the proposal in the Bill to make people in the UK—and therefore problem gamblers in the UK—more aware of online gambling opportunities, the failure to provide a credible model of self-exclusion for those gambling online becomes much more serious. We already effectively discriminate against online problem gamblers in the care that we offer by providing them with a far weaker self-exclusion opportunity than that afforded to other problem gamblers. The Bill not only gives us an opportunity to put that right, but massively compounds the imperative for us to do so by introducing new arrangements that will make problem gamblers more aware of online gambling opportunities.
Given that online problem gambling has one of the higher problem prevalence figures, that one of the key accepted tools to help problem gamblers—self-exclusion —does not work as effectively online as it does in a terrestrial context, and that it is technologically possible to make good this shortcoming through the provision of a one-stop shop self-exclusion mechanism, the only possible reason for inaction can be a lack of political will within the House. I am sure that that is not the case. Given that we are proposing to make life even more difficult for online problem gamblers by making them more aware of online gambling opportunities and that we have the opportunity to introduce new compensatory measures to help them, a failure to act could only be the result of a terrible failure of moral will. Why is there a political and moral will to address online safety challenges in other contexts, but not in this context? Given that doing so would help thousands of online problem gamblers, what possible justification can there be for not backing new clause 14 as a step in that direction?
Mr Leech
I am grateful for the opportunity to speak in this debate and would like to make some brief points about several new clauses, particularly new clause 1, which stands in my name and that of the hon. Member for Rochford and Southend East (James Duddridge) and colleagues from the Culture, Media and Sport Committee.
One of the recommendations of our Select Committee’s pre-legislative scrutiny was to allow British casinos to offer their online gaming products on their premises. It is nonsense that people can play on remote internet sites using mobile phones or other mobile devices in their own homes or anywhere else, while a casino may advertise its own online products in the casino but is not allowed to make customers aware that the product is available from an internet-linked computer inside the casino or to advertise its online sites on or around an internet-linked computer. Given that casinos have the most rigorously controlled premises, it is absurd that that anomaly remains.
New clause 1, in the name of the hon. Member for Rochford and Southend East, would make it clear that a remote gambling terminal provided in a casino was not a gaming machine and would give powers to the Secretary of State to regulate the number of remote machines allowable in a casino. On Second Reading, the Minister argued that the proposed change would undermine existing regulatory controls on gaming machine provisions, but the new clause would ensure that the effective size of the virtual part of the casino remained controlled, while giving added protections to customers gambling online in the casino environment. I understand why the Government might be reluctant to support the new clause, because there is a danger that casinos could be encouraged to promote the online sections of their casino at the expense of the bricks and mortar parts simply to reduce their tax, so the new clause must go hand in hand with the introduction of a tax regime that creates a level playing field for the onshore gambling industry.
I would like also to speak briefly to amendment 1, which stands in the name of my Select Committee colleague, the hon. Member for Shipley (Philip Davies). Given his comments and line of questioning to the Gambling Commission in Committee, Members could be forgiven for thinking that he was trying to cause a little mischief with this amendment, but I am sure that that was not the case. In fact, there is a lot of sense in ensuring that Parliament receives some feedback from the commission on how successful enforcement action has been and whether additional measures, perhaps along the lines of new clause 12, which stands in the name of the hon. Member for Eltham (Clive Efford), might be required to avoid a proliferation of gambling on unlicensed sites. I hope the Minister will be able to reassure the House that we will be updated on the effectiveness of enforcement. Will she tell us how that is to be achieved if it is not to be specifically covered in the Bill?
On new clause 3, there is some sense in making customers aware of whether a site is licensed or not. The hon. Member for Shipley was rather uncharitable in describing the shadow Minister as naive in proposing the new clause. I agree that punters are likely to be looking for odds rather than for a kitemark when deciding whether to place a bet, but from a consumer protection perspective, it is preferable that customers go into this with their eyes open, and that they know whether they will be covered by the protection provided by a licensed operator or whether they are running the risk of not getting a pay-out from some dodgy unlicensed operator. Will the Minister tell us how she will ensure that customers will be made aware of whether an operator is licensed by the Gambling Commission?
On new clause 7, the Minister will be aware that my right hon. Friend the Member for Bath (Mr Foster) produced a report for the Government on dormant accounts. Following that report, what action do the Government plan to take on dormant accounts and on the potential for using the money in them for the benefit of the gambling public?
Robert Neill
I do not have the same degree of hands-on experience of the gambling industry as some hon. Members who have spoken—unless we count my past part-ownership of a greyhound, which offered little financial success but a certain amount of entertainment value. I support new clause 1, tabled by my hon. Friend the Member for Rochford and Southend East (James Duddridge) and others. He has made the case for it very powerfully, and I hope that the Government will take it on board. He and I have been known to shop in the same establishments and outlets, but I can assure the House that we are not advocating a one-size-fits-all policy. I hope that the Minister will take the new clause on board.
The hon. Member for Bradford South (Mr Sutcliffe) has pointed out that we are unlikely to get another legislative opportunity to adopt this provision. During my two and a half years as a Minister at the equivalent level of the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Maidstone and The Weald (Mrs Grant), I was repeatedly told by my advisers in the civil service that although this or that measure was a good idea, there was no legislative vehicle with which to achieve it. Good, sensible reforms can often miss the bus owing to the lack of such a vehicle, and I merely point out to the Minister that we have a bus available here and it would be sensible to make use of it.
Clive Efford (Eltham) (Lab)
I echo what the hon. Gentleman is saying. In that spirit, does he agree that we should take this legislative opportunity to adopt the amendments on the horseracing levy?
Robert Neill
I understand the hon. Gentleman’s point, and I have some sympathy with his argument. There might be other ways of achieving his aims, however, and I hope that the Minister will touch on them when she responds to the debate.
I pointed out in an earlier intervention that new clause 1 would be consistent with Government policy on alcohol. Alcohol and gambling are lawful, enjoyable activities but, because they can hold some risk for certain vulnerable people, society accepts that it is reasonable that they should be used or engaged in under certain controls and in controlled environments. Throughout my time as pubs Minister, I actively promoted the value of the public house as a safe place in which to enjoy alcohol. My hon. Friend’s new clause adopts the same principle; if someone is gambling using a tablet, a casino will offer a more controlled environment in which to do so than their home. I hope that the Minister will reflect on that point.
New clause 13 has been tabled by the hon. Member for Eltham (Clive Efford). I am not sure that its format provides the answer, but I hope that the Minister will reflect on the serious issue that the hon. Gentleman raises. A great deal of offshore gambling that is currently regulated by the white-listed countries will move back into the UK jurisdiction and the UK’s Gambling Commission will have responsibility for it. We need to ensure that there is no diminution in the standards of consumer protection or of any other aspects of regulation. Is the Minister satisfied that the Gambling Commission has the capacity, resources and expertise effectively to carry out the greater degree of regulation that will be required of it under the new arrangements?
Will the Minister also take on board the fact that some of the white-listed jurisdictions—I am thinking particularly of the Alderney gambling commission and that of Gibraltar—have built up a considerable degree of expertise in the fields of public protection, regulation and enforcement? It would be a tragedy if that expertise were lost. What steps will she take to ensure that, if firms migrate from the white-listed jurisdictions to the UK, the Government will work with them to move that expertise across so that it can remain available to protect the interests of the consumer and the taxpayer?
There is concern that a period of dual regulation could exist during the transitional period, during which firms are registered in a white-listed jurisdiction and in the UK. I hope that we can reflect on that fact, perhaps while the Bill is in the other place, and ensure that no confusion arises over who is responsible for what during that time. I urge the Minister to commit to working more closely with the white-listed jurisdictions to ensure that their expertise in this area is not lost.
Clive Efford
Notwithstanding the views of the hon. Member for Shipley (Philip Davies), the new clauses and amendments have allowed us to have a wide-ranging debate on gambling, and to explore concerns about this area of regulation. That is only fit and proper. The hon. Gentleman’s amendment 1 is a sensible proposition; I have no objection to his proposal for a report that would give us an opportunity to keep an eye on what was going on. We often pass legislation that simply drifts off into the ether and seldom comes back to us, and we rarely have the chance to see how our work is functioning out there. I therefore welcome his sensible suggestion.
Sadly, I cannot say the same about new clause 1. I will listen carefully to what the Minister says about it, and I entirely respect the views of the Select Committee. I understand its point about the anomaly of someone being able to gamble on a hand-held device outside a casino but unable to do so perhaps only a few paces away inside the building. I have looked at some of the websites and seen the sums of prize money increasing at an alarming rate. Sometimes, total prizes of £8 million are advertised. The proposed change for casinos would therefore represent a very big step. If there is a case for such a change, we should consider it in more detail.
Mr Sutcliffe
Has my hon. Friend had a chance to read the briefing from the National Casino Industry Forum? It deals with the way in which casinos would implement and monitor the proposed change, if new clause 1 were to be accepted. It has been stated that our casino industry is the most regulated of the lot, and I would say it is also the safest of the lot. I understand my hon. Friend’s fears about new clause 1, but because of the way in which the industry is regulated and the way in which it protects people with gambling problems, I do not share his concerns.
Clive Efford
I have seen that document. I agree with my hon. Friend: the UK gambling industry is highly regulated and highly regarded. I have a great deal of respect for the way in which it conducts its affairs, and I would not suggest for a minute that it would not deal with this new area of the market in a responsible way, were the new clause to be accepted. The proposal does, however, represent a major step forward, because unlimited prizes would be offered on machines—albeit remote gambling machines—inside casinos. We have regulated on that cautiously in the past. If we are to take that step, it would need consideration in separate legislation or a change in the licensing rules, whichever is required. Having looked at these websites, I think that we need to consider the matter further and that it would not be appropriate to take this step in this Bill.
Philip Davies
If these sites are illegal and, as is probable, in some far-flung part of the world, what would prevent people from just putting the kitemark on there themselves?
Clive Efford
It would have to be policed, would it not? Like anything else that is happening on the internet, it would have to be policed. The ultimate argument the hon. Gentleman is making is: what is the point in regulating at all? I think we are getting to the root of his position on all these issues.
On research and treatment, the figure of 0.9% has been used a lot. The 2010 gambling prevalence survey identified that for problem gambling in respect of online slots the figure rises to 9%—we are dealing with online gambling here, so we are talking about almost one in 10 and something that is very serious. The overall figure of 0.9% equates to 450,000 people and we should take note of that, because it equates to 700 people per constituency. It is not the insignificant number it may seem when we say 0.9%—we see that when we talk in terms of 700 people per constituency.
Mr Sutcliffe
I agree with the point my hon. Friend is making, and nobody would want to underestimate the issues relating to problem gambling. The industry has a voluntary levy and it raises more than £5 million. Is it not the case that the health service provides no budget at all to deal with problem gambling, whereas it does make provision to deal with problem drinkers and those dealing with other addictions?
Clive Efford
My hon. Friend is right about that. Of course, a significant duty is levied on alcohol and tobacco, which does contribute towards providing public services, for just the reason he outlines. He rightly says that just about £5.7 million is spent on treatment and research, but the overall value of the gambling industry is about £6 billion. The online gambling industry is worth about £2 billion, so it is not unreasonable to expect that more could be contributed towards the treatment of problem gambling in the future.
I am getting a little bogged down, so I will try to move quickly through my amendments. On self-exclusion, the Minister failed to convince us in Committee that she was going to be robust enough in ensuring that we will deliver a one-stop shop—a single exclusion system right across the gambling industry regulated by the Gambling Commission. We reached a point where I kept asking the same question and I got several evasive answers, so I put my simple question to her again: will she require the Gambling Commission to introduce a single, one-stop shop self-exclusion system across the gambling industry? That is what we are pushing her to do.
When we talk about dormant accounts, we are also talking about bets that are void because the horse did not run, about unclaimed winnings and about the accounts of people who have left money sitting in them for more than a year. That money should be put to use for good causes, such as treatment. I know that an element of it is used in that way, but we do not know how much. [Interruption.] If the hon. Member for Shipley, who is trying to intervene from a sedentary position, were to look at the report written by the right hon. Member for Bath (Mr Foster), he would see how difficult it is to identify how much money there is in those accounts. This is an opportunity for us to deal with that.
We are recommending financial blocking because it should be part of an overall package of measures that the Gambling Commission needs to have at its disposal. Much has been made of the Ofcom report, which concluded that financial blocking, as part of an overall basket of measures, could be an effective means of intervention, and we would certainly recommend that it should be so. Other countries use financial blocking and, taking on board the comments of the hon. Member for Bromley and Chislehurst (Robert Neill), we ask that none of our standards fall below those of other white list countries.
Finally, the horserace betting levy is an extremely important element that we have debated during the passage of the Bill. The horserace betting industry suggests that racing is missing out on £20 million a year that could be made if online remote betting companies were contributing to the betting levy. New clause 10 redefines the definition of a bookmaker in the Betting, Gaming and Lotteries Act 1963 to bring those remote gambling companies into line with the onshore companies that currently pay the levy.
Rather than saying to the Minister here and now that we can pass a system under this Bill that would require everyone to pay the betting levy long into the future, we are suggesting in new clause 11 that there is all-party agreement on the betting levy and that we all accept the principle of it. In fact, several of her hon. Friends have attempted to take a private Member’s Bill through on this specific issue. As we have said before, this is a rare opportunity to legislate in this area, and another such opportunity may be many moons away. In the meantime, the horse racing industry is missing out on vital income. The Minister has an opportunity in the legislation to take reserve powers away, to consult on what would be a long-term acceptable method of raising the horserace betting levy into the future and to come back to the House with her conclusions. It would be the waste of an opportunity not to do that at this time. If she is not minded to set such a timetable for the betting levy, we will put this new clause to the vote.
I hear what the hon. Member for Strangford (Jim Shannon) said about his amendment on self-exclusion and I know that he intends to put it to the vote. If he does, I will urge my hon. Friends to support his amendment as well.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)
I thank Members for a highly stimulating debate on a wide range of issues including casinos, enforcement, spread betting, consumer protection, dormant accounts, the advertising watershed and, of course, the levy.
I will start with new clause 1, which relates to casinos. We have heard important contributions from my hon. Friends the Members for Rochford and Southend East (James Duddridge), for Shipley (Philip Davies), for Manchester, Withington (Mr Leech), and for Bromley and Chislehurst (Robert Neill) and the hon. Member for Bradford South (Mr Sutcliffe). Members will not be surprised to hear that I have had several iPhones waved at me recently, with the implication that such devices can be played on trains and in bedrooms, so why not in casinos? Let me make it clear, those devices can be played in casinos, and can indeed be offered by casinos to customers but within the limits of the machine stakes and prize regulations.
Mr Sutcliffe
I understand the point the Minister makes; it is quite proper that she speaks to the industry, but there is concern over the time scale. Is she going to try to do this while the Bill is going through both Houses, or is she looking at another date? The concern is that if we miss this opportunity, the boat will have gone. Just so I can be clear, is she talking about trying to do this within the time frame of the Bill passing through both Houses?
Mrs Grant
That is a fair question that I am just about to come on to. I know that the hon. Gentleman wants progress here, and I am aware that people need us to get on with this and I assure him that it is my intention to get on. I am committed to bringing the conversations that we have already started to a conclusion by March 2014. That may be a little later that he would like, but I want to do this properly, because that is far better than not doing so. Furthermore, I reassure him and my hon. Friend the Member for Rochford and Southend East that primary legislation is not needed in relation to the casinos’ aspirations. Those aspirations could be achieved by secondary legislation, if we felt that to be wise. For all those reasons I am firmly opposed to the new clause, because it removes important controls for consumer protection, which is what the Bill is about, and paves the way for unintended consequences.
I thank my hon. Friend the Member for Shipley and the hon. Member for Eltham (Clive Efford) for their important suggestions about enforcement, including reporting on enforcement activity and financial transaction blocking. However, amendment 1 is unnecessary as the Gambling Commission already publishes annual information and data about its activities, including its regulatory and enforcement activities as well as industry statistics, which include those on betting integrity. I draw the attention of my hon. Friend the Member for Shipley to the Gambling Commission’s 2012-13 annual review, which already details the enforcement activity it has undertaken. A further separate report would not significantly add anything to the material already published by the commission and would therefore involve unnecessary duplication. I know that he is a stickler, and I want to assure him that the commission is constantly improving its coverage of information and has assured me that it is willing to ensure that it includes information about its enforcement activities in relation to remote gambling as part of the material that it already publishes. For those reasons, I do not intend to accept my hon. Friend’s amendment.
Mrs Grant
I want to make some progress; I have too much to get through. When I have made some progress, I will come back to the hon. Gentleman.
New clause 12 would permit the Gambling Commission to introduce financial transaction blocking. The evidence on the effectiveness of financial transaction blocking is far from convincing and, as we heard in Committee, the industry clearly has doubts about its effectiveness. I do not wish to rule out the blocking of financial transactions in the future should it become appropriate or necessary and if we can see that it is effective. As the range of tools at the Gambling Commission’s disposal has already been shown to be effective, I do not feel that it would be appropriate to seek that power in this Bill.
I thank hon. Members for raising the important issue of sporting integrity and the need to ensure that operators have an obligation to report suspicious market activity. Although I am satisfied that strong and effective measures are in place to ensure that that happens, I am pleased to be able to confirm, to the shadow Minister in particular, that the Financial Conduct Authority will issue guidance to the two sports spread betting firms operating in the United Kingdom and that will reinforce the current arrangements. The new guidance provides an opportunity for the FCA to clarify the meaning of its rules and to state precisely what it requires of the sports spread betting firms. That will allow greater consistency in how suspicious market activity is reported.
Clive Efford
I want to clarify what the Minister has just said about the FCA and what is being confirmed. She said, I think, that the FCA was confirming the current arrangements, which are far from satisfactory. Will it adopt all the requirements of licence condition 15.1?
Mrs Grant
No, I did not say that at all. In evidence given in Committee, the FCA clearly said that it would consider publishing further guidance to the two spread betting operators that it regulates. The FCA has come back since then and said that it will do that. I am sure that the shadow Minister is aware of the teeth that such guidance has, particularly if it is specific. If there is a breach of guidance, that will clearly have serious consequences for those who have breached it. In my opinion, this is a highly proportionate response to an issue that, although important, does not require intervention through primary legislation. I hope that the hon. Gentleman agrees that there is absolutely no evidence that the regulation of sports spread betting by the FCA has compromised sporting integrity. I do not believe there is a case for a fundamental change to the arrangements and it is right to allow the FCA, which is an independent regulator, to get on with issuing the guidance. If appropriate, the FCA will, of course, assess its effectiveness in due course. I encourage the authority to do that very quickly.
New clause 3 would require a kitemark to be displayed on licensed operators’ websites. I continue to argue that we are all batting for the same aim. I support the arguments made by the hon. Member for Eltham in Committee and today that providing clarity for consumers that they are using a Gambling Commission-regulated site is an important element of consumer protection. I hope that it would provide a strong element of promotional advantage to the operators licensed by the Gambling Commission. As I said in Committee, I will follow through on my intention to see progress on the work that the commission has already commenced to ensure that consumers can quickly and clearly establish that they are transacting with a GB-licensed site. I certainly do not intend to get involved in clarifying with the commission how many centimetres the logo should measure or what colour it should be. It is reasonable to leave the regulator to get on with that. Accordingly, I see no need for a new clause to achieve the end result that we clearly all want.
New clause 4 would end the voluntary approach to operator contributions for research into, education on and treatment for problem gambling, making it compulsory for all operators licensed by the Gambling Commission. The voluntary arrangements were revised only recently, in 2012, and I am satisfied that they are working. I will, of course, continue to monitor the effectiveness of the voluntary arrangements and therefore do not intend to accept the new clause.
New clause 6 would enshrine in statute a one-off commitment to consult on standardised self-exclusion. At present, the Gambling Commission’s licence conditions and codes of practice include the requirement for remote licensees to put into effect procedures for self-exclusion. We recognise that operators could do more by co-operating and working together to help players self-exclude from local gambling premises and online sites, but the industry is already taking steps. A good example is the imminent harm minimisation conference being organised by the Responsible Gambling Trust. I expect to see progress on player protection over the coming months, including the development of better tools to help players to gamble safely. If we are still having this conversation in 12 months’ time, there will be little alternative but to embark on a process of mandating controls.
New clause 14, tabled by the hon. Member for Strangford (Jim Shannon), would enshrine in statute the requirement for the Gambling Commission to hold a list of those who wish to self-exclude. It would be a condition of the remote operating licence that individuals on the list must be excluded. A one-stop shop might be an appropriate goal and I know that it would do considerable good, but I do not wish to make a commitment to pursue that option alone—given the complexities and practicalities involved—when other elements of harm minimisation might be even more significant, such as player feedback and information on betting habits as well as in-play alerts on losses. We should also not lose sight of the fact that self-exclusion is just one tool in a suite of player protections. I urge the industry to make the fastest possible progress. The shadow Minister pressed me on this point in Committee and has done so again today, and I am prepared to commit to driving all the parties to make good their commitments on developing and implementing player-protection measures and to consider using the powers I have, including the imposition of licence conditions, if I am not satisfied.
New clause 13 seeks to ensure that the social responsibility provisions adopted by the Gambling Commission reflect the highest possible standards. As I said in Committee, I am confident that the British regulatory system is a model of international best practice and the commission’s requirements are robust and of the highest standard. I do not accept that the commission lags behind in its social responsibility requirements.
Robert Neill
I understand the Minister’s point, but is she satisfied that, regardless of the quality of the standards, there is the capacity in the system effectively to enforce those standards on a larger scale? What can she say about not losing expertise from the white-listed countries?
Mrs Grant
My hon. Friend makes a good point, but I must tell him that I am absolutely satisfied that the Gambling Commission has all the tools it needs at its disposal properly to enforce the regulations. There will, of course, always be grey areas, but when the commission comes up against them, it is up to it to make proper decisions according to risk and proportionality.
The Gambling Commission is internationally respected. It engages extensively with overseas regulators, participates in international and European regulatory forums and hosts numerous visits each year from overseas regulators who are keen to learn from it. The new clause is therefore unnecessary and I do not intend to accept it.
Clive Efford
I am grateful to the Minister, who is being very generous in giving way as I know she has a lot to get through. The issue is that although it is easy to self-exclude from, for example, four betting shops on the high street, there are a multiplicity of ways of gambling on the internet without a single system of self-exclusion—that is, a one-stop shop. Is that the minimum standard that she will require?
Mrs Grant
I have made it clear that the industry has made various commitments, and I want it to get on with what it has said it will do. There are issues and complexities with the one-stop-shop method of self-exclusion. I will keep it under review and if I am not satisfied within a reasonable period that the Government are doing everything we should be doing, I will look at it again.
Clive Efford
There is agreement among Members on both sides of the House about this, and many Government Back Benchers have supported a private Member’s Bill that would have a similar effect. We are suggesting not that we solve the problem now but that she takes a reserve power and comes back to the House. In the meantime, we should allow the levy to be applied to remote gambling operators, because in the intervening period the horse racing industry is missing out on £20 million per year. When will she regulate if not now?
Mrs Grant
I think I have made it clear to the shadow Minister that I am happy to look at this; I will consult on any workable proposal that is put to me which is sustainable, enforceable and legally sound, but we have to do it properly. I am not prepared to cut corners—we owe that to betting and to racing. We have waited 50 years; we now have a four-year opportunity and I am determined to make the most of it.
Horse racing is enjoyed by millions of people and is the second most attended sport in Britain after football. It supports 85,000 jobs across the country and contributes to local economies both through employment and by attracting a considerable number of visitors. We owe it to racing and the betting industries to get this right, and hon. Members will have repeatedly heard my determination to do exactly that. That is why it is important to get levy reform right and not to accept either of the new clauses, which could so easily set limits on what can be achieved.
For all the reasons that I have stated, I cannot accept any of the new clauses or amendment 1.
James Duddridge
While I am clearly disappointed that new clause 1 was not accepted, we have had an interesting debate and moved things forward a little. The Minister will continue to have discussions with the industry. I was concerned about how long those would take, and the Minister has assured me and other hon. Members that this process will come to a conclusion in March 2014. I expressed some concerns about whether we would be able to take this forward in secondary legislation. The Minister has asserted that that would not be a problem. Time did not permit her to go into detail, but I take her at her word. Perhaps she will look at how it will happen again, and reflect on the suggestion made by the hon. Member for Bury North (Mr Nuttall) that an amendment should be tabled in the House of Lords that would permit her to make this change if at the end of the consultation the Minister believed it was the right thing to do.
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 11
Power to extend the horserace betting levy to overseas bookmakers
‘(1) The Secretary of State may by regulations amend any provision or provisions of the Betting, Gaming and Lotteries Act 1963 (c 2) (at a time when the provisions listed in section 15(1)(a) to (c) of the Horserace Betting and Olympic Lottery Act 2004 (horserace betting levy system) have not been entirely repealed by order under that section), the Gambling Act 2005 and/or the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159 for the purposes of ensuring that each person who holds a remote gambling operating licence under the Gambling Act 2005 which authorises that person to provide facilities for betting shall be—
(a) liable to pay the bookmakers’ levy payable under section 27 of the Betting, Gaming and Lotteries Act 1963 (c 2); and
(b) subject to the provisions of section 120 of the Gambling Act 2005 (as modified in accordance with the Gambling Act 2005 (Horserace Betting Levy) Order 2007/2159) if that person is in default of such bookmakers’ levy.
(2) Regulations under this section must be made by statutory instrument.
(3) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.’.—(Clive Efford.)
Brought up.
Question put, That the clause be up added to the Bill.
Mrs Grant
I beg to move, That the Bill be now read the Third time.
I begin by thanking all those from across the House and outside who have taken part in the debates on the Bill. In particular, I thank the Chairmen of the Committee, my hon. Friend the Member for Wellingborough (Mr Bone) and the hon. Member for Arfon (Hywel Williams).
The Bill has its origins in the previous Administration’s review of the remote gambling regulatory framework. I thank the hon. Member for Bradford South (Mr Sutcliffe) in particular for his contribution during the Bill’s progress. I thank the Culture, Media and Sport Committee for its thoughtful and thorough pre-legislative scrutiny, which was key in helping to strengthen the Bill.
I believe I am right in saying that the Bill enjoys support from across the House, although some believe that it does not go far enough. Several issues have been debated at various stages, including today, and several new clauses have been tabled. I have explained as carefully as I can the reasons we have chosen not to accept them. Although the Government have not accepted any amendments on these matters, as we do not believe the Bill is the right vehicle for such changes, we have noted the concern on these matters and hope to make progress on them through a non-legislative avenue.
The Bill is a prudential measure which will provide greater protection for consumers based in Great Britain. It will tighten current legislation to ensure that all remote gambling, whether provided in Britain or overseas, is a licensed activity, subject to the Gambling Commission’s standards and controls. I commend the Bill to the House.
Clive Efford
In spite of all the amendments that we tabled, we welcome the Bill, as far as it goes. It brings an industry that has grown to £2 billion a year under the UK Gambling Commission as the licensing authority and, in respect of licensing, it will create a level playing field between remote gambling operators, those that have remained onshore and our high street betting shops.
The questions that we have raised will be tested by how well the Gambling Commission enforces the requirements that are laid out in the Bill and implicit in the licence. Aspects such as research, treatment, the protection or self-exclusion of individuals, enforcement tools using IP blocking, financial blocking, and possible change to the watershed will all be subject to enforcement by the Gambling Commission. We will have to remain vigilant and see how that is implemented to ensure that the Bill has the desired effect, as expressed by Members in all parts of the House.
I pay tribute to my hon. Friend the Member for Bradford South (Mr Sutcliffe) for the work that he initiated in government. Shortly after the remote gambling regulations were put in place in 2007, he and the present Comptroller of Her Majesty’s Household, the right hon. Member for Bath (Mr Foster), who is not in his place and to whom I pay tribute, identified the need for further regulation. It has taken some time for us to get to the point where we have the legislation before us, but we are here now and the Bill, as far as it goes, has support from all parts of the House, because we want to set the very highest standards here in the UK, which others will follow across the world in the regulation of remote and online gambling.
We certainly want the Gambling Commission to set the very highest standards so that people can enjoy the pastime of gambling in safety and in the knowledge that everything is being done to ensure that they can do so without fear of any harm. We commend the Bill and hope sincerely that everything required by it will be realised under the licensing regime applied by the Gambling Commission.
Philip Davies
I, too, rise to support the Bill, although not necessarily for the reasons it was introduced. The Government introduced the Bill—if we believe what they say—for the purposes of regulation, but it seems to me that for the purposes of regulation it is completely unnecessary. In fact, it will probably make the regulatory system worse, because although virtually every gambling operator used by UK consumers is currently properly regulated, either here or in other places such as Gibraltar, the chances are—the Treasury’s own forecasts show this—that as a result of the Bill around 20% of betting will take place with unlicensed and unregulated operators. As far as the regulation of gambling is concerned, the Bill represents a step backwards, rather than a step forwards.
However, I support the Bill for the real reason behind it, which the Government dare not say: it will allow them to tax gambling companies currently based in places such as Gibraltar and allow people in the UK who place bets with those companies to be subject to taxation. I think that is a perfectly legitimate thing for the Government to do, but I understand that for legal reasons within the EU they do not want to say it. I am pretty certain that is the reason for the Bill, and on that basis I support it.
I have one question for the Minister, which I hope she can answer. She will be relieved to know that it is not about sport. I was tempted to ask her the name of this year’s winner of the grand national—a clue is that it was trained in my constituency—but I will resist that temptation. Will she give me a guarantee that the Bill will not lead to any empire building by the Gambling Commission, which could claim that it needs ever more resources, ever more money and ever bigger fees to do the regulation that will be expected of it as a result of the Bill? The Culture, Media and Sport Committee was keen to get assurances on that during our pre-legislative scrutiny. I hope that she will make it clear to the Gambling Commission that the Bill cannot be used as an excuse.
Robert Neill
My hon. Friend makes a fair point. Does he accept that one way to avoid the needless spread of bureaucracy would be for the UK’s Gambling Commission to use some of the expertise that exists in the Alderney gambling control commission or Gibraltar’s commission, where there is likely to be spare capacity? Using what is already there, rather than inventing new methods and posts, might be a way of achieving sensible regulation at a reasonable price.
Philip Davies
I very much agree with my hon. Friend. He gets to the nub of my concern about the Bill, which is that companies based in places such as Gibraltar are already particularly well regulated by the authorities there, which is why the Bill is complete nonsense from any regulatory or licensing perspective—it is clearly about taxation. Once we get over the emperor’s new clothes situation, I hope that the Government will take my hon. Friend’s advice, because the most effective way to license and regulate those industries will be by using the expertise that already exists.
Notwithstanding my concerns about empire building by the Gambling Commission, which I hope will not be a consequence of the Bill, and the fact that I consider the regulatory system for gambling to have taken a step backwards, I support the Bill and hope that the revenue raised will be useful in paying down our debts. The success or failure of the Bill will depend not on the legislation, but on the rates of taxation the Treasury places on the gambling industry as a consequence of it. The Treasury—I hope that the Minister will take this message back—must not stifle some of the smaller niche gambling companies, which employ many people in this country, because they would be finished off by a rate of 15%. The big gambling companies can look after themselves, but the smaller ones need a competitive rate. Otherwise, they will go out of business and we will end up losing jobs and tax revenue. Notwithstanding those concerns, I support the Bill.
Mr Sutcliffe
It is a pleasure to follow the hon. Member for Shipley (Philip Davies). We disagree on some things, but he is an excellent advocate for the horse racing and betting industries. We might draw different conclusions on the purpose of the Bill, but I think that we agree that it is important. I pay tribute to the Minister for bringing it forward. The process started, as my hon. Friend the Member for Eltham (Clive Efford) said, more than three years ago. I also pay tribute to the officials in the Department for Culture, Media and Sport, because it is important that they work with the Gambling Commission and the sector to understand the nature of the industry, which is very important to this country given the number of jobs it creates, the amount of tax that it pays and the investment it makes in the economy.
Opportunities to discuss the gambling industry in the House are few and far between. One of the difficulties is that some people take a blanket approach to gambling and oppose anything to do with it because they think that it is alien to our country, but in reality that is not the case. As we have seen with the success of the national lottery and national institutions such as the derby, the grand national and many other racing events, sport and gambling are interlinked.
The important thing about the Bill is that it offers a consumer safeguard, and in that respect it fills a gap in the previous legislation, the Gambling Act 2005. However, we have put a lot of trust in the Minister today—I do not doubt that it will be honoured—to do things we have asked her to do. We have asked her to look at the casino industry and, outside the scope of the Bill, the opportunity to put right some of the wrongs for that industry. I look forward to hearing what she has to say as a result of her consultation with the sector in due course.
I think that the Minister is wrong not to support the new clause on the horserace betting levy. The horse racing industry is important to the country. The problem is that if it takes four years to reach a conclusion for the next negotiations, some race courses and parts of the industry might not survive. I hope that she can give some momentum to that. I referred in Committee to the other place, and I am sure that when the Bill goes to the other place its Members who are even more committed to racing than we are in this House—if that is possible—will remind her of the levy’s impact on the industry.
The Bill is a good one. I am grateful to the Minister for listening to the comments that have been put to her from both sides of the House. I look forward to its passage through the other place. However, I feel that the House needs to look at the impact of gambling on society, because there are people who have problems, and the hon. Member for Strangford (Jim Shannon) is right to raise those concerns. It might sound like a small percentage—0.9%—but my hon. Friend the Member for Eltham is right about the number of people affected, so there needs to be adequate research, education and treatment. I support the Bill.
Jim Shannon
I thank the Minister for her response. Although we did not get the response we wanted, as the Minister acknowledged, she did make a commitment to consider pushing the industry in the direction in which we all want it to go. From the Government’s point of view, and that of the Opposition, I think that the overall consensus is that we need to help those who need help. That is where I and many others come from in relation to problem gamblers and vulnerable people.
With regard to new clause 14, I hope that when the Bill goes to the other place, with due diligence—to use that terminology—perhaps something might be added that this House can endorse. I would be glad to see such a move in the right direction. I would also be pleased to see money from dormant bank accounts going to help those with gambling addictions—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The debate is on Third Reading, not the clauses.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. It is not about understanding it; the point is that you have to talk about it. I am not too worried about the understanding.
Jim Shannon
I stand corrected, Mr Deputy Speaker. I understand it very well and I will now get it right.
When the Bill returns to the House, I hope that we will have an opportunity to address all those issues. I look forward to legislation that empowers problem gamblers and vulnerable people to get help when they need it most. If we can achieve that, we will have achieved a lot.
Question put and agreed to.
Bill accordingly read the Third time and passed.
London Local Authorities and Transport for London (No. 2) Bill [Lords]
(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Bob Blackman (Harrow East) (Con)
I beg to move, That the Bill be now read a Third time.
I do not wish to detain the House for too long because the Bill has been subject to very detailed scrutiny at all its stages in this House and in the other place. I hope that, like the two previous London Local Authorities and Transport for London Bills, this Bill will be passed this afternoon, giving the councils and Transport for London very useful powers that I am sure will be welcomed by everyone who lives in London.
London councils and boroughs bring forward proposals for Bills, and this one started out in May 2007. At that time, I was sitting as deputy leader of Brent council, where we gave the Bill some detailed scrutiny. After the proposals were refined in summer 2007, the Bill was finally lodged in November 2007. It can therefore be said that it has had a long gestation period of some six years.
I pay tribute to my hon. Friend the Member for Christchurch (Mr Chope) and his colleagues, my hon. Friends the Members for Shipley (Philip Davies) and for Bury North (Mr Nuttall) and others, who have subjected the Bill to very detailed scrutiny. It is fair to say that it has been a long process. My hon. Friend the Member for Christchurch has sought tirelessly, not only on this private Bill but on others promoted by London local authorities and, indeed, authorities throughout the land, to ensure that such Bills are given detailed scrutiny, as is entirely appropriate. It may be said that they get far more scrutiny than legislation proposed by the Government that is much more important, if that is possible. I am sure that his constituents will rest easy knowing that his assiduous work on this Bill on their behalf means that when they next visit this great city there will be less clutter on the streets, apart from electricity charging points, safer skips and cleaner air as a result of the increase in the use of electric vehicles that will no doubt arise.
Mr Christopher Chope (Christchurch) (Con)
I am grateful to my hon. Friend for his generous remarks. This Bill started off with 39 clauses and now has 20. Does he accept that other legislation we pass in this House would invariably be much better if it were similarly truncated?
Bob Blackman
I thank my hon. Friend for that intervention. Before the Bill started, 15 clauses were removed by the Lords Select Committee that considered it, 10 of which formed one part of the Bill, and three were dropped by the promoters in agreement with people who objected. Detailed elements of the Bill have been subjected to tidying up and making sure that they are appropriate to the times we live in.
I thank the Under-Secretary of State for Transport, my hon. Friend the Member for Wimbledon (Stephen Hammond), and the hon. Member for Nottingham South (Lilian Greenwood) for their contributions to this debate.
Finally, I would like to mention something that will no doubt cause great distress to my hon. Friend the Member for Christchurch and his colleagues and perhaps some joy and relief to others, including our Whips. I have been told that apart from a short four-month period in 1991, ever since the first London local authorities Bill was deposited in November 1988 there has been at least one such Bill before Parliament. When this Bill obtains Royal Assent, as I trust it now will, that continuous record will end. The torch is being carried on to some extent by TfL with a Bill that is currently in the Lords, but for the London boroughs, for the moment, that is it. As it happens, tomorrow is the day by which private Bills must be deposited in Parliament. I have it on very good authority that a London local authorities Bill will not be deposited.
With that, Mr Deputy Speaker, I thank you and your colleagues for your forbearance and hope that the House will shortly see fit to give this worthy Bill a Third Reading.
Mr Christopher Chope (Christchurch) (Con)
We have up to three hours in which we could debate the Third Reading of this Bill—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I might be able to help the hon. Gentleman. As we all know, Third Readings never drag on for that long, and I would be tempted to put the Question way before then, so he ought to get his points in and not detain the House for too long. I know that he is desperate to get on to the Second Reading of the next Bill.
Mr Chope
As always, you anticipate my remarks, Mr Deputy Speaker.
The whole process of private legislation should perhaps by revisited by the Procedure Committee, because this Bill shows that too often Bills are brought to this House and presented without being sufficiently thought through in advance. Great chunks of the Bill have been removed as a result of the scrutiny that this House has given to it. I know, Mr Deputy Speaker, that on Third Reading we do not talk about what is not in a Bill but only what is left in it. However, it is important to put it on record that all the provisions relating to pedicabs, for example, which were very controversial, have been completely removed. As I indicated in my intervention on my hon. Friend the Member for Harrow East (Bob Blackman), a Bill that originally had 39 clauses now has only 20, so it is much tighter.
There have also been a significant number of amendments. I commend my hon. Friend for the constructive way in which he has dealt with the points that have been raised. Obviously he and I have not agreed about everything, but where we have been able to agree we have amended the Bill accordingly.
Sir Greg Knight (East Yorkshire) (Con)
Has my hon. Friend not rather destroyed his own argument? If the Bill has been improved in the process of scrutiny that already exists, surely there is no need for the Procedure Committee to look at our procedures.
Mr Chope
As my right hon. Friend is a former distinguished Chairman of the Procedure Committee, his intervention will probably carry considerable weight. I can understand why the Committee might not want to get involved in looking at private legislation. However, quite a lot of right hon. and hon. Members’ time has been taken up with this legislation, and the implication of my remarks was that some of that time could have been spared if the contents of the Bill had been thought through more carefully in advance before it was presented. I have noticed a distinct drying up of the number of private Bills being brought before the House. I hope that the thorough scrutiny to which they have been subject has become part of a deterrent process whereby people realise that one cannot just dream up some idea, put it in the form of legislation, present it, and hope that it will go through the House without anybody taking too much notice of it. If the Procedure Committee wants to look at the issue, then obviously it will do so.
The next Bill we are debating deals with filming on the highways in one particular locality. It is often asked why we need Bills dealing with a particular locality that could have a more general application through an enabling Bill passed by the Government that would enable local authorities, if they so wished, to opt into certain legislation. However, that is a debate for another day.
Having had such constructive engagement with my hon. Friend the Member for Harrow East, it would not be appropriate to seek to divide the House on Third Reading. As I have I said all along, there are parts of this Bill that I support. I merely wanted to ensure that it was a better Bill when it left this House than when it arrived. I think that anybody looking at this objectively will agree with me and with you, Mr Deputy Speaker, that it is a better Bill that is worthy of a Third Reading.
Lilian Greenwood (Nottingham South) (Lab)
I am glad to be able to speak in this debate, if a little surprised at how soon I am doing so. No doubt hon. Members on both sides of the House will be glad that six years after this Bill was deposited in the House we have finally reached its Third Reading.
Many Members have worked to improve the Bill, of whom many are in their places today, as have many in the other place, and not least in Committee. I want to take this opportunity to place on record my thanks to my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick), who spoke on behalf of the Opposition on Report. It should be recognised that the main promoter of the Bill, Westminster city council, has shown a willingness to compromise on a number of points. Thanks to that work, this is, overall, a sensible package of measures and I hope the House will give the Bill a Third Reading.
The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
I am delighted that we have reached Third Reading and I congratulate my hon. Friend the Member for Harrow East (Bob Blackman) on his efforts in promoting the Bill. He and many other Members present have sought to make changes to, and contribute to extensive scrutiny of, the Bill during its passage through Parliament. The debate has been healthy and constructive, and the Bill has undoubtedly been improved as a result. The Government have made it clear throughout that we support the principle of the Bill. I thank my hon. Friend for his work in steering it through the House and Third Reading, and I hope it will receive Royal Assent. With that, I reiterate the Government’s position.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Hertfordshire County Council (Filming on Highways) Bill [Lords]
(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr James Clappison (Hertsmere) (Con)
I beg to move, That the Bill be now read a Second time.
This debate has already had something of a preview, but I hope there will not be a sequel. This very important Bill is promoted by Hertfordshire county council and has the full support of the borough council in my constituency, Hertsmere borough council. The purpose of the Bill is to confer powers in relation to filming on highways in Hertfordshire and thereby to help the film industry, which is an important business and employer in Hertfordshire.
In fact, there are no fewer than five major film studios in Hertfordshire, including Elstree studios in my constituency, the BBC studios in Elstree and the Warner Brothers studios in Leavesden. They are responsible for some of the most well-known and well-liked television programmes on our screens today, as well as for some important films. Elstree studios in particular have made a major contribution to the British film industry since its very beginning. They have also made a contribution to the international film industry and were used for the “Star Wars” and “Indiana Jones” films. They have made a contribution to the British film industry since 1925 and many of our most iconic films were made there, including my all-time favourite, “Ice Cold in Alex”. I hope it will not disappoint too many fans of that film if I disclose that the ice-cold beer consumed at the end of the journey across the desert—supposedly in Alexandria—was in fact consumed just off the Shenley road in Borehamwood.
Likewise, many important television programmes have been and continue to be produced there. Last Saturday evening’s episode of “Strictly Come Dancing” was produced at Elstree studios, which is the programme’s new home. I am not sure whether that particular programme will need to avail itself of the Bill’s provisions, but many other productions at local studios may wish to do so. The intention behind the Bill is to help those productions and to facilitate film making in Hertfordshire. A number of new programmes are in production at Elstree studios, including a new production of “Paddington Bear”, which may well want to avail itself of the provisions.
I am confident that the film studios in my constituency will continue to be at the forefront of film making in Britain for many years to come, not least because the Elstree university technical college opened its doors in September, offering a range of courses focusing on technical skills and crafts that support the film, television and entertainment industry.
Sir Greg Knight (East Yorkshire) (Con)
What duties would rest on my hon. Friend’s county council to inform motorists of a road closure? If one is trying to get from A to B and one is not from the particular county in which one happens to be travelling, there is nothing more infuriating than to find oneself faced with a road closure that was not flagged up earlier. What duties would the county council be under, should the Bill become an Act, to advise motorists that a road closure is in force?
Mr Clappison
My right hon. Friend makes an extremely good point. Hertfordshire county council has given an assurance that it will follow similar procedures to those set out in the Road Traffic (Temporary Restrictions) Procedure Regulations 1992 on giving notice of when roads will be used during the course of filming. Those requirements relate to posting notices in the street, notifying the police and making certain advertisements of when the roads will be closed. The duties for when the roads are actually closed are set out in clauses 3 and 4, to which I will turn shortly.
Mr Christopher Chope (Christchurch) (Con)
Following on from the point made by my right hon. Friend the Member for East Yorkshire (Sir Greg Knight), proposed new subsection (6C) in clause 4 makes it clear that the county council is seeking powers to enable it to close a road with a minimum of only 24 hours notice. Does my hon. Friend think that that is reasonable?
Mr Clappison
As my hon. Friend will know, that is the film notice, as opposed to the film order, and the various requirements relate to film notices. I hope he will take some consolation from the fact that a film notice can continue for only 24 hours, whereas a film order can continue for longer. As he has said, notice of a film notice has to be given at least 24 hours before it comes into effect. The purpose is to deal with situations in which weather may be a factor and the film producers want to take advantage of temporary weather conditions.
Mr David Nuttall (Bury North) (Con)
My hon. Friend has set out the long history of film making in his constituency and his part of the world. Given that that has happened for so many years, will he briefly set out why these measures are now deemed necessary and how the area managed without them in the past?
Mr Clappison
My hon. Friend makes a fair point. I am aware that roads have been closed in the past, but I am not sure whether the legal powers under which they were closed were, shall we say, as certain as some would have liked them to have been. I think my hon. Friend would be among the first to ask whether there was a proper legal power and to look into it. The Bill will put the legal position beyond any doubt. I hope I will be able to assist hon. Members by explaining that this Bill is analogous to existing legislation for other categories of event and activity for which roads can be closed. The Bill merely makes it clear that film making will be added to that list.
May I say, in general support of the Bill, that the film industry and the ability to attract films to use our excellent local environment are very important for the local economy? It was reported in December 2011 that Hertfordshire employs approximately 3,200 people in the film and television industry, quite a few of whom live in my constituency. Film and television productions are facilitated if film makers are able to use out-of-studio locations in the many picturesque locations in Hertsmere and Hertfordshire. As I have indicated, this Bill will put the use of those localities and local roads on a firmer legislative footing.
The provisions of the Bill will have the effect, as I have suggested, of extending, with modifications, the existing powers of the highway authority to close roads for special events. Those powers are found, as I am sure hon. Members will know, in the Road Traffic Regulation Act 1984, which was amended in the 1990s to enable the Tour de France to be hosted in England for the first time. The relevant provision of the 1984 Act allows closures to facilitate the holding of a relevant event, which is defined as
“any sporting event, social event or entertainment which is held on a road.”
It is ambiguous whether that definition includes film making.
Sir Greg Knight
Is there not a difference, though, between those examples and the Bill’s proposals? When a road is closed for a street party or a sporting event, it could be argued that it is for the public benefit, because the public are invited and expected to take part. When a road is closed for the making of a film, however, the film director will not want the public to be present, because they will spoil the shot. It could therefore be argued that the Bill seeks to close a public highway for a narrow sectional interest. Is that not the difference?
Mr Clappison
I have been in agreement with interventions by my right hon. and hon. Friends, but may I put a different case? My right hon. Friend gives the example of entertainments and the like, but they do not confer any wider economic benefit. Filming confers a wider economic benefit on the community because it will help prosperity and employment to be established in Hertfordshire.
I also disagree with what my right hon. Friend said about keeping people away from the filming. My experience is that film makers are happy for members of the public to be present to watch from an appropriate distance, provided they do not interfere with the filming. That may not always be the case, but I know of examples in my constituency where it has been.
Members of the public in Hertfordshire take not only great pleasure from witnessing films being made, but pride from the fact that well-known local landmarks are used for filming. My right hon. Friend will not be old enough to remember “On the Buses”—I remember it, I am sad to say—but in Borehamwood, we take great pleasure from the fact that the principal figure in the series happened to be a bus driver, the late Reg Varney, who was a great character. For the filming, he drove his bus up and down Shenley road in Borehamwood, and if one watches those films, one can see Shenley road as it was then, with members of the public standing around and witnessing the film being made. It is all there in that very good series. I will not digress any more about “On the Buses”, but I am sure that there are many other good examples.
Legally, the Bill will have the effect of categorising the making of a film as a “relevant event”, therefore allowing the council to make closure orders. The existing restriction on special events that allows such events to last for three days will continue in force, but it will be extended to seven days for film orders. The 1984 Act allows a road to be closed for three days, but the Bill will allow it to be closed for seven days. Up to six film orders can be made for any one stretch of road under the provisions.
In addition to such film orders, the Bill makes provision for film notices, to which my hon. Friend the Member for Christchurch (Mr Chope) has already referred. Going beyond existing provisions for special events, film notices will enable the council to issue restrictions on road use where it appears to the council that it is expedient that the closure should come into effect without delay, although the duration of up to 24 hours is shorter than the seven days for film orders.
Mr Chope
Does my hon. Friend accept that it is possible to close any road for only three days once a year under the Road Traffic Regulation Act, but under his Bill it will be possible to close a particular piece of road on six occasions for a maximum of seven days each time—in other words, for 42 days a year?
Mr Clappison
My hon. Friend makes a good point. If he has been listening, I hope that he will accept that I have been careful to say that the power is being extended. That is one of the details that it is important to debate, and no doubt he will want to come back to that point. I suggest that that is so to fit in with the needs of the film industry. I suppose that it will be hoped that roads will not need to be closed for the maximum period or for the maximum number of six occasions in a year. That provision is to fit in with the convenience of, and to promote, the film industry, which has to be balanced against the other factors that he mentioned, including the interests of local road users.
Mr Clappison
There is a procedure for making the orders by the local authority. I take my hon. Friend’s point, but I must say that many businesses are dependent on the film industry, particularly in my constituency, because there is so much film making there. People are so used to the film industry that they accept that some inconvenience is associated with attracting to Hertfordshire, and in particular to my constituency, important productions that are of so much general benefit to the public and the local economy. As far as I am aware—I will probably have an avalanche of mail complaining about it—there is a general acceptance of that in my constituency, as well as great pride in our connection with film making and a wish for it to continue. He makes a good point about the generality of the powers, but there are special circumstances to take account of in the case of my constituency.
I hope that I have been frank enough for my hon. Friends about the proposals in the Bill. As I have said, film notices go beyond the existing provisions for special events that I have mentioned in current legislation. Film notices enable the council to issue restrictions on road use where it appears to the council that it is expedient that the closure should come into effect without delay, which is particularly valuable to the film industry.
To turn to the detailed provisions, clause 3(2) provides that a “relevant event” under section 16A of the 1984 Act will include film making. Hon. Friends who are familiar with the 1984 Act will know that roads can already be closed, although for a shorter duration, for the several events specified in section 16A, covering
“the holding of a relevant event,…enabling members of the public to watch a relevant event, or…reducing the disruption to traffic”.
The film order will be added to that list of special events.
Clause 4 deals with restrictions on film orders and notices. Subsection (2) allows for film orders to remain in force for up to seven days, compared with the three days for relevant events under existing provisions, as we have already discussed. Subsection (4) provides that no more than six film orders may be made in any one year, that a film notice shall continue for only 24 hours and that notice of a film notice must be given at least 24 hours before it comes into effect.
Among other matters, clause 5 provides that a breach of a film order or notice will be an offence in the same way as a breach of an order relating to a relevant event under the existing provisions in section 16C of the 1984 Act. I understand that there has been some discussion and, I am happy to say, constructive dialogue between the Bill’s promoter and the Minister, as I hope the Minister will confirm.
Clause 6 provides for the council, as a highway authority, to give permission to film makers for the temporary placing of objects on a highway, subject to conditions imposed by the council and certain defined conditions set out in subsection (3). The general purpose is to ensure that that is done safely, because safety is of overriding importance. Subject to such conditions, clause 6 allows the council to authorise equipment, such as static film cameras, lighting rigs or camera trucks to be placed on roads during filming.
Jacob Rees-Mogg (North East Somerset) (Con)
Will my hon. Friend explain what penalties will apply to somebody who breaks an order, particularly if they were trying to get back to their home on a road that had been closed?
Mr Clappison
To assist my hon. Friend, let me point out that those penalties are set out in existing legislation. I hope that I am right in saying that such breaches are dealt with by way of fines, but I will be corrected if I am wrong. I will look at the detail and come back to him in due course.
Jacob Rees-Mogg
Will there be an exemption for people who are trying to get back to their own property, because it would seem unreasonable if the closure of a road made it impossible for somebody to get a vehicle back to their own drive or for a pedestrian to walk back to their own house?
Mr Clappison
I hope that it gives my hon. Friend some comfort to know that the penalties will be exactly the same as those that have existed for a long time under the 1984 Act, under which roads are closed for the holding of specified events. Famously, that related to the Tour de France, but it has also been used for other events and entertainments. I hope that there is a spirit of reasonableness in all such matters and that only somebody who is unreasonable will come anywhere near to receiving the penalties that can be meted out under the law.
In summary, the Bill will benefit film making, particularly in my constituency. I have no doubt that it will be subject to the same scrutiny as every other Bill of this kind. I hope that I have been frank with the House in setting out its provisions.
Sir Greg Knight
I am grateful to my hon. Friend for giving way again; he is being very generous. Have there been any discussions between the promoter of the Bill and the police? For example, are there any police manpower implications? Should the Bill become an Act, the police might be asked to enforce the film orders, so have the police been consulted?
Mr Clappison
I will come back to my right hon. Friend on that matter in due course. My understanding is that the county council has consulted widely, so I am sure that the police are aware of what is being proposed. I might be speaking out of turn here, but I think that the police may well find it helpful to have their powers put on a firmer footing. That is the purpose of the Bill.
I hope that the Bill will engender many benefits for my constituents. On that basis, I invite the House to give it a Second Reading.
Mr Christopher Chope (Christchurch) (Con)
May I say at the outset that it is not my desire to divide the House on Second Reading? However, I hope that my hon. Friend the Member for Hertsmere (Mr Clappison) and the promoter of the Bill will take on board the concerns Government Members have expressed in interventions.
Essentially, the issue is: what is proportionate and reasonable? At the moment, national legislation enables activities to take place on the highway for a maximum of three days and ensures that no piece of road may be affected more often than once a year. As I made clear in an intervention, the Bill would make it possible for an individual piece of highway to be closed for as long as 42 days a year, without any compensation for businesses or residents who were inconvenienced or suffered a loss as a result. The question is whether this House needs to give such wide powers to a local authority through private legislation.
One can envisage what would happen if Westminster bridge was closed for 42 days a year for filming. One could make any number of arguments as to why it would be a wonderful location for filming. If it was closed for 42 days a year, one can imagine what the consequences would be for local residents and other users of that highway. I venture to suggest that the Road Traffic Regulation Act 1984 was drafted in the way it was to maintain a balance between the interests and needs of local residents and the wider interests that might be served by closing a road for a particular purpose on a particular occasion.
A lot of films are made in Hertfordshire, so the county council feels it needs to increase the powers that are available to it or, as my hon. Friend said, clarify those powers. However, the Bill goes far beyond clarifying the wording of the 1984 Act. A clarification could be made by adding one or two words to that Act and without changing the amount of time for which a road may be blocked. It is a misrepresentation to suggest that the Bill merely seeks to clarify an ambiguity in the existing legislation. It goes far beyond that and I hope that in Committee it will be given a degree of scrutiny commensurate with those extra powers.
I have been approached by Buckinghamshire county council. I do not know why it thought it necessary to write to me for advice on introducing a private Bill, but it had the courtesy of so doing. I wrote back to the council leader and said that the Bill that he was seeking to bring forward was very similar, if not identical, to this one. If it is presented tomorrow, as we heard it might be, we will see. I suggested that rather than his county council bringing forward a separate Bill, it might get together with Hertfordshire and any other county council that is interested, speak to the Minister and see whether it could bring in more general legislation.
If the Minister wishes to intervene, I shall be happy to hear his answer. Perhaps we will hear in due course whether he thinks it would be appropriate for the national framework legislation to be changed so that instead of having the rather unhealthy competition between rival councils that are vying to present neighbouring towns as the most friendly to film-makers, which ultimately comes at the expense of the convenience of local people, there would be a more objective way of assessing what is reasonable and what is not.
There is another point that concerns me about the Bill. When I am not in my constituency, I live in a part of London that has a network of streets that were constructed largely in the late-Georgian period. The streets have retained their character and are often used for film sets. To compensate residents for the inconvenience associated with the use of local roads for film sets, which involves not being allowed to park and sometimes having access impeded by film crews, film companies pay a significant sum to the local residents association. It means that the association can function and hold Christmas parties and such things that it might not otherwise be able to afford. In a sense, there is a quid pro quo. Film companies are not acting for charity but to make money for themselves, so why should there not be a system for compensating those who are inconvenienced as a result of those activities? I would be interested if at some stage the promoters of the Bill considered whether some provision could be included to ensure that residents and businesses that are unduly inconvenienced, or perhaps inconvenienced on more than one occasion each year, are entitled to some compensation or recognition in monetary terms that they are making a contribution that should be recognised by the film company.
Like a lot of other Bills, this Bill merits considerable scrutiny. I am also puzzled by the explanatory memorandum that states that clause 3
“enables closures for the purpose of enabling members of the public to watch the making of a film.”
If we start closing roads to enable spectators to watch the making of a film, it seems to me that we are getting a long way from the Bill’s core purpose alluded to by my hon. Friend the Member for Hertsmere, which is to enable people to make films. If we start saying that additional roads must be closed, or additional time taken up because we must provide for people who want to watch the making of films, that is going further than might have been intended by the architects of the Road Traffic Regulation Act 1984. I hope that in due course that issue can also be addressed.
Sir Greg Knight
My hon. Friend made an interesting point about compensation. Does he know whether under existing legislation a local authority could charge a whopping licence fee to the film makers, thereby making money out of the process?
Mr Clappison
My hon. Friend is making some excellent points. My intervention will be brief, but I gently point out that the local council is the owner of Elstree studios. As long as those studios are in business and doing as well as they are at the moment, I believe the council’s revenues are considerably assisted by that. My hon. Friend mentioned local benefit, and my constituency contains a school that has been established to try to get young people into jobs in the film industry. That gives a lot of pleasure and satisfaction to local people.
Mr Chope
I am grateful to my hon. Friend for that further information. I had not realised that Elstree studios is a municipal enterprise. When my hon. Friend’s council next says that it is short of funds, he will be able to say, “Why don’t you sell off your interest in Elstree studios?”
Mr Clappison
It is a Conservative council with a substantial Conservative majority and an excellent record on finance, and it continues to provide very good services with a very good value for money council tax.
Mr Chope
I certainly do not want to get myself into deep water—deeper water—with Hertfordshire county council. My hon. Friend has explained that there is in a sense a potential conflict of interest between the county council as the highways authority, the regulator and the body setting and charging the fees and the county council wearing its hat as owner of the studio. That issue merits some detailed scrutiny by the House. It is wonderful that my hon. Friend has been so open and frank in exposing these issues for scrutiny and I am sure that plenty of people will want to take advantage of that in due course.
Jacob Rees-Mogg (North East Somerset) (Con)
I wish to speak only very briefly in response to the answer my hon. Friend the Minister gave me regarding the fines that can be levied on people who may use streets when they have been closed. This House should always be enormously careful about passing any further laws that increase the risk of British people being fined when going about what has previously been their lawful business. Every time this Parliament acts to make the life of individuals that little bit harder, that little bit more onerous or makes someone a little more at risk of coming into conflict with the authorities, the worse we make our society.
I would hope that any Bill that we pass reduced the risks of these impositions and that we will be very careful to think about the necessity for legislating when the existing system has worked. We heard from my hon. Friend the Member for Hertsmere (Mr Clappison) that films are made regularly and successfully in Hertfordshire, creating a great deal of business for the county. Roads are closed by common consent, good sense and the willingness of residents to co-operate with what they know to be a good and sensible business, even if it is technically a slightly grey legal area. That very British approach to things has worked successfully over many centuries, and if possible it is preferable not to legislate.
Richard Burden (Birmingham, Northfield) (Lab)
This Bill will enable Hertfordshire police to sustain and attract the film industry, which is a significant contributor to the local economy and to local jobs—a point made forcefully by the hon. Member for Hertsmere (Mr Clappison). My understanding is that it will clarify the current uncertainty in the legal position for the county council and the police, who have been using the Town Police Clauses Act 1847 to enable road closures for filming. The use of that Act ended a few years ago because of some nervousness over the appropriateness of doing so and the council has therefore proposed this Bill, which I understand—the hon. Member for Hertsmere will no doubt clarify this as the Bill goes forward—the police support.
The powers are already available to local authorities in London and Kent. The Bill goes further, enabling the council to close roads with only 24 hours’ notice. I understand that this aims to deal with unpredictability in filming, such as the weather. Concerns—we have heard some today—have centred on the impact on local people and others that could result from sudden road closures and the risk of prosecution for other people breaching a closure notice. My understanding is that after a request from the Lord Chairman of Committees, the county council has updated its code of practice for location filming to address these concerns, including a section requiring the county council to consult local residents and businesses.
On that basis we can see merit in the Bill and in its going forward.
Madam Deputy Speaker
Order. I am sorry, I am unclear. Mr Burden, have you finished or are you giving way?
Sir Greg Knight
I thank the shadow Minister for giving way. Does he agree that if arguments favour the Bill after it has been fully scrutinised, there will also be a case for national legislation—as mentioned by my hon. Friend the Member for Christchurch (Mr Chope)—rather than doing this county by county?
Richard Burden
Something tells me that all those issues and others will be considered as the Bill goes forward, which is entirely appropriate. At this stage, we are dealing with a Second Reading and we can see merit in the Bill and its objectives. On that basis, we are happy for it to go forward.
The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
I congratulate my hon. Friend the Member for Hertsmere (Mr Clappison) on moving the Second Reading of this private Bill. We welcome the opportunity presented by the debate, and we have listened to a number of the interventions. This Bill will certainly enable the successful film-making industry in Hertfordshire to prosper. I suspect my hon. Friend will enjoy many happy hours in Committee scrutinising this Bill.
Let me make it clear from the start that the Government do not oppose the Bill. We accept that it largely replicates previous legislation, including the London Local Authorities and Transport for London Act 2008 and the Kent County Council (Filming on Highways) Act 2010, but we had some initial reservations about the limited procedural protection offered to property owners and the travelling public. These are similar issues to those raised by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), who can be reassured that the Government have had discussions with Hertfordshire county council. We are grateful that the council reassured the Government that when it puts in place film orders and film notices, it will—to the extent that there are no mandatory requirements in law—follow the procedures similar to those set out in the Road Traffic (Temporary Restrictions) Procedure Regulations 1992.
I heard my hon. Friend the Member for Christchurch (Mr Chope) musing on why Buckinghamshire county council should have asked him to sponsor a private Member’s Bill on a similar subject. I can assume only that, after his long hours of parliamentary scrutiny, it considers him to be the House’s expert.
Stephen Hammond
I am happy to have that correction put on the record, but equally, I am sure that his advice was sought for exactly the same reason, given my hon. Friend’s extensive hours of scrutiny over various private Members’ Bills. I heard his comments and those of my right hon. Friend the Member for East Yorkshire (Sir Greg Knight) about the potential for looking at national legislation, and given that I am known as a most generous Minister, I am happy to offer the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill) for a meeting if they wish to pursue the point. None the less, the Government wish this Bill well on its Second Reading, and we have no objection to its moving forward through the House of Commons.
Mr Clappison
This has been a very good debate. I hope I was frank enough in it, and I am grateful to my hon. Friends for their acknowledgement of my frankness. There are issues to be debated. This Bill has to go through scrutiny in the same way as every other single Bill does: most, if not all of them, are much better for that process.
Good points have been raised in the debate. My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) asked a pertinent point about whether this constituted an offence and, if so, what the penalty was. I can tell him that it is an offence in the same way as a transgression of existing provisions relating to other special events for which roads are closed is an offence under the Road Traffic Regulation (Special Events) Act 1994. I believe, although I could not swear to this, that a level 3 fine will apply in this case.
I very much hope that those responsible for enforcing the Bill will take a view on the public benefit and take cognisance of the public interest in deciding whether any such prosecutions should take place. I hope that that situation can largely be avoided. As my hon. Friend the Member for North East Somerset quite rightly said, members of the public who want access to their premises or who have other important reasons for going about their lawful business should be able to do so. I am sure that there will be a will for that to apply.
My hon. Friend the Member for Christchurch (Mr Chope) raised some important points about the time for which roads may be closed. I very much hope that it can be kept to a minimum. As I understand it, we have been talking about the maximum periods and on each occasion up to six of the orders might be applied for, but I hope again that this will be a maximum and that the filming can be completed in much less time. As a maximum, of course, it can be debated. I probably agree with the ideological views of my hon. Friend the Member for Christchurch as far as local and national public ownership are concerned. This seems to be a case on its own, an exceptional circumstance, as Hertsmere borough council owns the studios.
I can assure my hon. Friend that—as, indeed, I think he knows—Hertsmere is not, in fact, a hotbed of socialism, but very much a testing ground for Conservatism. In this instance it may be a pragmatic type of Conservatism, for thanks to the keen commercial acumen of the Conservative leadership of the council over the time—quite a few years now—for which it has owned the studios, they have been a great success. I could read out a long list of films that have been made there, and another list of contemporaneous television programmes. I have already mentioned “Strictly Come Dancing”, but I could mention many other programmes, including “Who Wants To Be A Millionaire?” and “Celebrity Big Brother”. The BBC studios are the home of “EastEnders”.
I can assure my hon. Friends that Hertfordshire, and Hertsmere in particular, are very important to the film industry, which is a great asset to our country. It does a lot of good for us economically, attracting investment and helping our balance of payments. I ask my hon. Friends to think about that carefully when they scrutinise the Bill. I ask them to bear it in mind that the country—and my constituency in particular—has an important interest in promoting our film industry, and that the Bill will help to promote it in the ways I have described.
Question put and agreed to.
Bill accordingly read a Second time, and committed.
Business without Debate
(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Business of the House (2 December)
(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Christopher Chope (Christchurch) (Con)
It is good to have a reasonable slot in which to expand on the remarks that I was making just before 10 o’clock last night, and it is good to see that my right hon. Friend the Leader of the House is on the Front Bench and in a position to explain a bit of the background to the motion.
Mr Chope
Indeed: all the background.
The purpose of the motion is to enable the House to sit until as late as 11.30 pm on Monday, or even later, in order to consider two motions, one of which proposes to amend Standing Orders. I wanted to know why the Leader of the House had decided that the business should be debated so late on Monday, after a Second Reading debate on the important Mesothelioma Bill. Why could it not be debated at some other time? I believe that the motion proposing amendments to Standing Orders has been on the Order Paper for a long time, and I understand from contacts that I have had with my own Whip that the Government are concerned about the possibility that the House will divide at 10 pm on Monday. The business is highly contentious, which is why Members have been told that they will not be allowed to be “slipped”, or that slips that had been granted to them have been withdrawn. That suggests the Government regard it as highly contentious. If they do, it is all the more reason it should be given a primetime slot, rather than pushed towards midnight on Monday.
On a more serious point, the motion restricts the amount of time during which the two issues can be debated. It states that
“the Questions necessary to dispose of the proceeding on the Motion…relating to select committee statements and the Motion in the name of”
the Chairman of the Procedure Committee, including on amendments, shall be put
“not later than one and a half hours after the commencement of those proceedings”.
That means that a maximum of three quarters of an hour is being given to each subject, including for the discussion of amendments and for votes on the first motion before the second motion is debated.
I am speaking now on the last item of business on a Tuesday afternoon before the Adjournment debate. The hon. Member for Argyll and Bute (Mr Reid), whose Adjournment debate it is, could therefore have an extended debate on the defence police and fire pensions review until 7.30 pm. I cannot understand why the business on 2 December is being so dealt with and why effectively we have to suspend Standing Orders and move this business motion. I am not normally of a suspicious disposition, but this raises various questions.
Mr David Nuttall (Bury North) (Con)
Does my hon. Friend think it bizarre that this motion could be debated for longer than the 90 minutes allotted for the actual debate next week?
Madam Deputy Speaker (Dawn Primarolo)
Order. That depends on the debate staying in order. Its subjects are the length of the debate proposed—an hour and a half—and its timing, which, as Mr Chope has said, is next Monday.
Jacob Rees-Mogg (North East Somerset) (Con)
I am puzzled by my hon. Friend’s view that after 10 pm on Monday is not a good time for debating these issues. What on earth else would anybody rather do than come to the House and debate these important matters?
Mr Chope
I would be happy, as I am sure my hon. Friend would be too, to debate these issues until 1, 2 or 3 o’clock on Tuesday morning, should the need arise. That is why, as I said, the more serious of my concerns is the time limit rather than the timing. Obviously, he and I will participate in the debate at whatever time is set down, but we need to think about how easily people outside can follow our proceedings.
Mr Chope
That is a gross exaggeration of my position. I was suggesting to my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) that we should sit until we concluded the business, but that one advantage of having debates earlier—during primetime, as the Government would put it—is that they would be more likely to attract more interest from people scrutinising our affairs, who would not have to look at the historical record, but could watch it as it was happening.
Madam Deputy Speaker (Dawn Primarolo)
With respect, I would prefer the hon. Member for Christchurch (Mr Chope) not to answer that point. The purpose of the debate is to discuss only the date and the allocation of time. Nothing else is relevant to the specifics that we are dealing with.
Jacob Rees-Mogg
I am simply concerned that, at that late hour, some Members might be tempted to go to nightclubs and things like that. It would be distressing if we were to have the debate at a time when that might happen.
Mr Chope
I hope that when the debate takes place, it will be allowed a longer period of time than the motion currently provides for, and that it will have a similar spirit of good humour to the one that is prevailing in this short debate. I see no reason for extending this debate; I am making only a short point. Why does the Leader of the House need to close down debate on these issues and limit the discussion to 45 minutes on each of the two subjects, one of which has been the subject of a Government amendment to the motion tabled by the Procedure Committee? If we are going to encourage Members to participate to the full in the work of the Select Committees, including the Procedure Committee, the least we can do is allow proper time for colleagues to debate and question the proposals of those Committees.
I do not think that 45 minutes for each subject is sufficient, and I would be interested to hear why the Leader of the House thinks that those time limits are sufficient and appropriate, particularly as we have quite a lot of surplus time available now. I was talking to a journalist earlier, and he suggested that the business for next week seemed extremely light. I put these questions to the Leader of the House in a spirit of friendship. I know that, even though he does not always succeed, he tries hard to accommodate the needs of Back Benchers.
Mr Peter Bone (Wellingborough) (Con)
It is a pleasure to follow my hon. Friend the Member for Christchurch (Mr Chope), who has made a lot of important points. My concern is the restriction of time for the debate to one and a half hours. We shall be discussing important changes to the way in which Back-Bench business is debated in the House. When this Parliament came into being, the Backbench Business Committee came into force and we took great steps towards greater transparency and accountability. That is to the great credit of the Government, but I am worried that there is sometimes a temptation for them to row back slightly in this regard.
The Leader of the House might well have a good explanation for the decision to limit the debate to one and a half hours. If he does not think that the debate will take more than that length of time, there is no need to bring in the restriction. If, however, he thinks that Members might want to speak for longer on this important matter, surely they should be able to do so. There seems to be no point in curtailing the debate, especially as the motion states that it will be allowed to
“continue, though opposed, after the moment of interruption”.
The Government have been very good on the questions of transparency and accountability and it is a shame that, on occasions such as these, they seem to row back a bit.
The Leader of the House of Commons (Mr Andrew Lansley)
As ever, I am grateful to my hon. Friends the Members for Christchurch (Mr Chope) and for Wellingborough (Mr Bone) for their good-natured contributions. It is entirely right that they should ask a number of questions about this motion as the time permits. It might be sensible if I make it clear that the business of the House motion has two main effects. First, it allows the House to take the two motions together for debate. Given that both relate to the work of the Backbench Business Committee, that seemed entirely sensible, as it would not otherwise have been possible for them to be brought together in one debate. Secondly, it specifies a maximum time for debate of one and a half hours, as my hon. Friends have noted. My view is that that is an entirely sensible period to allow for this debate. I freely admit that that is a judgment about the amount of time in which the issues that arise on these two motions are likely to be debated. My personal view is that the second motion, relating to the capacity for Select Committee reports to be launched, will not detain the House for long, as we have seen in practice, but it needs to be regularised in the structure of the provision of Backbench Business Committee time.
Mr Bone
I thank the Leader of the House for the explanation he has given so far. If the motions had been tabled separately, he would almost certainly have granted one and a half hours for each of them. I do not think he would have granted a 45-minute debate; so a good compromise might be to extend the total time to three hours.
Mr Lansley
I think I have explained straightforwardly the judgment I have made, which is that the two motions relating to the work of the Backbench Business Committee in the House can be brought together perfectly sensibly. The latter motion, which I understand has the support of the Chairs of the Liaison Committee and the Backbench Business Committee, would not detain us at any great length. From my point of view, in order to protect Government time, it is important for us to ensure that we have allowed these motions to be brought forward for the House to debate. I freely admit to the House that it has been difficult to find Government time. The Backbench Business Committee, as my hon. Friends will know, does not have the capacity to use its own time to bring forward its own motions relating to itself. [Interruption.] That is a separate debate, but the Committee does not have that capacity under the Standing Orders. For these motions to be debated, Government time has to be used, and so I have looked, along with my colleagues, to ensure that we find such an opportunity. That has been difficult and we have made the appropriate judgment in securing the possibility of time.
It is entirely a matter of speculation as to whether the Mesothelioma Bill will absorb all the time through to 10 pm. The assumption being made is that it will do so, and if it does, so be it. If we commence this debate after the moment of interruption, I do not want it to extend for a long period beyond 10 pm, although I am happy for the debate to go beyond 10 pm if necessary.
Mr Chope
My right hon. Friend makes an important point—he says that he does not want the debate to go on for more than one and a half hours after the moment of interruption. Unfortunately, that is not what his motion says. His motion says that it cannot go on for more than one and a half hours after it starts. Perhaps he would be willing to withdraw this business motion and table an amended motion saying that we could have the maximum of one and a half hours after the moment of interruption.
Mr Lansley
I point out to my hon. Friend that I have said two things. I have said, first, that I do not think that the debate requires more time than one and a half hours, and it is Government time that we have found for the purpose. I have said, secondly, that I would not wish it to go for more than one and a half hours beyond the moment of interruption. It does not follow that I think it requires three hours—in any circumstances.
Yesterday, my hon. Friend the Member for Christchurch questioned the need for the Standing Orders to be amended. He knows that this motion exempts the business from both the moment of interruption and the Standing Order relating to deferred Divisions, and he will understand that Standing Orders are amended regularly for such purposes. The motions for debate next Monday result from the work of the Procedure Committee, and it is right that the House is given the opportunity to resolve those issues.
Jacob Rees-Mogg
To follow up the point made by my hon. Friend the Member for Christchurch, it would be a pity if we went home early on Monday, would it not? If the earlier debate were to finish well before 8.30 pm, it would be a shame if the House’s business came to an end before the normal hour of closure.
Mr Lansley
In scheduling business, my purpose is to ensure that there is time available for all the business. My objective is not to fill time. I say gently to my hon. Friends that they could have raised the matter when I announced provisional business at business questions last Thursday. They have done so in the past. They have raised issues after business questions and, on occasions, I have taken those issues away and we have amended the timing and the character of business. In this particular instance, I have to say that the motion relating to Back-Bench business has been on the Order Paper since before the summer recess. It relates to a report published by the Procedure Committee in November 2012. It has taken us more time than we would have wished to bring it forward. The Procedure Committee was rightly keen that we should schedule that business. We have done so, and we have given it adequate time. From my point of view, I hope that the House will allow the business to go forward as proposed in motion 9, which I moved yesterday.
Question put and agreed to.
Defence Police and Fire Pensions
(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Alan Reid (Argyll and Bute) (LD)
I thank Mr Speaker for granting me tonight’s debate. I want to express my thanks to Mr Eamon Keating of the Defence Police Federation and to Dave Kirby of the defence fire and rescue section of Unite for their help in preparing for this debate.
Many of my constituents work as police officers and firefighters at the naval bases of Faslane and Coulport. They are a dedicated and skilled work force. However, they have been caught out by what I believe is an anomaly in the Public Service Pensions Act 2013. The anomaly arose because defence police and fire personnel have traditionally been on civil service terms and conditions rather than on conditions comparable with the country’s other police and fire services. As they are on civil service terms and conditions, their retirement age had been 60.
The previous Government imposed a pension settlement, which meant that new recruits to the defence police and fire services have a retirement age of 65. However, efficiency savings have meant that very few recruits have joined those services since then and more than 90% of the current work force have a retirement age of 60. Those who have a retirement age of 65 tend to be younger people who have joined recently, so it is unlikely that there is anybody over 60 working at the moment.
The present Government inherited that situation. The unique circumstances of the defence police and fire personnel were then overlooked by Lord Hutton when he prepared his report on public service pensions.
Through the medium of the Public Service Pensions Act, the Government have faithfully implemented Lord Hutton’s recommendations, one of which was that those in occupations for which the normal pension age had traditionally been under 60 should have a normal retirement age of 60. That applies to the uniformed services: the armed forces and all police and fire services except those in the Ministry of Defence.
However, Lord Hutton has subsequently said that he was not aware of the unique circumstances of the defence police and fire personnel when he compiled his report. He added that had he been aware, he would have recommended that they be treated the same as the other uniformed services, with a retirement age of 60. I hope the Government will take on board Lord Hutton’s admission that he made a mistake.
The Public Service Pensions Act implements Lord Hutton’s recommendation of a retirement age equal to the state pension age for public sector workers other than the exceptions already mentioned. That means a retirement age of 65 rising over time to 68. My understanding is that the Government have already agreed that the retirement age for defence police and firefighters will not rise above 65 when the state pension age does. I would be grateful if the Minister could confirm that tonight.
The number of personnel involved is very small—about 3,500 in total out of a civil service work force of about 700,000. Defence police and firefighters do a vital job that involves putting themselves in dangerous situations and requires a high degree of fitness. Fighting a fire on a vessel at sea requires a person to be extremely fit and also extremely quick thinking. The same degree of fitness is required for police officers who have to wear body armour and carry a heavy weapon.
David Wright (Telford) (Lab)
Obviously, there are similar personnel in areas such as Telford, where there is a large MOD footprint. Does the hon. Gentleman agree that what we need for this group of people who do a great job for our country, often in difficult circumstances, is a pretty comprehensive review of their terms and conditions? I hope to hear the Government’s view tonight, but a future armed forces Bill might pick up on this issue and consider these workers’ terms and conditions as well as their status. I believe that they deserve a very high status indeed.
Mr Reid
I agree with the hon. Gentleman that these workers deserve a high status. The review I shall talk about later is of pensions and the retirement age, but I certainly agree and hope that this Government or a future Government will conduct a wholesale review of those people’s terms and conditions.
Like all other uniformed services, defence firefighters and police have to be ready to go instantly from a state of rest to 100% alertness and high physical exertion. That puts a heavy strain on the body and, as someone nearing 60, I know that we all have to accept that age takes its toll on us.
What makes the uniformed services different from workers in manual jobs is the need to go instantly to a 100% level of alertness and effort. Many other manual jobs involve hard work, but it tends to be done at a steady rate over several hours, whereas the uniformed services have to go to their 100% physical and mental peak immediately.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
The hon. Gentleman will be aware that I, too, represent MOD police in my constituency. They do a job that requires them not only to be fit and alert at times of crisis but to keep up arduous standards of fitness in preparation for any eventuality. The key issue is that it is often a false economy to keep people working beyond the peak of their physical fitness. If they have to leave work owing to ill health, that can be more expensive in the long run.
Mr Reid
The hon. Lady is perfectly correct. I shall talk about that aspect of the problem later. She is right that the defence police and fire personnel need a high level of fitness or they will be forced to take early retirement. That question leads me nicely on to the next part of my speech because I want to draw the House’s attention to a report produced for the Ministry of Defence by Dr P. Griffin, a consultant adviser in occupational medicine. The report makes it clear that a person’s ability to function at peak physical and mental alertness declines once they are over 60. I hope that the Government will take that report into account during their review.
Defence police and firefighters have to undertake regular fitness checks and demonstrate a high degree of fitness. I am concerned that if they have to work beyond 60, many of them will fail those tests before they reach the normal retirement age. Having a high proportion of personnel retire early on health grounds is no way to manage vital services such as policing and firefighting.
During the later stages of the Public Service Pensions Bill, I was pleased that the Government gave an undertaking to review the effects of defence police and fire fighters working until 65. That undertaking became section 36 of the Public Service Pensions Act, and I want some answers to questions I shall put to the Minister tonight.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
Will the hon. Gentleman give way?
Madam Deputy Speaker (Dawn Primarolo)
Order. This is an Adjournment debate. Opposition Front-Bench Members cannot intervene from the Dispatch Box in an Adjournment debate. Interventions can be taken from Back Benchers.
Mr Reid
The review is to be presented to Parliament no later than 24 December, so time is short. The report will look at the impact of the Public Service Pensions Act 2013 on the health and well-being of defence police and firefighters, and at the ability of those over 60 to meet the strict fitness requirements that are needed for the important and dangerous job that they do. The report will also consider the consequences of early retirement for workers who are forced to retire early on health grounds because they cannot meet the stringent fitness requirements. It will also look at the likely cost to the taxpayer.
If the retirement age is 65 and significant numbers of personnel are forced to retire early on health grounds, both the taxpayer and the worker will lose out. The worker will lose out because they will not get the full pension that they expected; the taxpayer will lose out because the amount that has been paid into the pension pot will not cover the cost of the pension if it is paid out early.
John McDonnell (Hayes and Harlington) (Lab)
The hon. Gentleman may recall the debate on the Bill; I was party to it as well. The impression that Ministers gave then was that this category of workers was an anomaly that had not been dealt with in the legislation. There was cross-party anxiety about this issue. I think that the hon. Gentleman will agree with me that, to get the legislation through, the Government gave the impression that this group of workers would be treated fairly and consistently with others working in this field, which meant that they would not be expected to work longer because of the physical capacity problems they would experience.
Mr Reid
I remember the hon. Gentleman’s contribution to the debate on Lords amendments. In response to the concerns expressed by hon. Members on both sides of the House, the Government tabled a new clause which became section 36 of the Act, which set up the review that we are now discussing. I hope and expect that that review will recommend an age of 60, for all the reasons that I have given and some that I shall go on to explain. I hope that the review will make that recommendation. If it does, I will certainly expect the Government to accept the outcome.
John McDonnell
Perhaps I can make the point more clearly. I think that the passage of the Bill was secured only because of those assurances. There was such strength of feeling across the House and across parties about this group of workers in particular that others would have objected to the Bill overall if the new clause had not been inserted and if assurances had not been given that this group of workers would be treated sympathetically.
Mr Reid
My expectation was that the review would recommend a retirement age of 60, and that the Government would accept it, and that is what I hope will happen.
I simply do not believe that it would be right for these workers to work beyond 60. The most appropriate comparison is with other firefighters and police officers. Members of all the other fire services and police services in the country are allowed to retire at 60 under the provisions of section 10 of the Public Service Pensions Act. Those staff whose pension conditions are being investigated by the review have important knowledge about their jobs, so I hope that the review team is consulting them. People who are actually doing the job can give information that no one else can so it is important that they are consulted.
I have some questions which I hope the Minister will be able to answer tonight. What consultation have the Government had with the work force representatives—the Defence Police Federation and the defence fire and rescue services section of Unite? What further consultation will be held with these representative bodies before the review report is completed? Will the Minister confirm that they will be able to see a draft before final publication and feed their views into the process?
Another important question for the Minister is whether the publication of the review will be the final word, or the basis for further consultation and negotiation. What research has been carried out to establish whether people over 60 are likely to have the fitness required to carry out the duties of defence police and firefighters without long absences from work, and what proportion would be likely to retire early on health grounds before reaching the age of 65 because they did not meet the stringent fitness requirements?
David Wright
I strongly support the hon. Gentleman. This is not just about fighting those fires that have an impact only on bases. He will be aware that in Telford and Wrekin a few decades ago, there was a huge fire at MOD Donnington, which affected the entire community around that base. It is in the public interest to ensure that those on MOD bases who have to fight fires are capable of doing so in the most efficient way.
Mr Reid
Yes, and I certainly remember the fire that the hon. Gentleman refers to; it was in all the news media. He is perfectly correct: this is a vital job. In Faslane in my constituency, there are nuclear submarines. We are talking about a very strenuous and highly skilled job and one that is very important, not just because of the assets on the base but for the general public.
Unite has supplied figures that are specific to age-banding and to ailments including those involving the heart, strokes and blood pressure, muscle and bone, and anxiety and depression. It also looked at long-term sickness over a 24-month period. It obtained those figures from medical and absence data provided by Defence Business Services, and has asked for the inclusion of those figures in the report. Will Unite’s figures be taken into account when the report is compiled? What plans do the Government have for a balanced, fair and equal retirement strategy for those individuals who may not be able to maintain the stringent fitness requirements?
The civil service pension scheme historically had a lower employee contribution than police and fire service pension schemes, so defence police and fire service workers had net pay deductions and abatements taken off their pay in an attempt to give parity with other police and fire services. However, the impact of these deductions has been that the defence firefighters’ pension is based on net pay after those deductions, rather than on their gross pay. Other police and fire service staff receive a pension based on their gross pay before employee superannuation payments are deducted. An actuary engaged by the Defence Police Federation has said that the abatement and net pay deduction system is antiquated and very unfair. There may have been a logic to the system when it was introduced 30-odd years ago, but over time it has become antiquated. I hope that that will be looked into as part of the review.
If defence police and firefighters have to work on beyond 60, they will be contributing more towards their pension and collecting it for less time than their colleagues in other police forces and fire services. I hope that the Government agree that there should be parity, in pension terms, between defence police and firefighters and those who come under the remit of other Government Departments and the devolved Administrations. In addition to investigating whether people over 60 are likely to be physically fit enough to carry out policing and firefighting duties, the review should look at levels of abatement of pay and net pay deductions. In that regard, I draw the House’s attention to what was said during the final debate on the Public Service Pensions Bill on 24 April by the hon. Member for Bromsgrove (Sajid Javid), then Economic Secretary to the Treasury, and now Financial Secretary to the Treasury:
“I agree that abatement, which the hon. Member for Nottingham East and my right hon. Friend the Member for Bermondsey and Old Southwark raised, is an important issue. It is therefore important that the MOD review considers it. It will have to consider a broad range of issues affecting the workers in question, including all pay and remuneration conditions and other potential benefits. It will have to examine the matter in its totality, and I would expect nothing else.”—[Official Report, 24 April 2013; Vol. 561, c. 912.]
I hope that the Minister can tell us tonight about that aspect of the review. Pensions calculations are notoriously complex, and I would ask that as well as a recommendation in the review on the level of employee superannuation contributions, all the calculations behind this recommendation be published for checking and comment.
Defence police and firefighters do an extremely important and strenuous job. I simply do not think it is right that they should be asked to continue doing it beyond 60. Sixty-five-year-olds should not be fighting fires or tackling terrorists. I draw the attention of the House to what was said by Phil Salt, the chief fire officer of the Defence Fire Risk Management Organisation, who is on record as fully backing a retirement age of 60. I understand that senior officers in the Ministry of Defence police share this view.
Police, fire and rescue personnel working in the Ministry of Defence should be allowed to retire at the same age as their counterparts in the country’s other police and fire services. I hope that that will be the outcome of the review and I look forward to the Minister’s answers.
John McDonnell (Hayes and Harlington) (Lab)
I thank and congratulate the hon. Member for Argyll and Bute (Mr Reid) on bringing this issue to the attention of the House at a key time before the review is finally published.
I want to go back to the original debate, because it is important that we set the issue in the right context. To be frank, we approached it in legislation quite late in the day. This seemed to be an area of service that had been missed out in the debate on pensions. The emphasis in that debate—and this is exactly the final point made by the hon. Gentleman—was on the physical capacity of that group of workers to do the job once they reached the age of 60.
I have seen some of the figures that Unite has submitted as part of the review, and they demonstrate that for workers over the age of 60 in this field the absentee rate doubles as a result of sickness and incapacity. That is a clear indication that it becomes more difficult to undertake the job. The argument has been made—we debated this in the context of the Fire Brigades Union dispute—that if someone is incapable of achieving the required fitness levels, they might be redeployed within the service. We have discovered that those vacancies do not exist, so redeployment is not really an option. People face continuing in the job at a risk to their health—lack of fitness quickly becomes incapacity, as we have seen in other emergency services—or they face losing their job with a reduced pension as a result of having to withdraw from the service. There are certainly no opportunities for redeployment.
The whole issue is the unfairness of the situation. When people are called out to tackle a fire or for any other incident, they are all called out to do the same task. They do not have on their helmet something saying “Reduced duties” or “Unfit for lifting certain ladders”. They are all called to do the same task, so they all require the same fitness levels. As a result of our concerns, at least we managed to insert into the Bill provisions for a proper review that took into account the issue of fitness and ageing with regard to the responsibilities people were required to discharge.
My understanding is that some aspects of the review are based, for example, on 12 months of absentee rates rather than on 24 months. I hope that the review will look comprehensively at all the information—and as the hon. Gentleman has said, the word we have is that management support the workers in their demands, because they understand the nature of the role that they have to perform—but, whatever the review says, at the end of the day it is for Ministers and Government to decide. I return to the point that I made earlier: when that legislation was going through the House a common-sense view was taken by the majority of members that, yes, a review would take place, but it would take into account the strength of feeling among Members of Parliament, who recognised the importance of that role and the difficulties of discharging it for an ageing work force if people have to stay on beyond 60.
That common-sense view was accepted by the House, and I hope that the Government clear the matter up, forget the review, make a decision and implement it rapidly to reassure the workers concerned. I remember the debate, because Member after Member stood up to praise the service provided by that group of workers. I remember them being described as loyal professionals undertaking their task in a way that we all commended, and putting their lives at risk at different times in their history. Now that the review, as the hon. Gentleman said, is more open and transparent, I hope that the drafts will be provided to all the parties concerned in advance of publication so that they are aware of what is coming, and that Ministers will deal with the matter speedily and in the way that the House directed, which was to ensure that these workers are not discriminated against, they are treated like others, and the special circumstances of their job are properly taken into account.
The Parliamentary Under-Secretary of State for Defence (Anna Soubry)
I congratulate my hon. Friend the Member for Argyll and Bute (Mr Reid) on securing this debate and on his tenacity and diligence on the issue. I am aware that there is, and has been, a great deal of interest in this matter. I thank the hon. Member for Hayes and Harlington (John McDonnell) for his speech. He reminds us that the topic attracted a number of speakers during the passage of the Bill and of the importance that many attached to it.
It is important to set out that members of the Ministry of Defence police and the defence fire and rescue service are civil servants. Although there are similarities in the roles and responsibilities of both groups when compared to their Home Office and local authority colleagues, I would say that they are not the same. I believe that that has been recognised historically.
By way of history and some background, the 1979 Wright committee that examined the Ministry of Defence police found significant differences in their role when compared with what we call the Home Department police forces—the ordinary police officers and police forces as we ordinary citizens know them. For example, at that time—back in the 1970s—the work was essentially routine and involved a high proportion of static duty, largely because of the high degree of security.
In 1994 a study led by Sir John Blelloch recognised that there had been a significant change in the role of the Ministry of Defence police since the Wright report. Most notably, a requirement had been introduced for all MDP officers to have the capability to be armed. The MDP had also moved away from routine security towards higher-value armed guarding roles. Nevertheless, Blelloch noted that there were still substantial differences between the role of the MDP and the role of Home Department forces, such as the lower level of crime dealt with and the attendant physical stresses and strains placed upon Home Department police forces, as opposed to their counterparts in the MDP.
It might be helpful for the House to know that a much wider review of terms and conditions of service concerning the Ministry of Defence police is currently being conducted. This review, although begun earlier, is being taken forward in the light of the outcome of the independent review of the remuneration and conditions of service of police officers and police staff in England and Wales that was undertaken for the Home Secretary by Tom Winsor.
The defence fire and rescue service is subject to rigorous modernisation and efficiency initiatives, including the examination of opportunities for greater private sector involvement through the defence fire and rescue project which is in its assessment stage following initial gate approval, as it is called.
The Ministry of Defence police and the defence fire and rescue service personnel have always been members of the principal civil service pension scheme, as are all uniformed civil servants. Therefore they are subject to the normal pension age of that scheme which is 65, although the closed sections have a normal pension age of 60. The civil service unions have already accepted this move to a normal pension age of 65 for all staff joining since—after, in other words—2007. Prospect and Unite, which represent members of the defence fire and rescue service, were two of those unions.
As I am sure Members will be aware, in 2010 Lord Hutton conducted a review of public sector pensions. He recommended that the normal pension age for civil servants should rise in line with the increasing state pension age, but he made an exception, as we have heard, for the armed forces, firefighters employed by local authorities and Home Department police forces. For those individuals, he proposed that the normal pension age should be set at 60, but only where their normal pension age was currently below 60. That would have the effect of their pension age increasing in line with that of other public servants.
Following the review into public sector pensions, both the Defence Police Federation, which represents the Ministry of Defence police, and Unite, which represents the firefighter grades of the defence fire and rescue service, lobbied the Lords. They wished that exception to be extended to them so that their normal pension age would not only not rise in line with the state pension age, but reduce from 65 to 60.
As we have heard, the Public Service Pensions Bill was last debated in the House on 24 April this year. The Lords amendment proposed at the time was accepted by the Financial Secretary to the Treasury. He announced that the Ministry of Defence would prepare and lay before the House a report on the likely effect on both groups of staff of the normal pension age increasing in line with the state pension age. The report was to consider the following three issues: the likely effect of the increased pension age on the health and well-being of the two groups; the likely effect on their ability to continue to meet operational requirements; and the extent to which they were likely to take early retirement as a consequence of the increase in normal pension age, and the consequences of that for them and for the taxpayer.
On 15 May the Ministry of Defence set out the report’s terms of reference, which were simply to
“review the Normal Pension Age of both the Ministry of Defence Police and Defence Fire and Rescue Service personnel”.
Those terms of reference were communicated to the respective trade unions and accepted without amendment. As part of the review, my Department has consulted the relevant trade unions and the chief constable of the Ministry of Defence police and the chief fire officer of the defence fire and rescue service.
David Wright
The Minister says that she has consulted the unions. She might not be able today to give the dates on which those meetings took place, but could she provide that information in the Library of the House?
Anna Soubry
I see no reason why not, so I am more than happy to do so. I should have explained, as I often do in these debates, that if I do not answer the various matters raised by hon. Members in the course of my speech, I will write to them.
Mr Reid
My hon. Friend said that there were discussions with the trade unions. For clarification, the Defence Police Federation has reminded me that it is a professional association, not a trade union. I just wanted to check whether it had been consulted along with the trade unions.
Anna Soubry
I am so sorry—this is entirely my fault, because I was specifically briefed on that—but I have completely forgotten the answer to that question. I am grateful to my hon. Friend for rightly raising that point about the Defence Police Federation. I know that there is an answer to his question, and it might be provided to me in the course of my speech. If it is not, I undertake to put it all in the Library. There is no difficulty at all in doing that.
I will now turn to the specific points my hon. Friend raised. I thank him for providing a copy of his speech, which is so helpful in these circumstances. I fear that I will be unable to answer all his questions, because of the short time available to us. The MOD will review the levels of abatement of pay and net pay deductions as part of the continuing and wider work into the terms and conditions of service and the future of both the MDP and the defence fire and rescue service. It is as part of that work that we are reviewing pension calculations.
We are also reviewing all pay and remuneration conditions and other potential benefits. For the purposes of that report, the Defence Secretary directed that the review should concentrate on the questions posed by the Act. As I have already stated, a separate continuing review is looking at the broader issues. The Department has engaged with the Defence Police Federation—I think that that answers my hon. Friend’s question—and the defence fire and rescue service section of Unite. Engagement with the federation has been through the quarterly police committee, the monthly Ministry of Defence police management board, and regular meetings in respect of the separate terms and conditions of service review.
Unite was briefed by relevant business units at the outset of the review. It has been engaged in agreeing the statement of requirement that, as I explained, was submitted to the Government Actuary’s Department, and it was invited to attend workshops and make separate submissions to the review as it has progressed. Unite is fully aware of the business units’ conclusions, and its concerns and points of view have been considered by the review. The reports due to be laid in the House—I will give the dates in a moment—will form part of the continuing discussions regarding future changes to the terms and conditions of both groups, including their pension age. I am reliably informed that staff representatives will have a copy of the report before it is published, and that is an eminently sensible idea.
David Wright
The Minister is relatively new to her post but I have experience of working with her in other areas of work and she is always fair and equitable. Is she willing, as the Minister involved at this point, to meet the trade unions to talk through some of the issues that the hon. Member for Argyll and Bute (Mr Reid) has raised? That would be very welcome.
Anna Soubry
As an old trade unionist—a proud shop steward, I might say, of the National Union of Journalists—I am more than happy to meet the hon. Gentleman, my new friend. I have absolutely no problem with that, or with meeting my hon. Friend the Member for Argyll and Bute and trade union representatives. It might be fair to add the Defence Police Federation. It is always a pleasure to talk to the federation.
In respect of parity, the MOD acknowledges that defence police and firefighters deliver a professional and valued service to the Department and, not least, to the nation. There are significant differences in how they carry out their roles and responsibilities as compared with those under the remit of the Department for Communities and Local Government and the Home Office, and it is only right that that should be reflected in their terms and conditions of service.
During the review of the pension age, the MOD has considered a number of studies on the fitness levels of people over 60 and their ability to carry out their duties without long absences from work, including the likelihood of early retirement before the age of 65. These will all be referenced in the report. In addition, we have taken account of the management information available within the MOD. Individuals who find that they are unable to maintain the fitness capability required will continue to be exited under the regulations that are applicable to their pension scheme membership.
I hope that I have addressed all the questions raised by my hon. Friend the Member for Argyll and Bute and others; if not, I will do so by way of letter. We must not forget that we agreed to undertake a review into the likely effects of an increase in the normal pension age beyond 65 on Ministry of Defence police and defence fire and rescue service personnel and, as part of that review, we will consider the three matters that I have outlined. I can assure Members that that is what we are doing. The review is due to be completed by 24 December this year and the Department is on track to meet that deadline. The report will be laid in the House before it rises on 19 December.
Question put and agreed to.
Petition
A14 road improvement and financing
Westminster Hall
(10 years, 5 months ago)
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Transport Infrastructure (North Wales)
(10 years, 5 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Martin Caton (in the Chair)
As can be seen from the attendance, there is quite a bit of interest in this debate. Six Back-Bench Members have already indicated that they would like to speak, so if Members can curtail their remarks as far as possible, we will get everyone in.
Mark Tami (Alyn and Deeside) (Lab)
I welcome you to the Chair, Mr Caton. It is a pleasure to serve under your chairmanship.
I am pleased to have secured this debate on an important issue. I will mainly concentrate on north-east Wales, particularly its economic importance, the history of the area and why the transport links that we have now and that we hope to have in future are so important.
The area, whether people want to call it the Deeside hub or Mersey-Dee, covers Flintshire, Wrexham, Denbighshire, Cheshire west, Chester and Wirral, with a population of about 1 million and gross value added of some £17 billion a year. Some 83% of the area’s journeys start and finish in the area. More than 17,000 people commute across the border to England, and some 10,000 go the other way. There are also students who go to Chester, and students going the other way to Glyndwr university.
I am pleased to say that the area contains many modern and very successful manufacturers, with Airbus, Toyota, Shotton paper, Tata Steel Colors, ConvaTec and many more on the Deeside industrial park. On the other side of the border, we have Vauxhall at Ellesmere Port, Bank of America and, again, many more. Indeed, north Wales accounts for more than 30% of the manufacturing output of Wales as a whole. I know that colleagues both in England and in Wales are surprised at the size and skill levels of some of those factories and at the number of jobs involved. My hon. Friend the Member for Vale of Clwyd (Chris Ruane) will no doubt talk about the Technium in St Asaph, and my hon. Friend the Member for Ynys Môn (Albert Owen) will talk about Wylfa in Anglesey.
Airbus employs more than 6,500 people, 60% of whom live in Wales, coming from as far afield as Anglesey. The other 40% live in England, coming from as far afield as Derby, or so I am advised—that seems a fairly long commute to me, but apparently it is the case. There is substantial spend in the local economy, but those people need to get to and from their place of work. The supply chain is beginning to site in the local area, which, again, is creating more jobs. The big danger is that we take all that for granted, as if it will be there for ever and a day.
I have told this story before, but I will tell it again because I think it is worth telling. When I entered Parliament in 2001, before giving my maiden speech—I am sure other colleagues did the same—I looked at what my predecessor did. My predecessor, who is now Lord Jones, talked about the two great powerhouses of the area, which were Courtaulds Textiles and British Steel. One of those companies has gone altogether, and the other is still important but employs only a fraction of the numbers it did back then. It still holds the record for the most job losses on a single day at a single plant, when more than 8,000 people lost their job. We cannot assume that, just because companies are big and employ a lot of people, they will be there for ever and a day.
Many other areas that suffered in the 1980s have still not recovered, but because of the efforts of Flintshire county council and others, including my predecessor Lord Jones, new investment was attracted to the area, and we have managed to build on that. Importantly, we want to attract companies that will stay, not just companies that come because they want grant assistance and that will then up stumps and move somewhere else. We want long-term investment not only in buildings but in the work force. Even in good times, we have seen that successful companies can still fail. I remember when we thought that the optical fibre market was doing extremely well, but it crashed overnight and the high-tech factory closed. We lost quality jobs in a relative boom period.
We are getting by okay at the moment, so why do we need to improve and update our transport network? To be honest, we are barely getting by. If we get the level of growth in the local area for which we hope, we will need to improve things, because our transport system is creaking at the seams in places. The Mersey Dee Alliance carried out research, which is included in both the Haywood and the north-east Wales integrated transport taskforce reports to the Assembly, showing that we can expect to get between 40,000 and 50,000 jobs in the next 20 years. That figure comprises Mersey waters enterprise zone, with 20,000 jobs; Deeside enterprise zone, with 5,000 to 7,000 jobs; 4,500 jobs at Ellesmere Port; Ince resource recovery park, with 3,200 jobs; the university of Chester’s Thornton site, with 2,000 to 4,000 jobs; central Chester business district, with more than 1,000 jobs; the Northgate project, Chester, with 1,600 jobs; Wrexham industrial estate and western gateway, with 2,500 jobs; 7,500 jobs in Denbighshire; Vauxhall Motors, with 700 jobs; and Bank of America, with 1,000 jobs. So we hope that a substantial number of jobs will come to the area during the next 20 years, which is positive stuff, but we need a modern transport system that works to ensure that that happens.
We are already over-dependent on car usage. In Flintshire, more than 80% of people use their car to travel to work, which is a very high figure—Flintshire had the highest car usage in the country, but I do not know whether it still does—and I am sure the figure is not much different in other parts of Wales. I do not think that is just because people like using their car; it is because there is a problem getting anywhere using any other system of transport.
The north-east Wales integrated transport taskforce report of June 2013 clearly highlights some of the problems that we are facing. I will illustrate them by referring to a few journeys to the Deeside industrial park. From Flint by car it would take an estimated 16usb minutes, and by public transport 43 minutes, which is not too bad. Rhyl is 39 minutes by car, or one hour and 25 minutes via a bus and a train with one change. Denbigh is 44 minutes by car, or two hours and 17 minutes by public transport—a bus and a train, two changes. Wrexham is 32 minutes by car, or one hour and 25 minutes by public transport—it is a bus and two changes, even from Wrexham. Frodsham is 24 minutes by car, or one hour and 14 minutes by bus and train, again involving two changes.
Chris Ruane (Vale of Clwyd) (Lab)
I thank my hon. Friend for securing the debate. Two of the big centres that he mentioned, the Airbus factory and the Deeside industrial park, are on the north Wales line. Is there a case for building dedicated stations on the Deeside industrial park and at Airbus itself?
Mark Tami
I think there is, and I will talk about why we need a dedicated station. It is important that we make it easy for people to move about, because there is a lot of anecdotal evidence showing that some people are not taking up jobs that are perhaps not well paid because the difficulty and cost of getting to that job outweigh the benefits of taking it. We need to address that.
What do we need to do? On road improvements, we have a pretty good system, but there are pinch points. Considerable work has been done on the M56 to sort out problems on the English side of the border, but there is a pinch point on the A494 and the A55 around Queensferry and Aston Hill. With the creation of the Deeside enterprise zone, that will probably get worse, rather than better. In saying that, I am certainly not arguing for the original proposal, which was totally out of proportion to what was required. At one point, it included 13 lanes—I think it could have been seen from space. It failed to take account of local issues, and there were serious local concerns about that.
I think we can do things relatively cheaply—we are in difficult financial times. As someone who uses the road a lot, I know that most of the problems are caused by lorries and, in the summer, caravans slowing down. A crawler lane could deal with a lot of those problems.
Whatever we do, we need noise protection measures. We also need to involve local people. The Assembly is looking at the issue, and I have written to the Transport Minister about it. The problem is that there is a lot of uncertainty, which makes it difficult for people to sell their houses or to know the size of the project they will face. I recognise that £70 million has been earmarked for improvements further into Wales. I read the other day that another crossing to Anglesey was being considered, depending on what borrowing powers deliver.
A further pinch point is between the A483 and the A55. As someone who has sat in traffic there on many occasions, I know that it causes a bit of a problem. Again, it could be sorted out relatively easily. I am always struck—this perhaps demonstrates that we need more joined-up government—by the fact that the A483 has tarmac on it on the Welsh side of the border. I actually know when I am entering England, because I drop off the tarmac and on to concrete slabs. I do not know why the two Administrations could not just have spoken to each other and sorted the whole thing out in one go, but clearly that did not happen.
As I said, we do not have a bad road network; it needs improving, but it does not need major surgery. The same cannot be said for our rail network, which is particularly poor—especially for people in the Mersey-Dee area who use it to commute to work. The Wrexham-Bidston line goes through the whole area, and it is an ideal solution to many of the transport issues I have talked about. There is great potential, but the service’s frequency and reliability are, unfortunately, not what the average commuter expects.
Susan Elan Jones (Clwyd South) (Lab)
My hon. Friend has spoken about a variety of matters, but does he not agree that some small changes could have a real impact? He referred to the inadequate rail service. In my constituency, there are two stations—Chirk and Ruabon—neither of which has ticketing machines. If one wishes to print a ticket, one has to go to Wrexham General station, which defeats the whole point of advance booking and the like. There is also no disability access at the stations, so it is not possible to go from one side to the other. Those are small things, but they suggest the lack of a mindset favourable to rail usage in smaller areas.
Mark Tami
I thank my hon. Friend. I agree there are lots of small changes that could be made. Someone came to see me who was blind. He said that few announcements are made on trains, so he feels unsure whether he is getting off at the right station. There are small things we can do to improve the situation, and they do not involve a big cost.
Hywel Williams (Arfon) (PC)
The hon. Gentleman has listed a large number of possible road improvements, and he is now talking about rail improvements. However, I was under the impression that transport is a devolved matter. I am not springing to the Minister’s defence, but would the hon. Gentleman’s comments not be better directed at his Labour colleagues in Cardiff?
Mark Tami
I would say that I thanked the hon. Gentleman for that intervention, but that would not be true, would it? He has made his point, but I was talking about joined-up government, which would make sense. The hon. Gentleman might realise that there is no Hadrian’s wall at the border; in fact, there is no border at all as far as most people are concerned. As I have tried to illustrate, people work on both sides of the border, and we do not want to be turning away jobs, although perhaps that is what the hon. Gentleman wants.
Mark Tami
I think the hon. Gentleman has made his point.
The Wrexham-Bidston line does not work well, particularly for shift workers, for whom it does not start early enough or end late enough. We really need to modernise the service. In the first instance, we need to introduce a half-hourly service. In the longer term, we need electrification, although we must take on board any concerns among people living along the route.
We have to look at a cross-border service. In the past, when we thought we had made progress on the Wrexham-Bidston line, it came to nothing, partly because costs suddenly spiralled—I never quite understood why—but also, if we are honest, because the Administrations failed to work together for the benefit of those on both sides of the border.
I certainly support upgrading the service. As my hon. Friend the Member for Vale of Clwyd mentioned, we need a dedicated station on the route to serve the Deeside industrial park. The Hawarden Bridge station offers an opportunity, although we might want to build a different station. However, we need something on the site. To be frank, it is incredible that the industrial park was built without a dedicated station in the first place—that seems crazy to me. For those who do not have a car, the only way to get there is to use the shuttle bus. For a park with 7,000 or 8,000 jobs, that is completely ridiculous. We can look to the past, but we really have to learn the lessons of the past and not make the same mistakes again.
I welcome the improvements at Saltney junction, where line speed and capacity will be increased. I would also welcome the reinstatement of the Halton curve, which links the Chester-Manchester line at Frodsham with the west coast main line at Runcorn. That would allow the reintroduction of a direct rail service between north Wales and Chester, and on to Liverpool Lime Street and, importantly, to John Lennon airport. A study is looking at the viability of that, and I hope it reaches a positive outcome.
A service we tend to forget—it is seen just as an add-on—is buses. We need a more co-ordinated approach, and we need to look at the cross-border nature of bus services. As I indicated, even short journeys seem to take a ridiculous time—[Interruption.] My hon. Friend the Member for Vale of Clwyd is indicating that I am doing a similar thing. As I said regarding the Wrexham-Bidston line, the public must have confidence in bus and train services if they are to use them. If they do not, they will see them as unreliable, and they will carry on using cars.
I will make one final point, as I know people are keen that I conclude. There has been some mention of having an airport in north Wales at Hawarden, effectively in Broughton. Broughton is vital for taking wings out of the manufacturing facility there to be assembled in France and Germany, and for a limited number of light aircraft movements. It is in a very built-up area, and we have two perfectly good airports at Manchester and Liverpool. We do not need to expand any service at Broughton; we need to ensure it is easier to get to and from the airports at Manchester and Liverpool. That makes far more sense than expanding capacity at Broughton.
In conclusion, we have a great opportunity in north Wales to grow and to create jobs, and to use the very skilled work force we have there to grow the economy for the future. We are only going to do that if we have the right transport infrastructure in place.
Glyn Davies (Montgomeryshire) (Con)
I want to do exactly as you would prefer me to do, Mr Caton, which is to speak for a very short time, because I intend to make only one point in this debate. My point builds on one made by the hon. Member for Alyn and Deeside (Mark Tami) about the relationship between the Welsh and British Governments and how they work together to recognise cross-border links.
The issue of cross-border links applies to several areas in Wales, but as this debate is about north Wales, I want to speak specifically about Llanymynech. I will not go into the case for a bypass at Llanymynech today, because it has been made elsewhere and would take away from the point that I want to make, which I want to make on the basis of the strong case for that bypass having already been made. Part of that new road would be in Wales and part of it in England, so it would require a commitment from both sides. There is often a strong commitment from Wales in these cases, as there would clearly be access to markets in England—in mid-Wales, near Middletown, there is a very strong case, and only a little bit of the road would be in England. The case from Wales is very strong and the investment would be made, but the case from the English side is very weak, because there is little access to markets. Although the scheme would be hugely important to the benefit of Wales, it cannot go ahead. It has been stopped, by devolution, from even being considered. That is a negative aspect of devolution which will grow over time. As road links elsewhere in Wales improve, we will still find bottlenecks on the border that cannot be dealt with because of devolution.
Hywel Williams
I do not want to disagree with the hon. Gentleman, but he ascribed the difficulties to devolution. Were there any moves to improve the road before devolution? As he identified, the problem comes on the English side, so if devolution is the problem, surely it is not devolution to the Welsh Government; it is something else, which people do not talk about here: devolution in England, possibly.
Glyn Davies
I thank the hon. Gentleman for his intervention. Discussions about that particular road crossing in Llanymynech had been going on for many years, but my understanding is that it is now not being considered at all, because of the difficulty of coping with the constitutional problems. Cross-border links in other parts of Wales have fallen off the radar because of the difficulties of taking them forward. We must address that.
Devolution is not independence. It is not separation, even though some Members might prefer it to be so. We need the Governments in Wales and England to work together on projects in which they both have an interest and accept that sometimes the priority on one side must be considered alongside the priority on the other. With cross-border links—I have used the example of Llanymynech today—that is crucial. The English Government must consider the economic benefits of Wales when looking at the priority they might give to such schemes. I hope the Minister takes that on board and considers it in relation not only to north Wales, but to cross-border links from the north to the south of Wales.
Mr David Hanson (Delyn) (Lab)
I thank my hon. Friend the Member for Alyn and Deeside (Mark Tami) for introducing this important debate.
My central contention to the Minister is perhaps contrary to what the hon. Member for Arfon (Hywel Williams) said. What happens to transport in England matters to my constituents and to north-east Wales. What happens in England with these projects—for example, the Halton curve, linking north-east Wales to Liverpool, electrification from Crewe to the north Wales coastal railway line, and the potential HS2 project and its Crewe link—matters a lot, and so does the speed with which people can get to north-east Wales. Transport is devolved to the Assembly in many respects, but the Assembly budget is set by the House of Commons, and important issues for improving transport links to my constituency rest partly with Department for Transport Ministers.
My hon. Friend the Member for Alyn and Deeside began his speech by stating the importance of the north Wales economy, which is linked to that of north-west England. As he said, north Wales business is now worth more than £10.4 billion to the economy, with 22% of the Welsh economy and 30% of its manufacturing residing in north Wales. He spoke about Airbus, paper, steel, wind farms and tourism. Only today, a report shows that the north Wales coast path has brought 416,000 visitors to the county of Flintshire, which he and I represent, since it opened. All those businesses and potential economic growth areas rely on an efficient and effective public transport system.
We are inexorably linked to Manchester, Liverpool, Chester and Crewe through the Mersey Dee Alliance. As my hon. Friend said, there is the potential to create 45,000 jobs in the next 20 years, including at the Wirral Waters enterprise zone, so it is the responsibility not only of the Assembly but of the United Kingdom Government and Parliament to help to develop the region’s transport system. We have great potential for business and tourism growth. Only last week I hosted a meeting at Flint town hall of Arriva Trains Wales, Virgin Trains, Flintshire county council and Taith, the local council-sponsored transport network for north Wales, to consider how businesses in the area, and in particular tourism, could grow.
My hon. Friend mentioned the north-east Wales integrated transport taskforce, which produced a report in the summer. I want to focus on the points it made, which the Minister should reflect on, from his perspective as the link between the UK Government and the Assembly. My hon. Friend the Member for Alyn and Deeside highlighted difficulties with public transport times versus car journey times and mentioned Flint, in my constituency. It takes 16 minutes to get from Flint to the industrial areas of Deeside by car, but 43 minutes by bus, with one change. The fact that people’s morning journeys would take so much longer by public transport is a disincentive for them to use it.
However, the taskforce focused on other key areas and made severe criticisms for Government to attend to, saying:
“The rail network does not link places where people live to employment sites effectively and does not offer sufficient service frequencies to allow seamless commuting where it does. Bus networks serve town and city centres reasonably well, but outside of the core network service frequencies are often poor… Marketing of alternatives to the car is poor and ticket arrangements across public transport networks are complex, not joined-up and are often not understood by consumers.”
Crucially—the Minister should reflect on this point—the report said:
“There is evidence that transport networks either side of the border are developed partially in isolation from each other, leading to gaps in service provision and difficulties in seamless cross border journeys.”
The report also made some strong recommendations, in particular on rail:
“The rail modernisation business case should consider how frequencies of service and journey times within North Wales and to/from key destinations in the North West can be improved. We would encourage the provision of new stations”,
which my hon. Friend the Member for Alyn and Deeside mentioned. Another recommendation, which I want to emphasise, states:
“There is also strong support for the delivery of the Halton Curve to enable direct services to…Liverpool from the study area”,
which comprises our constituencies.
We have a unique opportunity in the next few months and years to look at those recommendations. What discussions is the Minister having with colleagues in the Department for Transport about progress on the Halton curve to link north Wales to Liverpool—to Liverpool John Lennon airport in particular? What progress is he making with the business case, about which I know he is concerned, for electrification and how that will link between England and Wales for business and tourism purposes? Following yesterday’s publication of the High Speed Rail (London - West Midlands) Bill, will the Minister explain how he sees north Wales benefiting from that investment and the link to Crewe?
Although rail journey times from London to Crewe will be shortened after the project’s second stage—if we reach it following the long parliamentary process—I am interested in what discussions the Minister has had with Assembly colleagues about the long-term vision for north Wales following HS2. It has my vote and support, but, because it could outlive all of us in this room in terms of parliamentary procedures, what is the Minister looking at now to maximise the benefits?
With companies such as Airbus securing £30 billion of new-aircraft orders, which will be on its order books for 20 to 25 years, only last week, we need to examine business and commuter movement, the growing tourism market and the effects that HS2, electrification and improvements to the Halton curve and other rail infrastructure can have on north Wales. Those are challenges for the Minister now, and I hope that they will be challenges for my right hon. and hon. Friends in the near future.
Guto Bebb (Aberconwy) (Con)
It is a pleasure to serve under your chairmanship, Mr Caton, and to follow the right hon. Member for Delyn (Mr Hanson). I am pleased to be involved in this debate, and I congratulate the hon. Member for Alyn and Deeside (Mark Tami) on not only securing it, but articulating a positive view of the future of the Welsh economy.
It is important that we should sometimes speak as Members for north Wales, rather than trying to make party political points, and the spirit of the debate has been positive. We are all extremely proud of the success of the north-east Wales economy, which, it is fair to say, is interlinked with that of the north-west of England. As a Member for a constituency further west, I want to see some of north-east Wales’s success move along the A55 and the railway line to ensure that more of north Wales benefits from the economic performance of north-east Wales.
The success of north-east Wales—I am thinking of Airbus in particular—is putting Wales on the map. A week and a half ago, when the announcement was made about Airbus’s success in securing further significant orders, I happened to be in Washington, and it is my pleasure to say that both Senators and Congressmen were aware of Wales, mainly because of the success of Airbus. For Wales to be known for the high-skill, high-technology industry in the area is an important development.
On the performance of our predecessors, I should say that before making my maiden speech, I read Lord Roberts of Conwy’s, but I felt depressed afterwards. He said that he wanted to do two things during his time in Parliament—first, to ensure that there was a dual carriageway from Chester to Holyhead, which was delivered—
Guto Bebb
Almost to Holyhead. Lord Roberts also wanted to ensure that Bangor had a new general hospital, which was delivered. When preparing a maiden speech, looking at a predecessor’s performance can be a sobering experience.
The road infrastructure in north Wales is actually fairly good, but we need to consider whether we can deal with some of the pinch points, not least those on the A55, which can create difficulties—in particular on summer Friday nights when people are heading into Wales for the weekend from the north-west and Yorkshire and any accident or problem can cause severe delays.
The A55 is a designated Euroroute and yet that dual carriageway has two roundabouts in my constituency—the only two roundabouts on Euroroutes in the whole of Europe. I can assure everyone that the caravans and tourists trying to get down to Anglesey or the Llyn peninsula make returning from my constituency office on a Friday night a difficult journey. The A55 does need some improvements, but we should be fairly pleased with the current road infrastructure.
We need to look carefully at the required investment in rail. Anybody who travels from London to north Wales is well aware that there is a two-hour service to Chester, where one must often change trains and enter what feels like a less effective system. The mere fact that it takes two hours to get from London to Chester, but then another hour and 45 minutes to reach Holyhead is indicative of the problems.
I warmly welcome the announcement of the £200 million- plus investment in signalling on the north Wales main line, but we need to keep up the pressure for electrification. It is to be welcomed that the Government are delivering electrification in south Wales—in particular on the valley lines—but we need to argue the case for north Wales. Signalling will make a huge difference to speed and capacity, but I acknowledge that we need to look at electrification as the long-term goal. The north Wales railway line can take high-speed rail, by which I mean a speed much faster than the current performance. Much of that can be achieved through signalling, but we must keep up the pressure for electrification.
Given the growth and renaissance of Liverpool, the fact that there is no direct link from there to north Wales is problematic. People in my constituency travel to Airbus, to Deeside and over the border for work, and I am sure that they would travel even further afield if the transport links existed. I would support a direct link into Liverpool.
We should, however, be confident of the fact that positive things are happening on the railway, and not only in signalling. Virgin Trains has plans to develop services in north Wales. My constituency is dependent on tourism, so a service from Llandudno Junction to London in three and a quarter hours, which is what Virgin envisages as possible, would make a huge difference. To be able to say that a constituency such as mine was within three hours and 15 minutes of London would be a huge boost to tourism in my area.
The Conwy valley railway has also seen significant investment into communication for the cabs travelling up and down the line. It is an important link, but we sometimes think of it as a line that happened to escape the Beeching cuts. I recently gave a hitchhiker a lift from Tal-y-Cafn back to Dolwyddelan when on my way to a surgery. The gentleman in question worked at the new Bodnant Welsh food centre. He catches the train down from Blaenau Ffestiniog to Tal-y-Cafn in the morning and then hitchhikes back in the evening, because he cannot afford the rail fare. He wanted to work, so he preferred to do that than be unemployed in Blaenau Ffestiniog. He cannot hitchhike in the morning, because he needs to be in work for 8 am, so the only way he can make it is via the Conwy valley railway.
Another important point about the line is that my constituency and that of the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) have both seen huge development in outdoor sports, such as mountain biking. Market research in the area shows that many of those who visit for such sports would really like to travel by public transport, so the Conwy valley railway is important. My aspiration is that such people should go biking on the new tracks at Blaenau Ffestiniog while staying at Betws-y-Coed or other places in my constituency. The railways are getting some investment, but we need more.
Before I finish, I have a few points to make about infrastructure. When discussing infrastructure, we need to talk about broadband. The fact that 10% of the broadband fund has been spent in Wales is a real success for the Government and a great success for the partnership between Westminster and the Assembly. The important investment from the Department for Culture, Media and Sport, which has been matched and supported by the Welsh Government, is most welcome.
If we aspire towards a modern economy, broadband infrastructure is just as important as any transport link. Frankly, in an area aspiring to have new businesses, saying that we have no broadband capability is not very persuasive. That is also true from a tourism perspective; time and again I am told by businesses in my constituency that the lack of broadband capability and of wi-fi affects them.
All that must be underpinned by the skills sector. We can talk about the need to invest in infrastructure—whether road, rail or broadband—to our hearts’ content, but we must also underpin all that by training our young people so that they can take the job opportunities. In that respect, the investments in Deeside college, Glyndwr university and, in my constituency, Llandrillo—including the support of Coleg Menai, which is part of Grwp Llandrillo Menai, for the energy sector—provide examples of the further education sector supporting the jobs that, without doubt, we hope to see in north Wales.
Infrastructure is important, yes, but unless we have the skills base in place, we will not be able to exploit the economic potential of the area.
Albert Owen (Ynys Môn) (Lab)
It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb). He started off by saying that there were no partisan points to be made, but I have to come back on a serious one that he made in trying to rewrite history: the A55 from Chester to Holyhead was not completed and there was a huge gap of 15 or 20 miles across my constituency for 15 years. That allowed the economy of my area to decline significantly, because of the logjam of traffic from Ireland.
It was all a huge mistake, and I was proud that one of the first things that the Labour Government did after coming to power in 1997 was to dual the A55, allowing us to join in the prosperity of the rest of north Wales. It is worth putting that on the record. I have a lot of time for the predecessor of the hon. Member for Aberconwy, an Anglesey man, but that was a failure of his in the Wales Office of the previous Conservative Government.
I want to concentrate on some issues that have not been touched on, and one that affects full integration is the ports. Britain is an island and the island of Ireland lies off Wales, so it is important to get gateways from Ireland to the United Kingdom. One of the best ways of achieving that is to have 21st-century ports.
Holyhead is the major port on the western seaboard; it is one of the busiest ports in the United Kingdom, but I feel that sometimes it has been losing out. I want to make this point again, as I did to the Minister’s predecessor, who is now the Secretary of State for Wales. When the Government put aside £60 million for investment in UK ports, which are a reserved area, they immediately made it for England only. English ports were allowed to share the £60 million, but Welsh ports were not allowed to bid for it—there was just a Barnett consequential and, as a result, ports in Pembrokeshire and west Wales shared only some £3 million. Everyone knows that we cannot get much port development for £3 million.
Meanwhile, because the £60 million was an England-only policy, other ports in England had the lion’s share, which meant that it has become difficult for Welsh ports to compete against English ports. The economies of areas around ports rely heavily on port development. Offshore wind development needs proper infrastructure to get goods to the wind farms. There is a great danger that, without the necessary infrastructure in Welsh ports, the equipment will be assembled in other parts of the United Kingdom—or, indeed, Europe—and be shipped to the wind farm locations.
I make a plea to the Minister. Let us look again at UK port policy and ensure that Welsh ports have an even and level playing field for investment for the future, because a huge number of skilled jobs are involved. People in my constituency are good at maintaining its offshore wind farms, which are some of the best in the world. Turbine Transfers works throughout the world, but it cannot work out of its own port, because of the lack of development.
Rail is also important. I agree that there have been some huge improvements over the past 15 years on the north Wales line. The investment in the west coast line—some £13 billion over that period—has given great benefit to north Wales, with faster and better trains between Holyhead and Euston. That is why I support High Speed 2; the same benefits could be derived from HS2, if we got those fast links to Crewe in the first place and then electrification along the north Wales coast. The issue is hugely important and we should look at it positively. Dublin and London can be linked via north Wales, which can be part of a huge European network between those capitals—with shipments on to Felixstowe, for example.
For ports as well, the carrying of freight by rail and ship is important to alleviate the problems on our roads. We need to invest more in the freight capacity of our railways. If we have faster speeds on the lines, we get more capacity on our railways for carrying freight across the United Kingdom and for the purpose of connecting continental Europe and the Republic of Ireland. We must concentrate on those issues.
Hywel Williams
Is the hon. Gentleman satisfied with the performance of this Government, and of the Welsh Government, on the trans-European transport network, TEN-T? The route to Ireland is designated to go through Liverpool rather than Holyhead in his constituency.
Albert Owen
I know what the hon. Gentleman is referring to—a little scaremongering by Jill Evans, MEP—but the European Commission and the Welsh Government say that that is not the case and that the priority will remain the existing TEN-T route, including from Felixstowe to Holyhead.
Opportunities have, however, been lost; if the hon. Gentleman wants to be partisan about the Tory coalition Government in Westminster and about the Welsh Government, I should say that one such wasted opportunity was between 2007 and 2011, when we had a Minister who was not of those colours, but did not put the case for the electrification of the north Wales line. As a member of the Select Committee on Welsh Affairs, the hon. Gentleman knows that a Plaid Cymru Minister gave evidence at the time; when we were pushing for electrification for south Wales, he said that for north Wales it was only an aspiration. I would expect a Minister from north Wales to have greater priorities for north Wales than merely “aspiration”.
Rather than scaremongering about such routes, we should be dealing with the situation. We should put the case for north Wales—with HS2 and with all the European and British networks—because we want an integrated north-west Wales in an integrated United Kingdom. That is not supported by the hon. Gentleman’s party.
I could go on longer about rail, but I am conscious of time, so I turn to air links, which we have not mentioned in any great detail. My hon. Friend the Member for Alyn and Deeside (Mark Tami), whom I thank for securing the debate, said that we need to get proper air links. We are going to have huge investment in north-west Wales—a proposed £8 billion; among the biggest in the whole United Kingdom—in the development of Wylfa nuclear power station. We need to get people and goods to the area, so we need a proper, fully integrated transport system. I want to see the development of north Wales airports—yes, Hawarden and Anglesey airports—so that people can fly there.
The novelty in this country is that we think we have to go by the slowest and longest routes. In continental Europe and the Americas, people leap from city to city and country to country via air links. They do it to do business fast. Yes, we need broadband, but we also need people to get from A to B as quickly as possible, and air links are good way of doing that.
My constituency is only 40 minutes away from the capital city of Wales, because we have an air link. It is important that we are able to say to the rest of the world that we can get from capital cities to such locations quickly. We need to concentrate and improve on a western corridor that might include Cardiff, Anglesey, Belfast and many other areas. Such a corridor has not been explored, and Belfast is an important and growing city in the United Kingdom, so we need to get such air links to it.
On roads, we have heard about the potential for an extra bridge across the Menai straits, funded by extra borrowing. I do not dismiss that option, but the road infrastructure in Anglesey will take a pounding during the development of Wylfa power station. [Interruption.] My hon. Friend the Member for Vale of Clwyd (Chris Ruane) has been signalling me to get me to halt my speech, but I have a final and important point to make. That Wylfa development is one of the biggest investments—it is not in north-east Wales, but in north-west Wales, which deserves equal weight with the rest of north Wales. The road infrastructure in Anglesey needs huge improvements. I would like to see some focus on that from Government across the United Kingdom.
I make one final point to the Minister. We need to work together on this matter. The UK Government, the Welsh Government and local government need to work together to get the best out of our infrastructure and create the prosperity that we all want. North Wales is a place to do business. We can do business better and faster if we have better and faster infrastructure—sea, air, road and rail.
Ian Lucas (Wrexham) (Lab)
I pay tribute to my hon. Friend the Member for Alyn and Deeside (Mark Tami), and echo much of his introductory message about the strength of the economy in north-east Wales.
I want to start in a bipartisan spirit by quoting the Secretary of State for Wales—not something I do very often—who said:
“Together, Deeside and Wrexham make up one of the most important industrial areas in Europe”.
That is absolutely true. In fact, I would go further: we could say that together they form one of the most important industrial areas in the world. At the Dubai air show last week we heard the fantastic announcement that 50 A380 jets have been ordered, the wings for which will be built at Broughton in north-east Wales.
We need to be a voice for north Wales on a cross-party basis, to create strong infrastructure to support our industry. As my hon. Friend the Member for Alyn and Deeside said, there is no guarantee that that industry and those businesses will remain in north-east Wales. It is important to construct that infrastructure across north Wales and into north-west England—that link is crucial—so that we can compete with international businesses and competitors that would love to have those businesses and industries in their own countries.
In north-east Wales the infrastructure in my view is really from the 1990s, but is trying to cope with industry that is developing towards 2050, so we need a far-sighted approach. We welcome the investments in infrastructure that are now being made in the region. The Welsh Government have promised to invest £44 million on the line from Wrexham in Wales to Chester in England. That is crucial to the people of Wales; many people go every morning from my constituency of Wrexham across into England, to work for businesses such as General Motors in Ellesmere Port or the pharmaceuticals centres in Daresbury. They have high-quality jobs there and need to have contact with those areas. The businesses that employ those people want to ensure that they have access to a skilled work force.
We are also seeing developments in infrastructure in north-east Wales. Yale college in Wrexham has merged with Deeside college, creating Coleg Cambria, which will be a world-challenging organisation and will build support networks for competitive businesses. In Deeside and Wrexham we need a linked-up transport system, so that the fleet of buses that now travels from Deeside down to Wrexham and back is replaced by a modern, integrated transport system.
We have heard a lot about the Wrexham-Liverpool line, which goes right through this hugely important industrial area. The Wrexham industrial estate and Deeside industrial park have both been extremely successful in attracting important international businesses. We need to link those industrial estates; as has been said, it is extraordinary that a new estate such as the Deeside industrial park was built without a real public sector transport connection. I am afraid that it is also extraordinary that in the 1980s, the Wrexham-Chester railway line was reduced from a dual to a single track, one of the most short-sighted decisions I can remember a Government making. Fortunately that is going to be addressed.
We also need collectively—it is important that north Wales MPs speak collectively on this matter—to stress the importance within Wales of north-east Wales. We have colleagues who are eloquent in promoting different areas within the country. Only yesterday I saw a report that the south-east Wales local authorities are pressing for a metro system in their region. It is true that there has been massive investment in the past 10 years in the valleys lines and the Vale of Glamorgan line in south Wales. That sort of rail investment has not happened in our area in the past. It is coming now, and I have referred to the cross-border investment in the Wrexham-Chester line, which will lead to a big improvement and create a great deal of additional capacity. We need to say to our colleagues in the UK Government and the Welsh Government that if our tremendous industrial area is to sustain jobs and be internationally competitive, we need to work collectively to provide an infrastructure, in both skills and transport, that makes the area too good for any globalised company to leave. North Wales has to be the place where people want to be.
We have world-beating industries in our area—not just Airbus, but Toyota and JCB; Sharp is also based in my constituency. Those companies are at the cutting edge of research. We established a university in north-east Wales for the first time in 2008, when Glyndwr university was established; that needs to be part of a support network for our businesses. Businesses need to work together with our educational institutions to put together proposals for the Government on building an integrated cross-border system of transport, so that people who are now travelling across the border can do so more easily and far of them can use more public transport than at present. Wrexham and Flintshire are two of the counties in the UK with the biggest proportion of people who travel to work by car. That is creating pinch points in that 1990s transport network that I have referred to.
We need to look ahead to 2050 and construct a transport system that uses the tracks we already have for a modern rail system linking Liverpool, Manchester and north Wales. Liverpool and Manchester have extremely successful air transport networks, but we have dreadful links to those airports. Anyone who travels to those airports from the west would be insane to travel by train, so they travel by car, which will create additional pressure on the road network in the years ahead. We have to look at how we will link to those international hubs, given our international businesses.
We also need to look at High Speed 2, thinking ahead to its construction and how north Wales will benefit from that. As north Wales MPs, we need to press the Wales Office about HS2 to see how it will specifically benefit our area, and we need to press the UK Government to ensure that there is a plan for north Wales with regard to HS2. We have seen enormous improvements in the rail network down to London and down to Cardiff in recent years, mainly through investment in the west coast main line but also through investment in north-south networks within Wales. That has happened only because of insistent pressure from north Wales. We need to keep that going and look much more closely than we have in the past at the public transport system within north-east Wales, especially the rail system. We need local authorities, AMs and MPs to work together to speak out loudly on behalf of the region that we should all be proud to represent.
Chris Ruane (Vale of Clwyd) (Lab)
It is a pleasure to serve under your chairmanship, Mr Caton. I pay tribute to my hon. Friend the Member for Alyn and Deeside (Mark Tami), who secured this debate for us, for his good work in promoting north Wales and his constituency in Parliament.
I will talk first about rail transport in north Wales. In the 19th century, rail transformed north Wales. My home town of Rhyl had a population of 1,000, but when the train came in 1849, it turned Rhyl into a premier tourist destination. Rail also opened up the port of Holyhead and the train route to Ireland, bringing great wealth to north Wales.
In the mid-20th century, rail took a dip with the advent of Beeching. Many smaller lines in north Wales and throughout the UK were closed, but in the 21st century we are looking at a rail renaissance. North Wales MPs must ensure that we receive our fair share of the UK transport budget. London and the south-east have had massive input into their transport infrastructure. They have had Eurostar; Crossrail, one of the biggest construction projects in Europe, is being built; and Heathrow airport has been extended. Many people in the south and London do not want what they believe is over-intensification.
MPs must look at the regional impact of transport investment. There should be a rebalancing towards Wales and north-west England, and we in north Wales must ensure that we tap into that transport infrastructure. We must also ensure that we do not get just crumbs from the table, as we did when Virgin’s rolling stock was upgraded and we ended up with Voyagers instead of Pendolinos. We must ensure that we are not short-changed on electrification of the north Wales line, and that we get transport links to the Manchester end of HS2 so that we have the proper investment to attract tourists and manufacturers to north Wales.
The road infrastructure in north Wales is also important to bring in tourists and manufacturing as well as research and development. I pay tribute to the work of Glyndwr university, which called the A55 a “knowledge corridor”. In my constituency, it has invested in the optic research and development centre, which won a £200 million bid to create the optics for the extra large telescope that will be located in the Atacama desert. That is the sort of 21st-century investment we need in north Wales.
There is a proposal for an A55 science corridor from St Asaph business park in my constituency all the way to Daresbury near Manchester, taking in Airbus and the optic research and development centre to bring that science corridor alive with jobs and investment. That is important.
Airports are essential for us in north Wales. Our regional airports are Liverpool and Manchester, and public transport links to them are very poor. If investment is coming, we must ensure that we have coach and rail links direct to those airports. I take on board the point made by my hon. Friend the Member for Ynys Môn (Albert Owen)—Ynys Môn is fair old distance from Liverpool and Manchester—that there is a definite need for an airport in north-west Wales.
My hon. Friend the Member for Alyn and Deeside mentioned the jobs growth in his constituency at the Deeside industrial estate and at Airbus. There are already tens of thousands of jobs there, and tens of thousands are to come. We must ensure that workers from the unemployment hot spots on the north Wales coast at Holyhead, Bangor, Colwyn Bay, Rhyl and Flint can get on the train in their home town and get off at dedicated stations for the Airbus factory and the Deeside industrial estate, where the jobs are. Will the Minister look at the Department for Work and Pensions transport grants that were available about 10 years ago to help to link people to jobs?
As well as speaking about the big stuff—airports, rail and road—I want to speak about cycling in my constituency. My right hon. Friend the Member for Delyn (Mr Hanson) referred to the north Wales coastal path, which brought 416,000 visitors to his county last year. It is a fantastic facility for north Wales and I pay tribute to Sustrans for attracting millions of pounds of lottery funding for the UK coastal footpath and cycleway. A £4 million dedicated cycle bridge, Pont Dafydd, was opened in my constituency two weeks ago, and I am grateful to the Welsh Government for their investment in that, to the European regional development fund, to Sustrans and to Denbighshire county council. Cycling is an important form of local transport. My constituency has the finest off-road cycle networks in Wales, and I pay tribute to Adrian Walls, the cycling officer for Denbighshire, Gren Kershaw, who set up a cycling attraction in my constituency, and Garry Davies and Howard Sutcliffe from Denbighshire’s countryside services, which have provided fantastic cycling facilities.
Finally, the first hovercraft passenger service in the whole world was from Rhyl to Wallasey in 1963. Is a future transport link possible across the Dee estuary to link the hundreds of thousands of people on the Wirral and Merseyside directly to Rhyl?
Martin Caton (in the Chair)
I will call you now, Mr Williams, but I appeal to you to sit down at 10.40 for the wind-ups.
Hywel Williams (Arfon) (PC)
I certainly will, Mr Caton.
I may surprise everyone in the Chamber by agreeing almost entirely with everything that has been said. It is not the border that worries me, because, as the right hon. Member for Delyn (Mr Hanson) said, what happens in England is important. Anyone who has travelled from Caernarvon to Crewe knows that they get to the border quickly, but then the road between Chester and Crewe is appalling. What happens in England is important for Wales, and I agree with him entirely about that. I also agree entirely with the points about Manchester and Liverpool airports.
Two factors frame this debate. Historically, transport links go through Wales to Ireland rather than to Wales, and transport is largely a devolved matter. In the short time left to me, I will consider matters that are the responsibility of the UK Government rather than the one down in Cardiff. However, I must break that promise almost immediately by agreeing with the hon. Member for Aberconwy (Guto Bebb) that the two roundabouts on the Dublin to Moscow route are both in north-west Wales, which is an anachronism that must be looked at immediately.
The Welsh and UK Governments have spoken about A55 improvements, and I would be very happy indeed if the Minister could tell us what they might entail. I hope that the two Governments have been talking deeply about that, and that we will see a new crossing from my constituency to that of the hon. Member for Ynys Môn (Albert Owen). That is important.
Another point is the one I made earlier about the trans-European transport networks—TEN-T—corridor to Ireland. The hon. Member for Ynys Môn said that I was scaremongering on behalf of my colleague, the MEP Jill Evans, but everyone knows that the quickest and easiest route to Ireland is through north Wales from Holyhead to Dublin, yet the TEN-T route currently goes through Liverpool, which is complete nonsense. I would not mind hearing from the Minister about that. My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) asked the Department for Transport about that, and it gave the game away when it said that the UK Government’s priority was to ensure that member states rather than the European Commission remain responsible for transport planning and investment decisions on national networks. It seems that the Commission wanted the route to go through Ynys Môn—[Interruption.] The hon. Member for Ynys Môn says “no” from a sedentary position, but I did not hear him explain that in detail in his rather longer speech. Perhaps we can debate that in future. It seems to me that the Commission wanted the route to go through Ynys Môn, but the UK Government wanted it to go through Liverpool.
Wales still does not have a single millimetre of electrified rail in Wales, and I am pleased about the possibility of that on the south Wales line, but I must ask about the north Wales line. As other hon. Members have said, it is vital.
Finally—you will be glad to hear that, Mr Caton—there has been some talk about HS2. Yesterday, I came down on the train through Crewe, and I recommend that any hon. Member who is travelling through Crewe station looks, as they go over the bridge from platform 3 to platform 5, at the very large poster extolling HS2. There are several arrows pointing up from London to Runcorn, Liverpool, Leeds and Manchester, and Wales is a very large blank.
Nia Griffith (Llanelli) (Lab)
I congratulate my hon. Friend the Member for Alyn and Deeside (Mark Tami) on securing this important debate. We can tell by the number of Members who are here—a 100% turnout from Labour MPs in north Wales—just how important infrastructure is, and transport infrastructure in particular. As he rightly pointed out, although we have one of the most vibrant economic areas in Europe in north-east Wales, we cannot be complacent. Even big household names can go bust or move elsewhere. If we want to keep investment there, retain existing firms and attract new investment, we need to be continually upgrading our transport infrastructure to compete in the modern world. He highlighted the over-reliance on cars because of the lack of availability of public transport and pointed out that some people face a real dilemma, in that they hesitate to take up low-paid jobs, particularly if they are part-time or split-shift, because of the high cost of transport to get to them.
The hon. Member for Montgomeryshire (Glyn Davies) talked of cross-border bypasses, saying that although there is enthusiasm for road improvements on the Welsh side of the border in order to access markets, there is no real commitment from the UK Government to back up the English side of the project.
The hon. Member for Aberconwy (Guto Bebb) emphasised the need for better services not only to London but to Liverpool. He highlighted the success of the Conwy Valley rail line and pointed out that rail is vital to bringing in tourists, particularly those with mountain bikes. He also stressed the important success of local FE colleges in helping to upskill local people.
The hon. Member for Arfon (Hywel Williams) referred to the status of Holyhead and whether it was the top priority for the TEN-T European scheme. He also mentioned the importance of electrification and the need for better transport links when crossing over from Wales into England.
My right hon. Friend the Member for Delyn (Mr Hanson) held a local summit to bring together partners, showing how infrastructure is part of the business community’s priorities and something that everybody needs to be involved in. He talked of the importance of long-term commitments and projects such as HS2, which will outlive all of us. He also mentioned the growing importance of tourism, such as that brought by the completion of the all-Wales coastal path.
My hon. Friend the Member for Ynys Môn (Albert Owen) stressed the importance of Holyhead as a port, particularly as part of the route from continental Europe through to Ireland. He pointed out that ports are a reserved matter, and that although £60 million of funding was made available for English ports, Welsh ports had to make do with only £3 million. I ask the Minister what he will do to secure a better funding deal for Welsh ports. I am sure that he will be only too aware of the issue, from Milford Haven in his constituency, and I hope that he will be able to respond to my hon. Friend on the subject of Holyhead.
My hon. Friend the Member for Wrexham (Ian Lucas) pointed out that new industrial estates need to be fully integrated and served by public transport. There needs to be proper joined-up thinking, as the phrase goes. He again stressed the need for better connectivity to the international airports in England—obviously, Manchester and Liverpool are absolutely vital to north Wales—and for a link with HS2. He also stressed the need to keep up the pressure for better rail transport in north-east Wales and, like my right hon. Friend the Member for Delyn, stressed the importance of working together with the local business community to keep that pressure up.
My hon. Friend the Member for Vale of Clwyd (Chris Ruane) praised the vision of the A55 science corridor, and he stressed the importance of railways and rolling stock. He talked, again, of the connectivity to Manchester and Liverpool airports and mentioned the importance of infrastructure to tackle unemployment. He would like an answer to his ambitious vision for a hovercraft project from Rhyl to Wallasey and suggested that the Minister might instigate some sort of feasibility study to look at how that might work out in practice. Perhaps we can hear the Minister’s views on that project.
I turn to how we will fund the infrastructure and, in particular, what measures the Government can take to facilitate funding for infrastructure in north Wales. We have heard the Secretary of State for Wales telling us that £2.25 billion of new infrastructure will benefit Wales, but the reality is that we will see little of that—possibly none of it—in this Parliament. Government Ministers have boasted frequently about electrification, but in fact, only 50 miles of rail track will be electrified by the time of the election across the whole of Britain.
When we left office in 2010, we already had plans for the electrification of the Great Western main line to Swansea, but this Government have had a stop-start approach. The project was cancelled, and then there had to be a campaign to reinstate the plans for the line through to Swansea. That electrification project will not start until 2015, so what about north Wales? The Welsh Government have been looking at plans for rail electrification in the north, but when are we likely to see the funding mechanisms for that put in place?
The reality of investment in Wales is very different from the rhetoric. The truth is that the Tory-led Government in Westminster have cut the Welsh capital budget by a third, as part of an overall budget cut of £1.7 billion, hindering the Welsh Government’s ability to invest in transport, housing and other essential infrastructure.
Hywel Williams
I cannot allow the hon. Lady to get away with what she said. Where were the Labour Government for 13 long years, when not a single millimetre of railway in Wales was electrified? Where were they? It is not a stop-start process—it is a stop-stop process.
Nia Griffith
I want to point out, first, that we had all the plans in place for electrification, and the Tory Government wasted time by cancelling them so that we had to campaign to reinstate them. Secondly, as my hon. Friends have already pointed out, there was a certain Minister from Ynys Môn who was the Transport Minister in the Welsh Government from 2007 to 2011, and who seemed to think that electrification in the north was just pie in the sky. Perhaps if he had fought a little harder for it, it would have been higher up the agenda.
Chris Ruane
Would my hon. Friend not say that the greatest achievement of the Transport Minister from Ynys Môn was “Ieuan Air”?
Nia Griffith
I endorse my hon. Friend’s comment.
Turning back to funding for infrastructure in Wales, borrowing powers are absolutely vital for the Welsh Government to invest further in transport infrastructure in north Wales. However, I am concerned not only about what seem to be considerable delays in the introduction of borrowing powers, but about the fact that the goalposts on borrowing seem to be being moved.
We had the announcement back in October 2012 about borrowing powers. UK Government Ministers have indicated that devolution of the minor taxes is a sufficient independent income stream against which the Welsh Government can borrow for capital expenditure. We therefore need clarity on how much borrowing will be released when the minor taxes are devolved.
However, in the UK Government’s response to the Silk commission, we read that “appropriate short-term borrowing powers” will be given to the Welsh Government to manage lower-than-forecast tax revenues, but it also says that capital borrowing powers will be given and that:
“The precise levels of capital borrowing will…depend on the outcome of the income tax referendum”.
I should remind the Minister that in Scotland, borrowing is not linked to income tax powers in that way. The Scotland Act 2012 gives the Scottish Government the power from April 2015 to borrow up to £500 million for current expenditure to manage volatilities in tax revenue when they gain responsibility for stamp duty and landfill tax. They will also be able to borrow for capital expenditure, with a limit of 10% of the capital budget up to a maximum stock of £2.2 billion. Both those powers are coming into effect prior to income tax-varying powers. According to a similar formula, that would mean that the Welsh Government could borrow about £150 million for capital expenditure. Will the Minister clarify exactly what borrowing powers will be given to the Welsh Government based purely on the devolution of minor taxes? If some borrowing powers are to be linked to the devolution of income tax powers, that is a very different situation from the previous understanding that they were linked to the minor taxes.
Will the Minister explain why there are still delays on the issue of borrowing for the M4? We know that there may be some borrowing powers purely in respect of the M4, as has been mentioned today. First, will he explain what is preventing the Treasury from immediately permitting the Welsh Government to use their existing borrowing powers to finance the much-needed M4 upgrade? Secondly, and more importantly for this debate, as the Welsh Government are being given specific borrowing powers for the M4 first, with a more general borrowing power to follow, what will happen to any north Wales projects? Will they have to wait for a more general borrowing power, which could be until the end of the decade, or will the Minister confirm that borrowing might be available sooner for specific north Wales projects, along the same lines as the M4 borrowing, should the Welsh Government ask for it? Will he please tell us what infrastructure can go ahead in Wales, what extra borrowing powers there will be and what sort of time scale he envisages for all this?
The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)
It is a pleasure to serve again under your excellent chairmanship, Mr Caton. I thank the hon. Member for Alyn and Deeside (Mark Tami) for securing the debate and congratulate him on that. It has been a very good debate, largely free from partisan tribal politics. During the past hour and 20 minutes, we have had a very good discussion about some key issues for people and businesses in north Wales. I commend the hon. Gentleman for the way in which he addressed the issue, for the strategic oversight that he brought to the debate and for his detailed knowledge. He has proved himself to be an effective voice for economic development in his constituency and region.
Transport infrastructure plays a vital role in the economy of Wales and in north Wales. It enables people to access job opportunities and is a key determining factor for the attractiveness of a location for business investment. As the debate has demonstrated, there is a great deal that we can be proud of in north Wales. The north Wales economy, and particularly what we see in Wrexham and Deeside, is a jewel in the crown of the Welsh economy at this time. Opposition Members have demonstrated their pride in what is happening in their constituencies and in the region. It is right that they should take pride in that but want to go further.
I take four broad messages from the debate. The first is the recognition on the part of all hon. Members present of the huge economic importance of north Wales, as a region, for the economy of Wales, but also for the United Kingdom. It is a strategic location for business investment. What we have there with the likes of Toyota, Airbus and all the other companies that hon. Members have mentioned is an engine of job creation in north Wales. I take the point made by the hon. Member for Alyn and Deeside that we should not take any of that for granted. He has been around long enough to have seen huge economic change in his constituency and region. Companies that were once huge employers there have disappeared altogether to be replaced by other companies, so we cannot take that economic success story for granted.
Key to underpinning that economic success story is continuous investment in transport infrastructure. That is the second conclusion that I take from the debate—a joint recognition, on the part of all hon. Members present, of just how important transport infrastructure is in securing the future economic development for north Wales that we all want to see.
The third conclusion is the recognition that, because of the nature of the cross-border issues and economic development in the region, there is huge interconnectedness between what is happening on the Welsh side of the border and what is happening on the English side. There is a shared interest on the part of the UK Government, who are responsible for transport in England, and on the part of the Welsh Government, who are largely responsible for transport on the Welsh side; and because there is that shared interest, there is also a shared responsibility.
That leads to the fourth conclusion that I take from the debate, which is the need for far better and more effective working together. The point about devolution is not that suddenly the UK Government here in Westminster become uninterested in what the Welsh Government are doing on transport priorities and vice versa. Actually, this debate has demonstrated that the need for the two Administrations to work together becomes even greater. That can be difficult. Hon. Members have highlighted some of the complexities in relation to the devolution boundary. I am thinking in particular of my hon. Friend the Member for Montgomeryshire (Glyn Davies) and the issue of the bypass in his constituency that he mentioned. That highlighted a specific issue that we need to overcome to get the Administrations working better together to tackle some of those cross-border transport priorities.
That brings me to the fourth and final broad conclusion that I take from the debate, which is about unity. Yes, we need far better working together between the Administrations, but one of the things that can help that, and which has come to the fore this morning—largely—is north Welsh MPs working together and speaking with a united voice as champions of further economic development and further transport investment in their region.
Albert Owen
Will the Minister take a fifth point from the debate? I am referring to the development of Welsh ports and the importance of their having a level playing field with the rest of the United Kingdom. That is a reserved matter; it is the responsibility of the UK Government, although economic development is devolved.
Stephen Crabb
I wanted to use the last five minutes to highlight a number of specific points that different hon. Members raised, so let me deal first with the issue of ports. I absolutely recognise the point that the hon. Member for Ynys Môn (Albert Owen) makes. He is a powerful voice for and champion of port development. Yes, ports are a reserved matter, but many of the decisions about the infrastructure that supports the development of ports are of course devolved, so this is a classic case of the two Administrations needing to work together.
During international shipping week recently, we at the Wales Office hosted a function for the Welsh ports and shipping sectors. It proved to be a very successful opportunity to bring together different interested players, and involved the Department for Transport as well. There is no intention on the part of the UK Government—ourselves at the Wales Office and colleagues at the Department for Transport—of ignoring the needs of Welsh ports. We absolutely want to see Welsh ports share in the future success of all UK ports.
What else are we are doing at the Wales Office? One thing that I do is chair the Wales Office infrastructure working group. Transport infrastructure is just one component of the body of work that we are taking forward. I am pleased to say that the Welsh Government are represented on that working group, as are a number of key private sector players and a number of public sector agencies and organisations. We try to focus our mind on some of the big strategic infrastructure priorities for Wales for the future—the things that will make a difference to the Welsh economy in the years ahead—and start to identify hurdles and barriers that need to be overcome in order to see Wales benefit from the larger infrastructure projects that we know are so important to it.
Moving on to some of the specifics that have been mentioned, I shall deal first with HS2, which a number of hon. Members mentioned. HS2 is a hugely strategically important project for the UK, and for north Wales in particular through the new station at Crewe. That will unlock the opportunity for businesses and individuals in north Wales to benefit from access to high-speed services. Crucially, HS2 strengthens the case for electrification of the north Wales main line, which a number of hon. Members mentioned. If we are interested in building the business case for that electrification of the north Wales coastal main line, HS2 strengthens that case. I see a number of hon. Members nodding their heads, and I am pleased by the level of support for HS2 that has been expressed here this morning.
The other thing that HS2 will do, of course, is bring north Wales closer to other parts of the north of England. I think that it was the hon. Member for Alyn and Deeside who talked about commuters coming to his constituency from Derby, and said that he was surprised at the distances that some people were travelling to come to there. With HS2, we will see the journey times to other parts of the north of England coming down even more and there will be even more commuting, both from north Wales into different parts of England and from England into north Wales, so there is a huge economic opportunity there.
With regard to the Wrexham to Bidston line, I do not want to throw out too much excitement and optimism, because, as I think the hon. Gentleman recognised, a number of intermediate improvements could be made to the service on that track before we get to thinking about electrification. From a Wales Office perspective, we are looking at the business case for electrifying the line. It is part of the package of transport infrastructure improvements for north Wales that we are keen to progress, and we are in dialogue with the Welsh Government and the Department for Transport about that.
With regard to the Halton curve, I cannot offer any immediate cause for optimism. It has been looked at previously. Again, it is part of the package of improvements that, in the longest term, we want to happen. I will write to the hon. Gentleman, as I will to other hon. Members who have mentioned specific projects.
We have had an excellent debate about the transport infrastructure needs of north Wales. There is a lot of work to be done if we are to see all those projects realised and bringing about the economic benefit that we want to come to north Wales, but I thank all hon. Members for their contributions and I will write to the hon. Member for Vale of Clwyd (Chris Ruane) about his desire to see a renaissance of the hovercraft on the Mersey estuary.
CAP Budget
(10 years, 5 months ago)
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Dr Eilidh Whiteford (Banff and Buchan) (SNP)
It is a great pleasure to serve under your chairmanship this morning, Mr Caton. I am pleased to see at least a few other hon. Members taking an interest in recent developments on the common agricultural policy, and in particular the convergence uplift.
Common agricultural policy funding secures the vitality of farming in Scotland, and it is instrumental in the sustainable development of our rural economy. I represent one of the most rural constituencies anywhere in the UK, where farming underpins a healthy food production sector and a range of successful agricultural industries, and supports vibrant towns and villages. The investment we make in our farming sector through the CAP generates jobs, creates sustainable livelihoods and ensures effective land stewardship. Without it, our environment, economy and communities would be immeasurably poorer.
Earlier this year, agreement was reached on the future shape and direction of the CAP. There will be some substantial changes, but most significant for the purposes of today’s debate is the requirement for more equitable distribution of CAP funding, known as external convergence, across the EU. That has enormous significance for farmers in Scotland, because historically Scotland has had very low levels of support relative to the area of land in agricultural use. Scotland receives an average of €130 per hectare, compared with an EU average of €196 per hectare. In the UK, the English average is €265 per hectare, the Welsh average is €247 per hectare and the Northern Irish average is €335 per hectare. Compared with other parts of the EU and other parts of the UK, Scotland has been short-changed on the CAP for a long time, which has put our agricultural sector at a considerable competitive disadvantage. In that respect, moves towards convergence are an important step in the right direction.
Last week, when I questioned Ministers from the Department for Environment, Food and Rural Affairs on the matter, I received a response that was based on average farmer payments, which concerned me because it betrays either a worryingly poor understanding of what the convergence uplift is or a shameless attempt to pull the wool over our eyes. Average farmer payments are completely irrelevant to the calculation of the convergence uplift. I appreciate that the Minister is quite new to his role and might not yet fully understand the technicalities of how the convergence mechanism is calculated and what it is intended for. That is why it is so important to clarify that the convergence uplift has nothing whatever to do with individual farm size, which varies across Europe, depending on the landscape, climate and model of farming. The convergence uplift is calculated on the basis of average payments per hectare and nothing else. It is intended to benefit those whose support per hectare falls below 90% of the European average.
The convergence uplift is a mechanism introduced by the EU to ensure that member states with payment rates of less than 90% of the EU average rate per hectare receive an uplift designed to close the gap over the next six years. Although England, Wales and Northern Ireland are all above that threshold, Scotland is well below it —so far below, in fact, that it brings the UK average down. That is why the EU has awarded the UK a convergence uplift of €223 million. That is money designed to level the playing field, calculated on the basis of the average payment per hectare across Europe. It is money earmarked for Scottish agriculture.
Mr Iain McKenzie (Inverclyde) (Lab)
I congratulate the hon. Lady on securing this important debate. She has laid out a conclusive argument for Scotland getting its fair share of the money. Does she agree that it is essential for the Scottish and UK Governments to get together and deliver a coupling deal for the benefit of Scottish farmers?
Dr Whiteford
I agree entirely with the hon. Gentleman. There has been an unprecedented degree of co-operation in the Scottish Parliament on the matter. DEFRA has succeeded where many have failed in creating unity among the warring tribes in the Scottish Parliament.
There was a sense of disbelief in the Scottish farming community on 8 November when the UK Government announced that they had decided to split the convergence uplift four ways, rather than using it for its intended purpose. That disbelief has quickly turned to anger and a sense of betrayal. Last week’s Scottish Farmer called it an “act of grand larceny”. Last week, when I met with Scottish farming leaders—some of whom, I believe, are here today—we discussed what representations they might make to Ministers to look again at the issue and, at the very least, bring forward the promised review from 2017 to deliver progress towards convergence over the next six years. Yesterday, along with other Scottish MPs, I received a letter from the Secretary of State for Scotland, which appears to kick that possibility into the long grass by reiterating that no changes will be introduced until after 2020. I appeal to the Minister to look again at the need for convergence in the UK. Will he consider his review timetable and get round the table with stakeholders to work out how the convergence uplift can be used for its intended purpose?
Mr Alan Reid (Argyll and Bute) (LD)
I congratulate the hon. Lady on securing this debate. I agree that the review is very important, and I am sure she agrees that the UK Government must map out how they will achieve the EU target—which I believe will be implemented in 2020—of convergence towards the EU average of €196 per hectare.
Dr Whiteford
I know that the hon. Gentleman shares my concerns from a constituency perspective, because his constituency, like mine, is set to suffer some of the worst impacts of the Government’s approach. He makes an important point, and I hope the Government are listening.
The UK seems to be saying that it will simply ignore convergence until the next round of CAP negotiations. We are asking the Government to listen to the voices of the farming community and to work with stakeholders to ensure that convergence happens as the EU intended and that the convergence uplift comes to Scotland. The coalition parties have enjoyed an enviable degree of loyalty over the years from parts of the farming community, but that loyalty is not blind. Trust is a precious commodity in politics, and the Minister would be wise to listen to the farming community, even if he will not listen to the hon. Member for Argyll and Bute (Mr Reid) and me.
The issue has prompted a great degree of cross-party co-operation and collaboration at Holyrood. Will the Minister commit to meeting the cross-party representatives of the Scottish Parliament—the SNP, Labour, Tory and Liberal Democrat rural affairs spokespeople—who wrote to the UK Government recently requesting a meeting? As they pointed out:
“These receipts only exist because of Scotland’s current position. All other parts of the UK are above the threshold set by the EU for external convergence, and it is only because of Scotland’s extremely low average level of Pillar one payments per hectare that the UK as a whole fell below the threshold and qualified for an external convergence uplift.”
They made the important point that
“Passing on this uplift to Scotland will also not entail any deductions at all for farming colleagues in England, Wales or Northern Ireland.”
They went on to say:
“The European methodology focused entirely on per-hectare levels of payment, and the within-UK decision must be on the same basis.”
It is important that Members of this House understand how support for farmers in Scotland compares with support for farmers in other parts of Europe, so they can see that Scottish farmers are asking not for special treatment, but for parity of treatment with their neighbours and competitors. In Denmark, for example, the area eligible for pillar one funding is less than two thirds the size of Scotland’s eligible area, but Denmark receives more than one and a half times as much pillar one funding—€964 million, compared with Scotland’s €596.6 million. That means that Denmark’s per-hectare pillar one rate is almost three times the Scottish average pillar one rate. Denmark’s pillar two rate of €31 per hectare is more than two and a half times as high as Scotland’s rate of €11 per hectare. The Czech Republic also has a smaller eligible area than Scotland does, but the Czech Republic gets one and a half times as much money to fund pillar one. Its average pillar one rate per hectare is almost twice that of Scotland, and its pillar two rate is more than 10 times higher, at an average of €116 per hectare.
Even closer to home, our neighbours in the Republic of Ireland, who have a similar amount of eligible land under pillar one, get twice as much funding as we do, which means that the average Irish per-hectare pillar one rate is more than double the Scottish average, while its average per-hectare pillar two rates are more than 10 times the Scottish average. I could go on and list every single European Union member state, because each and every one of them, without exception, will receive a higher per-hectare rate than Scotland in both pillar one and pillar two by 2019. Let us be clear: if the average rate of payment in Scotland had been increased to €196 hectare, in line with the EU average and the objective of all member states by 2019, Scottish agriculture would have benefited to the tune of €1 billion over the next six years. Instead, as a peripheral region of a member state that places a low priority on the rural economy, Scotland’s per-hectare rate will drop to €128 by 2019 and could fall as low as €108 if all the eligible land comes into the system.
The same is true for pillar two. Although our rural development budget will rise by 7.8% in cash terms, in real terms that amounts to a 5.5% cut over six years. By contrast, 16 member states argued successfully for uplifts in their rural development funding. Ireland has secured nearly €2 billion, compared with Scotland’s £478 million. Finland has secured even more. With that kind of rural development funding, we could make transformational step changes to Scotland’s rural economy. We could create more jobs, help farms to diversify, improve amenities in our rural communities and strengthen environmental sustainability. Instead, Scotland will continue to have the lowest rural development allocation per hectare in the whole European Union.
Quite frankly, it is an insult to the intelligence of our farmers to pretend that the deal is anything other than profoundly lousy. For the Government to claim largesse, by suggesting that 2% additional flexibility on coupling in some way compensates for the failure to deliver adequate core funding, has been described to me as “quite pathetic”. As one farmer put it to me, “We’re supposed to be grateful to get the crumbs from a cake that should be ours by right.” Just to clarify, the 2% flexibility on coupling brings with it no extra money. It would merely allow us to divvy up the pot differently, to target more resources at the livestock sector, where they are most critical. The serious point is that an extra 2% coupling makes a negligible difference to beef farmers in Buchan, some of whom are set to take sizeable hits under the new regime. What they want and need is the option to go up to 13% coupling, like those member states that face similar challenges and that have successfully negotiated the ability to do so.
Mr McKenzie
I thank the hon. Lady for giving way again; she is being generous with her time. She sets out a compelling argument for the Minister to meet the cross-party group, which supports her position, from the Scottish Parliament as soon as possible. Would she say that he needs to give the date on which he will do so?
Dr Whiteford
I hope that an outcome of today’s debate will be not only meetings with the Scottish Parliament, but meaningful engagement with the National Farmers Union and other stakeholders. The farmers and crofters of Scotland desperately need a resolution. The sense of outrage is palpable in rural communities, going well beyond the farming communities that are the primary producers in the agricultural economy.
The convergence uplift has come to the UK only due to Scotland’s woeful position, languishing at the foot of the international table for pillar one and pillar two cash receipts. Scotland has the lowest levels of agricultural support in the European Union, yet the Secretary of State for Scotland believes he has delivered
“a fair, positive and stable package for all parts of the UK”.
He is demonstrating plainly that, far from being Scotland’s man in the Cabinet, he is the Tory’s spokesman in Scotland, defending an utterly indefensible decision. I will be interested to see whether the Minister can stand here today—an historic day in Scotland, when we consider our future and the future of our country—and repeat the Secretary of State’s claim with a straight face.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)
I thank the hon. Member for Banff and Buchan (Dr Whiteford) for securing the debate, which is important to all parts of the UK, but particularly her constituents in Scotland, because as she says, she has a very rural constituency.
As hon. Members are aware, the Government have recently announced the allocation of €27.6 billion in funding from the common agricultural policy between England, Wales, Scotland and Northern Ireland for the period 2014 to 2020. The vast majority of those funds will come to the UK as direct payments under pillar one of the CAP. In total, between 2014 and 2020, the UK will receive €25.1 billion in the form of direct payments and €2.6 billion in funding for our rural development programmes under pillar two. Although these are significant sums, the UK will receive less CAP funding in the next seven-year EU budget than it did from the current EU budget. The fact that the UK will receive less funding from the CAP in the future is in line with the reduction in the EU budget that the Prime Minister secured at the February European Council. That position was overwhelmingly supported earlier this year by the House of Commons and will be to the benefit of all UK taxpayers.
Mr Mike Weir (Angus) (SNP)
The Minister says that there is a reduction in overall funding, but he does not address the fact that the convergence uplift was specifically due to the difference between Scotland and other parts of the EU. The money was given in the budget for a specific purpose. Should it not be used for that purpose?
George Eustice
I thank the hon. Gentleman for that intervention, but I am one minute and 50 seconds into my speech and I have another 12 or so minutes in which I might get to those issues.
Across the EU, most member states will see reductions in their CAP budget and receipts, and it is only appropriate that the UK shoulders its share of the cut. It is worth noting that we have done better than many other member states. With a shrinking pot of money, how we allocate the funds between Wales, England, Scotland and Northern Ireland was always going to be a difficult decision for the Government. In reaching that decision however, the Government consulted extensively with the devolved Administrations. We have had to be fair to all parts of the UK; I shall explain why I think we have been. Through a collaborative process, the Government decided on the most appropriate way to allocate the funds. There was an equal and proportionate reduction in funding to each Administration. That is fair.
George Eustice
I was going to move on to the uplift, which is the main topic of the debate. I have heard the views of hon. Members who say that the additional funds should have been made available to Scotland, but quite simply the UK’s direct payments will fall over the next seven years and there are no additional funds to allocate. Compared with 2013, the UK will receive around €500 million less in direct payments over 2014 to 2020. It is important to note that the convergence uplift does not mean that there is an additional pot of money to allocate. It simply slows the rate at which we have to make reductions for everyone across the UK. To give more funding to Scotland—or any one region, for that matter—would have required deeper cuts to the other parts of the UK.
George Eustice
I want to make progress; I will get to the point that I think the hon. Gentleman will address in a moment.
The point has also been made that Scotland has the lowest per-hectare payment in the UK and that, by virtue of that, Scotland should have received additional funding. There are a number of points to make about that argument. First, the so-called convergence uplift was calculated based on a UK average payment. Secondly, the lower per-hectare payment in Scotland is due to Scotland’s extensive moorland, which has yielded lower levels of production and, therefore, has historically attracted lower subsidy payments than other parts of the UK. Thirdly, it is important to note that Scotland still makes payments based on historic subsidies received by farm holdings in 2001, which means that those areas of land that had been most actively farmed, and generally still are most actively farmed, receive more money than the unfarmed moorlands.
Scotland’s low per-hectare payment also needs to be viewed alongside the fact that Scotland has the highest average per-farm payment in the UK, at about £26,000, compared with just £17,000 in England, £16,000 in Wales and £7,000 in Northern Ireland. I know that the hon. Member for Banff and Buchan said that she has no respect for that argument, but it is legitimate. Scotland has bigger farms, and the land there has historically been less intensively farmed. I think that the public will realise that if Scottish farmers are getting payments of almost £26,000 a year, they are getting far higher payments than the UK average, which is currently only about £16,000.
Dr Whiteford
It all depends how one cuts the figures. In fact, the majority of Scottish farmers—50% of them—receive CAP payments of less than £10,000. Obviously farming is more extensive in upland areas of Scotland, which can skew the figures, but it is important to understand the median average payment, rather than the mean average payment. Either way, it is irrelevant to the convergence uplift.
George Eustice
I do not think it is irrelevant. As I said, the reason why Scotland has historically had a lower allocation is that there is much more moorland, which is not farmed as intensively. One can make the argument that there are differences within that and that some small farmers get less than £10,000, but that is also the case in Northern Ireland, England and Wales. The principles are set, but Scotland’s average farm payment is among the highest in the EU. In fact, only in the Czech Republic, where there are still huge collective farms, is the average payment received per farm higher than in Scotland.
Finally, it is important to note that there have always been wide variances in the per-hectare rate paid, both between member states and within member states. Countries such as Latvia and Estonia receive less per hectare than Scotland. I should also point out that the Government’s approach in allocating the cut equally across the UK’s Administrations is consistent with the approach that we adopted earlier this year when allocating the UK’s structural funds. Of those, Scotland received €795 million, which represented an increase of €228 million compared with the amount it would have received if the EU’s formula had been used, so Scotland received an uplift of sorts when it came to the allocation of structural funds, because the UK was willing to depart from the EU formula and adopt the approach that we have taken historically. We must accept that if we are to be consistent and take the historical approach, Scotland might lose in some areas, but it might also win in others. It has undoubtedly won from our adoption of the historical approach to structural funds.
In announcing the allocation of CAP across the UK, the Government have also committed to undertake a review of the allocation of CAP funding in 2016, at the same time that the European Commission will be undertaking a review of the 2014 to 2020 EU budget. The president of the National Farmers Union Scotland, Nigel Miller, has made a strong case for us to do the review early, and I am keen to meet him to discuss some of his concerns.
Let me say to hon. Members who have raised points that I speak regularly—almost weekly—with the devolved Assembly. One thing about the farming and fishing ministerial brief is that we deal extensively with all our colleagues in the devolved Administrations. The next time I visit Scotland or other devolved Administrations, I am more than happy to discuss the issue with politicians there. I am a great believer that we in the UK are stronger working together. DEFRA has a good track record of engaging closely with our partners in the devolved Administrations.
Mr Reid
I am pleased that the review will take place in 2016, but my understanding is that the Government have given no commitment to implement its outcome quickly. Will the Minister leave open the option to implement the review’s outcome in 2017, rather than waiting until 2020?
George Eustice
A number of other things must happen at about the same time as the review, not least, particularly in Scotland’s case, moving from the current approach, which is based on historical payments in reference to 2001, to an area-based approach. Scotland will have to think about that carefully in order to get it right. One would not necessarily want a single, flat rate for all land areas; there will be a difference between lowland rates and moorland or upland rates.
It will be a big exercise for Scotland to get the rates right for different types of landscape. Only after we have seen how the transition from historical payments to land area-based payments will work can we make decisions about it. There may also be legal issues about whether things can be changed before the next financial perspective, post 2020.
I know that Nigel Miller, the president of the NFUS, has made a strong case and wants us to consider the issue. The Secretary of State has already discussed it with him, and I am keen to discuss it with the NFUS when I go to Scotland, to ensure that we engage fully with the Scottish farming industry on this important issue. The review, concluding in 2017, will be an opportunity for us to consider domestic CAP allocations and reflect on wider developments across the EU and UK as a result of CAP implementation. We might also be able to see how the different approaches taken by various devolved Assemblies are working in practice.
Throughout the CAP negotiations, which have only just concluded, the UK fought hard to ensure that Scotland and the other home nations could deliver the CAP in a manner that suited their needs and those of their farming industries. The UK has used its size and influence to deliver a series of wins for Scotland and Scottish farmers, including securing greater regionalisation of the CAP, ensuring that the national reserve is flexible enough to provide continuing support to new farmers, clarifying that farmed heather is a form of permanent grassland and extending to 2016 the designation of areas of natural constraint, which are particularly numerous in Scotland. Finally, although the hon. Member for Banff and Buchan was sceptical about the value of this, we have also secured for Scotland the ability to increase the use of coupled payments—I know that there is a strong view in the Scottish industry that that is particularly important for beef production.
Now that we have negotiated all those outcomes for Scotland, it is up to the Scottish Government to decide how they want to proceed in implementing the CAP. The UK Government have ensured that Scotland and other devolved Administrations have the ability to implement the CAP as they see fit. I know that consultations are under way in all the constituent parts of the UK. The agreement that we secured includes significant flexibility for Scotland to direct funding to those parts of the rural economy and environment that it deems appropriate. With the budget settlement recently announced by the Government on the CAP across the UK, all the devolved Administrations now have the certainty they need to start making those important decisions.
Mr Weir
The Minister has not addressed the point I raised earlier. He said that there was less money in the budget from Europe, which may be true, but the UK Government argued for a lower budget. The budget coming to the UK has been increased by the convergence uplift specifically because of the Scottish situation. That money was given because Scotland had a particular problem, and it is not coming to Scotland. Surely that is not right.
George Eustice
I think I did address that point. I made it clear that the calculation for the convergence uplift was UK-wide, not Scottish, that there are historical reasons why Scotland has had less and that Scottish farmers receive more on average per farm unit than farmers anywhere else in the UK. I do not accept that I did not address that point. We are taking a consistent approach by sticking with the historical approach, as we did on structural funds. We have achieved a lot for Scotland and other devolved parts of the UK, in terms of giving them flexibility to implement the CAP as they see fit.
Mr McKenzie
Perhaps I can take the question asked by the hon. Member for Angus (Mr Weir) in another direction. Does the Minister understand Scottish farmers’ frustration and anger that moneys specifically targeted at Scotland have not arrived in Scotland but have been distributed elsewhere?
George Eustice
As a UK Minister, I must be fair to all parts of the UK, and I think we have been fair and consistent in how we have applied this, for all the reasons I have set out. As somebody who worked in the farming industry for 10 years and who comes from a far corner of the UK, I am a firm believer that, as a UK Government, we can achieve more for all parts of the UK by staying together. It would be regrettable, for instance, if Scotland did not have the muscle that it gets from being part of the UK in European negotiations. If Scotland left the UK, it would be in danger either of being outside the EU altogether or of having negligible voting weight and being one of the smallest countries in the EU, which would not be in Scotland’s interests.
Fly-Grazing of Horses
(10 years, 5 months ago)
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Mr Philip Hollobone (in the Chair)
I know that this debate is very important, because I have received constituency correspondence about it myself. We are privileged today to be led in this debate by Mr Damian Hinds.
Damian Hinds (East Hampshire) (Con)
Thank you, Mr Hollobone, for calling me to speak. It is a great pleasure to see that so many hon. Members, including the Minister, my hon. Friend the Member for Camborne and Redruth (George Eustice), have come to debate this important issue.
In September, in Alton in my constituency, 46 horses were left in a field off the New Odiham road. On that occasion, they had been left with permission, but their owner had not arranged for them to be fed regularly and their welfare deteriorated to the extent that they were taken by the police under the Animal Welfare Act 2006 and given over to the Royal Society for the Prevention of Cruelty to Animals.
A couple of weeks later, in the same field, another 18 horses appeared, belonging, apparently, to the same owner. If I quote briefly from the Redwings charity, which subsequently cared for a small number of the horses, that will give an indication of the extent of the cruelty imposed on them; I know that I must not quote at length, Mr Hollobone. I should explain that Redwings named the horses after characters from Jane Austen novels, as they were rescued from Alton in my constituency. Redwings said:
“We very tragically lost Georgiana, only two weeks after her rescue. Georgiana was suffering with salmonella - which several of these horses have - and also an horrendous small redworm burden.
Mr. Darcy is also an orphan foal and must have lost his mother at Alton. He was so hungry that he had actually been chewing the tails of the other horses in the group.”
I know that this issue and similar ones have been raised before by, among others, my hon. Friends the Members for Vale of Glamorgan (Alun Cairns), for York Outer (Julian Sturdy) and for Dudley South (Chris Kelly). Many hon. Members will recognise this kind of case, where horses are on farmers’ fields, local authority land, grass verges or common land.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I congratulate my hon. Friend on securing this debate. Does he recall the absolutely appalling case of Spindles farm in my constituency? In January 2008, the police and the RSPCA finally gained access to the farm and found the most unrepeatable cruelties being perpetrated on horses and donkeys. If he does remember the case, will he acknowledge the great work that the RSPCA did in obtaining a conviction against James Gray—a life ban on keeping horses and a 26-week sentence of imprisonment, which was richly deserved?
Damian Hinds
Absolutely. My right hon. Friend brings up one of the most terrible cases. I think that 2008, when the horses were seized in Amersham, was a high point for RSPCA horse seizures, and I pay tribute to the organisation’s work. I should also say that it has been of great assistance to me as I have prepared for this debate.
There are four senses in which the practice of fly-grazing is a terrible problem. First, of course, there is often the terrible condition of the horses themselves, which suffer neglect and malnutrition. Secondly, when a farmer’s field is being grazed on, it is also a problem for the farmers. Grazing, where it is not authorised, is theft; it is theft of a farmer’s livelihood. Quite often, of course, the farmer is left to deal with the problem. Although they are the victim and not the perpetrator of the crime, they assume some responsibility for the horses. Thirdly, fly-grazing is a burden for those who must enforce the law, and for the charities that care for the horses. Currently, those charities find themselves significantly over-burdened as a result. Finally, fly-grazing is a great problem for the public—there are issues of public safety if, for example, horses get on to the public highway.
Neil Parish (Tiverton and Honiton) (Con)
I also congratulate my hon. Friend on securing this debate. Does he agree that one of the great problems is the traceability of these ponies and horses? We must ensure that we know where they are. We have 70 or 80 passport-issuing agencies; there is no central database. We need to know where the horses are and who they belong to if we are to take action to stop fly-grazing and the welfare problems.
Damian Hinds
My hon. Friend rightly raises one of the significant underlying issues, and it is one that I will return to later.
There are three key pieces of legislation in this arena. First, there is the Animal Welfare Act 2006. However, that applies only where there is significant suffering; I am told that quite a “high-hurdle” test must be passed for it to be used. Secondly, there is the Highways Act 1980, which relates to cases in which animals are on or by the public highway. Thirdly, there is the Animals Act 1971, which is a means of getting horses off private land, although the process involved is quite onerous; I will discuss that process later. Significantly, there are also a number of private Acts that apply in different parts of the country, including the Mid Glamorgan County Council Act 1987 and, in my own area, the Hampshire County Council Act 1972.
What is the process if a farmer discovers that, say, a dozen horses have appeared on their land? They should call the local authority, which may check the horses. In doing so, it often finds that there is no microchip to allow traceability. The local authority then puts up a notice to say, “Contact us if these horses are yours.” The owner then has two weeks to come forward. Then, just before the two weeks are up, the horses miraculously disappear; hon. Members will be familiar with the situation.
Chris Kelly (Dudley South) (Con)
I congratulate my hon. Friend on calling for and securing this important debate. Does he have experience of an issue that I have in my constituency? Once horse bailiffs seize horses, or council employees are involved in bringing in horse bailiffs, people are then intimidated by the owners of the horses—the owners who have neglected them and left them in such a sorry state.
Damian Hinds
It is indeed a recurring problem. I know that the presence of uniformed police on these occasions often helps, but people worry about intimidation a great deal.
If the horses do not miraculously disappear just before the two-week period is up and no one comes forward to claim them, the only option for the local authority is to auction them—but, of course, if a horse is to be put up for auction it must first be properly documented and microchipped. There is another situation that I think hon. Members will recognise. The horses go to auction but are often bought back by the same person who was responsible for abandoning them in the first place. Afterwards, of course, they have acquired a more valuable animal, because it has been microchipped at a low price.
The scale of the problem of fly-grazing is both large and growing. No one knows exactly even how many horses there are in the country, let alone how many are neglected, abandoned or fly-grazed.
Mr Andrew Smith (Oxford East) (Lab)
I commend the hon. Gentleman on securing this important debate. I assure him that concern about this issue is not confined to rural areas; I have been struck by the number of my constituents who have contacted me about it.
Is not the need for a national strategy underlined by the fact that a piecemeal postcode lottery approach will ensure, in the end, that those who abuse animals in this way simply move them from the areas that are taking action to the areas that are not prepared to take action—a problem exacerbated by the action being taken in Wales? Does not every area need to be prepared to deal with the problem?
Damian Hinds
Indeed. I think that is one of the themes that we will hear a number of times during this short debate.
Best estimates suggest that perhaps 7,000 horses are at risk of welfare problems, with upwards of 3,000 on land without consent. In the year to date in my own county of Hampshire, the RSPCA has received calls about 14 incidents of fly-grazing; in the first quarter of 2013, the British Horse Society saw complaints about horse welfare go up by 50% on the prior year.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I congratulate the hon. Gentleman on securing this debate. Like my right hon. Friend the Member for Oxford East (Mr Smith), I have had many letters from constituents about this issue. However, I want to clarify one thing with the Minister. Is it the case that racehorses are not in this situation because of the fact that they are microchipped as a matter of course, so they do not become part of the problem?
Damian Hinds
My understanding is that there are different categories of horse. Typically, the type of horse that ends up in such situations will not be raced.
This year, calls to Redwings about abandoned horses have risen by 75%.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I congratulate the hon. Gentleman on securing this important debate. My wife keeps horses and recently rehomed two from animal charities that receive abandoned horses. Might not part of the solution be for the horse-owning public with capacity for extra horses to receive and rehome abandoned horses rather than breeding their own?
Damian Hinds
I commend both the hon. Gentleman and his wife for what they do. Of course, rehoming is a good solution, but I fear that the scale of the problem, the stage that some of these horses have come to, and the cost and time it takes to—
Mr Philip Hollobone (in the Chair)
Order. The second Division was not anticipated, so I can restart the debate earlier than advertised. The debate will continue until 4.26 pm.
Damian Hinds
Members will be pleased to know that I intend to accelerate my speech somewhat, because I know that several people want to speak.
As I was saying before the interruption, the problem is large and growing. Ten years ago, the RSPCA had 100 horses in its care; that figure now stands at 850, and the charity has to spend £3.5 million a year on food, board and care. The number of horses taken in has increased hugely since the peak year that my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) referred to earlier. Prosecutions under the Animal Welfare Act 2006 have also risen. The debate is so important now, however, because of the risk that the problem will become much greater in England in 2014 following the enactment of the Control of Horses (Wales) Bill that is going through the Welsh Assembly.
Mr Donohoe
It is my understanding that the circumstances are no different in England and Scotland, whereas Wales has that new legislation. It is necessary to put on the record that Scotland should also consider changing the law to prevent the same situation from arising.
Damian Hinds
The hon. Gentleman makes an important point; I defer to him on the situation in Scotland. Fly-grazing certainly happens right across England and Wales, including up to the border, so that would seem a sensible consideration.
Nia Griffith (Llanelli) (Lab)
I congratulate the hon. Gentleman on securing this important debate. In response to the awful problem of fly-grazing and the intimidation of farmers in areas such as mine, the Welsh Government have introduced the Control of Horses (Wales) Bill in an attempt to get consistency right across the country and to give local authorities sweeping powers to deal with the horses immediately, rather than having to wait. Will the hon. Gentleman be seeking similar legislation for England?
Damian Hinds
The hon. Lady makes an important point. The Welsh Bill will not make the problem disappear, but it will make dealing with it somewhat easier, which may help to disrupt and discourage sharp practice. The worry, however, is that it may also displace the problem across the border. As I understand it, the Bill cuts the waiting time from 14 days to seven; reverses the burden of proof, so that an owner coming forward must actively prove that they own the horses; and, crucially, increases the options available to those who seize horses. Auction is therefore not the only option. Horses can also be rehomed, as the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards)outlined earlier, or—when necessary in the worst cases, and with sadness—euthanised.
As I said, the Welsh Bill will not make the problem disappear and it is worth reflecting on its root causes. The main reasons seem to be a relatively small number of irresponsible dealers and the excessive breeding of horses. There is an over-supply, with horses changing hands at auction for as little as £5. Following the horsemeat scandal, there is also less abattoir capacity, although given the cost of put-down and disposal, that option is, arguably, unlikely to be high on the list for owners of £5 horses.
All that explains to some extent why horses are abandoned, but it does not explain why dealers come to pick them up again or why they would buy them back at auction. To some extent, dealers perhaps believe that the market will bounce back and that the value of horses will rise again. It also seems that some sections of some communities attach status to the volume ownership of horses.
What, realistically, can be done? Eventually, we need to rebalance the supply of, and demand for, horses. It has been suggested that if there were a market in horsemeat, animals would be better cared for, and there is a great deal of logic in that. However, there is a cultural issue about that in this country, and there is no likelihood any time soon of there being a great appetite for horsemeat.
I do not have the answer, but I suggest to the Minister that we need to find ways to ban irresponsible people who should not own horses from doing so. That is made more difficult because such people may not own the horses directly, but through proxies.
Ian Lavery (Wansbeck) (Lab)
I congratulate the hon. Gentleman on bringing this important subject to the House. Historically, my constituency has had a huge population of horses, but we have seen an explosion in their numbers in the past year or two, with horses on almost every conceivable available blade of grass. However, we need to be careful in dealing with this issue, because there are some extremely good people in my constituency who have owned horses for generations. Just two days ago, the county council, which is leading the way in the country on this issue, lifted more than 20 horses in my constituency, and among them were foals and other horses whose owners had looked after them very well.
Damian Hinds
The hon. Gentleman makes an important point, and it is important not to generalise. Many people have owned horses for generations, and they do so responsibly.
I suggest to the Minister that our priority in the immediate term must be to disrupt irresponsible and cruel practice where it appears. Part of that may be about further propagating and encouraging partnership working, based on the best practice that exists in some parts of the country. The National Farmers Union points to south Wales and Durham as examples of places where there is good co-operative working between the police and local authorities.
Guy Opperman (Hexham) (Con)
I congratulate my hon. Friend on securing the debate, and I echo the point made by the hon. Member for Wansbeck (Ian Lavery). Does my hon. Friend agree that the ultimate solution would be to amend the Animals Act 1971, strengthening this area of the law and empowering local authorities and the Government to address this issue? However, we must be careful not to transfer the burden immediately on to farmers.
Damian Hinds
My hon. Friend makes an important point, and I will come to the legislative points in a moment.
I wonder whether further guidance on best practice would be useful for local authorities and police constabularies. There might also be innovative and different ways of utilising publicly owned land to keep seized horses.
Tessa Munt (Wells) (LD)
I wonder whether I might, through the hon. Gentleman, implore the Minister to consider having discussions with his opposite number at the Ministry of Justice? There are prison farms on prison land, and prisoners at a few of them are given the duty of looking after horses as part of their outside work. There are two advantages to that: one is that the horses are cared for, and the other is that the prisoners take responsibility for caring for an animal. This is often the first time they have taken responsibility for caring for anything or anyone, and they develop new skills. That might be a slightly innovative way of looking at the issue.
Damian Hinds
I raised the question whether there might be different or innovative ways of using publicly owned land, and I am sure the Minister will have heard that suggestion.
Earlier, we talked about the challenge of traceability; large numbers of horses are not microchipped. Clearly, more enforcement is needed in that regard, and I ask the Minister whether he has any thoughts on how traceability can be better enforced, especially given that free microchipping is available to many people today but is not taken up.
It appears that the existence of a national equine database of some sort is important—it could, at least, make the current system work better. It might be possible to find a simpler, less costly version of the former national equine database to make traceability possible while minimising the attendant additional costs.
Most importantly, we need to make enforcement less onerous; that is the most critical immediate-term challenge, especially given the legislation across the border in Wales. We need to make the removal of horses more straightforward, and there are two, and possibly more, ways we might do that. First, as my hon. Friend the Member for Hexham (Guy Opperman) outlined, we could amend the 1971 Act to bring it into line with the best of the private Acts.
Alternatively, we could replicate the legislation going through in Wales. Either way, there needs to be a way to reduce the waiting time, during which owners can claim ownership. In Wales, it has been reduced from 14 days to seven—although seven is not a magic number; we could have another number. Whether the holding period is seven days or whatever, we also need to stipulate that horses do not have to be held on the land they were found on and that they can be held on the enforcer’s land, which puts the onus on the owners to come forward.
Mr Henry Bellingham (North West Norfolk) (Con)
Does my hon. Friend agree that problems are often exacerbated by travelling communities that allow their horses to go on land where they should not be? Plenty of travelling communities, however, do control their horses and ponies very effectively and graze them in the right places.
What advice would my hon. Friend give councils regarding better liaison with travelling communities? Will he also join me in paying tribute to two organisations that have been very busy in Norfolk? One is World Horse Welfare, at Snetterton, and the other is Redwings, at Hapton. They do an absolutely tireless job in helping to solve this problem by taking in many horses that should never have been abandoned.
Damian Hinds
I certainly join my hon. Friend in those commendations. I echo what he said, which in turn echoed what the hon. Member for Wansbeck (Ian Lavery) said, about the large numbers of people who look after their horses extremely well. It seems that these irresponsible practices are concentrated among a relatively small number of individuals. As to my hon. Friend’s point about giving advice to local authorities, I am sure the Minister will pick it up.
On objectives for a legislative solution, we somehow have to break the cycle of horses being seized, going to auction and being bought back, with the result that the problem never decreases. Whatever the legislative solution, there must be options for rehoming and, sadly, for euthanising, where that is unavoidable in the worst cases.
Richard Graham (Gloucester) (Con)
This is an important issue, and we should all thank my hon. Friend for raising it. On the things we can do apart from changing the law, does he agree that the RSPCA must make absolutely full use of its existing powers to prevent foals and horses from dying in winter floods, as happened in Sandhurst lane, in Gloucester, last winter? My overwhelming sense is that the RSPCA moved too slowly. Has my hon. Friend come across other instances where it could have done more within its existing powers? We should not necessarily expect the law to do everything.
Damian Hinds
I do not know the specifics of that case, so I cannot comment on how quickly things were or were not done. On fly-grazing, I do know that the RSPCA and other charities are heavily overburdened and struggle to cope with their case load, which may be part of the issue.
Penny Mordaunt (Portsmouth North) (Con)
I thank my hon. Friend for securing the debate, not least because I hope it will raise public awareness. The public are really appalled at some of the welfare abuses that have taken place, but the strong message to them today is that they can be part of the solution by reporting cases. Quite often, welfare situations are exacerbated because of the time it takes for someone to identify where horses are and to report them. I congratulate my hon. Friend on securing the debate, and I hope it will help get that message out.
Damian Hinds
I am grateful to my hon. Friend. She is right that such incidents must be reported and that the public play an important part in that. It is frustrating if offences are reported and there either is not the capacity to deal with them or proceedings are started but end up in a shocking circular process.
Tessa Munt
It strikes me that one practical thing we can do, which I have done myself, is to refer to the RSPCA those in the area who run stables, particularly for livery purposes, and who have gaps because of the expense of raising horses. Where people have taken their animals back into their own home paddocks, or whatever, and there are spaces, the best thing we can do is to ensure the RSPCA and its various centres are aware of where there are spaces at livery. It is often cheaper to keep a horse at livery than to do anything else. We should encourage people to identify the spaces in livery to ensure that they are used by the RSPCA, as is done very well in my area.
Damian Hinds
I am grateful to the hon. Lady for her intervention. I am sure the Minister will have heard that point.
To conclude, I know that the Minister is seized of the importance of the issue and its urgency. Given the growth in incidents and the imminence of the Welsh legislation, I hope that he will be able to give us some indication today of what can be done to assist hard-working charities, the police and local authorities to ease the burden on farmers and alleviate the suffering and cruelty inflicted on the poor animals.
Mr Philip Hollobone (in the Chair)
Order. A large number of Members wish to catch my eye. My intention is that everybody be allowed to speak; I am going to impose a six-minute time limit on speeches to enable that to happen.
Mr Pat McFadden (Wolverhampton South East) (Lab)
It is a pleasure to serve under your chairmanship today, Mr Hollobone. I begin by congratulating the hon. Member for East Hampshire (Damian Hinds) on securing such an important debate. I would also like to explain that I might not be able to stay for the full length of the debate, as I face the not unusual House of Commons problem of having to be in two places at the same time. However, I would like to use the minutes that you have allotted me, Mr Hollobone, to make a few points.
As the hon. Member for East Hampshire rightly said, although the problem of abandoned horses might be thought predominantly to affect rural areas, that is certainly not the whole case. I can assure the House that it is a significant problem in some urban areas, such as my own black country constituency. In many parts of the black country, specifically around the Bilston and Bradley areas of my constituency, it is common to see horses grazing on abandoned former industrial land or small plots of common land. The state of the horses varies. Sometimes they are in a decent state and looked after, but sometimes they are not and are in a very poor state. Sometimes they are tethered, sometimes they are not. Sometimes they can break free and be found wandering round housing estates, going into people’s gardens and causing at least a nuisance and in some cases real danger.
Chris Kelly
I thank the hon. Gentleman, a fellow black country MP, for giving way. Does he share the experience that I have had in my constituency, where these poor animals have been found dead, still tethered to the rope that chained them?
Mr McFadden
The hon. Gentleman is right that sometimes the horses die, particularly in winter when they are not fed during harsh weather. The problem is difficult to tackle on two different levels because of what I call the ownership issue. By ownership, I mean that it is difficult to establish who owns the horse. Even if you can establish that, it is difficult to get that person to accept responsibility for the horse’s welfare. In theory, under the law, horses should be microchipped and have passports that enable them to be identified, but the Minister will be aware that the law is routinely breached and ignored. I have been told by the animal welfare officer at Wolverhampton city council that, in her estimate, the vast majority of abandoned horses in my constituency have no microchip. The system is therefore simply not operating.
The first ownership problem is that it is difficult for the authorities to know to whom the horses belong. The other problem is that they are moved around at short notice, leaving a place and returning to it, which makes it difficult to track them. Another aspect of the ownership problem is that it is not clear who, in law, is responsible for policing the issue, removing horses and dealing with the problem. The police tend not to get involved unless the horse is on the highway, and practice among local authorities varies greatly. Some try to tackle the problem with energy and resources, but some do very little. The owners are aware of that and can take advantage of the situation by moving the horses around from one piece of open ground to another. Horse owners know that councils’ attitudes differ in that way.
The part of my constituency that is most affected by the problem is close to the boundaries of Wolverhampton, Dudley and Sandwell. It is quite easy for horses to be moved, and that makes enforcement more difficult. Sandwell is next to Wolverhampton, and its council estimates that the cost of a removal—for bureaucracy and transport, as well as legal and animal welfare costs—can be up to £1,500. Some councils have tried to tackle the problem by providing grazing space and charging owners to put horses there. For responsible owners, that may work. However, irresponsible owners currently get a free good by putting horses where they should not; they are unlikely to queue up to pay £10 a week or more for what they currently get for nothing.
Another issue is the resources of local authorities. I am not making a partisan point, but we know that money is tight for councils. Wolverhampton city council has one animal welfare officer, who works part time. She is responsible for pet shops, domestically kept animals, the few farms in the city council area and the huge issue of abandoned or illegally tethered horses. I spoke to her earlier today, and by lunch time she had had three reports from the public of concern about abandoned horses. To expect her, on her own and working part time, to deal effectively with the issue alongside her other responsibilities is clearly absurd, and it will not work.
Even for officers who have enough time, another issue is at play, which we should be honest about: fear. Although the horse owners may not want to declare themselves, those involved in removing horses fear reprisals by them. It cannot be right that those who are empowered to deal with the situation, albeit on an imperfect and incomplete legal basis, should be inhibited from carrying through their powers by fear of reprisals. We would not tolerate that state of affairs in other walks of life, and we should not tolerate it in the one we are debating. The effect of what I have outlined is a problem that has gone on for years without a proper solution and without anyone getting a proper grip on it. It is a significant animal welfare problem that causes the public disturbance and distress. We cannot go on as we are.
What, then, is to be done? The current law is inadequate. There is a right of removal under the Animal Welfare Act 2006, but only if the horses are in poor or severe condition, which is not always the case. Different provisions apply to public and private land, and there are different approaches for the highway or common land. All that needs to be straightened out and simplified. I do not know whether what the Welsh Assembly Government are doing is perfect, but at least animal welfare groups, landowners and the general public have welcomed it. The Minister should endeavour to clarify and simplify the law to make it easier to remove the animals.
The simplification should include introducing easier powers of removal from common land; minimising cost and delay in dealing with some of the issues that the hon. Member for East Hampshire raised; and removing the problem of proving ownership—in fact, why not reverse the burden of proof and ask those who claim ownership of the horse to prove it, rather than charging local authorities with running around trying to find out who owns it? The changes should also include improving animal welfare and giving confidence to the public. The problem is growing, and may grow further because of what has happened in Wales. The fact that solving it has been too difficult so far should not prevent us from putting our heads together and trying to come up with a better system.
Mr David Heath (Somerton and Frome) (LD)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for East Hampshire (Damian Hinds) on securing the debate and the right hon. Member for Wolverhampton South East (Mr McFadden) on his contribution. This is a huge issue of not only welfare—bordering on criminality—but antisocial behaviour. We need to look at both aspects if we are to come up with a solution.
I first came to terms with the subject when a constituent came to me in despair, having found a number of horses in a field that she owned and been told by the local authority that there was nothing she could do to remove the horses; that there was no way of identifying whose they were; and, what was more, that she was now liable for the welfare of the animals, with third-party liability should anyone be injured crossing her land on which the horses now resided. She was quite rightly extremely upset that that should be the case. I looked into it further and found that it was not an isolated problem, even in my own area—I was told, anecdotally, that one gentleman owns 80 horses, but not one square foot of land on which to graze them, so was using everyone else’s land—and throughout the country.
As has been suggested, the situation has been exacerbated by what to some extent has been a crisis in horse ownership. The recent difficulties in the economy have meant that an awful lot of people who bought horses with the firm intention of looking after them properly now find that they are unable to do so, so a lot more horses and ponies are either abandoned or sold cheaply than would normally be the case. Had I any doubts about that, they would have been dispelled by visiting the Glenda Spooner farm in my constituency, in Kingsdon, near Somerton. It is run by World Horse Welfare, which has already been mentioned and does a superb job of looking after abandoned animals and getting them back into shape so that they can be rehomed. I applaud its work.
I was trying to address the issue when I was in the Minister’s position, and it is not without its complications—I will not pretend otherwise. It boils down to a number of clear areas in which the Government could perhaps have an effect. First, on intervention, the Government can help to prevent animals from entering the stream, as it were, by supporting horse charities and perhaps by considering what they can do directly to help people who get into difficulties to find a new home for their horses.
Secondly—a lot of the debate will be about this—there is the possibility of new powers. I discussed that at length with the Home Office, which assured me many times that the Anti-social Behaviour, Crime and Policing Bill would be capable of remedying the nuisance. Potentially it will be, through the injunctions in the Bill and community protection orders, but we need guidance to be issued to local authorities and others as to how they can use the powers in the Bill to provide help in the area we are discussing. I hope the Minister will help me with that. Failing that, we need to look at the Welsh proposals. I spoke to Alun Davies, the Minister in Wales, some months ago about the subject, because I knew that he was working on his proposals. What is being suggested in Wales—providing a range of disposals to local authorities and others—seems to have an awful lot of merit.
Thirdly, I want us to consider liability, which I remember discussing many years ago during consideration of the Countryside and Rights of Way Act 2000, when it became clear that people had an absolute liability for animals on their land. That cannot be right. If it is not their animal, they did not ask for it to be there and they do not want it to be there, how on earth can they be liable for its actions? Yet that is the situation in law.
Lastly, we need to deal with identification. Microchipping needs to be enforced, of course, but that applies only to horses under four years old. There is a misconception about the national equine database, which was abolished by my predecessor, in that it did not provide traceability. We need a hugely better passporting system that ensures that we can trace a horse back to its owner. Serious discussion was going on with the Irish and French Governments on the issue, and I wonder whether the Minister can bring us up to date on where precisely we are.
I wish to raise a final, not uncontroversial, issue, which I remember discussing with the Irish Agriculture Minister, Simon Coveney. I am not betraying any confidence, because he has since discussed it with his Select Committee in the Dail, but he told me about the possibility of widening hugely the euthanising of horses in the Republic of Ireland, because of the overpopulation. We have to give serious consideration to that. No one wants to kill horses, any more than anything else, but if we have huge overpopulation, we will never get to grips with the welfare issues. We first have to reduce the population, bringing it back to the sort of level where we can find enough good, careful and sensible owners to look after the horses.
Chris Evans (Islwyn) (Lab/Co-op)
It is a pleasure, as always, to serve under your chairmanship, Mr Hollobone. It is also a pleasure to follow the hon. Member for Somerton and Frome (Mr Heath). The Department for Environment, Food and Rural Affairs is somewhat poorer since he left as a Minister, but we have had the joy of hearing his words of wisdom today. I congratulate the hon. Member for East Hampshire (Damian Hinds), who is a good friend of mine, on securing the debate, for which the whole House has come together. Like many Members, I have received a great many representations from constituents who have expressed concerns about fly-grazing, and 10 of them asked me to attend the debate specifically because of horse welfare.
Fly-grazing of horses is illegal, but the legislation makes it difficult for landowners to remove horses from their land. Fly-grazing poses risks to people when horses wander the roads, going through school grounds, digging up sports fields or damaging nature reserves. In June 2013, animal welfare charities released “Left on the Verge”, which reported that more than 7,000 horses were at risk of needing rehoming or rescuing.
This issue was recently brought home to me by a constituent, Mr William Jenkins, who grazes his horses on Manmoel common, in the heart of my constituency. He relies on common-land grazing to feed his stock in the spring—more so than ever this year. However, when he turned his flock on to the common in May, after one of the harshest winters he can recall, there was little grass to graze, because it had already been eaten by dozens of abandoned ponies—unsurprisingly, many had already perished in the prolonged freezing conditions, dying of starvation or exposure. This has been an issue on Manmoel common for a number of years—although not only there—robbing farmers of their historic rights to graze the common, an important food source for livestock.
In a recent case, more than 100 horses were destroyed after being kept in detrimental conditions. They were among 400 horses found in a neglected state by RSPCA inspectors. In another recent case, a breeder was sentenced to 10 weeks in jail and banned from keeping horses for 10 years after being found guilty of causing unnecessary suffering when nine horses had to be put down and another 51 placed in sanctuaries.
There are a number of reasons why fly-grazing throughout England and Wales is increasing—primarily, the economic downturn combined with too many horses being bred. The result has been a horse market in which horses at every level have dropped in price. At the lowest end, they are being sold at auction for as little as £5. Farmers may advertise a horse and sell it after 14 days to cover their costs, but if the pony has no passport or microchip, that animal cannot be sold, costing the farmer more than the cost of raising the horse. There are also reports of some dealers cutting the cost of animal welfare and disposing of their horses by abandoning them on other people’s land when the horse has no further value to them.
The issue is made worse by the confusion about who has responsibility for fly-grazed horses. Is it local authorities, landowners or animal welfare charities? The Government need to take action to clarify the situation. Dealing with abandoned horses is a problem further complicated by rescue centres being under severe pressure and close to capacity, local authorities struggling with the numbers of horses left on their land, and landowners having to engage in costly legal action to have abandoned horses removed safely.
Another reason for the proliferation of fly-grazing is that the mechanisms in place for prosecution are insufficient and perpetrators are finding it easy to get away with—the benefits to them far outweigh the cost. The present law is insufficient, as it makes pre-emptive action impossible, and is insufficient when attempting to trace horse owners. Indeed, the inability to trace ownership is the fundamental reason why current laws do not work. Fly-grazers do not comply with horse identification legislation, and horses are often not microchipped when they should be.
The problem comes down to the complex mix of legislation relevant to removing fly-grazing horses. It includes the Animal Welfare Act 2006, the Animals Act 1971, the common law of lost or abandoned property, the Local Government (Miscellaneous Provisions) Act 1982, the Highways Act 1980, the Equine Identification (Wales) Regulations 2009 and the Horse Passports Regulations 2009—makes sense that, if you are a farmer or a horse owner, Mr Hollobone. All situations are different and require different elements of legislation to resolve them. Enforcers such as the police and local authorities will get involved only in incidents that violate criminal law.
John Mann (Bassetlaw) (Lab)
On local authorities, is my hon. Friend aware of the situation in places including Bassetlaw where, when the local authority takes action for good reason, the horse owner simply moves the horse to a non-local authority-owned piece of land, and if the owner of that land takes action, they move the horse back to the local authority land? In other words, they can never be nailed down under the law.
Chris Evans
My hon. Friend has hit the nail on the head. Horses are being moved round in a cycle. People are wise to the law and know that unless a criminal act has taken place there is no violation.
As a Welsh MP, I think we should look to the Welsh approach. As the hon. Member for East Hampshire said, that approach might not be perfect, but it is at least a start and is getting a grip on the problem. Wales is now taking action to rectify the problem. Ministers there are introducing a new Bill to tackle fly-grazing, the Control of Horses (Wales) Bill, which will take effect from early 2014. Conservative estimates are that 3,000 horses are being fly-grazed in Wales and 2,500 in England. Given the tough approach being taken by the Welsh Government, the Westminster Government need to highlight what measures they are taking to ensure that those 3,000 horses in Wales do not simply become England’s problem, which follows on from the point made by my hon. Friend the Member for Bassetlaw (John Mann). Fly-grazing is also a cross-border issue. My constituent, Mr Jenkins, supports the Welsh Government and has said:
“I think the new legislation will go a long way to help stop the problem, it will make people think twice about fly-grazing. The legislation is not perfect, a lot more could be done, but it is a step in the right direction and something we can work off moving forward.”
That is the issue.
The Westminster Government need to take action on the issue of fly-grazing, which has been getting increasingly worse over the past two to three years. They must simplify the legislation dealing with fly-grazing, whether they opt to make small amendments to existing legislation, such as the Animals Act 1971, or introduce new legislation, as the Welsh Government are doing. While streamlining the existing legislation, the Government also need to enforce the equine identification legislation, including the requirements to microchip and register horses.
There are several key areas that need to be addressed in any action taken by the Government. The first is easier removal of horses. It should be possible to remove horses immediately and dispose of them after seven days if the owner does not come forward. Secondly, we should reverse the burden of proof of ownership. Owners should have to prove ownership of horses they have sought to claim, which would reduce costs and the time currently spent by local authorities. Thirdly, we should make it easier to dispose of horses. Currently, horses can only be sent to auction or sold at market. Authorities should authorise options such as rehoming or, in worst-case scenarios, disposal.
I have two key questions for the Minister. We have seen in Wales that to enforce the legislation we will need multi-agency co-operation between local authorities, the police and charities. What support will the Government give to enable forward planning and the prioritisation of resources? Secondly, will the Government provide guidance to landowners and local authorities on how to handle cases of fly-grazing so that costly legal advice need not be taken to determine exactly which of the seven or eight pieces of relevant legislation apply?
Julian Sturdy (York Outer) (Con)
It is a pleasure to serve under your chairmanship this afternoon, Mr Hollobone. I congratulate my hon. Friend the Member for East Hampshire (Damian Hinds) on securing this important debate.
My hon. Friend may remember that I secured a similar debate back in July last year, on the connected issue of illegally tethered horses and the steps we need to take to clamp down on that problem. I said then that the problems that my constituents face on the edge of York with fly-grazing and illegally tethered horses are not restricted to York or the Yorkshire region. The problem is found throughout the country, predominantly —although not exclusively—in rural areas. I hope that the number of Members attending this debate has sent a clear message to the Minister about how important the issue is to constituencies around the country.
It must be remembered that fly-grazing not only blights the lives of the horses that are subjected to it, but impacts on farmers who grow crops that are destroyed and puts road users in jeopardy when animals stray on to the highway. I have had various meetings with the Royal Society for the Prevention of Cruelty to Animals, the local National Farmers Union and constituents about the issue of fly-grazing, and the message is clear: no one group can solve the problem alone. It is essential that we all work together on this growing crisis. The only way we can do that is with the support of the public, the Government agencies, the police and local authorities. If we all work together, we can stop the abuse once and for all.
At the core of the issue is a simple but profound point of principle that I believe in: no one should be above the law. Nor should people’s lives be negatively affected by those who have little regard for such laws. This is a horse crisis. That is exactly how the charities concerned regard the issue, in the excellent report “Left on the Verge”. The RSPCA, Redwings horse sanctuary, the Blue Cross, World Horse Welfare, HorseWorld and the British Horse Society have all reported an increase in the number of cases of neglect and abandonment that have been brought to their attention.
Chris Kelly
Local newspapers are also reporting huge numbers of cases of tragic horse deaths. In my constituency, the Express & Star, the Stourbridge News and the Dudley News are regularly filled with stories about horrific cases of horse death and neglect. Has my hon. Friend had a similar experience?
Julian Sturdy
I agree entirely with my hon. Friend. Those sorts of issues have been reported regularly in local media in my area. Also, there have been reports of issues on the highway, with cases of horses that were illegally tethered or were being fly-grazed on the highway escaping on to it and causing serious road accidents. We have to remember that this issue has a wider impact than just illegal fly-grazing.
My understanding is that ever since the horsemeat scandal, which devastated our confidence in the EU’s food safety process, the price of horsemeat has plummeted. Notwithstanding that collapse, irresponsible dealers have continued to buy, breed and import horses as the market has become saturated. As has already been mentioned, a horse can now be purchased for as little as £5, although it can often cost in excess of £100 a week to look after it properly. Irresponsible dealers are importing horses from France and Ireland under the tripartite agreement that allows for the free movement of horses without health checks.
As the market for horsemeat in mainland Europe is depressed, dealers are left with a surplus of horses, much of which, sadly, can been seen along the roadside and in other people’s fields, or even in people’s gardens. One particular case from my postbag, which I would like to touch on briefly, highlights the vast amount of damage that fly-grazing can do and the way it affects farmers. My constituent, Mr David Shaw, farms land in Osbaldwick that is located in close proximity to the local Traveller site. Mr Shaw’s land has been regularly overtaken by horses belonging to the Traveller community, which has caused a great deal of damage to his fences and crops, and to the land itself. Just recently, in October, Mr Shaw found approximately 14 horses in his fields. He turned them out, repaired the fences and spoke to the Traveller who owned them, requesting that he keep them off his land, but l5 minutes later the horses were back in his maize field again.
Nigel Adams (Selby and Ainsty) (Con)
To me, that sounds like intimidation of landowners, so I wonder whether my hon. Friend and neighbour has had similar experiences to me. A constituent of mine came to one of my surgeries in tears because he had found horses in a paddock that he owns, with a sign asking him to ring about them. When he did, he was told that if they did not stay on his land for a certain period, he could be in trouble. The police should surely take serious action about that sort of intimidation.
Julian Sturdy
I agree entirely with my hon. Friend and neighbour. That is a worrying development; indeed, I now want to talk about some of the intimidation that my constituent has suffered from.
The following Sunday, Mr Shaw again found the horses in his field. He spoke to the owner once more, and it turned out that the owner was banned from keeping animals, following a previous cruelty case brought against him. Mr Shaw was subjected to the most horrific verbal abuse. Despite that, he carried on. He removed the horses and mended the fences. That evening, he again found them back in his field again. This exhausting exchange continued for a further four days, in which Mr Shaw spent well over 12 hours of his time dealing with the issue, all the while trying to run his dairy business. He removed the horses from his field a total of nine times and mended the fences the same number of times. That is a lot of expense for a problem that the council can do little to help him with.
My hon. Friend the Member for East Hampshire touched on the problems of the existing law. He also touched on the need for an equine database, and I entirely agree with that. The action that the Welsh Assembly is taking has been well rehearsed. I start from the simple principle that fly-grazing should be a criminal offence, to ensure that action can be taken swiftly and offenders brought to justice. The culprits are too often simply banned from keeping horses for a period, but the easy way round that is for animals to be transferred into the ownership of a relative. When horses are starving on the roadside, justice dictates that a custodial sentence should be brought to bear for such a horrible abuse.
It is essential that horse traceability is improved, because rules are routinely flouted, with few if any sanctions for non-compliance. It is important for everyone locally—the police, the local authority, animal welfare charities, the NFU and Traveller representatives—to work together for a long-term solution. I intend to hold a round-table meeting in my constituency in the new year to add impetus to the issue. Sadly, fly-grazing affects and touches many people in different ways—
Roger Williams (Brecon and Radnorshire) (LD)
It is a pleasure, Mr Hollobone, to serve under your chairmanship this afternoon. I congratulate my hon. Friend the Member for East Hampshire (Damian Hinds) on securing this important debate.
I am secretary of the all-party group for the horse, which is well aware of the extent and depth of the equine crisis. It has been caused by the cost of keeping horses, which has increased at a time when many family incomes have come under pressure, with people finding themselves less able to look after their horses and ponies properly. The people involved in fly-grazing are many and varied. Some keep horses commercially and their incomes have decreased. Rather than disposing of their horses responsibly, they have tried to keep them irresponsibly. There was a terrible example in Wales of someone who kept many coloured horses and bred from them, but slaughtered every colt foal, keeping only filly foals. It was one of the worst examples of animal welfare abuse I have come across.
Some people who keep horses for personal or recreational purposes can no longer afford to keep them. However, because they cannot afford to put them down—doing so responsibly is quite an expensive affair nowadays—they let the horses out on any available ground. That ground is variable, as we have heard. Sometimes the land is owned for proper purposes by the local authority, on verges beside roads, and sometimes it is owned privately—we have heard examples of that. However, one example we have not heard about—although the hon. Member for Islwyn (Chris Evans) mentioned this—is that when people cannot afford to keep horses and ponies, it has sometimes been the practice in south Wales to turn them out on common land. That land is often extensive and remote. If a horse is turned out there, it is out of sight and out of mind, but it will suffer greatly, particularly as winter approaches.
Some commoners’ associations act responsibly, and at this time of year will gather all the horses and ponies from the common and establish who owns them and whether they are fit enough to go back on the common for the winter. Welsh mountain ponies are bred to survive difficult conditions and are fed only when conditions are extreme and there is snow on the ground. The commoners will bring in all the horses and dispose of them humanely if they cannot establish who an owner is. I congratulate commoners’ associations that act in that way—I have experience of one common, the rights of which are owned by the Duke of Beaufort, who acts responsibly.
The problem is not the fault of the horse or the pony, and dealing with the horses or ponies is not the way to ensure that such practices stop. Therefore, we must take action against the owners. I know the difficulty—many hon. Members have rightly emphasised the need for a proper identification process, so that we can establish who is responsible—but action must be taken against owners who have caused or are likely to cause harm to the horses.
My hon. Friend the Member for York Outer (Julian Sturdy) spoke about people who are already banned from keeping horses who are then found to have committed the offence again, but suffer very small penalties. As far as I am concerned, there is only one penalty for anyone who is banned from keeping animals but then found to be doing so without looking after their welfare properly and responsibly, and that is imprisonment. If that was the case, the message would go out that people cannot abuse horses or any animals in their care, and the situation would improve. However, only when magistrates courts understand the severity of such actions will such people be sent to jail.
Alun Cairns (Vale of Glamorgan) (Con)
It is a privilege to serve under your chairmanship, Mr Hollobone, in this important debate. I pay tribute to my hon. Friend the Member for East Hampshire (Damian Hinds) not only for securing it, but for introducing it, covering the issues and touching on some sensitive matters in a way that brought all the parties together.
The problem is significant in Wales, and exceptionally so in the Vale of Glamorgan. Just two weeks ago, the BBC reported on the network news that 45 horses were tragically destroyed as a result of animal welfare issues. That case involved the excellent work of charities such as Redwings and World Horse Welfare. I pay tribute to those organisations for the compassionate work they conduct in difficult circumstances. However, a constituent contacted me to say that it was not just 45 horses destroyed, but ultimately hundreds. That demonstrates the scale of the problem just two weeks ago.
Over the last year alone, hundreds of horses have regularly been moved, throughout my constituency and the neighbouring constituencies, and on scores of occasions. The police recently reported to me that they were involved in 1,500 horse-related incidents in the last 13 months alone. Animal welfare must be our driving focus in this debate, but we must bear in mind the significant financial cost. The police estimate the cost to be around £1.2 million, and they can point to £745,000 spent directly by them, the local authorities and the RSPCA. One example, from a range of services that have to spend money to protect themselves and ensure safety, is Bryntirion comprehensive school in the constituency of the hon. Member for Bridgend (Mrs Moon). That school had to spend £61,000 on a fence to protect children in the playground because horses were so regularly breaking the boundary fence and grazing on the playing fields. Not only were they breaking the fence, but they were causing damage to the school and preventing children from participating in physical education and using those facilities. Landowners also face significant costs. The average farmer in my constituency will face a cost of between £1,000 and £1,500 if he is involved in fly-grazing in any way. Some 56% of farmers responded to a survey saying that their land had been involved in fly-grazing.
I can cite those factual data, or accurate data, because of a co-ordinated effort led by the police force. In particular, I pay tribute to South Wales police and Superintendent Paul James, who worked extremely closely with the local authorities in Bridgend, the Vale of Glamorgan and Gwent, where Operation Thallium led to a focused approach to ensure that every organisation, including the charities, were co-ordinated in trying to bring about an end to the problem throughout my constituency and the neighbouring constituencies.
I remember that Superintendent Paul James said to me this time last year, “Unless we resolve the problem on this occasion, I simply don’t know where we can go next year”. That was because of the resources being taken up. It was not only about the financial issues that I have highlighted, but about the time, which would not be costed into the figures that I mentioned, that he and all his colleagues had to spend trying to bring an end to the problem. There was one prosecution, but I fear that we are entering a situation in which the problem is simply being moved from my area to other areas.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
The hon. Gentleman is making a powerful speech. I have a similar issue in some parts of my constituency, which may surprise people. In Bedfont, a number of residents have approached me about similar situations. Does the hon. Gentleman share the growing concern of charities, which now say that they are running out of resources to help horses and other animals that are being neglected?
Alun Cairns
I am grateful to the hon. Lady for that intervention and support her in that. She has also highlighted that it is not only rural areas that are affected. The problem has become so great that it affects urban areas and particularly urban fringes, where horses end up close to towns whose large populations are put at risk because of the problem.
Operation Thallium, a joint effort by the police and the Welsh Local Government Association, identified three key themes. One was about the identification of horses and the need for proof, and how difficult that makes things. The second was the delay that the landowner, having identified the horses or ended up with horses fly-grazing on their private land, experiences before they can act to dispose of the horses. People end up being almost forced or encouraged, on some occasions, to contribute to the problem. Scores of horses can be found on domestic properties, and strictly speaking, according to the law, people should be looking after the horses according to welfare standards, rather than driving them out on to the road to move the problem forward.
It is a shame that I cannot expand much more on that, but I want to underline the third theme, which is how the horses are handled thereafter and their disposal. The delay that I touched on is significant, with the current legislation restricting the agencies to acting in a humane, responsible way and considering the auction obligation. However, the euthanasia issue also needs to be addressed. I pay tribute to the Welsh Government and the way in which they are approaching the legislation. It is an important start—it is not perfect, but I hope that the Department will take it on board.
Mr Philip Hollobone (in the Chair)
It is a shame that the hon. Gentleman cannot carry on, but we have now reached the end of speeches from Back-Bench Members and the start of the contributions from Front-Bench Members. The debate is due to end at 4.26 pm.
Huw Irranca-Davies (Ogmore) (Lab)
It is great to serve under your stewardship again, Mr Hollobone. I begin by thanking the hon. Member for East Hampshire (Damian Hinds) for securing this timely debate, and I want to thank all the other Members who have spoken. I will not be able to note their contributions in full, but I thank my right hon. Friend the Member for Wolverhampton South East (Mr McFadden), my hon. Friend the Member for Islwyn (Chris Evans) and the hon. Members for Somerton and Frome (Mr Heath), for York Outer (Julian Sturdy), for Brecon and Radnorshire (Roger Williams) and for Vale of Glamorgan (Alun Cairns). I shall turn to the Vale of Glamorgan in a moment. It has been a very good, wide-ranging debate with expert thought and analysis.
I also thank the organisations that have campaigned long and hard on the issue to force the growing crisis—and it is a crisis—of horse and pony fly-grazing up the political agenda. Those organisations include the RSPCA, Blue Cross, World Horse Welfare, HorseWorld, the British Horse Society and Redwings, which came together to produce a damning report called “Left on the Verge: In the grip of a horse crisis in England and Wales”. It catalogued appalling neglect and animal welfare abuses in London and Gravesend, Tyne and Wear and Blackpool, County Durham and Norfolk, and Bristol and Leicestershire —in short, in all parts of the United Kingdom.
I also thank the local authorities such as Durham, Cardiff and Bridgend and the coterminous police authorities who have taken a positive lead in developing joint-working protocols and memorandums of understanding to tackle the problem. I pay tribute to the leadership shown by the Labour Government in Wales and the National Assembly for Wales, who, as we speak, are fast-tracking new legislation as an early Christmas present. Where Wales leads in tackling fly-grazing, we hope that England will follow.
The past three years have seen a crisis develop in fly-grazing in the UK. Horses are suffering and dying in increasing numbers. Local authorities, police and highways agencies are navigating through legislation that is, frankly, out of date and not fit for purpose. Farmers, conservation bodies, other landowners and commoners are seeing their land trashed. Horse and animal welfare organisations, along with the public, are dismayed at the seeming inability of authorities to act promptly and decisively. However, their hands are tied. Minister, we must seek to resolve this issue in Parliament and in Government, and in collaboration with those affected.
It is worth saying that there are many good horse and pony owners, including many in the travelling community and others for whom responsible horse ownership and trading is an integral part of their way of life and culture. We should remember that. However, this debate is not about the good owners or even about some romanticised valleys culture, as portrayed in the quite wonderful series, “Stella”, in which the neighbour in the terraced house opposite keeps a horse in the house as part of the family—I am not sure whether the RSPCA would approve of that. It is also not about whatever the equivalent is in Tyneside or Gravesend.
The issue is about the increasing horse welfare problems associated with fly-grazing and the tethering of horses. It is about the dumping of those horses in the light of over-breeding, the drop in the value of horses and the lack of passporting and micro-chipping or easy identification of horse ownership. It is about the complexity of outdated legislation, which allows frankly unscrupulous owners to dance, at great taxpayer expense, around the authorities and the enforcement agencies. It is also about criminality.
The Equine Sector Council for Health and Welfare notes the rapid rise in reported incidents over the past three years as the cost of responsible care and disposal of horses has outstripped their commercial value; the 20% rise in calls to the RSPCA for tethered horses in 2011; the rise in welfare concerns to Redwings over fly-grazing, from 160 reports in 2009 to 500 in the first six months of 2012; and the huge rise in reported incidents to local authorities. That crisis has grown remarkably in the past three years and has shown, as it has grown, the legislation to be sorely wanting.
My constituency of Ogmore in south Wales includes the local authority of Bridgend, which, along with neighbouring authorities such as those in the Vale of Glamorgan, represented by the hon. Member for Vale of Glamorgan, has seen some of the worst excesses and abuses of horse and pony welfare in recent years. Labour-run Bridgend county borough council and the neighbouring coalition council in the Vale of Glamorgan are to be commended for their strenuous efforts alongside South Wales police and animal welfare organisations to resolve the situation, although it has been tortuous and unnecessarily complex and costly due to outdated legislation.
In January this year alone, South Wales police reported nearly 500 calls from the public about nuisance, damage and animal welfare issues because of fly-grazing. Much attention centred on one individual and his family, a well known horse trader in south Wales, who regularly denied responsibility and ownership. That lengthened the time-consuming and costly farce for taxpayers, local authorities, and police and animal welfare agencies with those responsible ducking and diving to evade their responsibilities.
In such cases, public areas such as school playing fields, which the hon. Member for Vale of Glamorgan mentioned, and common land are trashed. Private land becomes temporary corrals for apparently ownerless horses that appear there overnight through broken fences and disappear just as quickly when enforcement measures are eventually taken. There are risks to public safety and to highways—and all the time, horses and ponies suffer and die through wilful neglect. Outdated and ill-fitting legislation and enforcement powers allow criminals to pirouette through their responsibilities and evade justice, and the horses suffer, as do the public, private landowners and commoners who find themselves enmeshed in this cruel and unnecessary tragic farce.
The individual whom I mentioned, Thomas Tony Price of Wick, was found guilty in June of 57 offences of causing unnecessary suffering and failing to meet the needs of 27 horses. His two sons were also found guilty of related offences. RSPCA Inspector Christine McNeil, commenting on the 12 horses found locked in a barn with no space and no access to food and water—she believed they had been left there to die—said:
“These horses turned out to be the most poorly and diseased horses I have come across.”
She then turned her comments to the wider, UK issues. That individual is now in custody, but that is not the end of the matter. The RSPCA, which was intimately involved in the original case, now fears that the estimated 2,000 to 2,500 horses in the family’s care—I use the term “care” advisedly—that have historically been moved from location to location anyway, may have been steadily relocated across Offa’s Dyke to England, where the enforcement agencies may not be as prepared, in anticipation of the law’s being strengthened in Wales.
In short, parts of England are being seen as the softer option, and Wales’s problem may now be being exported to add to the existing problems in England. Horses that may be related to the south Wales case have already been appearing in the Surrey and Hampshire areas and elsewhere, causing the same problems and concerns.
That is just one sad postscript to the story in south Wales. As of last week, despite the best efforts of the RSPCA, the Vale council, the Redwings sanctuary and the police, just over 100 horses had been euthanised at a site in the Vale of Glamorgan. Thankfully, others have been rehomed. Our thanks go out—I know that the thanks of the hon. Member for Vale of Glamorgan do—to all those involved in trying to alleviate the suffering of the animals and to resolve this tragic saga.
Labour is urging the Government immediately to follow the leadership of the Labour Government in Wales and National Assembly Members, who will bring forward new legislation within weeks, or to update, at least, existing legislation to the same effect. Otherwise, what is good news for Wales could result in the 3,000 Welsh horses becoming England’s problem overnight, adding to the 2,500 already in England. We call on the Government urgently to consult on new or revised legislation and other measures to tackle fly-grazing in England and to bring forward proposals at the earliest opportunity.
The coalition of horse and animal welfare charities that produced the report “Left on the Verge”, which I have referred to, have also produced the blueprint for the way forward. With new legislation—the Welsh Government model—or with amendments to existing legislation such as the Animals Act 1971, the changes would remove the barriers that currently prevent timely action against fly-grazing. The changes would include: the ability to remove fly-grazed horses immediately and, if rehoming and all else fails, to dispose of the horses within seven days; making it easier to dispose of the horses by rehoming them or, when all else fails, by euthanising them, rather than sending them, in a costly process, to auction; reversing the burden of proof on ownership and so reducing the financial and time costs to local authorities of proving ownership; and improving enforcement and joint working in a wide range of ways.
I know that “unions” is normally a dirty word for this Government, but I ask the Minister to listen to the words of at least one union, the National Farmers Union, which is demanding that the Government match the legislative changes in Wales or risk more horses being abandoned in England, or to the words of the coalition of horse and animal welfare groups when they say in their report that Wales is taking action—England must, too. We will support the Minister and the Government in bringing forward the necessary legislative changes at the earliest opportunity, but if the Government are minded to resist, we will make the necessary changes when we return to government.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)
I add my congratulations to my hon. Friend the Member for East Hampshire (Damian Hinds) on securing the debate. I, like many other hon. Members, have received lots of e-mails from constituents imploring me to attend the debate. I have been able to reply to them and say, “I’ll see what I can do.” It is a delight to be here to respond on behalf of the Government.
We have heard a little today about the scale of the problem. Although there are no official figures, the charities concerned have estimated that almost 7,000 horses are at risk. The welfare charities, in their report “Left on the Verge”, which has been cited by numerous hon. Members, have also identified a growing trend in welfare cases involving equines. Incidents of fly-grazing appear to be on the rise. Clearly, that is wrong and both a burden and a source of concern for the landowners affected.
I want to pick up on a point that my hon. Friend the Member for Somerton and Frome (Mr Heath) made about the stress that the practice can cause landowners. He makes an incredibly important point. We are talking about people who care deeply about animals and livestock, and it can be very distressing for them to find abandoned on their land horses that have not been cared for—that have been neglected, maltreated or underfed. They may have been left in fields where there is ragwort, for instance, which could affect their health. Sometimes the field is not sufficiently secure to keep the horse within it. I was very struck also by the point made by my hon. Friend the Member for Vale of Glamorgan (Alun Cairns) about the school that had to spend money to put up fences to keep horses off its land as a result of this problem.
My hon. Friend the Member for Somerton and Frome also talked about the cost borne by the landowners in these cases, and it is true that that is a feature. I point out that sections 4 and 7 of the Animals Act 1971 give powers for landowners to recover that cost, but I completely accept that, as with all these things, the difficulty is in the landowners being able to bring a case to get the money back.
Let me say a little more about what laws are currently in place, or we have in the pipeline, that could be used to tackle some of the issues described today. It is important to note that quite a lot of powers are already available. First, section 7 of the Animals Act 1971, which applies in England and Wales, allows horses to be taken into the landowner’s possession, provided that certain conditions are met. After 14 days, the horses may be sold. The landowner may also claim any reasonable costs from the owner of the horses for the upkeep of the horses or any damage that they do until they are either returned to the owner or sold at market.
Secondly, as a number of hon. Members have highlighted, the Highways Act 1980 can also be used and is often used by local authorities. That Act makes it an offence for horses to stray or lie on or at the side of a highway. The police have powers to remove the horses, and reasonable costs can be recovered from the owners in doing so.
Thirdly, as we have heard today, horses that are simply abandoned or neglected are often in a poor state of welfare. I was particularly struck by the appalling anecdote told by my hon. Friend the Member for Dudley South (Chris Kelly) about horses that were literally dying on a tether in some instances and by the case cited by the hon. Member for Ogmore (Huw Irranca-Davies) involving someone who had dozens or hundreds of horses that were being neglected.
It is important to recognise, though, that in such circumstances it is possible to use section 9 of the Animal Welfare Act 2006, which makes it an offence to fail to provide for the welfare needs of an animal. The DEFRA statutory code of practice for the welfare of horses, ponies, donkeys and their hybrids provides clear advice on how to meet the requirements of the Act. Although failure to abide by the code is not in itself an offence, it can be used in a court of law as evidence of neglect, and frequently is.
Mr McFadden
I thank the Minister for giving way; I know that he has limited time. He cites all this legislation. We know that it exists, but it is not working. Does he believe that it is? If it is, why do we have this problem?
George Eustice
I will address that point in a moment. I just want to make this point about new powers in the pipeline. Clearly, the act of leaving a horse or horses on another person’s land is an example of antisocial behaviour. The Anti-social Behaviour, Crime and Policing Bill is currently before Parliament and, when enacted, will provide enforcers with new and much more flexible powers to tackle antisocial behaviour in all its forms, including the act of leaving a horse on someone else’s land. Indeed, there have already been some instances in which the existing antisocial behaviour orders—ASBOs—have been served on perpetrators of fly-grazing.
The new antisocial behaviour measures will make it even easier for enforcers to use such powers to tackle these problems. For example, if a person is identified as having left their horse on someone else’s land without permission, the local authority or police could issue a community protection notice requiring the individual to do anything reasonable to address the antisocial behaviour.
In the case of fly-grazed horses, the notice might require the individual to remove or even to sell the horses. Failure to abide by a community protection notice is a criminal offence, and anyone who does so may face a fine or other sanctions. The provisions give the authorities power to impose a forfeiture order on any item, including an animal, used to breach a community protection notice; in this case, that would be a horse.
Several hon. Members have alluded to the frustration of those who complain to the authorities about such problems but no action appears to be taken. If a complainant is dissatisfied with a local authority, either because it has not responded to their concern or because they consider that it has not dealt with the concern effectively, it may be possible to use the new community trigger. Under the community trigger, the police, local authorities and other organisations can be required to review their response if a resident or group of residents have complained about the same problem three or more times and are not satisfied with the response.
In applying all those antisocial behaviour measures, it is necessary to know who the culprits are. We should not delude ourselves into thinking that we can tackle the problem without identifying and tackling irresponsible owners. If authorities can pool their intelligence and information, it should be possible to identify the leading perpetrators of fly-grazing and take appropriate action. If the problem is acute in certain areas—looking at the charts, Wales appears to be particularly badly affected—it should be a priority for the authorities to do whatever is necessary to deal with it. The tools are there, and we need to ensure that they are enforced.
One of the problems in dealing with fly-grazing is identifying the owners. As we know, identification of the owners of the horses involved is one of the key issues in enabling the authorities and those with whom they work to tackle fly-grazing.
George Eustice
I will press on, otherwise I will not cover all the points.
Revised horse passport regulations have been in force since 2009. They require all owners to obtain a passport for each horse that they own and all newly identified horses to be fitted with a microchip. We and other member states are currently considering EU Commission proposals to improve and strengthen the horse passport regime in response to the horsemeat fraud incident earlier this year.
Several measures are under consideration, including stricter standards for passports and a requirement for all member states to operate a central equine database, to which several hon. Members have alluded. DEFRA officials are working closely with the equine sector council strategy steering committee on the matter. As we have heard today, however, horses associated with antisocial behaviour are frequently not identified, so although we welcome the strengthening of the horse passport regulations, we recognise that it is not a solution in itself.
I wanted to touch briefly on another point raised by the hon. Member for Somerton and Frome about the tripartite agreement between France, Ireland and the UK. The Government are committed to protecting our equine industry from the threat of disease from overseas. European statute requires that horses that move between EU member states must undergo a veterinary inspection 48 hours prior to movement, and that they must be accompanied by a passport and health certificate. Any movement must be pre-notified to the competent authorities.
However, the existing tripartite agreement applies a derogation from those rules for horses moving between the UK, France and Ireland, on the basis that the three countries share the same health status for equines, and it seems reasonable that that should continue. We have, therefore, managed to avoid imposing unnecessary costs and burdens on horse owners.
Following considerable work with the equine sector and the member states concerned, I can confirm that a new tripartite agreement has been signed, which limits the derogation from EU health controls for intra-EU trade to groups of horses with a demonstrably higher health status. That will come into effect in May 2014. Those new changes will apply only to movements between the UK and France, and Ireland and France. The situation regarding movements between Ireland and the UK remains unchanged, because we are satisfied that on disease control grounds—bearing in mind the aims of the relevant EU directive—there is no additional risk. The new agreement between the UK, France and Ireland will hugely benefit the sector.
My hon. Friend the Member for York Outer (Julian Sturdy) highlighted the importance of co-ordination. We have been particularly struck by the protocols introduced by councils in Wakefield and York, which give guidance to local practitioners about the steps they should take to deal with the problem of fly-grazing, citing all the laws at their disposal. I emphasise to local authorities that they can use existing and future antisocial behaviour legislation to tackle that problem.
My hon. Friend the Member for East Hampshire and others have asked whether it would be possible to provide further guidance, and we are looking at that. In the case of tackling dangerous dogs, for instance, we issued specific guidance to councils so that they understood the implications of the new measures. We are keen to learn from Wakefield and York councils about whether further work can be done in the area.
On the Welsh proposals, there are a couple of limitations. My biggest concern with what is proposed in Wales is that it introduces no new powers beyond those in the Animal Act 1971, but it shortens the time scales. There is a danger of our putting the onus on local authorities to deal with the problem, rather than on tackling irresponsible owners. We could end up imposing costs and additional burdens on local authorities—
Mr Philip Hollobone (in the Chair)
Order. I am sorry to interrupt the Minister. I thank all those who took part in that important debate and ask those not staying for the next debate to leave quickly and quietly.
Cycling (London)
(10 years, 5 months ago)
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Mr Philip Hollobone (in the Chair)
As one who was knocked off his bike in London many years ago, I am delighted that Mary Macleod is leading this debate.
Mary Macleod (Brentford and Isleworth) (Con)
It is wonderful to have this debate under your chairmanship, Mr Hollobone. This timely debate on safe cycling in London is about saving lives. Just recently, there were six deaths in just two weeks in London, which forced attention on the issue. Two collisions occurred on the same day, which was particularly poignant. Our thoughts are with those who have died on London streets, and with their families. Most recently, Brian Holt, Francis Golding, Roger William De Klerk, Venera Minakhmetova, Khalid al-Hashimi and Richard Muzira have died on the streets of London on their bikes.
As well as highlighting the whole issue of safety for cyclists in London, the recent spate of fatal accidents has raised serious concerns about roundabouts such as Bow, where Hounslow resident Brian Dorling died in 2011. I have a personal interest in the matter because I, too, sometimes cycle into work and around my constituency. Every time I do, I feel as though I am taking a risk, even though I abide by the rules of the road. Even cycling around Parliament square, which is right outside, it feels as though I am taking my life in my hands.
I want to encourage cycling, because it is good for health, well-being and the environment, but we need to find a way to make it safer for everyone on the roads. Some 70,000 cyclists took to the streets of London in August for the Prudential RideLondon festival, and the Barclays Boris bikes have expanded across London. I want to encourage the inspiration created by the Olympics and the Tour de France, which will come to Yorkshire in 2014. Individuals such as Bradley Wiggins, Sir Chris Hoy, Chris Froome, Victoria Pendleton, Laura Trott, Lizzie Armitstead, Jason Kenny and others have inspired a whole nation of cyclists, which has to be good.
The number of journeys made by bike more than doubled between 2000 and 2012 to more than 540,000 a day in London. The central London cycling census conducted by Transport for London in April this year calculated that bicycles accounted for up to 64% of vehicles on some main roads during the peak morning period, a time of day that recent incidents have shown to be particularly dangerous. More bicycles than cars travel across London, Waterloo, Blackfriars and Southwark bridges during that time, a setting that presents enhanced safety hazards to cyclists. In pure numbers, however, there were fewer cycling fatalities in the past six years than in the previous six. Reading the figures in a different way shows us that in London in 2012, 22% of all casualties on the road were cyclists, whereas in 2006 10% were, so there has been an increase in the percentage.
Across the country, 2012 saw the highest number of cycling fatalities, with 118. For me, that is far to many. In London specifically, there were 10 deaths in 2010, four of which involved HGVs, and 14 deaths in 2012, five of which involved HGVs. This year, we have had 14 deaths so far, nine of which involved HGVs. There is absolutely a case for doing something. Fourteen deaths in the capital so far this year is 14 deaths too many. We should be doing something about it.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
I thank the hon. Lady for bringing an important topic to the House today. As a fellow Hounslow MP, I am sure she will join me in congratulating the Hounslow cycling campaign on its work in promoting road safety for cyclists, making roads safer and increasing the number of women cyclists. I am sure she will come on to this point, but does she agree that there is concern over the Mayor of London’s comments that seemed to suggest that irresponsible behaviour on the part of cyclists was disproportionately contributing to the problem? We need roads to be safe and we need those driving large vehicles, as well as cyclists, to drive safety.
Mary Macleod
I thank my neighbour in London for that intervention. London councils have made an effort to create a safer environment for cycling, but I always push them, because when we have deaths, it shows that there is more to be done. The Mayor certainly stressed that there were issues with cyclists, but there are also other matters to consider. He has published “The Mayor’s Vision for Cycling in London”, so he is addressing the serious issues. Everyone on the roads has a responsibility. Whether we are motorists, cyclists or lorry drivers, it is important that we take responsibility. There are things that we can all do improve safety.
Dr Sarah Wollaston (Totnes) (Con)
Does my hon. Friend agree that in this important debate we should stress that someone is more likely to be killed walking a mile than cycling a mile, and also stress the health benefits? Our overall life expectancy is increased if we cycle and lead an active, healthy life. We should ensure that we stress the benefits of cycling for well-being, as well as the dangers, and make it safe for those who cycle.
Mary Macleod
I completely agree with my hon. Friend. We want the debate to be positive, and we want to say that cycling is brilliant for everyone to participate in and has amazing benefits. I want more people to cycle, so we must make it safer for everyone.
Stephen McPartland (Stevenage) (Con)
My hon. Friend is being generous in giving way. I am pleased that she has secured this important debate. My constituency has thousands of cyclists, who are fortunate to benefit from an integrated cycle network, so they feel safe cycling. My constituency is close to London, and over the past few months, as these unfortunate deaths have occurred, we have seen a huge increase in the number of cycles left in the cycle racks at Stevenage station, because those cyclists are now scared of cycling in London.
Mary Macleod
My hon. Friend makes a pertinent point. There is a fear of cycling in London. My hon. Friend the Member for Totnes (Dr Wollaston) pointed out that it is important to stress the positives, but we also have a responsibility as MPs to protect people and allay some of the fears.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I occasionally cycle in my constituency in Plymouth. Safety is not only an issue for cycling in London. We have a big problem in Plymouth with potholes, some of which are incredibly deep, and I suspect that the situation might be the same elsewhere.
Mary Macleod
I agree that many issues need to be addressed. There were 118 deaths across the country last year, so we must look at what we can do to make cycling safer in every area.
This year, the Mayor appointed London’s first cycling commissioner, who with the Mayor created “The Mayor’s Vision for Cycling in London”. There are many great ideas in that paper, which is intended to build on the Olympic legacy for all Londoners and make the roads safe for people who want to take up cycling, as I did after many years of not being on a bike. I take great pleasure in using my Brompton bicycle, which was made in my constituency. Brompton Bicycle Ltd in Brentford is a great local company.
We want to encourage more people to cycle safely. Earlier this year, city hall announced almost £1 billion in improvements over 10 years to make cycling safer. I push the Department for Transport to work closely with the Mayor, because he has responsibility for only a certain number of roads in London. More communication, co-ordination and partnership would be good, with all the stakeholders involved sitting together and working out a vision and strategy that will help everyone.
Several schemes are certainly helping. We have already heard about what is happening in the London borough of Hounslow, and there are also various initiatives such as Bikeabilty training for beginners, advanced cyclists and children. We must see whether more can be done. The police recently played their role in cycling safety with Operation Safeway, whereby 2,500 Metropolitan police officers were posted at junctions in London to advise on the increased road safety problems caused by the high volume of traffic.
There have been several petitions through which we can see that the public are behind us: the “Save our Cyclists” petition has 35,500 signatures; the “Get Britain Cycling” petition has 72,000 signatures; and the “Better road driving test” petition has 17,900 signatures. The public want movement. We do not need a knee-jerk reaction to the deaths, but we must have a response. That is why there is an urgent need to have measures in place before there are more deaths on the streets. I would like a co-ordinated plan for the initiatives and ideas that are coming forth on better and safer cycling, which all stakeholders can sign up to, so that we know that things are happening.
There are a lot of options to make cycling safer, such as better safety equipment on lorries—side guards, proximity sensors and side cameras. Given the number of deaths involving HGVs, the complete lack of visibility in HGV drivers’ blind spots is a grave issue that I want us to take seriously. When I cycle in London, I try not to go anywhere near a lorry if I can help it, and I stay well behind them at junctions. We could be slightly more radical and ban HGVs during rush hour, as they do in Paris. Deliveries in London during the Olympics were made at night, so it could be possible to do that again. We may need to tighten up driving tests for van and lorry drivers. We have talked about having more Trixi mirrors at road junctions—big mirrors that allow better visibility, especially for lorry drivers. In some areas of London, and elsewhere, where there are very wide pavements, there could be safe sharing of pavements to allow cyclists to travel more safely. It is important to crack down on cyclists breaking the rules of the road, and perhaps helmets should become a requirement.
Oliver Colvile
My hon. Friend raises an important issue. If someone decides to use a Boris bike—a wonderful initiative—they are not offered a cycle helmet at the same time. I am not suggesting for one moment that people should be forced to wear them, because I am a Conservative and I believe in a moderately liberal approach, but they should be offered them, particularly helmets that have lights attached, so that people can see where they are going.
Mary Macleod
My hon. Friend obviously knows my shopping habits. I recently bought a new light for my helmet, because I did not feel that I could be seen clearly enough from behind, even with a high-visibility jacket. That is important.
In this short debate, I would like to get a feeling from my hon. Friend the Minister about some of the things that must be considered as a matter of urgency. The first is a cycle safety summit, for want of a better term, to get all the London stakeholders around a table to discuss the vision, strategy and plan of action going forward. That would include, of course, the Department for Transport, the Mayor’s office, Transport for London, the Metropolitan police and each of the London boroughs, which all have roads for which they are responsible. It would also involve the cycling safety campaign groups, and maybe even the all-party group on cycling. It would be a conversation around a table about a joint approach and a plan of action to get things moving.
The second issue that we need to consider is continuing to improve the safety of road junctions, whether with Trixi mirrors or safe cycling routes. Transport for London has increased its budget for safer junctions from £19 million to £100 million, but how far will that stretch across the key London junctions that need to be sorted out? Can TfL also address some of the other junctions that might not be its responsibility?
The third issue is better safety equipment on lorries. I feel strongly about that issue, given the scale of deaths from HGVs; nine out of the 14 deaths so far this year have been linked to HGVs. Side guards are critical to prevent people from being dragged underneath, as are close proximity sensors to let drivers know whether someone is around and side cameras to help with blind spots. Maybe we will have to prevent HGVs from entering central London unless they have safety features. If they do not, maybe the Mayor could impose a levy or fine.
The fourth issue to consider is the importance of clamping down on all road users who break the law, with on-the-spot fines for dangerous driving or cycling. Those who use the roads must respect each other; I say that as both a driver and a cyclist. I think that being a cyclist has helped me be a better driver, and I encourage everyone to try it. We might consider a fixed penalty for going into the cycles-only box at junctions. I would also like those cycle boxes and the advance stop lines extended a bit. At the moment, they are about 5 metres out, which is very close to traffic queues, especially during the morning rush hour. Maybe that could be extended to 7.5 metres.
My fifth point concerns further training for children and adults. London boroughs and the police have been reasonably good at giving support on cycling safety, and there are also videos about how HGV drivers have blind spots. Adults returning to cycling after many years, in particular, may need a refresher. Another option is changing the driving test for drivers of all vehicles, including taxis, HGVs and cars, and including cyclist awareness and safety. I have mentioned considering a rush-hour HGV ban or a levy on HGVs not fitted with safety equipment.
This debate is important because it is about saving lives in our capital as well as elsewhere around the country. We want to do something as soon as possible in order to prevent more unnecessary deaths. It will help create a better, happier, safer city in which we can all live, and will hopefully save a few lives in the process.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
It is a great pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Brentford and Isleworth (Mary Macleod) for securing the debate, which comes after a series of fatal accidents involving cyclists on the capital’s roads in recent weeks. I offer my sincere condolences to the families and friends of those who have lost their lives.
Such incidents are a sobering reminder of the dangers that road users can experience on our busy urban streets, but equally, they should not discourage people from getting on their bikes. Cycling is still generally a safe activity. Indeed, the number of fatalities in London dropped from 21 in 2003 to 14 last year. Sadly, we have already reached 14 so far in 2013, including six in the past couple of weeks.
As my hon. Friend the Member for Totnes (Dr Wollaston) pointed out, we must not forget that the health benefits of cycling greatly outweigh the risks, but as the Minister with responsibility for cycling and road safety, I am determined to make cycling even safer. Since February last year, we have made an additional £159 million available to support cycling and boost safety, including £20 million to improve the design and layout of road junctions at 78 locations around the country. A further £15 million is being targeted specifically at dangerous junctions in London. More recently, we have announced £77 million to help eight cities across England realise their ambitious 10-year plans to increase cycling and make it safer.
Those investments are crucial as the number of cyclists on our roads continues to rise. After the heroics of Team GB in the Olympics and Paralympics and the success of our riders in the Tour de France, thousands of people are catching the cycling bug. Although I got the habit nearly a decade ago, I am also a Brompton rider, and I very much enjoy riding the vehicle, which was made in the constituency of my hon. Friend the Member for Brentford and Isleworth.
Dr Wollaston
The Minister is another Brompton rider in the Commons. I am grateful to him for pointing out the welcome boost to funding, but is he aware of the all-party parliamentary group on cycling report, which recommended that long-term stable funding is what makes the difference? At least £10 a head for the whole population, rather than for the seven cities, is what is needed if we are to make the great strides that we have seen on the continent and allow for infrastructure improvements, particularly separation at junctions and on our most dangerous roads.
Mr Goodwill
The Government have certainly announced long-term funding pledges for transport infrastructure that will, with reforms to the Highways Agency, enable planning year by year, unlike the stop-go investment that we have had.
I will be on my Brompton again on Friday morning as I cycle from King’s Cross station to Westminster. My officials have devised a route for me that will allow me to experience both the worst and the best of cycling roads in London.
The trend back to cycling is particularly noticeable among young people. British Cycling, the national governing body, has seen membership of under-18s soar by 42% in just a year. However, money is only part of the answer. We are also working in other ways to improve cyclist safety. For instance, we have made it simpler for councils to put in place 20 mph-limit zones, and we have encouraged local authorities to implement such limits in areas where cyclists and pedestrians are most vulnerable. Reducing traffic speeds can make roads safer and improve the local environment.
As we have heard, a high proportion of cyclist fatalities involve large vehicles, so we have given English councils the power to install Trixi mirrors at junctions. We have also made it easier for councils to install contra-flow cycling and signs saying “No entry except cycles”. Awareness of other road users is paramount, particularly in big cities, so we welcome initiatives such as TfL’s “Exchanging Places”, in which cyclists can sit in a lorry cab and watch for a police cyclist riding up on the left side of the vehicle.
Several new driver certificate of professional competence courses now take cyclists into account. As my hon. Friend the Member for Brentford and Isleworth will probably know, truck drivers must now undertake five days’ training, and then one day’s training every year, to achieve the certificate. The training may even require the driver to experience what it is like to be a cyclist on busy urban streets. As someone who has driven HGVs, I know where their blind spots are, and I hope that those who participate in the scheme will too.
We are investing £11 million a year in Bikeability training to help a new generation of cyclists to get the skills they need to be safe on our roads. That training is not just for children; it is for adults too. On top of the Government’s funding, some local authorities provide free or subsidised training.
One of the most effective ways to make our roads safer is to change people’s driving habits through hard-hitting marketing and advertising. That is why we continue to develop new campaigns through our award-winning Think! brand. In October, I launched a new Think! cyclist campaign, targeting Leeds, Manchester, Bristol, Birmingham and Cambridge, on top of the activity already launched in London. That built on a similar campaign last year that was based around the message, “Let’s Look Out For Each Other”.
In August, the Prime Minister announced a major programme of work to cycle-proof new trunk road projects so that they can be navigated confidently by the average cyclist. That includes a £20 million investment from the Highways Agency to fund significant junction upgrades and other improvements to remove barriers to cyclists. We also expect local authorities to up their game to deliver infrastructure that takes cycling into account from the design stage.
The delivery of the Mayor’s “Vision for Cycling” could also help to make cycling safer in London. There will be a new network of better cycle routes in London, including a “Crossrail for the bike”—a fast, segregated east-west super-highway. The Mayor’s plans also include prioritising major and substantial improvements at the worst junctions, and making significant improvements to existing cycle super-highways, such as the one that I use every morning when I cycle in to Parliament.
Clearly, however, if we are going to improve cycling safety in London significantly, we will have to reduce the threat of trucks where full segregation is not possible. Cyclists are no more likely to be involved in a collision with a lorry than with any other type of vehicle, but when it does happen the outcome is all too often a tragedy. In September, we set up a taskforce with Transport for London to raise awareness of safety among HGV drivers and to take targeted enforcement action against the small minority of potentially dangerous operators, drivers and vehicles.
I understand that last Monday, on the first day of the Metropolitan police’s new road safety enforcement campaign, 70 lorries were stopped and 15 penalty notices were issued, for offences such as vehicles not being fit for the road. In addition, about 100 cyclists were advised of a range of road safety measures that they can take, such as wearing hi-vis jackets or helmets, or fitting their bike with lights. A number of cyclists were also stopped for riding on the pavement. Indeed, only this morning I witnessed a cyclist dangerously running a red light in this part of London.
New standards for mirrors on the passenger side of lorries have recently been agreed at international level, and the Under-Secretary of State for Transport, my hon. Friend the Member for Wimbledon (Stephen Hammond), recently wrote to the European Transport Commissioner urging him to ensure that those standards are mandated by the necessary regulatory change within the EU. Such mirrors are crucial, as they improve drivers’ visibility and make it easier for them to see cyclists on the passenger side, particularly when turning left at junctions.
The Department for Transport continues to work with international partners through the United Nations Economic Commission for Europe, particularly to allow camera technology that further improves driver vision. From 29 October 2014, all new goods vehicles will have to comply with revised European rules—for example, with regard to side guards—that will permit fewer exemptions than the current legislation does.
In August, the Prime Minister also announced that we will be publishing a cross-Government cycling delivery plan. We will work with stakeholders, including TfL, on drafting the plan, which will set out how we will deliver on our vision of more people cycling more safely and more often. It will be supported by Departments across Whitehall and will include a commitment to work together to deliver a cycling infrastructure that will make Britain a cycling nation to rival our European neighbours.
My hon. Friend the Member for Brentford and Isleworth suggested that there should be a cycling summit. That is a very good idea, but I have to say that I am ahead of the curve, because even before the most recent tragedies on our roads I met Chris Boardman, British Cycling, the Cyclists’ Touring Club and the charity Sustrans to discuss the issue. Indeed, I have a meeting in the diary for tomorrow with TfL to discuss some cycling issues, and on 4 December the Mayor is coming to the DFT to discuss cycling and other issues. It is important that we work together with all the stakeholders involved, including the cycling campaign groups and the all-party group on cycling, of which I used to be a member.
We can also look at other areas where we can make improvements. Mention was made of advanced stop lines, but a contribution could also be made by having early start signals, to allow cyclists to get away first before the lorries set off.
There is a huge amount going on to improve cycling safety standards in London and across the country. Our challenge is to ensure that an increase in the number of people riding bikes on our roads does not translate into more casualties. We are already making progress. Cycling in London has trebled over the past decade, yet fatalities of cyclists have fallen by 17% during the past five years. However, as the past few weeks have shown, there is absolutely no room for complacency. We have to continue working with our partners and continue delivering the investment. We must focus on key areas of threat, to continue raising safety standards for cyclists.
We should also examine some other ideas, such as those that my hon. Friend mentioned today. However, I have reservations about proximity sensors down the side of vehicles. They can often be set off by roadside furniture or other obstacles, and could actually distract a driver on some occasions. But it is absolutely imperative that we see what we can do about side guards. There are a number of vehicles that are currently exempt from having to have them, such as skip wagons, refuse wagons and some tippers, and it is important that we consider what we can do to improve the design of those vehicles, and to ensure that more and more vehicles are fitted with side guards.
As a Government, we are absolutely committed to doing what we can to improve road safety. I have considered the issue of having a ban on lorries in London. However, it must be borne in mind that in Paris the area covered by the ban is only about the size of the zone 1 area in London, so there is not an extensive ban in Paris. Of course, there are also communities in London that would resent deliveries being carried out at night as a routine measure, as that may—
Mr Philip Hollobone (in the Chair)
Order. I am very sorry to interrupt the Minister, but we have come to the end of our time for this debate. I ask all those who are not staying for the next debate to leave Westminster Hall quickly and quietly.
Company Boards
(10 years, 5 months ago)
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Jim Sheridan (Paisley and Renfrewshire North) (Lab)
Thank you, Mr Hollobone, for calling me to speak. It is a genuine pleasure to serve under your chairmanship.
In recent months, we have lived through difficult times in relations between employees and management. Grangemouth was a black mark on industrial relations in this country, and showed the work force there being exploited and totally taken advantage of by aggressive management. In the past year, my Labour colleagues and I have also been fighting for the rights of thousands of workers who have been blacklisted and blocked from working by immoral construction companies. The Government’s moves to bring in a Bill that will make being a member of a trade union all the more difficult will do nothing to improve relations. As chair of the Unite the union’s parliamentary group, and with plenty of trade union experience before coming into this place, I can truly say that I am saddened by the low that we have come to and the distrust and anger that we see on all sides.
I have come to Westminster Hall today to propose not a new idea but what I think would be a productive and collaborative way to allow constructive dialogue between managers, workers and shareholders. We need to find a way to work together for the sake of the British economy and the livelihoods of our hard-working constituents.
Our economy is too shareholder-focused. The pursuit of quick profit leads to short-term thinking and a lack of investment in our companies, and our focus on shareholders means that cultural barriers may further hinder investment. In 2010, 41.2% of investors in British companies came from outside the UK, and it must be true that a shareholder in a company who has investments all over the world takes less of a direct interest in that company than an employee of that company would. It leads to examples of bankers hedging their bets and putting people’s lives and jobs on the line. It also leads to a lack of training for staff and a lack investment in infrastructure, meaning that companies will last for the next few years but not for the next 40 years.
Our company structures are not good for the economy. They lead to a lack of stability and to unequal distribution of gains from growth. We know that there is a public outcry at this system in the economy, and not just from the left. It seems to me that giving workers more of a say on our boards could be a key way of improving our broken economy. People want the next boom to benefit everybody, and a responsible Government will ensure that that happens. The Leader of the Opposition has rightly pointed towards “responsible capitalism”, and I hope that my proposal will form part of that under the next Labour Government, hopefully in 2015.
Of course, having worker representatives in a position on the board is good for employees, including those who feel downtrodden or that they have no job security, but who could contribute to the running of a company much more productively than people who do not know the shop floor. In a survey of workers’ representatives in other EU countries, one Swedish representative said:
“We think of the employees who other board members sometimes forget.”
The issue is a moral one about what we want a 21st-century UK business to look like. Do we want to return to Dickensian scenes in which profit overrides everything and workers have no rights, no pride and no say in the job in which they spend so much of their time? Or do we want management to remember that those working for them need to be considered when they make changes to the company?
Whether employees are simply forgotten or neglected when decision are taken is irrelevant. What we need is someone championing their needs, in the same way that those of shareholders and of management are put forward. It is important to remember that many employees, unlike shareholders, cannot just walk away. They have trained for that job and so cannot diversify themselves as easily as shareholders can. They are key stakeholders tied to the company, and their issues need to be heard.
Having workers’ representatives on boards is good for business. The use of labour representation has been found to increase the value of firms. Employees have a detailed knowledge of the shop floor and of operations, so they become an important source of information for those making long-term decisions. In other countries, the proposal has been found to make a company more efficient. In a study of representatives, they remarked that their key knowledge of everyday business and employee matters made them specialists on the board, in the same way that other board members were specialists in, for example, accountancy or strategy.
The proposal would be good for business also because it would improve relations between the work force and management. It is telling that even Mr Ratcliffe of Ineos compared Germany with the UK and commended the good working relationship between unions and companies in Germany; this is the same Mr Ratcliffe who partly caused the problems at Grangemouth. I think a key part of that is the fact that workers in Germany sit on boards and can negotiate on issues before they get too far down the line.
Mr Andrew Smith (Oxford East) (Lab)
I congratulate my hon. Friend on putting this important issue on the agenda; he is making a powerful case. Does he agree that, although worker representation on boards cannot and will not be a substitute for collective bargaining, it ensures that such bargaining takes place in an atmosphere that is more like a partnership, which is constructive? I have seen the benefit of that in my constituency at Cowley, where I can contrast the industrial relations in BMW with how they were in Rover and British Leyland previously.
Jim Sheridan
My right hon. Friend makes an excellent point. I can only use my own experience before I came to the House, when I worked for Thales, which was a progressive company. It downsized during the defence cuts, cutting thousands of jobs, but it did so by talking to the trade unions and workers’ representatives. In Scotland and Portsmouth, BAE Systems is talking to its employee representatives in a progressive way and treating people like grown-ups. We can contrast that with what happened at Grangemouth.
In times of poor performance, employees are likely to be more aware of the troubles of their company and may offer concessions. Equally, they will expect returns when the company is doing well. Importantly, having a representative on the board offers an opportunity for early consultation. A recent survey found that, in such cases, both sides tended to be more realistic about the issues at hand.
Financially, the proposal works well, with fewer days lost to strike action. Germany lost 3.7 days to strikes for every 1,000 employees in 2008, whereas the UK lost 28 days in the same year. That is not a one-off: in 2007, Germany lost 8.1 days, while the UK lost 38 days. No worker likes to go on strike; it is always the very last option and a huge deal for all involved. The contrast shows how much more effectively Germans manage differences between employees and management. They come to more compromised agreements that suit everyone early on, and negotiations with the unions much less frequently result in strike action. I cannot see how companies, or indeed the Government, could disagree with a way to reduce days lost to strike action in the UK.
Directors like the system, with more than 60% of directors and 70% of chairpersons surveyed in Sweden finding the experience “very positive” or “rather positive”. Martin Gilbert, the outgoing chairman of FirstGroup, one of the few companies that use the system in the UK, said:
“The presence of employee directors on the FirstGroup board is invaluable. The few drawbacks are greatly outweighed by the benefits and having this two-way channel of communication has positively impacted on the running of FirstGroup.”
The proposal is popular, with 76% of UK employees in favour, according to a Survation poll. People are beginning to recognise that we get better results if a company board is representative of its work force. I think we are all in agreement that we need more women on boards, and we all see that it would be good for employees and the work force. The difference between the situations of women and employees in general, however, is that employees will never be at board level unless we change the rules.
I propose that we follow our European colleagues and make it mandatory to have employee representatives on boards. The Minister might say that we should not model ourselves on such countries, because the UK is different. However, the responsibilities of German supervisory boards are similar to those of British and American boards. We can therefore look at the German success story and follow suit. We even have a UK FTSE 100 company, FirstGroup, to model the idea on.
The proposal is not in direct contrast to what the Government have proposed. They are keen to encourage John Lewis-style employee-owned companies through tax breaks. There is appetite on both sides of the House to give employees more of a stake in their company—their livelihood. That is especially true with regard to executive pay, with the Secretary of State for Business, Innovation and Skills proposing to make boards and remuneration committees more diverse, following a cross-party Treasury Committee report in 2009 calling for more employee representation on those committees. Extending that to boards as a whole, which would make decisions more directly applicable to employees, does not seem to be much of a stretch.
I am sure Members have heard arguments on the issue from friends in the corporate world. There is a lot of resistance to the idea from UK directors. They say that it might move the objective of a board away from maximising shareholder value towards maximising the payroll. I question whether that is really a bad thing. In these years following a financial crisis, we should be looking to make companies less short-term focused and more rounded. We want UK companies that stand the test of time and that are good for communities. A board looking to do that would be focused not only on dividends. Also, we are talking here about some employee representatives, not 50:50 representation of directors and employees. The proposal would just give employees a voice and give the board a fresh perspective.
Members might also talk about the additional burden that the proposal would bring. They might say that it would make boards bigger and therefore less efficient, with members preparing less before meetings. There is indeed evidence that smaller boards are more effective, but evidence from Swedish employee representatives shows that corporate leaders and representatives are capable of co-operating in a way that is of benefit to all. Any inefficiency would be outweighed by the benefits of greater understanding of the company’s operations and more co-ordinated decision making.
Members might have been pressed about the risk of confidential information being leaked. However, we are first looking to improve relations between employees and the board, so I am confident that employees would respect the additional responsibility. Evidence from other countries shows that they are rarely tempted to whistleblow; if they are tempted to do so, does it not suggest that the company is up to no good?
British businesses are wary of employee representation, but that is because we do not have a culture of it, and because it would be likely to reduce ridiculously high executive salaries. For example, the boss of Volkswagen in Germany, Martin Winterkorn, saw his bonus for 2012 cut by 20%. Most directors are comfortable with high pay, because they are detached from reality. What they need is people on their board who can bring them back down to earth. There has rightly been scandal after scandal about bonuses and million-pound salaries. The Labour party supports having employees on remuneration committees, but I think it would be much more effective if we put them on boards, right at the top.
I understand the difficulties of forcing the proposal on to companies, but I do not understand why we cannot encourage those with whom we do business to adopt the approach. We could ensure that, in a tendering process for public services, more weight was given to companies that had adopted this collaborative approach to their board system. For companies regulated by Ofgem, Ofcom or Ofwat, we could ensure that part of the regulation was a better deal for employees through employee representatives. I am convinced that there would be wide public support for a measure that ensured that profits were spent on the right things, rather than on shareholder dividends or executive salaries and bonuses.
We can change the culture of the corporate world little by little, and employee representatives could be a first step. It would be a good deal for business, a good deal for consumers and, most of all, a fair deal for employees.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I start by congratulating the hon. Member for Paisley and Renfrewshire North (Jim Sheridan) on securing this debate, which is a helpful opportunity to discuss employee representation on the boards of UK companies. There has been a recent report by the Trades Union Congress on the topic.
I agree with much, although perhaps not all, of what the hon. Gentleman says. I may have to disappoint him on some issues, but I agree with much of his sentiment and many of his points, particularly on the positive role that the trade unions can play in industrial relations. It is sometimes far too easy to demonise trade unions without remembering that we have historically low levels of industrial action. The hon. Gentleman is right that we always want to do what we can to reduce industrial action even further, but the vast majority of trade unions work constructively and positively with employers in the workplace. Thankfully, examples such as Grangemouth, where industrial relations are in a much less positive sphere, are the exception rather than the rule.
I also agree with what the hon. Gentleman said about the downsides of pursuing short-term profit above all else, which the Government also recognise. My right hon. Friend the Business Secretary commissioned the Kay review to consider the matter, because we agree that long-termism is in the interests of the UK economy and, indeed, individual companies, but sometimes the models that we have in place reward and incentivise the pursuit of short-term goals, rather than long-term goals.
I take seriously the concerns of the hon. Member for Paisley and Renfrewshire North on the abhorrent practice of blacklisting, evidence of which the Government are very open to receiving. Of course, the Select Committee on Scottish Affairs recently held an inquiry into that practice.
The benefits of employee engagement within the workplace are significant and well proven, and we definitely want to encourage such engagement. I would make the case that the only way to do that is through worker representation on company boards. I think it would be desirable if more workers were represented on boards, and there is nothing in law stopping companies from having such representation.
The hon. Gentleman referred to the FTSE 100 company First Group, which of course has such representation on its board. He read out the company’s powerful testimonial on the consequent benefits to its operations, and many companies may want to consider such representation by looking at the experience of First Group. Ultimately, it is better if the decision is taken by companies, rather than being mandated across all firms, not least because choosing to do so probably means there is much more chance that a company will actually engage with the real issues and view the engagement positively than if it was forced to do so through Government intervention.
Mr Andrew Smith
Is there not an argument that the companies that are most reluctant might be the ones that need worker representation and could benefit from it the most?
Jo Swinson
That argument is always made on a range of issues, but we are trying to change the culture. The hon. Member for Paisley and Renfrewshire North rightly referred to that towards the end of his remarks, and it could be done in a variety of ways. I argue that sometimes mandation and regulation are not necessarily as effective as other methods of encouraging businesses to recognise the benefits of particular forms of behaviour. Whether on employee engagement or diversity, we need to consider what is the right tool to get the result that we want.
Further, there are a number of reasons why mandating that companies must have worker representatives on their boards would not be desirable. Part of that is because of the way in which our board system is structured. Our board system is different from other European countries that have been mentioned. We have a unitary board system, which means that anyone sitting on a board or a board committee is a director with the same responsibilities and duties as other directors, and is equally accountable to shareholders for decisions.
There is no legal distinction between different types of director, whether or not they are representing employees. All directors have a legal duty to have regard to the interests of employees in promoting the success of the company, and we need to be slightly wary of the danger that, if we force an employee representative on to boards, it could have the perverse, unintended consequence that the other directors on a board might take less seriously their existing duty to have regard to the interests of employees. We want all directors on boards to be thinking about that, rather than having it siloed into one individual position.
Jim Sheridan
Does the Minister agree with the comments of the now infamous Mr Ratcliffe that the events at Grangemouth would never have happened in Germany simply because there would be workers on the board who could have flagged up the problems earlier?
Jo Swinson
I am not sure whether I will take up the tempting offer to agree with Mr Ratcliffe, but better discussion and dialogue between workers and management is always the best way to avoid disputes. The vast majority of cases, thankfully, do not get to the stage that Grangemouth did—there were horrendous consequences, the worst of which were thankfully averted. None the less, it was difficult even to get to where we did, which is a far from ideal situation.
We must encourage such dialogue. Obviously, one way to do that could be through worker representation on company boards, but I disagree that that is the only way in which that dialogue could happen. Indeed, I suggest that employers can do a great amount, even without such representation, to ensure that they properly engage with their work force, address issues as they arise and have mechanisms in place to pre-empt difficult challenges.
The hon. Gentleman mentioned his experience at Thales, which is not far from my constituency and is still an appreciated employer. Many of my constituents work for Thales in Glasgow, but I do not know whether there is worker representation on the company’s board. Even if there is not, such representation is not necessarily what drives positive engagement. As hon. Members would agree, there are many companies out there that do not have worker representation on the board but that, none the less, manage to have very positive workplace relations, which is to be commended.
On directors, it is perfectly possible in UK law for a director to be responsible for ensuring that the views of employees are heard by the board, but having a director with a specific, legally defined responsibility for furthering employees’ interests may be unhelpful because it could risk directors pursuing competing interests, rather than coming together as a board to set common objectives for the company.
It would not be fair to portray the UK as having poor employee participation, and I have mentioned that many companies are good examples of such participation. Indeed, studies and research back that up. The latest report on employee involvement by the European Foundation for the Improvement of Living and Working Conditions shows that employee participation is high in the UK—across the EU, only the Scandinavian countries score higher. That backs up my point that formal legislative mechanisms are not the only means of achieving effective employee engagement.
Indeed, the Department for Business, Innovation and Skills recently supported a business-led initiative called “Engage for Success,” which outlines the benefits of employee engagement and provides practical best practice that businesses, large and small, may employ to improve the engagement levels of their work forces. Only one in three employees feels properly engaged in the workplace, so there are huge productivity gains to be realised. If the figure could be increased even to two in three, the UK economy would experience a significant boost. I encourage hon. Members to look at the “Engage for Success” website.
Engagement with employees is to be encouraged and promoted, but I would not go as far as prescribing that all companies should have worker participation on their board, which is perhaps not workable and not the best way to achieve the goals that we share.
Other EU member states have different board structures and systems of corporate governance, so we need a solution that works for the UK and our particular system of corporate governance and industrial relations, rather than a one-size-fits-all policy. The approach in Sweden and Norway, for example, is based on far greater levels of detailed negotiation and collective bargaining between employers and employees at all levels of company decision making. It is therefore simplistic to assume that we could just apply one element of such a system to the UK system.
The hon. Member for Paisley and Renfrewshire North is right to raise the issue of pay, because many hon. Members have been concerned about increased levels of executive pay in recent years. It has been excessive in many cases and the ratio between the earnings of those at the top versus those on the shop floor is also concerning. Directors’ pay in particular has ratcheted upwards, but, importantly, it has not been linked to performance. In a sense, there is nothing wrong with somebody being rewarded for a specific success, such as growing a company, providing new jobs or creating wealth for the economy, but where that reward is given when the company has not necessarily been experiencing particularly fantastic results, that needs to be questioned. Excessive pay for failure or for not bringing significant success damages the long-term interests of business.
We brought forward reforms, which came into force on 1 October, to create a more robust framework for the setting and reporting of directors’ pay. They will boost transparency, so that people can clearly and easily understand what those at the top of companies are paid. Importantly, the reforms will empower shareholders to hold companies to account through binding votes, creating a stronger, clearer link between pay and performance. We have already seen shareholders flexing their muscles in a much more welcome way on issues such as executive pay. It will take some time to see the full impact of the reforms, due to the voting and engagement patterns of investors, but there are already good examples of constructive dialogue between companies and investors.
More widely, the Government is committed to tackling short-termism through the recommendations of the Kay review. Earlier this month, the Government’s response to the Select Committee on Business, Innovation and Skills set out the progress made on this important agenda. Of particular help are our reforms, now in place, of narrative reporting and the governance of executive pay. We have also secured changes to EU law to end mandatory quarterly reporting by companies and will soon implement that reform in the UK.
The Financial Reporting Council updated the stewardship code last autumn to emphasise that investors should be focused on long-term company strategy and not just on governance arrangements, but more may need to be done. The FRC is undertaking a further review of the stewardship code with a view to strengthening its application and ensuring that it enhances engagement between investors and companies focused on long-term value creation. We have seen various initiatives from investment industry groups to develop good practice on stewardship, which we hope will continue, and on the disclosure of costs and charges in the investment chain. We have committed to publish next summer a full progress report on the delivery of the Kay review’s recommendations.
The hon. Member for Paisley and Renfrewshire North mentioned women on boards, and I agree that it is an important issue. Having more women on boards is important not only from the point of view of women or equality, but also in the same way that having more diversity of ethnicity, background and discipline is important.
One would not want a board comprised solely of accountants, lawyers, men or people who happen to be white. People bringing a diversity of views and experiences to a board can stop group think and make it a much stronger group that can really drive a company forward. Worker representation can lead to such diversity, but we should not necessarily mandate it. We want a mix of talents and experiences on boards to encourage higher performance. We are making good progress on gender diversity through the proposals put forward by Lord Davies in his excellent review.
The hon. Gentleman also mentioned the Government’s work on encouraging employee ownership, which is another way of encouraging employee participation in business. Last week, I launched the “The Nuttall review of employee ownership: one year on report”, which follows up on the recommendations of the Nuttall review. Many businesses are discovering that employee ownership can be an excellent model of governance that works incredibly well and that encourages an engaged and motivated work force.
The success stories include not only John Lewis, although it is obviously a great example, particularly given its increased sales at the moment, which can partly be put down to the rather fantastic bear and hare advert, but also Arup and the Baxi partnership—now Baxendale Ownership. A whole host of small companies up and down the country are showing the benefits of this particular model. It is perhaps not right for every business, but it is an important part of the mix, which is why we are supporting it further through tax breaks that we will announce more on shortly.
The hon. Gentleman suggested that we could promote employee representation through Government procurement or regulation, and we are open to further thinking about how to encourage that. Last month, the Government asked Professor Chris Ham of the King’s Fund to conduct a wide-ranging review of how best to encourage wider employee participation in health.
Written Statements
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International Tax Compliance Agreements (Bermuda and Montserrat)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
Agreements to improve international tax compliance were signed with Bermuda and Montserrat on 25 November 2013. These agreements set out precise details of information which will be automatically exchanged with the UK. The text of the new agreements has been deposited in the Libraries of both Houses and will be made available on HM Revenue and Customs’ website.
Education, Youth, Culture and Sport Council
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The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
The Education, Youth, Culture and Sport Council takes place in Brussels on 25 and 26 November. The UK’s Deputy Permanent Representative, Shan Morgan, will represent the UK for the culture, audiovisual and sport sections of the Council, which will be taken on 26 November.
Culture and Audiovisual
The Council will be invited to adopt a general approach on the proposal for a recast directive on the return of cultural objects unlawfully removed from the territory of a member state. The proposal aims to improve the operation and effectiveness of the directive and promote co-operation between member states. The UK will be able to support the general approach.
The Council is also expected to adopt conclusions on media freedom and pluralism in the digital environment. We are content that these conclusions accurately reflect the balance of competence in this area and the UK will support the adoption of the conclusions. However, we will table a minute statement setting out our position on EU-level action in the area of media freedom and plurality.
The Council will also hold a policy debate on connected citizens: changing behaviour of viewers in the converged media environment. The debate follows the Commission’s Green Paper on convergence and will be based on a discussion paper circulated by the Lithuanian presidency. Its aim is to discuss whether and how quickly a revision of the audiovisual media services directive is needed. In the debate, the UK will emphasise its position that we are not yet living in a converged world and that issues arising from convergence should therefore be dealt with at national level. The UK Government have examined the situation of the media and telecoms industries, drawn their conclusions and published their strategy. We consider that the framework for this industry is broadly working well, delivering world-class content and we are opposed to any regulation that could harm growth.
Sport
The Council will be invited to adopt a recommendation on promoting health-enhancing activities across sectors. This recommendation encourages the promotion of health-enhancing physical activity by acknowledging the EU’s physical activity guidelines, co-operation between the sport and health sectors, awareness-raising on the benefits of adopting a more active lifestyle, and physical activity in supporting active ageing. We consider the text to be uncontroversial and the UK will support the adoption of the recommendation.
The Council is also expected to adopt conclusions on the contribution of sport to the EU economy, and in particular to addressing youth unemployment and social inclusion. The conclusions present sport as a tool to address the social challenges that young people face across Europe. The UK is content with these conclusions and we will support their adoption.
The Council will hold a policy debate on good governance in sport, based on a discussion paper prepared by the Lithuanian presidency. In the debate, the UK will emphasise that good governance is the bedrock for the effective performance of all sports bodies, from the grassroots right up to the elite and professional levels, and will comment on the progress within the sport movement on improving and implementing good governance and the role of Governments in this respect.
Any Other Business
The French delegation will present a paper calling for the Commission to draw up a cultural strategy for the digital era. The UK does not consider it appropriate to initiate a debate on this item, but if necessary we will make a statement that any cultural strategy must avoid imposing limitations on areas such as the internal market, state aid and trade agreements.
The presidency will provide information on the world conference on anti-doping which took place in Johannesburg on 12-15 November.
The French delegation will provide information on proposals to mark the 100th anniversary of the football matches in the trenches during the Christmas truce of 1914.
Finally, the Greek delegation will inform the Council of the work programme and priorities for their forthcoming presidency of the Council.
Foreign Affairs and General Affairs Councils
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The Minister for Europe (Mr David Lidington)
I attended the Foreign Affairs Council (FAC) on 18 November and the General Affairs Council (GAC) on 19 November. My hon. Friend the Minister responsible for international security strategy attended the European Defence Agency steering board on 18-19 November and the Defence Foreign Affairs Council, which will be reported on in due course. The FAC and Defence FAC were chaired by the High Representative of the European Union for Foreign Affairs and Security Policy, Baroness Ashton of Upholland, and the GAC was chaired by the Lithuanian presidency. The meetings were held in Brussels.
Commissioners Barnier (international market and services), Füle (enlargement and European neighbourhood policy), Commissioner Georgieva (humanitarian aid), Piebalgs (development), and Tajani (industry and entrepreneurship) were in attendance for some of the discussions at the FAC and Defence FAC.
Commissioner Šefcovic (inter-institutional relations and administration) was in attendance for some of the discussions at the GAC.
Foreign Affairs Council
A provisional report of the meeting and conclusions adopted can be found at:
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/139633.pdf.
Introduction—Serbia-Kosovo
Baroness Ashton updated Ministers on the EU-facilitated Serbia/Kosovo dialogue and the 3 November elections in Kosovo. She welcomed the rerun of the Mitrovica local elections, and praised the EU rule of law mission (EULEX) for its close working with local authorities.
Introduction—Burma
Baroness Ashton briefed the Council following the EU-Myanmar Task Force which she led on 14-15 November. She had been accompanied by three fellow Commissioners, over 100 business leaders and a European Parliament delegation. She said the taskforce had successfully brought together political, economic and development agendas, as well as holding discussions with both President Thein Sein and Aung Sang Suu Kyi. I called on member states to sustain the EU’s push for constitutional reform to secure genuine democratic elections in 2015 and requested further discussion at the December FAC.
Introduction—Philippines
Baroness Ashton expressed sadness at the devastation brought by typhoon Haiyan. Some €20 million had been mobilised by the EU, with a further €100 million from member states.
Eastern Partnership
Discussion focused on the preparations for the Vilnius summit to be held on 28-29 November in Vilnius. Ministers exchanged views on Ukraine’s progress in implementing the conditions for the possible signature of the EU-Ukraine association agreement. I stated that it was important to send the message to Ukraine that we hoped to sign the association agreement at Vilnius but that, even at this late stage, we still needed to see further reform from Ukraine. The summit would also see the initialling of the association agreements with the Republic of Moldova and with Georgia.
China
Baroness Ashton briefed Ministers on the preparations for the 16th EU-China summit on 21 November. She also briefed on her recent visit to Japan ahead of the EU summit on 18-19 November. Her discussions focused on security and defence policy and welcomed the strength of EU-Japan strategic relations.
Bosnia and Herzegovina
Ministers discussed the situation in Bosnia and Herzegovina (BiH). Commissioner Füle said that BiH leaders had until December to reach agreement on implementation of the Sejdic-Finci ruling, if it was to be incorporated into BiH’s electoral law by April, ahead of the October 2014 elections. The Commission was pressing ahead with reallocating 54% of BiH’s 2013 instrument for pre-accession (IPA) funding. I stressed the importance of finding a way to overcome vested interests, and the need to do more to foster a political environment that encouraged alternative voices and ensured politicians were held accountable. We needed to highlight to the Bosnian people the opportunities they are missing as a result of their leaders’ failure to move forward. We needed also to target financial support as a key positive incentive for change. I supported the proposed IPA cuts.
Southern neighbourhood
Over lunch, Ministers discussed the situation in Syria. Commissioner Georgieva argued that more money was needed to respond to the ongoing humanitarian crisis. Ministers agreed conclusions which call for Geneva II to be convened quickly and welcome the National Coalition’s decision to attend. They committed the EU to do its utmost to further increase its humanitarian contribution and supported the October UN Security Council presidential statement calling for increased humanitarian access. Ministers also agreed conclusions expressing grave concern about the impact of the Syria crisis on the region, especially on Lebanon and Jordan.
Ministers discussed migration issues, both through the Mediterranean and across land borders, focusing on the humanitarian and security aspects. I argued that work on tackling migration flows should be taken forward in the context of the Task Force for the Mediterranean, established by the October European Council, which is working to identify short and medium-term measures to reduce the risk of further tragedies.
On Libya, the UK underlined the need for continued efforts to support stability. The EU should continue to urge the Libyan Government and General National Congress to put aside their differences and develop a single, inclusive national dialogue. Increased EU efforts were needed to help the Libyans tackle arms proliferation, by supporting work led by the UN mine action service. Ministers approved conclusions on Libya, which condemned the recent killing of civilians and emphasised that the Libyan Government and GNC needed to work together for a peaceful democratic political transition. They also committed to enhanced EU border security assistance to Libya, including via the border assistance mission EUBAM Libya.
Baroness Ashton underlined her continued commitment to supporting Egypt, stating that the decision to lift the state of emergency and invite EU electoral observers seemed positive signs. However, concerns over inclusivity and security remained, and she would continue to be active and engaged on these issues.
Ministers approved conclusions on Tunisia, which encouraged all actors to engage in the national dialogue to agree a way for a new constitution to be adopted rapidly and elections to be held. They underlined EU support for Tunisia in tackling socio-economic and security challenges, reiterating the connection between level of support and Tunisian progress in implementing reforms. Condemning the recent terrorist attacks, they welcomed Tunisian engagement on regional security, and indicated EUBAM Libya’s potential role on this issue.
Other business
Ministers agreed without discussion a number of other measures:
The Council approved the conclusion of a protocol to the association agreement with the Hashemite Kingdom of Jordan on the general principles for the participation of Jordan in EU programmes.
The Council adopted the EU priorities for co-operation with the Council of Europe in 2014-2015.
The Council agreed to support the activities of the World Health Organisation in the area of biosafety and biosecurity, in the framework of the EU strategy against the proliferation of weapons of mass destruction.
The Council established the EU position for the 12th meeting of the EU-Kyrgyz Republic Co-operation Council, to be held in Brussels on 21 November 2013.
The Council decided to sign and conclude an agreement enabling the participation of the Republic of Chile in EU crisis management operations.
The Council agreed to sign and conclude an agreement establishing a framework for the participation of Georgia in EU crisis management operations.
The Council noted the report by the head of the European Defence Agency.
The Council took note of the single progress report on the development of EU military capabilities for the period from November 2012 to October 2013.
The Council endorsed a note on EU rapid response capabilities and EU battle groups.
The Council agreed a declaration extending until 31 December 2014 arrangements concerning the financing of incremental transport costs for land, sea and air deployment of battle groups at short notice to the joint area of operations.
The Council approved the exercise specifications for the MILEX 14 crisis management exercise.
Joint Meeting of the Foreign Affairs Council and Defence Foreign Affairs Council:
Common Security and Defence Policy
In a joint session, Foreign and Defence Ministers welcomed the high representative’s report on common security and defence policy (CSDP) ahead of the December European Council discussion on defence, spanning the three agenda items: increasing the effectiveness, visibility and impact of the CSDP; enhancing the development of defence capabilities; and strengthening Europe’s defence industry. Member states set out their priorities for December Council discussion. The UK highlighted the importance of CSDP playing to its strengths as part of a comprehensive approach to crisis management operating in partnership with others, principally NATO. The European Council was an opportunity to demonstrate political will to develop capabilities and to act: but the package of proposed measures on the defence industry should not impinge on national sovereignty, nor should the Commission develop or own dual use capabilities. Ministers were unable to agree draft conclusions on CSDP at the Foreign Affairs Council, but following further discussions in Brussels working groups, they were subsequently approved by the Education, Youth and Culture Council on 25 November.
A copy of the conclusions adopted can be found at:
http://consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/139719.pdf.
General Affairs Council
The 19 November GAC focused on: the Commission work plan for 2014; the 2014 European semester launch; the follow-up to European Council conclusions; and the agenda for the 2013 December European Council, to be attended by the Prime Minister on 19-20 December.
A provisional report of the meeting adopted can be found at:
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/genaff/139649.pdf.
Commission work programme for 2014
The Commission introduced its work programme for 2014, which continues the emphasis on delivering jobs and growth, and on completing banking union. In welcoming the Commission’s document, I drew attention to priorities on better regulation and underlined the importance of the Council having input ahead of these work programmes.
2014 European semester
The incoming Greek presidency gave an update on changes with this semester compared to previous years, highlighting the role the European Council would play in focusing on the main priorities in the annual growth survey (AGS) at its December meeting, and guidelines on its implementation at the March European Council.
The Commission explained that the AGS was part of a broader package, including the alert mechanism report, in-depth reviews, single market implementation report and joint employment report.
I welcomed the single market report and the references to reducing regulatory burden, and warned against any dilution to the main focus of the semester process. On social indicators, I recommended that sectoral Councils hold political discussions of the proposed scoreboards.
European Council conclusions follow-up
The presidency presented its report on how European Council conclusions were being followed up. In welcoming the report, the Commission noted the significant progress made and the remaining work to be done, including on banking union, savings taxation and youth employment. I stated that this is an important strand of work for the GAC, both in preparing future Councils and ensuring that there is genuine momentum to achieve progress in the areas set by Heads of State and Government.
Preparation of the 19-20 December European Council 2013
The GAC discussed the draft annotated agenda for the 19-20 December European Council. This European Council, to be attended by the Prime Minister, has an extensive agenda covering: common security and defence policy; economic and monetary union; economic and social policy; enlargement; the Task Force for the Mediterranean; and energy. There was general agreement on the agenda.
Under any other business, the Netherlands Foreign Minister briefed the GAC on their review of subsidiarity which aims to identify areas where action should remain at national level, as well as areas where the Europe Union could do more. I welcomed the review as an important contribution to building a more flexible, competitive and democratic EU. Most member states supported the report’s findings, placing emphasis on different themes, with some particularly mentioning better regulation.
I drew attention to the wider context, on engaging citizens directly and using new communication technologies to do so. I made clear that the European Union had to be effective, and this meant knowing where it should limit action. Making the Europe Union work better would promote public confidence in it: this was about citizens seeing results.
Drugs Policy
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The Minister for Crime Prevention (Norman Baker)
We have taken the opportunity of the G8 presidency to galvanise international partners and institutions to meet the global challenge presented by new psychoactive substances.
The G8 meetings have developed a consensus to share more information on the emergence of new substances, their impact on public health and the supply routes. The United Nations Office of Drugs and Crime has launched its global Early Warning Advisory to facilitate this exchange and the UK Government will continue to work with partners to ensure it is used effectively.
Secondly, the G8 member states agreed to work with the UN and the International Narcotics Control Board to develop mechanisms to facilitate more systematic engagement with source countries of new psychoactive substances. We identified a need to speak with one voice to source countries, creating a space for dialogue about substances of concern and pressing for domestic controls in source countries and law-enforcement co-operation.
Thirdly, the GB partners recognised the central importance of reducing the demand for new psychoactive substances. The UK shared its experience of targeted communications activity carried out over the summer and there was a consensus that G8 and UN channels should be used to continue to share expertise.
Fourthly, there was clear support for the reinvigoration of existing international controls of new psychoactive substances via engagement with the United Nations Office on Drug and Crime and the World Health Organisation (WHO). The WHO has since initiated a consultation on re-energising the drug control process, proposing initiating risk assessments on a number of priority substances. We will continue to engage with G8 and UN partners to support a robust and timely framework for international controls which are fit for the challenges of the 21st century.
Fifthly, we initiated a discussion on enforcement best practice. We identified real challenges in terms of the paucity of the intelligence picture; diversity and pace of change within the market place; and the global nature of the market place and supply chain. Nonetheless, there was appetite for future information-sharing and collaboration through the G8 mechanism.
We will continue to work with G8 partners through the Russian presidency of the G8 in 2014.
I will keep the House informed of progress.
Grand Committee
(10 years, 5 months ago)
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Arrangement of Business
(10 years, 5 months ago)
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The Deputy Chairman of Committees (Lord Geddes) (Con)
My Lords, it is now 3.30 pm and I must begin, as usual on these occasions when starting a Grand Committee, by advising noble Lords that if there is a Division in the House, the Committee will adjourn for 10 minutes.
Small Companies (Micro-Entities’ Accounts) Regulations 2013
(10 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Viscount Younger of Leckie
That the Grand Committee do report to the House that it has considered the Small Companies (Micro-Entities’ Accounts) Regulations 2013.
Relevant document: 12th Report from the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)
My Lords, the purpose of these regulations is to implement legislative flexibilities introduced by the EU’s micros directive, which are now incorporated in the new accounting directive. This directive sets an important precedent in European company law. It recognises the need to reduce burdens on our smallest companies to a more proportionate level and creates a new category of company, the micro-entity. A micro-entity company is one which, at the end of the period to which its balance sheet relates, does not exceed two of the following conditions: having a balance sheet total—that is, a gross assets total—of £315,000; having an annual turnover of £632,000; and having an average number of 10 employees during the financial year.
There are an estimated 1.56 million micro-entities in the UK. Many are engaged in business at a local or regional level. They are significant contributors to the UK economy, creating employment and developing new economic activities, but they are burdened by detailed accounting requirements, from requiring a detailed breakdown of figures in the profit and loss account to notes on provisions for liabilities and generally uninformative information on share capital. In The Plan for Growth, published in March 2011, the Government set out their ambition,
“to make the UK one of the best places in Europe to start, finance and grow a business”.
They identified that this could be achieved, in part, by lessening the regulatory burden on business.
At present, our smallest companies must comply with the same financial reporting rules as other small companies, which may be 20 times bigger. The Government do not believe that this is necessary for most micro-entities. We should remember that our current financial reporting requirements are meant to address the information needs that exist between the shareholders and the management of the company, where there is a separation between its ownership and management. For micro-entities, there is often no such separation of control. That is because many micro-entities are owner-managed. Indeed, research has indicated that approximately 45% of these companies have only one shareholder, and that often the owner is the only employee. Therefore, the statutory financial statements are not necessary for the communication of the company’s performance. The burdens associated with comprehensive financial reporting requirements may be disproportionate and yet offer no real benefit. Why should they produce pages of financial data when they are not going to make use of them and no one else is really interested?
The directive provided a number of options for member states to consider but it explicitly recognised that member states would need to assess how these options complemented their financial reporting regimes. I will put this in perspective. France and Germany have already adopted lighter-touch reporting regimes for their smallest companies and others, such as Denmark and Poland, are considering doing so. The flexibility offered to micro-entities will be known as the micros exemption.
The Government sought views on the implementation on the various parts of the exemption and, as the directive allows, the regulations will, first, enable micro-entities to prepare and publish simple, highly abridged financial statements and, secondly, relieve micro-entities of the obligation to produce the full notes to the accounts, provided that specified notes are placed at the foot of the balance sheet. These are limited to information around commitments by way of guarantees, and any advances and credits to the directors.
The consultation identified two issues, however, which prompted significant concerns. The first was the application of the true and fair principle in relation to micro-entity accounts. Several respondents noted that the micros exemption would allow directors to state that the micro-entity accounts gave a true and fair view of the company’s financial position, provided the accounts complied with the directive. Respondents questioned how this could be achieved, given the much-reduced nature of those accounts. They argued that this would conflict with the UK approach, where company accounts are considered to provide a true and fair view only if they are prepared in accordance with accounting standards that require higher levels of disclosure.
The second issue related to the ability to provide exemption from certain aspects of accruals accounting. Nearly all the respondents opposed the introduction of this provision, noting that such an approach would lead to confusion for micro-entities, add unnecessary complexity to the preparation of the company’s financial statements, and produce little, if anything, by way of savings.
Respondents argued that the result in both instances would lead to reduced confidence in the financial statements themselves, and could even present a misleading position of the financial health of the company. The Government held discussions with professional bodies to consider the issues in more detail.
First, on the issue of true and fair, we acknowledge the potential for conflicts with other areas of regulation. Accordingly, the regulations make clear that only those aspects of accounting standards which conflict with the reduced reporting requirements of micro-accounts may be set aside. They also make clear that should micro-entities voluntarily provide additional information, this information must comply fully with the relevant accounting standard in order to be true and fair. For example, if you decide to include a fixed assets note, the information you provide must comply with accounting standards.
Secondly, on the issue of partial accruals accounting, we recognise the concerns raised and agree that confidence in financial statements must not be undermined. To ensure consistency, we will not implement this option in the UK.
I should point out that there are some exclusions for which reduced levels of information would clearly be inappropriate. Therefore, certain types of financial and investment bodies-for example, credit unions or hedge funds-and any company currently excluded from the small company regime, may not take advantage of the exemption for micros. Charitable companies are also excluded. This follows discussion with the Charity Commissioners, who wished such companies to remain subject to the additional accounting rules applied to them, thereby retaining the higher level of transparency expected by those who donate to important causes through charitable companies.
Exclusions aside, the Government recognise that micro-accounts will not be suitable for all micro-entities; but we believe it is appropriate to provide companies with a choice. The decision to prepare and publish micro-entity accounts will be a business decision for a company’s directors: one based on the current and future information needs of the company. But simple businesses will now have the option of preparing truly simple accounts. I commend this regulation to the Committee.
The Earl of Erroll (CB)
My Lords, I will ask a quick question. This issue occurred in relation to something else where there were exemptions for small companies, SMEs or micro-companies. It is in the definition of companies that qualify as micro-entities. The third criterion that can be applied is the number of employees: not more than 10. It then talks about averaging the number of people in contracts of service. If you employ two people part-time—for instance, one who has young children and wants to take them to and pick them up from school, and the other who is retired, say, and happy to fill in for the rest of the day—you are employing two people, but you only have one full-time equivalent. In that kind of situation, or with people working seasonally or casually, this criterion could discriminate against small employers who are trying to get several people all doing a bit of part-time work for them, because the number of employees could then easily exceed 10. Therefore, it should probably be worded as full-time equivalents in future. I will not suggest anything here, but I want to flag up the general point to regulation-makers that it would be fairer on small entities if there was some way to bring it back to full-time equivalents.
Baroness Donaghy (Lab)
First, I welcome anything that makes life easier for small businesses. I have often felt that the definition of small and medium-sized enterprises that fits in with the European definition is somewhat misleading in our country because a medium enterprise as per the definition would be regarded as quite a large company in the UK, so to recognise micros in this way is more than welcome.
I have a question for the Minister that I suppose relates to the flexibility of the definitions of turnover, balance and staffing, referred to by the previous speaker. I hastily looked through both the impact assessment and the regulations and could not find anywhere how the updating of the turnovers and balances will take place. What length of time is considered reasonable? I believe that the issue of part-time equivalents is quite important, particularly for companies of this kind that might start off in a fairly informal way. It is actually written in to the regulations, which I presume means it is quite inflexible.
Lord Cope of Berkeley (Con)
My Lords, I just wanted to welcome this provision altogether. As my noble friend the Minister said, in some respects it is a first step that many people—myself included—have been urging for a very long time. It is particularly welcome because it flows from work done by the European Union and in Brussels, where there has long been an initiative to improve matters for small firms. “Think small” has been the watchword. It has not produced an awful lot of actual benefit, but this provision will produce a worthwhile benefit to a lot of very small companies.
I have no interests to declare in this matter. The only company of which I am a director is a charity, and, as my noble friend said, charities are excluded from these regulations. I think that is correct because, after all, one has to consider who has an interest in looking at the accounts. Obviously, those who have an interest, even in very small companies like this, include the shareholders, the employees and the others involved, as do those who might be thinking of lending them money or otherwise advancing credit to them and doing business with them. In the case of a charity, it is those who give money to the charity who have the biggest interest in ensuring that the money is spent on the charitable object that they have in mind when they give the money. Therefore, I think it is right in this statutory instrument to exclude charities, and I welcome it.
Baroness Hayter of Kentish Town (Lab)
My Lords, this side also welcomes the statutory instrument. I will make one comment and then pose a number of questions. First, my comment may be slightly tongue-in-cheek, but this is all about helping very small companies. The impact assessment identifies transitional costs of, I believe, just below £500,000 for businesses and £200,000 for the public sector, which is very good as they are very small numbers. Therefore, it is perhaps a surprise that it took BIS 24 pages to be able to get to that. I hope that it was not really expecting all those small companies to be able to read all that and submit views. I should think that it took up a fair degree of civil servants’ time to go through the document that I now see arranged in front of us.
Some of the questions that I should like to pose are quite important, if not substantial. First, why was the consultation only three weeks long? That seems to be in breach of Cabinet Office best practice, particularly given that, in the words of the noble Viscount, Lord Younger, serious concerns were raised. Indeed, the explanation shows that the responses were only broadly supportive, so three weeks feels like an unnecessarily rushed job.
Viscount Younger of Leckie
My Lords, I thank members of the Committee for their valuable and detailed comments during this debate and for their general support for this provision. I thank my noble friend Lord Cope of Berkeley for reiterating that this is a European measure that will benefit small companies. It introduces into EU law a definition of a micro-entity, as I said in my speech.
I remind noble Lords that the directive sets an important precedent in setting down a legal definition for a micro-entity and enables member states to take up flexibilities suited to their national needs, and to reduce the administrative burdens on these very small companies. This regulation is deregulatory and will enable the smallest and simplest companies to prepare simpler accounts that are proportionate to their size and that reflect their needs. It is entirely voluntary. The ability of micro-entities to produce simple accounts will lift unnecessary burdens, enabling micro-entities to focus on running and growing their businesses.
A number of questions were asked by noble Lords. I shall first address the question asked by the noble Baroness, Lady Hayter, about the consultation. She stated that she thought that it lasted only three weeks. The consultation was, in fact, a continuation of a long period of informal discussion and built on an earlier discussion paper of which she may be aware. We worked closely with the FRC throughout, and it has been extremely supportive.
The noble Earl, Lord Erroll, asked an interesting question about the definition of “employee” and made the point that employees can be defined in a number of ways, depending on whether they are defined as part-time. The quick answer is that for this purpose the count is defined as the number of employees, not how many hours they work. This wording is set out in the directive. I am not sure whether that completely clarifies the question, but that is how the count is defined.
The Earl of Erroll
That completely but disappointingly clarifies the point, because it does not recognise that if you have someone coming in for two hours a week, which HMRC might regard as full-time since it is regular employment, it will count against you as a micro, which is sad. It may be that this could be raised at a European level.
Viscount Younger of Leckie
I suspected that that answer might disappoint the noble Earl. I will be delighted to recheck with officials on that specific question and write to him to clarify.
The noble Baroness, Lady Hayter, later asked about charities and what they feel about the exclusion of charitable companies. There were no responses to the public consultation from individual charities, but we worked closely with the Charity Commission throughout, as I said in my speech, and we continue to work with it to consider how burdens can be removed for this group. We will consult again. I hope the noble Baroness will be pleased when I say that that will be done as soon as 2014.
The noble Baroness, Lady Donaghy, asked how the updating of balances will take place and about the definitions of the criteria on how turnover, for example, will be met. The regulations are subject to review by the Commission on a regular basis. I have just checked what precisely that means, and it means on a five-yearly basis. As the directive updates the thresholds, the Government will reflect them in UK legislation to allow the greatest possible number to take advantage of the exemption.
The noble Baroness, Lady Hayter, asked about the Charity Finance Group, which has asked the FRC to consider the needs of small charities. This is another charities-focused question. The FRC will work with the commissioners and BIS to address their concerns. A new SORP—statement of recommended practice—for the preparation of accounts is being prepared to update the guidance.
The noble Baroness, Lady Hayter, also raised the issue of small trade unions and why other measures increasing the accounting regulations on them are being introduced. In fact, she alluded to Part 3 of the Transparency of Lobbying etc. Bill which, as she said, I take the lead on. I do not want to be drawn into that on this particular issue but it is important that we consider each policy carefully and on its own merits. The Government are working to reduce the burdens across a range of areas and will do so wherever possible. Micro-entity regulations, on which we are focused today, are an example of that.
Finally, I draw the attention of noble Lords to the important element of choice for businesses. Micro-entities will be able to choose whether to adopt micro-entity, small company or full accounts. The Government conclude that the regulation meets the requirements of the Act and I commend this regulation to the Committee.
Baroness Donaghy
I apologise for coming in again and thank the noble Viscount for clarifying the issue about a five-year review. I will just make the point that that could be quite a long period if inflation starts to increase by any substantial amount. That could have unintended consequences for the expansion of micro-businesses if they get to one or two of the magic limits set in the instruments, in particular where they refer to,
“a company in a year in which it satisfies two or more of the following requirements”.
One could read into that that as long as they stick within the turnover and balance sheet, they could employ more than 10 people, or other variations. It might mean that companies look more to those qualifying things than to simply expanding their business. If we cannot do anything about that today, can we make the point to the European Commission that a five-year review might be totally unsatisfactory?
Viscount Younger of Leckie
The noble Baroness raises an interesting point. As I said, I rechecked that the review period is five years. I quite accept what she said about things changing during the five years. That includes companies growing. That is of course a good thing for companies, but it might mean that the definition of the company changed from being a micro-entity to a small company—perhaps it is a bit much to hope that it might become a medium-sized company. I should, and would like to, write to the noble Baroness to not only reiterate what I have said today about the review period but also give her some greater reassurance about the definitions we have included, how they relate to the five-year period, and how they will be treated. That would be very sensible. I am on a learning curve, to that extent.
Renewable Heat Incentive Scheme (Amendment) (No. 3) Regulations 2013
(10 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Baroness Verma
That the Grand Committee do report to the House that it has considered the Renewable Heat Incentive Scheme (Amendment) (No. 3) Regulations 2013.
Relevant document: 12th Report from the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, in moving the Renewable Heat Incentive Scheme (Amendment) (No. 3) Regulations 2013, I start with an apology. These regulations correct earlier amendments made in April and September to the Renewable Heat Incentive Scheme Regulations 2011, as after further scrutiny of them some minor corrections proved necessary. I am, as always, extremely grateful for the opportunity to speak to the Committee, and am always grateful to your Lordships for helping the Government deliver a robust set of regulatory controls for the scheme.
Before I expand on the purpose of the regulations and why the corrections they deliver are now warranted, I reassure noble Lords that I spoke in good faith during the earlier debates and that our policy intent was correctly reflected in the draft regulations. In ensuring that we were absolutely sure of policy interest, we ensured greater scrutiny and, in doing so, recognised that minor corrections were necessary.
The non-domestic RHI scheme has now been in operation for two years. Over 3,500 applications have been received to date, with around £68 million-worth of RHI payments expected to be paid out in the next year. Installations that have already been accredited have generated 497 gigawatt hours of renewable heat, and biomass has performed particularly well under the scheme. My department will shortly publish details of scheme improvements to drive uptake across the full range of technologies. This will include the outcomes of a review into existing tariff levels. Detailed plans have also been announced for a domestic scheme to open from next spring, which I know has been warmly welcomed by many. We are on track to deliver this commitment.
The RHI remains a vital component in the Government’s strategy to increase the amount of energy delivered from renewable sources by 2020. It is helping to achieve this by incentivising installations that produce heat from renewable sources. By doing so, it will help to reduce the UK’s greenhouse gas emissions. The introduction of the domestic scheme and improvements to the non-domestic scheme next year will also move us closer towards our goal of working to eliminate greenhouse gas emissions from our buildings by 2050.
In earlier debates we focused on two complex yet important changes to the RHI. Those changes were vital if the scheme was to be successful in its aims to provide value for money and protect our environment. In March we debated the mechanism to control spending under the scheme until March 2015. It is crucial that taxpayers’ money is spent appropriately. In July we debated the introduction of emissions limits for biomass boilers, so that the quality of our air is protected, among other measures intended to reduce the scheme’s complexities. The House agreed to both sets of changes.
I will now speak about the corrections needed to the regulations that govern these two policy areas. The first of these corrections is to ensure that the budget management policy—or cost control mechanism—for the scheme is able to operate as intended. The policy reduces existing tariff levels if the uptake of renewable heat technologies is more than expected and the scheme spend is estimated to be greater than the budget can afford. Tariffs are then reduced—or degressed—where there is strong market growth as a way to cool uptake.
The Government published the full and correct policy explaining how the mechanism should work in February of this year. The regulations debated in March were believed to deliver this policy in full. Subsequently, we detected a small part of the policy detail that was not accurately reflected in the regulations. However, I am keen to reassure the House that where the policy has not been fully reflected in the regulations, this has not resulted in any adverse impact. This is because the situation that is incorrectly accommodated in the regulations affects only a high market growth scenario occurring after an earlier degression. Such a scenario has not happened to date. There has been no impact on tariff levels and so all applicants who have successfully applied to the scheme have received the tariff as intended by the policy.
The framework for the financial mechanism is very detailed, which is why this error occurred. This level of complexity, as noble Lords are only too aware, is necessary as the regulations must set out exactly how we will keep spending on the RHI within budgetary limits. Because of this, it is vitally important that we reduce tariffs by an appropriate amount where needed, and the regulations must be specific in how we will calculate what an appropriate amount is.
The regulations specify that a reduction is applied where expenditure limits—which are often called triggers—are hit. To avoid overreducing tariffs, the level of a first reduction is set at a rate of 5%. The manner in which this reduction can be applied is correctly set out in the regulations. Indeed, we applied the regulations in this regard to the medium biomass tariff in July.
The regulations then allow reductions to double in size each quarter from 5% to 10%—and from 10% to 20% if growth rates demand it. It is this aspect of the policy where the regulations do not reflect the policy intention. I alluded to the fact that a scenario where the application of this part of the policy would be needed has not yet occurred, but because there remains a possibility that it might occur, it is important to amend the regulations now.
The policy is purposefully flexible, and a higher rate of reduction is not automatic. My department will examine the impact of an earlier reduction applied to tariffs and ask itself, “Has it had an impact? Has it started to slow down deployment?” If the answer is no, a further or higher rate of reduction can subsequently be applied.
The regulations define the tests to be applied in this assessment of when a further reduction is needed. It is the tests in Regulation 37D(2)(c) to (e) that contain the discrepancy with our policy intent, and which we are now amending. The regulations as they stand require much higher growth rates in expenditure to occur between two quarters before a further or higher rate of reduction can be applied to tariffs.
As I said, the rationale for this approach was to build greater flexibility into the system and also to control spend. If we cannot apply the correct level of reduction, we risk breaching the budget. We then risk not being able to support some installations in future, which will damage the scheme as a whole. I therefore hope that the Committee will be able to support this minor correction.
The second minor correction I will speak about relates to air quality emission limits for biomass boilers. I have already said that biomass has performed very well under the RHI, but burning biomass clearly raises questions for some: for example, how do we ensure that pollutants from biomass fuels are controlled? Regulations were debated by this House in July that introduced measures to tackle this issue. Your Lordships supported those changes, for which I am extremely grateful.
Specifically, in relation to air quality standards, those regulations require applicants to provide an emissions certificate demonstrating that specified criteria are met. The certificate provides evidence that the installation does not exceed the stated emissions limits, that testing has been carried out by a certified test house and sets standards following a specified method.
The issue with the existing regulations relates to the specified standards against which testing must be carried out and to the issuing of compliance certificates. Simply put, certificates cannot be issued for some biomass boilers, regardless of whether they meet the emissions limits set out by the policy.
Paragraph 9 in Schedule A1 to the regulations sets out standards to which tests must be carried out for measuring particulate matter and nitrogen oxides. Those standards are suitable only for some biomass boilers, particularly those that cannot be tested by standard BS EN 303-5. As worded, paragraph 9 wrongly requires those standards to be applied to the testing of all biomass boilers. That makes it impossible to issue compliance emission certificates for boilers that are unable to be tested by those alternative standards. The latest regulations correct this error so that the most suitable standards can be used for testing.
It is vital that we amend that, as the issue currently impacts on approximately 49% of all applicants to non-domestic RHI, given the high uptake from biomass technologies. We have worked with Ofgem to ensure minimal disruption to applicants in the light of that error. All applicants who may be affected are being advised at the point of application that there could be a small delay to their accreditation date, due to the air quality requirements. Ofgem has agreed to work through all applications as normal up to the point of accreditation, which will be dependent on a valid RHI emissions certificate. Those that cannot meet this requirement will not be rejected but held until the regulations are amended.
Before I conclude on that issue, I wish to draw the attention of the House to an additional regulation which will not apply if these changes are made before 1 January. These regulations offer protection to applicants who have applied under the current regulations but cannot meet the required standards through no fault of their own. Their application can be accredited by Ofgem only once the amending regulations are made. It is possible that a tariff reduction could be announced by my department before then, and our next quarterly degression announcement, due to be published by the end of this month, will confirm that. It would not be right for those applicants to receive a lower tariff due to this error, and this addition simply seeks to ensure that it does not happen.
In conclusion, the measures contained in these regulations are needed so that the correct policy can be applied in all instances. These corrections will ensure that the RHI scheme delivers renewable heat in the most cost-effective manner, as well as ensuring that emissions from biomass have minimal impact on air quality. While I am extremely apologetic for these minor errors, I am confident that the dedicated work by my department in identifying and correcting any areas of uncertainty will help us to maintain our strong relationships with stakeholders, which is a great strength for us all.
I reassure noble Lords that my department has examined the process it follows when making regulations and is undertaking changes internally to ensure an improved quality assurance regime that will help to minimise the likelihood of such errors in the future. I hope that my explanation has been clear and comprehensive, and I commend these regulations to the Committee.
Baroness Worthington (Lab)
My Lords, I am grateful to the noble Baroness for her explanation. We have debated the RHI regulations on a number of occasions and have all noted that they are very complex in nature. Therefore, I thank the Minister for her clear articulation of these two minor amendments. We are grateful for the spirit in which the regulations have been brought forward and we of course accept that these minor corrections should be agreed to. However, I will take this opportunity to ask the noble Baroness some questions in relation to the policy.
We are expecting announcements in the autumn—I think that that was what was stated—and I am interpreting that as meaning before Christmas. It is important to note that the regulations that we have debated have been very complex and technical in nature, and they have mainly focused on the Government’s almost paranoiac fascination with trying to make sure that we limit the amount of money that we pay out through the scheme. However, the figures show that, overall, we are massively underspending in relation to this policy. The noble Baroness said that £68 million was expected to be spent this year. That is against an annual budget of, I believe, around £251 million. Therefore, obviously less than a third of the budget is likely to be spent this year. Why is that? Can the noble Baroness indicate whether perhaps we have been focusing all our energies and efforts on trying to reduce incentives? Given the numbers, it seems that this policy is failing to bring forward sufficient investment.
Secondly, it is a question not just of the money that is spent but of the impact that that money has. I only have the figures for 2012, but in that year our renewable heat stood at around 2.3%. We need to get to around 12% in 2020 in order to be compliant with our overall legally binding European renewables targets. Can the noble Baroness give me any indication of where we are likely to get to at the end of 2013 after this £68 million has been spent? Are we making inroads into that target?
I have mentioned that we are expecting more announcements, and those will be very welcome. We look forward to what I hope will be good, thorough debates once we have those announcements. I am sure that that will be when Ministers are able to outline improvements and we will see an increase and uptake in this scheme.
Today’s announcements are, as has been described, technical corrections. The explanation that has been given is valid and we agree with it. Air quality, which is covered in one of these technical amendments, is of paramount importance. We are pleased that this error has been spotted and made good. As the Minister said, this applies to a number of applicants. I think 49% of applicants will be caught by it, so it is good that it is being dealt with and corrected in a timely fashion.
Baroness Verma
My Lords, I am extremely grateful to the noble Baroness for welcoming the corrections and for her broad support for what we are doing. She raised a number of issues that we successfully debated during the passage of the Energy Bill. I am very grateful for the way she helped me navigate some complex and difficult issues in the Chamber.
We have just navigated that Bill. It illustrated the Government’s long-term commitment to putting low-carbon energy supply in the system on a much more stable footing. I recognise some of the concerns the noble Baroness raised. Given the measures we have taken, we will be able to see greater competition among the range of technologies. Part of that will be to see whether we need to put in the same support as we currently provide. There is no wish prematurely to withdraw the support we currently provide to any technology if it is giving a constructive, positive return. However, it is in our interest to ensure that where technologies have matured enough not to need as much support, that support is gradually withdrawn. It means that those technologies are able to stand alone and complete in the marketplace on an even footing.
The noble Baroness asked about underspend in the policy. It has been steadily growing since April. Of course, we have a long way to go, but we are going in the right direction. The useful thing about a policy that grows steadily is that we can identify whether a review is needed and whether it is making progress in the right direction—and, if not, what more we can do to better the policy. I am not sure that it is a bad thing for it to grow at a slower pace because, as often as not, identification of things that are not going as well as they could be can give them prominence.
I am slightly more optimistic than the noble Baroness on this one. It was right that she asked the question, but this Government are trying to be robust in ensuring that whatever policies we are to be measured against stand up to the test. I am extremely grateful for the noble Baroness’s questions and for her support.
The Deputy Chairman of Committees
My Lords, it might be convenient and a help to the Minister if we pause slightly, so that the civil servants, who have mysteriously disappeared, can reappear. They are doing the rounds. If it is in order, we will give them a couple of minutes to get round the back.
European Parliamentary Elections (Northern Ireland) (Amendment) (No. 2) Regulations 2013
(10 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Randerson
That the Grand Committee do report to the House that it has considered the European Parliamentary Elections (Northern Ireland) (Amendment) (No. 2) Regulations 2013.
Relevant document: 12th Report from the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)
My Lords, in moving this Motion, I shall speak also to the next Motion standing in my name on the Order Paper: that is, on the draft Local Elections (Northern Ireland) Order 2013.
I will speak first to the local elections order and then come on to the European parliamentary election regulations. The local elections order makes important changes linked to local government reform in Northern Ireland, and I have a detailed set of remarks to cover its extent.
As noble Lords will be aware, local government in Northern Ireland is undergoing significant reorganisation, part of which involves reducing the number of local councils from 26 to 11. The Northern Ireland Executive is responsible for the reform programme, but elections to local councils are excepted, and so are the responsibility of the UK Government. The Northern Ireland Executive asked the Government to support the reform by bringing forward the date of the local election by one year and facilitating a transitional period until 2015, during which councillors elected to the new councils will serve in parallel with existing councils.
The order makes changes in four main areas. First, it delivers a transitional period; secondly, it makes temporary changes required only for the 2014 elections; thirdly, it makes consequential changes to polling districts and places for parliamentary elections; and, fourthly, it allows the local election poll to be combined with the European parliamentary poll.
I will now briefly explain the changes being made in each of those areas. The order brings forward the date of the next scheduled local election in Northern Ireland by one year to 22 May 2014. The transitional period will run from the fourth day after the election until 31 March 2015. The order provides that the new councils will come into their full powers on 1 April 2015 but will be able to exercise powers in relation to limited transitional issues in advance of that date. For example, that would include taking decisions on the formation of the new councils in relation to rates, debts and standards of service provision.
New councillors will remain in office until 2019, four years after assuming full powers. Existing councillors will remain in office until 1 April 2015 and continue to exercise powers in relation to the day-to-day management of council business, but not on transitional issues. Vacancies in the new councils will be filled by co-option if they arise during the transitional period, and any vacancies on existing councils will continue to be filled by co-option until 1 January 2015.
The order also introduces some temporary changes, required only for the first election of the new councils in 2014. The first is in relation to election expenses. The Chief Electoral Officer for Northern Ireland can normally claim an advance on his local election expenses before the election from the relevant local council to allow preparations to be made. Since the new councils will not exist before the election in 2014, this order makes provision for the statutory transition committees established by the Northern Ireland Executive to provide the advance of election expenses before the election, and for the new councils then to pay the balance of election expenses after the election.
Secondly, under usual circumstances the chief executive of each council serves as the deputy returning officer. However, the open competition being run for the chief executive positions in the new councils will not be completed sufficiently far in advance of the election for them to be appointed as deputy returning officers. The order therefore provides for the statutory transition committees to appoint deputy returning officers for the purposes of the 2014 elections, in consultation with the Electoral Commission. The Electoral Commission’s role is to help ensure that each committee appoints a person with sufficient experience to fulfil the role of deputy returning officer. For example, it may provide committees with advice on the role and functions of a deputy returning officer and the selection criteria used. It will not offer views on the merits of particular candidates.
Thirdly, as noble Lords are aware, the Northern Ireland Assembly agreed new wards for each local government district. The polling station scheme for local elections needs to reflect this new ward structure. This order therefore requires the chief electoral officer to prepare a new polling station scheme before the elections in 2014. The new scheme will be published after the Secretary of State lays an order before Parliament grouping the wards into district electoral areas.
The order also makes changes to polling districts and places for elections to the House of Commons, which are necessary in consequence of the changes made to local government boundaries. Currently, the polling districts and places for parliamentary elections are those established for local elections. When the chief electoral officer designs a polling station scheme for local elections, it will apply automatically to parliamentary elections. However, some of the new local government wards will fall between two parliamentary constituencies. As it will no longer be appropriate to maintain the link between parliamentary polling districts and local government wards, this order makes amendments to allow parliamentary polling districts to instead be designated by the Secretary of State, in consultation with the Electoral Commission.
The chief electoral officer will still designate polling places for parliamentary elections and will be required to carry out reviews of the polling places in 2014 and every five years thereafter. Such reviews will follow the same process as that followed by registration officers in Great Britain.
Lord Empey (UUP)
My Lords, the Minister has little choice but to bring these regulations before us, but I have to say that the whole process is a dog’s dinner. Noble Lords will have detected that in the regulations we are now creating three different classes of councillor. One class consists of councillors in the existing local authorities, which will run until 2015; another class consists of councillors who will be elected in 2014 and who will run in parallel with the existing ones until 2015; and a third class consists of members of both the old and the new. On top of that, we have a statutory transition committee, doing bits and pieces of work, which will also be populated by councillors from the old regime. You could not make this up.
This process has taken 14 years, and we are transferring only one meaningful power to local authorities in addition to the relatively small powers that they have at present—which is in planning—and they will have only part of the power at that. Pretty well everything else has been held back by the government departments that have ground away for the past 14 years and succeeded in ensuring that the local councils that will be elected are not much more powerful than the existing ones.
I will put to the Minister just one point about people queuing outside polling stations and their votes being counted. In the past, there have been cases where polling stations have been kept open and votes taken after the deadline had passed; I am sure that the Minister is familiar with that situation. I just wonder how it is to be policed. At what point is a line drawn between when people can queue up and when they cannot? Who will go outside and actually police this? Indeed, will it be the police? Will it be staff under the control of the chief electoral officer? Who will do this? I believe that there is potential, particularly on dark nights, for confusion. Who will decide where the line is drawn? A queue is outside, staff are inside, and more people come along to queue. How is that going to be handled? When does that process actually end?
When this process began in 2001, one of the watchwords was coterminosity, which meant trying to ensure that Westminster, the Assembly and local councils were as compatible as possible in a boundary sense. Now we have a system where they are utterly and completely incompatible, which is another startling outcome of this process. Therefore, not only are things more chopped up and divided than ever between different parliamentary Assembly constituencies and local authorities but the whole context of having local identity taken into account during the local government reform process was excluded from the Bill. In fact, the Boundary Commissioner was excluded from taking local identity into account. Considering that it was local government reform, I just leave with the Committee the thought that it seems the most bizarre process to have entered into. There was the most flagrant political gerrymander of the city of Belfast—but there will be more of that later in another context.
The scheme that the Minister has proposed is required, given that we have two elections on the same day which involve consequential changes. I notice it is proposed that the ballot boxes for both elections will be opened at an early stage when the verification is being undertaken. I assume that there are past examples of different ballot boxes being in the polling stations, with some votes being placed in the wrong ballot box, either accidentally or deliberately. However, does that mean that there will be a joint verification process on the same day or that the ballot boxes will simply have the wrong ballots taken out of them and the other ballots will not be processed, doing one verification at a time?
The first election votes to be counted will relate to local government. Although the European elections take place on the same day, as most voting in Europe takes place on a Sunday, those votes will not be counted until the following Monday. Therefore, when those boxes are opened, will be they verified at that stage or will there be a separation of ballots so that the votes end up in the correct boxes?
Lord McAvoy (Lab)
My Lords, first, I thank the Minister for a very clear and full exposition of these necessary changes. I know that the noble Lord, Lord Empey, is a complete realist and knows that those changes must go ahead to fit in with the various consequential amendments that are required.
Like the noble Lord, Lord Empey, I noticed that there will be two ballot boxes, and I am aware of what happens in those circumstances and so on. Being an experienced politician, I can see the capacity for confusion and mistakes. Therefore, will special emphasis be placed on the counting officer being required to make sure that all the political election agents concerned have a right and a duty to supervise that procedure so that there will not be instances of it going ahead in the absence of one or more political agents?
I also noted the comments of the noble Lord, Lord Empey, concerning coterminosity. I understand his point of view, because in Scotland we also hoped that we would have coterminosity in terms of organisation after the founding of the Scottish Parliament. However, we do not have the coterminosity that many of us would like to have seen, and I understand his point of view. It is a cliché, but we are where we are. We need these SIs to go ahead. I believe that there were commitments to coterminosity at the time. I remember that quite clearly because local boundaries in Northern Ireland, as everywhere else in the United Kingdom, are quite important. Nevertheless, the Opposition views these SIs as necessary. We are grateful for the clear exposition. If the Minister could comment on the two ballot box situation, I would be very grateful.
Lord Browne of Belmont (DUP)
My Lords, I welcome these SIs, which are designed to help the elections proceed smoothly. With regard to the Local Elections (Northern Ireland) Order, which replaces the existing 26 councils with 11 larger local council areas, the elections are to be held on 26 May 2014. I welcome that. It is important that local elections go ahead as, to date, there have been many co-options on to local councils in order to address the so-called problem with double-jobbing. Many councils have a high proportion of councillors who have never received a mandate from the electorate. From 2015, when I understand co-option will stop, councils will be truly democratic.
In order for political parties to have sufficient time to prepare for these elections, it is vital that they know in good time what wards are grouped into which electoral areas. Will the Minister indicate how soon an order will be laid before Parliament so that the chief electoral officer will be able to draw up plans for locating polling stations? I regret that the normal 12-week consultation period in the draft scheme has been withdrawn, but I trust that that will not lead to problems with the siting of polling stations.
I am pleased to hear that the papers for the local election and the European election will be of different colours. That is what happened last time when we had the Assembly elections and the local council elections, but there was considerable confusion because even though the papers were colour-coded, the colours were insipid, which led to problems. This time, with the papers having a title showing which election they are for, that problem will be solved.
There is a continuing decline in turnout at elections in Northern Ireland. I think that only 55% of the electorate took part in the previous election—down from 62.9%—but I trust that these regulations will encourage voters to turn out.
Baroness Blood (Lab)
My Lords, the noble Lord, Lord Empey, said what I was thinking when I was listening to the Minister. This is a dog’s dinner. Working on the ground and trying to get young people interested in voting in Northern Ireland—it has mostly been older people who have voted—the different colours of ballot papers are hard to explain. I am most anxious that we are given time to explain and that this is not just put into the media or the paper and that is it. We will have to explain on the ground to young people, in particular, why this election is taking place and why we are working to the 2015 election and all that. Many people will get confused and think that they are voting for two lots of councillors. Knowing Northern Ireland as we do, that is a very distinct possibility.
I take up the point made by the noble Lord, Lord Empey, about who will police when the stations close. That can be a very dangerous situation in Northern Ireland. Has any thought been given to that?
Baroness Randerson
I thank all noble Lords who have taken part in this debate and I will do my very best to address the major points that have been made. The noble Lord, Lord Empey, referred to the concept—
The Deputy Chairman of Committees
With apologies to the Minister, a Division has been called in the Chamber. The Grand Committee stands adjourned until 4.55 pm.
Baroness Randerson
I will resume with the meat of what I intended to say in response to noble Lords.
The noble Lord, Lord Empey, referred to there being three classes of councillor. I refer the noble Lord to the description of the roles of those councillors. There are, in strict terms, three different positions, but there is no duplication of councillor roles, because councillors elected in 2014 can exercise functions only in relation to limited transitional issues before 1 April 2015. So there will be no duplication of roles, and statutory transition committees will cease to exist 28 days after the election. I can tell the noble Lord, from my own experience as a councillor in Wales in 1995—in a transitional council prior to local government reorganisation in 1996—that the transitional year was of tremendous value. It was extremely important in establishing the new councils on their road, and in enabling the old councils to fully wind up their work.
The noble Lord, Lord Empey, also raised the issue of queuing outside polling stations, and of who will decide who is in the queue, and where the queue ends. This will very much be an issue for the Electoral Commission, which has a key role to play. In particular, it will develop guidance for electoral administrators, which is what will happen in the rest of the UK, although in most cases it will be obvious who is in the queue and who is not. However, all these provisions should not make us forget that the important thing is good electoral planning. The provisions exist because in the past there have been problems with the closure of polling stations, such as people being left standing outside.
I welcome the support of the noble Lord, Lord McAvoy, on this. I believe that both he and the noble Lord, Lord Empey, raised the issue of two ballot boxes being open and the potential for confusion. I point out that the change of having the name on the top of the ballot papers will reduce potential confusion for electors, but there is always the situation where electors put their ballot papers in the wrong box. However, it may eventually be decided that ballot papers should all be put in the same box and sorted afterwards.
On the issue of the verification and counting process, observers and candidates for each election will be able to attend the verification and count of the other election to facilitate a joint verification process, if that is how it is decided to do it. Joint verification is facilitated, not prescribed. The timing of the verification process is very much an operational matter. It is a decision for the chief electoral officer. The purpose of this statutory instrument is to make provision to allow things to work as well as possible. The noble Lord, Lord McAvoy, is correct: it will allow those able to view any proceedings for either the local or the European elections to access those of the other election, as I said just now.
The noble Lord, Lord Browne, referred to the new wards and the 12-week consultation period. The District Electoral Areas Commission is due to report before the end of the year to the Secretary of State, who will lay the order before Parliament as soon as possible after that. On the noble Lord’s comments about co-option and whether it will stop in 2015, that is not the case. This order makes no changes to the general process for filling vacancies. It only deals with vacancies arising during the transitional period.
The noble Baroness pointed to the possibility of confusion. That can always exist when you have two elections on the same day. Despite the names on top of the ballot papers, the different colours and so on, there is always the possibility of confusion. However, this is a matter for the Electoral Commission and the political parties. We encourage them to engage with electors to explain the situation and make it crystal clear. I take this opportunity to point out that we are very pleased with voter registration as a result of this canvass period. The target was to achieve 85% and they have already achieved 88.3%. In many ways, that is an all-time record. The completeness of the register suggests that more people will be in a position to exert their right to vote. That is very important for the democratic process.
I need to make a slight correction to my answer to the noble Lord, Lord McAvoy. All EU observers can attend the local verification and the count. All local observers can attend the EU verification but not the count. That is probably explained because the count for the EU election will be held some time later. Of course, we are dealing with a very large area in that case.
I hope I have answered noble Lords’ queries satisfactorily. I will of course review the record to ensure that I have answered the substantive points as well as possible. I thank all noble Lords for their support.
Lord Empey
Perhaps I may refer the noble Baroness back to the issue of queues. A great deal of the problem has to do with the geography and where a polling station is located. Some are on the street and others are in more remote areas that have a large amount of land around them, whether that is in the form of steps, car parks, schools or whatever.
I have some anxieties about leaving this sensitive issue to the chief electoral officer. There was a case in 2001, I think, in Fermanagh in South Tyrone, where paramilitaries took over the polling station. They were voting well after the polling station was closed. With the polling station locked from the inside, they continued to vote. I am not making this up.
In remote areas where perhaps it is difficult for the police to function, depending on the geography, I still have an anxiety as to who will decide. Does a polling clerk, who is taken on for the day, come outside and say, “Right, mate, you are the last one. That’s it”? Who stays there to see that that person is the last one? Only the person who has decided that he should be the last one can verify when that last person comes into the polling station. I do not understand the mechanics of how this will work.
Perhaps the simplest thing is to know that if a polling station closes at 10 pm, that is it and there is no argument; you are either in or you are not. This business of queuing could be abused—that is my anxiety. I am not sure who will ensure that that does not happen.
Baroness Randerson
The noble Lord raises a significant point. He is right to raise it because the experience of the last general election showed that there were queues in certain places and that the approach of the polling clerks differed from one place to another. That is why these regulations were brought forward. They are intended to address that issue—which has not been addressed in the past—and are backed up by the fact that the Electoral Commission will issue guidance relating to these regulations. It will be for the Electoral Commission, having issued the guidance, and for the deputy returning officers, having provided training to polling clerks, to ensure that the guidance is rolled out smoothly.
As with every election in the UK, the police will provide back-up support if there are difficult situations to handle, and the PSNI will do this in the usual way, as it has always done.
Local Elections (Northern Ireland) Order 2013
(10 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Randerson
That the Grand Committee do report to the House that it has considered the Local Elections (Northern Ireland) Order 2013.
Relevant document: 12th Report from the Joint Committee on Statutory Instruments.
Redress Schemes for Lettings Agency Work and Property Management Work (Approval and Designation of Schemes) (England) Order 2013
(10 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Baroness Stowell of Beeston
That the Grand Committee do report to the House that it has considered the Redress Schemes for Lettings Agency Work and Property Management Work (Approval and Designation of Schemes) (England) Order 2013.
Relevant document: 12th Report from the Joint Committee on Statutory Instruments.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)
My Lords, I declare that I am an owner-occupier of a leasehold property. Before I get into the substance of introducing these regulations, I once again pay tribute to the noble Baronesses who have worked so hard on this matter and who are joining the Committee this afternoon.
The Enterprise and Regulatory Reform Act 2013 gave the Secretary of State the power to require all residential letting and property management agents in England to be members of a government-approved or government-administered redress scheme. This means that tenants and landlords dealing with agents in the private rented sector, and leaseholders and freeholders dealing with agents in the residential leasehold sector, will be able to complain to an independent person about the service they have received if they are not satisfied.
More and more people are choosing to live in the private rented sector. The number is up from 2.4 million households in 2005 to 3.8 million in 2011 and is still growing. We estimate that there are approximately 2.5 million leasehold properties in England. It is vital that people living or owning property in these sectors have the ability to complain if they receive poor service from their agent. This is supported by good professional agents. The requirement for all letting and managing agents in England to belong to an approved redress scheme will weed out the cowboys who give agents a bad name. Just as importantly, the scheme will drive up standards while imposing the least regulatory burden. This order is the first step towards implementing this requirement.
The order, which was laid before the House on 25 October 2013, makes provision for: applications for approval of schemes; the conditions that a scheme must meet before they may be approved or designated as a government-administered redress scheme; and the process for withdrawing approval or designation where a scheme no longer complies with those conditions. A government-administered scheme must meet the same conditions as those for approved schemes, with the exception of independence, as in a government scheme it is a given that the scheme is independent from those who could be investigated by it. These redress schemes will complement and not replace the existing protection awarded to tenants and leaseholders; for example, the consumer protection legislation and the duties of local authorities.
When this order comes into force, the Secretary of State will invite schemes to come forward for approval. When the Secretary of State is satisfied that all agents can join a scheme of the required quality, a second order will be made that will require agents to belong to such a scheme. Article 4 sets out the conditions that schemes must meet to be approved. The provisions of the scheme must include, for example, what types of complaints may be made, what the ombudsman’s duties and powers are in relation to investigating complaints and what redress a member of the scheme may be required to make to a complainant. Types of redress must include apologies, explanations, compensation and making good. Article 4 also requires schemes to have procedures in place to ensure that members of the scheme deliver the redress that has been awarded to claimants. This may include expulsion from the scheme if a member agent does not comply.
We know that consumers in the private rented sector are especially concerned about the fees charged by agents, particularly when they are mentioned only after tenants have signed a contract or invested emotionally in a specific property. Where this occurs, the schemes may investigate a complaint about this and may require the agent to pay compensation.
When the duty to belong to a scheme is introduced, agents who do not belong to a scheme could be prevented from operating. To help enforcement of the duty, Article 4 also requires schemes to have arrangements in place to provide information to other redress schemes and to the regulatory bodies. This will enable agents who do not belong to a redress scheme to be identified and, in the longer term, will help drive up standards.
We recognise the importance of the redress schemes being seen to be independent and of their operation being transparent. Article 4 requires scheme administrators to publish an annual report on the operation of the scheme. Article 7 requires administrators of approved schemes to provide the Secretary of State with information about the operation of the scheme, enabling performance to be monitored. In exceptional circumstances, where a redress scheme no longer meets the conditions of approval, Article 8 of the order enables the Secretary of State to withdraw that approval. This will help ensure that the level of service and standards expected of the redress schemes are maintained.
It is also important that there is competition between the schemes to ensure that costs are competitive and that there is sufficient capacity for all letting and managing agents in the private rented and residential leasehold sector to join. However, we also recognise that having a large number of schemes may cause confusion and that consumers will need to have clear information on which schemes are authorised and which ones they should go to. Article 6 enables the Secretary of State, when making a decision about whether to approve a scheme or designate a scheme as a government-administered scheme, to take into account the number of other schemes that are likely to be approved or designated as government-administered schemes.
I commend this order to the House. I beg to move.
Baroness Gardner of Parkes (Con)
My Lords, I find this an interesting order. I read the Explanatory Memorandum, but nothing really explains anything very clearly. I ask the Minister to confirm that this is just a sort of preliminary paper and that we will have to await the next step before we know what on earth it is about, because so much here is unclear. My personal interest is declared in the register of interests. I have leasehold property, which I let.
Nowhere does the order bring out the importance of transparency and how much we want to see that. Paragraph 7.14 of the Explanatory Memorandum states that the order,
“requires individuals responsible for running approved schemes … to provide such information on the operation of the scheme as the Secretary of State may reasonably require”.
However, I am not concerned about what the Secretary of State wants to know; I am more concerned about all the millions of people in leasehold properties who want to know what this is all about. Unless we have complete transparency, a lot of redress will be demanded by people, as they will all find it unsatisfactory that they never get straight answers to anything. I am speaking wildly and widely: this generalisation may catch people who are 100% reliable as managing agents, but there are far too many who are not. That is why we want this scheme to work and to work well.
Paragraph 7.12 says that there will be,
“publication of an annual report”.
I am not clear about who will make that annual report, and I should like to know what that is about. Is it is a report by the ombudsman or by each person who deals with the schemes? It is clear that there could be more than one scheme. Multiple schemes could be approved by the Government. It is not clear what exactly you have to do in order to be approved because, again, everything is shrouded in those wonderful words that now enable the Secretary of State to do pretty well anything. Therefore, until we see the next stage, we will not know what it is really talking about.
If there are, say, four approved schemes, will we have four annual reports, or will the Government or the ombudsman produce one report? I am mystified by the reporting process. Reporting is interesting and satisfactory up to a certain point, but what people really want is action. They want to know where they stand, and it is only fair and right that they should. There are currently a lot of cowboy practices, whereby some invisible person collects insurance from all the leaseholders, who find that they are paying a grossly inflated amount because someone is raking off money in the background. There are many points such as that which we need to look into.
It might be that we will need to have some clear definition of which parts of a building will be the responsibility of a communal system and in which parts the owners of individual flats will be responsible for work themselves. Regarding knowing what the responsibilities are, it is no answer to say “Well, it will all be in the terms of the lease”, because a lot of those leases are pretty woolly. No one is quite sure what happens with them.
That takes me to the point that any of your Lordships who read your Sunday paper must have seen: the story of this man named Jackson, who has just lost his flat. He went to the leasehold valuation tribunal but was foolish because he should have paid the £300 which was the original dispute, as far as I can see, and then gone to the tribunal. He ended up going to the tribunal when the maximum that he would have to pay was £500. Your Lordships will all have heard before, and I know that it is on record in Hansard, that I participated in Committee when the Bill was passed in 1996 that set a maximum of £500 that would be payable by any applicant. Now the whole tribunal system has changed, and however bad and expensive it has been, that is nothing to what it will be in future.
A lot of articles now are asking whether anyone will be able to afford to go to the leasehold valuation tribunal any more, even to go into the first stage. It was always acknowledged that if it went on appeal up to the second tier of the Lands Tribunal, that was where people who had big money would be at an advantage. No one ever foresaw the point where even if you were only liable for that £500 maximum, the other party could bring against you QCs and enormously expensive people who would charge the earth and then you, as a leaseholder, would find that it was billed back to you. The bill was not being taken on by the head lessee or the freeholder but came back on the person who had the cause for complaint. Will the redress schemes set out here cover that sort of issue, or will the situation be simply as it was for people such as that man?
This is exactly what happened to him. It started off as a minor dispute and he thought that he would be paying just £500. Eventually, after it had moved on, his legal bill was £76,000. I presume that everyone else in the block of flats had a share of that bill, too. He waited for the work to happen. A new company took over; again, that is rather typical of what happens. Indeed, I have had what I describe as wonderful whitewash letters saying, “We have been bad in the past but we are angels now. Everything is going to be all right and no one will have any cause for worry at all”.
Interestingly, at the meeting we had at the department, the person who is now running it was there. She claims to have had a whitewash and was very much in favour of the redress scheme. Perhaps the companies are reformed but we must wait and see. The problem is where it may end up. This man received bills to meet all these charges for three years, but no work was done in that time. That is very unsatisfactory and I feel very sympathetic towards him. For anyone to think that they are going into a minor thing, designed for ordinary people, only to find instead that they lose their home over it is a tragic situation.
I therefore have great hopes for this redress scheme, but we have an enormous number of problems to look at. When I look at the document in front of us, for example, there is nothing set out yet in Article 3(1). It states only:
“An application to the Secretary of State for approval of a redress scheme must … (a) be made in such a manner as the Secretary of State may determine; and (b) be accompanied by such information as the Secretary of State may require”.
There is nothing there to tell you what you would actually get out of it at all. This may be a formality but it is very important. Whatever we do on the matter, this is just the first step, and we have such a long way to go to make life fair for people in these properties.
These are all technicalities, and everything has taken a long time. Was it not in the summer that we passed this amendment? Now we are pretty well at the end of the year and this is the first bit we have—this draft statutory instrument, which does not even look as if it goes very far.
I am concerned about arbitration. I spoke here when the issue of changing the whole tribunal system came up before. That is a retrograde step. The tribunals were intended to be handled so that any ordinary person could go to them. The way the system has changed now has taken us right back to the battles we fought in 1996 against all these prohibitive charges. It will be very worrying for many people who now will not dare to complain about things. Unless the redress scheme is good, well thought through, carefully planned and honestly implemented with transparency, I worry about what the future will hold.
Of course, I am a great believer—as I am sure everyone knows—in commonhold, the system we have in Australia. There, no one is dependent on an intermediate landlord and you all share the rights to your own property. Here, the law demands that if you want to change to that system, you need 100% of the leaseholders of the block of flats to agree. Everyone knows that all you need is one crooked landlord willing to pay someone to be the 1% that will not pass something and that will never happen. The Government should—and I believe will in future—look at changing that law so that it could be either a simple majority or a possible one. There are people living overseas, not resident in the place and not even knowing what is going on or caring—sometimes they have so much money it does not matter to them. Unless we can really change this and make it fair, it will remain a great injustice that people living in a place will find that they do not have the rights and control to which they should be entitled. I have said more than enough and am sorry to burden the Committee with even more on this issue.
Baroness Hanham (Con)
My Lords, I took an interest in this matter a little while ago when we considered it. I have a couple of questions as a result of this order coming forward. I agree with my noble friend Lady Gardner that it seems terribly short on detail as to implementation. I am not much reassured by the fact that I am not sure whether what I have here is an Explanatory Note or just guidance on how the scheme will be carried out. I am not very reassured by the idea that there will have to be a board for each of these schemes. It is not at all clear of whom such a board would be made up. The board is there to appoint the scheme administrator, but there is nothing else about what the board is meant to do. The only thing it says is that if you are under a complaint investigation you can sit on this board although you cannot particularly make up the majority of it.
My noble friend Lady Gardner, who has been absolutely remorseless in getting all this right, pointed out that it is the detail of the implementation that will matter. There is nothing very much about the scheme administrator except that he can be appointed for three years. The next thing that will happen is that we will talk about the ombudsman. There is nothing in between to suggest that the scheme administrator and the ombudsman will be different, or whether the ombudsman will fit into how the scheme will run. After all, the ombudsman probably will be one of the most important aspects of it.
Another quite trivial thing comes up later on. There is an awful confusion between “consumers” and “clients”. It would be helpful if we could decide which word will be used. I will give the example:
“Taking special care when dealing with consumers who might be disadvantaged”.
It might be clients who are disadvantaged. Anywhere else, all the way down, the text is about responding to “clients” in an appropriate time. Everything else is about clients. In the interests of clarity, let us decide who it is we are talking about.
There needs to be much more explanation of how many schemes are likely to be approved and how many would be too many. You might get 25, all of them absolutely perfect, but might actually need to have not more than about four or five because that is how they are made up. There must be much more clarity about who the ombudsman is and how the access to the ombudsman will work through this scheme.
Other than that, even though there are some holes and flaws and things that need to be taken further, this has moved at astonishing speed, by governmental standards, and I am grateful for that because it is long-overdue legislation.
Baroness Hayter of Kentish Town (Lab)
My Lords, we owe a lot to the two noble Baronesses who have already spoken, because without them we probably would not be here.
We welcome this order and look forward to rapid progress in future, we hope. It will give landlords, tenants and leaseholders an ombudsman to whom they can take their complaints about a letting or managing agent. However, we have a number of queries, and I will raise seven of them.
First, I still do not understand why the Government are reinventing the wheel. There are already two established, OFT-approved schemes that deal with letting and managing agents. Indeed, 60% of letting agents and all the managing agents that belong to ARMA are already members of one of those schemes. However, this order requires that the existing schemes must be reapproved, on slightly different criteria from those upon which they are already approved, and allows a plethora of others to apply, which will be confusing and not in the interests of consumers. I have never believed that there should be more than one ombudsman per industry. I lost that argument with my Government, but there should not be more than two per industry. Perhaps I can argue that. The idea of there being four, eight or 15 per industry will only add to the confusion and costs—and of course, it is not the consumer but the provider who will choose which to go to.
This goes against the feedback the Government had on this, and the Cabinet Office’s guidelines on Ombudsmen. Paragraph 9 of Ombudsman Schemes—Guidance for Departments, which was published in 2010, states:
“It is important to maintain a proper balance between the development of new Ombudsman schemes … and extending the remit of existing schemes where that is … possible. In choosing the best option, Departments will therefore need to … avoid multiple redress schemes within individual industry sectors, which may confuse consumers … by utilising existing Ombudsman schemes (even existing voluntary ones), or by introducing single new schemes”.
The latter is not the case here. There is the Cabinet Office saying, basically, that we should use existing schemes or extend them. The guidance goes on:
“Before creating a new Ombudsman scheme, you”—
this is addressed to departments—
“should consider the role and remit of existing schemes and decide whether a new scheme is necessary. It may … be more appropriate, and more cost effective, to extend the remit of an existing scheme”.
Why this part of the Government does not listen to that part of the Government, I do not know. Does the Minister expect more than the two existing schemes to be approved?
We know from the paperwork that a second order is envisaged that will make it mandatory for agents to be a member of a redress scheme once the department is satisfied that a sufficient—its word—number of approved schemes are operating. Will the Minister tell us what number is sufficient?
My second question is about the independence of the oversight body, or the board, in the words of the noble Baroness, Lady Hanham. The draft conditions of approval, which are not in front of us today but are related to this, suggest that the oversight board should have a member,
“from an organisation representing consumers”.
I wholeheartedly agree with the sentiment behind that, but the whole idea of a corporate board is that the individuals on it do not represent the organisations from which they come in but are part of a corporate entity. I hope that the department will consider a slightly different wording—perhaps, “with experience of representing consumers”—to ensure that the corporate identity of the oversight board is not put at risk.
My third question is about enforcement. That is the oddest part of the instrument. The Minister clarified that slightly just now. She will recall that the Government rejected my original amendment, which would have extended the Consumers, Estate Agents and Redress Act 2007 to letting and managing agents. That included an enforcement mechanism; the OFT could come in if orders for redress were not followed. As the Minister said in her introduction, schemes will have to make provision for enforcement of any requirement to provide redress, which may include expulsion from the scheme.
We need to be clear what happens if a letting or managing agent is expelled. Will they simply move over to one of the other redress schemes, and will that scheme then have to accept them? If not, can I be clear that they would have to cease trading? Obviously, we want to get rid of people who, having been found to provide redress, do not. I am in favour of that, but we need the Minister to clarify that that would happen. This morning, in the Commons Delegated Legislation Committee, the suggestion was made that a redress scheme could expel a member and that it would therefore cease trading. We need to be absolutely sure that there is the legal power to do that. Perhaps the noble Baroness can confirm that.
Related to that, the Government will obviously need to have an appropriate sanction for agents who refuse to sign up to a redress scheme, and it must be strong enough to be a deterrent. It probably has to mean that they cannot continue to trade. Otherwise, it would always be in their interests not to join an ombudsman scheme. Perhaps we could have clarification on that.
Fourthly, there is the really important issue of client money protection, which is a major cause of consumer detriment. There is a recent case, different from the one that has been mentioned, of a letting agent that went bust in Hastings and lost all its clients’ deposits. It cost landlords and tenants an enormous amount of money. At the moment, there is nothing to ensure that that does not happen again.
Client money protection is the only way to ensure that deposits, forward rents, payments for repairs, and so on, are kept safe. The Government’s words on this are a bit unclear. I think that it should be a condition of belonging to a redress scheme that there is client money protection, but the draft conditions that were published earlier this month state that in making a judgment, the ombudsman scheme would have to take account of whether the letting or management agents were:
“Treating clients’ money in an appropriate manner”.
That is nonsense. What is an “appropriate manner” unless it means what we mean by client money protection—in a separate bank account with separate bank signatories, and, perhaps, insurance? Does “appropriate” mean proper client money protection?
My fifth question is: what are the Government’s plans for ensuring that the other 40% of letting agents—I am less sure of the other figures—are signed up to a redress system, and what will be the penalty if they do not join? We hope that it will be that they have to cease to trade. But who will be responsible for that compliance? Who will go around identifying letting or managing agents who are not members of a scheme? I hope that consumers will not be expected to do it, and that plans are in place to deal with that.
The Government seem to want ombudsmen to run a sort of two-tier scheme. They are very keen for agents to join, but they say they should be able to do so without signing up to a code of practice. So they envisage a two-tier scheme where agents can choose whether or not to adhere to a code of conduct or practice, which seems absurd. The very least we can do is to say that any scheme must make it clear that when an ombudsman comes to a judgment it will be not—in the woolly phrase of the moment—on generally accepted principles of best practice, but according to a code. I assume the Government share our concern to raise standards, but if we are not going to enforce a code by taking ombudsmen’s judgments in line with it, we cannot do that. I do not see how the requirements for transparency proposed by the noble Baroness, Lady Gardner, are going to be enforced if there is no code that requires transparency and against which the ombudsman can take decisions.
My sixth question is: what are the Government going to do to inform consumers about their rights to redress? There were comments about making information from the scheme available to other schemes, and to anyone who regulates letting agency work, despite the Government’s refusal to set up a regulator for letting agencies, as I had wanted—but never mind. However, there does not seem to be a requirement for the list to be made available to the public, although surely it is the public who need to know which redress scheme their agent belongs to.
My last question is: when will this come into force? We heard rumours that it might not be before October, despite being expected it by April this year, but we were reassured at an early morning hearing in the Commons by the Minister there, who suggested that the target was still April. For the sake of this Committee, can the Minister confirm that that is the date that she and her colleagues are working towards?
Baroness Stowell of Beeston
My Lords, I am grateful to all the noble Baronesses who have spoken in the debate this afternoon.
Many issues have been raised, and, while I will do my best to respond to most of them, I will say straightaway that there may be some which I will have to follow up in writing. That should not delay us. As noble Lords know, we are at the start of a three-stage process, and I would expect to be able to answer some of the points raised today when we get to the next set of regulations. What we have in front of us is an order which sets out the criteria and process for approving schemes. The next stage is for schemes to come forward, and the third and final stage is to lay an order which would bring into force the legal requirement for agents to belong to a scheme. So, if I follow up anything in writing, it will be because we are in an ongoing process.
The noble Baroness, Lady Hayter, questioned whether we were reinventing the wheel, and why we were proceeding as we are when two schemes already exist. I remind her that we know that those schemes exist, but we hope that they will come forward to seek approval and to register. We certainly hope that happens.
As to whether there is a risk of too many schemes coming into force—a point raised by my noble friends Lady Gardner and Lady Hanham—as I said in moving the regulations, Article 6 makes it clear that the Secretary of State should have regard to the number of schemes that are, or are likely to become, approved schemes or government-administered redress schemes when deciding whether it is in the best interests of complainants and members to approve a scheme. This would require the Secretary of State to look at any scheme brought forward—other than the two I have just mentioned—but the power is there for the Secretary of State to conclude that there are adequate schemes already in place and that there might be a detrimental effect if more schemes were approved. We have considered and taken account of this issue in producing this order.
The noble Baroness, Lady Hayter, asked about enforcement and what happens if an agent is expelled or refuses to join. Enforcement will be detailed in a second set of regulations. On the issue of the conditions for membership of the schemes, as is made clear in the order, these will include whether someone can join a scheme after being expelled from another scheme. We would examine this issue where a scheme is brought forward to the Secretary of State for approval.
As to the issues of safe agents and money protection, I share the noble Baroness’s concerns about ensuring that client money is protected. Certainly we would encourage the use of client money protection arrangements and so-called safe agents. As she knows, we did not seek to introduce this as part of the order but certainly we would be supportive of schemes that referred to this in their terms.
My noble friend Lady Hanham raised additional points. She highlighted that there was confusion and inconsistency between the words “consumers” and “clients” in the language used in the order. It is fair point. I shall consider it and see what it is possible for us to do in that area. It is a legitimate point to raise.
My noble friend Lady Gardner covered a wide range of issues. I am sorry that she feels that too much is unclear in the order. As I have already said, we are at the first stage of a process towards introducing these redress schemes. As to the direct question of the noble Baroness, Lady Hayter, there is no desire on our part to delay the introduction of the order. We are working to the timetable that my honourable friend mentioned in the other place this morning, namely the spring.
My noble friend Lady Gardner asked about annual reports. Each of the approved schemes will have to publish its own annual report. So if there are, say, four schemes, that will mean four individual annual reports.
My noble friend also raised some questions about the rights of leaseholders when they take a case to a leasehold valuation tribunal, when fees are incurred and when, even if the complainant has had their complaint upheld, they see those fees being recycled into their service charges. I gather that this point was raised during the debate this morning in the other place, and that my honourable friend there agreed to meet the Member who raised that concern. I will discuss it further with him and come back to my noble friend, and perhaps she and I can have a meeting once I have been able to catch up with my ministerial colleague on that matter.
My noble friends Lady Gardner and Lady Hanham raised some questions about how the ombudsman would relate to the schemes and the detailed conditions currently available on the Government’s website. Those detailed draft conditions will be finalised when the order comes into force. Only schemes that can satisfactorily prove that they meet these conditions will be approved. It is for the schemes to decide whether there should be an ombudsman. All schemes will provide an independent way of investigating complaints, which is a condition that we will apply when a scheme comes forward for approval.
My noble friend also raised a point about the conversion from leasehold to commonhold. We will debate that matter on another day because I do not believe that it is directly relevant to the regulations in front of us. However, my noble friend makes the point well and I know that she feels very strongly about it.
In conclusion, the procedures and requirements set out in this order are key to delivering the first stage in the implementation of the requirement for letting and managing agents to belong to a Government-approved redress scheme. The order will enable the Secretary of State to approve redress schemes against a clear set of criteria that will ensure that all approved schemes will provide an independent and transparent service, and that consumer complaints will be dealt with fairly and consistently. On that basis, I beg to move.
Children: Development
(10 years, 5 months ago)
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Baroness Walmsley
To ask Her Majesty’s Government what steps they are taking to promote early childhood development in the post-2015 development framework.
Baroness Walmsley
My Lords, the millennium development goals, or MDGs, helped to channel political commitment and investment to bring about reductions in poverty and child mortality and improvements in health and education. They expire in 2015. This presents me with an opportunity to advocate today the inclusion of an integrated early childhood development target in the post-2015 agenda. In this debate, I hope to demonstrate that we need a measurable and actionable ECD goal to reduce by half the number of children under five who fail to reach their potential. This will not only strengthen progress towards the health and well-being of all children but also help reduce the intergenerational transmission of poverty and inequality.
My right honourable friend David Cameron, our Prime Minister, is one of three co-chairs of the high-level panel appointed by the United Nations. This panel is one of the elements which, working together with others, will craft the new goals. It is intended that the post-2015 goals will be more inclusive of various stakeholders than before and have an agenda that builds on the strengths of the MDGs but also addresses their shortfalls. They should be implemented by all countries, not just those in the developing world.
Why are we talking about early childhood development today? It is because focus on early childhood holds the long-term solutions to solving the economic and social problems of intergenerational poverty, and to achieving world peace and our environmental survival. That may sound like a very big claim, but mountains of evidence from almost every discipline come to one conclusion: the earliest years of life can give us the strongest foundation for individual, societal, national and global sustainable development. Research has shown that the key to the survival of our species is our long early childhood. This is the period of our lives when we are at our most vulnerable but, because we take so many years to develop to maturity, there is time for our brains to develop into much more complex organs, capable of more complex thought and action than any other species.
Evidence from neuroscience has shown that when a baby is born, its billions of brain cells are mostly unconnected. To function properly, these cells must be connected to each other, and these connections develop in response to the baby’s experiences. These early connections form the basis of personality and the lifelong capacity to learn, adapt to change and have resilience in case of unexpected circumstances, as well as physical and mental health. We develop these foundations at great speed in the first few years of life and we never again learn so fast. We also know that the quality of early care-giving can alter the brain’s chemistry and structure. That is why we need to pay attention to the early experiences of the world’s children, from before birth and right through childhood.
Economic studies have provided evidence that the largest returns on investment are realised in programmes for children prior to primary school. Therefore, although the MDGs have ensured that most children now attend primary school, we have to ask ourselves how well they are learning when they get there. Do they have the capacity to make the best use of that education and of the best instrument with which to learn—in other words, their brain? It is a bit like having all the parts of the engine of a very fast Formula 1 car. If you do not put it together in the right way and connect all the parts and tune them carefully, the car will not go very fast. It may limp along, but it will not beat Sebastian Vettel or Jenson Button.
Therefore, I should like to highlight something very rare: experts from many different disciplines are all coming to the conclusion that early childhood matters enormously. At a time like this, when money is scarce and needs are great, we must spend money smartly. The smart way is early, because it works in two ways. Not only does it produce better results, it will avoid the cost of putting things right when they go wrong. Therefore, I argue that an early childhood development target in the post-2015 goals will help us to achieve some of the other targets. The MDGs have achieved a lot, but the targets have not been fully achieved, so business as usual is no longer an option. Transformative and holistic solutions are required, addressing the root causes of problems rather than applying an Elastoplast to the symptoms.
Let us look at the role of early childhood programmes in achieving the UN’s aims. Let us take peace, for example. There is neurobiological evidence to show that in early childhood, we develop the capacity to love, empathise and show compassion. Through early childhood programmes, we teach children social skills and develop their decision-making capability. Those are carried forward into adulthood, resulting in better co-operation, aggression control and a reduction in violence. Wars are not instigated by armies; they are started by individuals who feel that aggression is the answer to their problems. It is not very clever. Wars contribute to poverty and environmental degradation, as well as suffering and death.
Let us take sustainability. In early life, we have an innate capacity to love nature. One has only to watch a young child with animals or in a garden. It is very clear: if we nurture that innate tendency, we can leave the world a generation of people who believe in sustainability and care for the environment.
Take the target of inclusive development. Here, again, when children are very young we have a window of opportunity to provide good nutrition and care in a responsive and safe environment. Early child development programmes promote an equitable start to a healthy life, especially if they start when babies are still in the womb. One of the greatest challenges for the next generation is the inexorable rise of non-communicable diseases, such as cardiovascular disease, diabetes, chronic lung disease and cancer. Although the symptoms of these diseases develop in adulthood, the foundations are laid in early childhood. That is when we need to lay the foundations for lifelong good health.
Let us look at gender equality. Early child development programmes improve outcomes for the girl child herself and often also for other female members of her family. Evidence shows that disadvantaged girl students are the ones making the most dramatic gains from such programmes. In Brazil, for example, girls from low-income families who attend pre-school are twice as likely to reach grade 5 and three times more likely to reach grade 8 as those who do not attend. In poor families, when the mother is at work, it is often older girls who have to look after the young children. If the toddlers are at pre-school, the older girls, too, can attend school.
However, the most obvious benefit of early years programmes is in the achievement of the target of learning for all. It has been said recently:
“A child born today must master skills and knowledge that were needed only by elites a century ago”.
I am sure that that is true. However, although progress has been made in school enrolment, great inequality occurs in actual learning.
Learning begins at birth. Does it not make sense for the UN to invest its efforts in the period when human beings learn fastest, thus also laying the foundations for a generation that eschews violence, cares for the natural environment and has developed the full capacity of its wonderful human brains? Learning is the result of a sequential and cumulative process of skills acquisition, with a hierarchy of achievement based on mastering early skills and then building on them, so early learning is vital for later achievement.
The UK, along with Nordic countries, is well positioned to be a beacon for early childhood development globally. We have already embraced the evidence of the benefits of early intervention and invested in the family nurse partnership, more health visitors and free early years provision for disadvantaged two year-olds. Now we need to become a global leader in championing early childhood abroad. The time to act is now, while the next set of goals is being developed. Will we be influenced by the mountain of scientific evidence? I hope so. I have a book full of evidence and solutions from the world’s experts. All we need now is the political will.
Will my noble friend pass on to her right honourable friend the Prime Minister our wish that he ensure that there is an integrated early child development goal in the next set of UN goals post-2015? Can she tell us how your Lordships’ House can influence the Prime Minister in his work with the UN? As the new goals will affect all countries, not just developing countries, will the UK Government take a lead by demonstrating the amount of economic and human capital that can be saved by investing in young children and their families?
Finally, I understand that there are to be multi-stakeholder consultations within countries on the post-2015 agenda to ensure a transparent process and meaningful participation from Governments. How is that being done in the UK? Can my noble friend assure me that the process will be comprehensive and that the Prime Minister will use its results when he works in his co-chair capacity?
Baroness Hodgson of Abinger (Con)
My Lords, I begin by thanking my noble friend Lady Walmsley for raising this issue today, because it is one of the utmost importance. The millennium development goals were undoubtedly the single biggest push to combat world poverty in our history. Although they have succeeded in reducing poverty and child mortality, unfortunately, there is still much to do. In that respect, the post-2015 development agenda has a vital role to play.
Early childhood generally refers to the period of a child’s life between nought and eight when, as my noble friend Lady Walmsley mentioned, critical development occurs—physical, cognitive, linguistic and socio-emotional. I argue that this debate should have a broader scope, because what happens in utero is also critical.
Research into brain development and early childhood development has shown that in utero development and the first three to four years are critical for the development of sensory pathways for social and emotional development. During the early years, the brain develops most rapidly so that children can acquire the habits and skills needed for social and educational success and self-protection. If that development does not occur, children are at risk of mental health, learning and behavioural disorders. Thus, those children will fail to reach their full potential and may also become a challenge to their societies.
MDG 5 focuses on maternal health and is one of the MDGs on which more progress needs to be made. Although maternal mortality has nearly halved since 1990, an estimated 287,000 maternal deaths still occurred in 2010, with the maternal mortality ratio in developing regions being 15 times higher than in developed regions. Having a baby at a very young age also increases the risk and it is estimated that 70,000 adolescents in developing countries die each year from complications during pregnancy and childbirth. Thus, early forced marriage is a factor, and FGM also increases birth risk. In those maternal deaths, many of the babies will also die.
Although more women today receive antenatal care, only half of women in developing regions receive the recommended amount of healthcare that they need. Still, today, nearly 50 million babies are delivered without skilled care. The figures that are never produced are for those births which go wrong and result in live babies that are damaged. Very minor damage or slight oxygen deprivation can mean that a child will never reach his or her full potential.
According to UNICEF, in spite of four out of five children now getting vaccinated for a range of diseases and deaths from malaria having fallen by a quarter, around 29,000 children under the age of five still die each day, mainly from preventable causes. Although the death rate has nearly halved since 1990, these deaths mainly occur in developing countries. In sub-Saharan Africa, one in nine children die before the age of five, while an Ethiopian child is 30 times more likely to die before his fifth birthday than a child in western Europe. Children born into poverty are almost twice as likely to die before the age of five as those from wealthier families. The majority of those living in extreme poverty are female, and they are the ones who will struggle most to raise their children.
Nurture is essential to the development of a baby and very young child, and of course the mother plays a vital role. To provide good care to her child, the mother’s health and well-being are essential. It is estimated that one in seven women in the UK experiences some degree of depression after giving birth, but in developing countries there are simply no statistics about this. Yet we know that when mothers have depression, it can affect the bonding process and thus the child’s development, so postnatal care is extremely important. However, such healthcare may be scarce in many developing countries.
The events of a child’s early life are formative and play a critical role in shaping the way a child develops, and thus in building human capital and promoting economic productivity in later life. Yesterday was the International Day for the Elimination of Violence against Women. Nearly a third of women who have been in a relationship have experienced physical and/or sexual violence at the hands of a partner. For a young child, seeing his or her mother being beaten up is a terrifying experience and one which will affect them for the rest of their lives.
Freedom from conflict and violence is the most fundamental human entitlement. War tears children’s lives apart and has a devastating effect on their development. Young children who live in war zones or who are refugees will be severely affected by what they have seen and experienced. Today, it is said to more dangerous to be a woman or a child in war than a soldier. Not only is there imminent physical danger but, usually, a lack of food, an interruption of education and enormous stress. A UNICEF report estimates that during the past decade, through conflict: 2 million children have been killed; 4 million to 5 million have been disabled; 12 million left homeless; more than 1 million left orphaned or separated from their parents; and some 10 million have been psychologically traumatised.
In May this year, I visited Syrian refugees in Lebanon. Meeting some of the families camping in the Bekaa valley gave me some understanding on how hard it was to look after children in such circumstances. I met a woman trying to care for her eight children in a small tent. Having insufficient sanitation and very little clean water meant that maintaining hygiene was especially difficult in those conditions. Diarrhoea was already starting to spread through the camp, which can be fatal for very small and vulnerable children. While the women were trying to look after the children, the men who were there had nothing to do and were frustrated by their situation. We heard that domestic violence was rising. Trying to resolve conflict and promoting peace are also essential for ensuring good childhood development.
Today, in spite of relatively improved nutrition, it is estimated that more than 200 million under-fives in low and middle-income countries will not reach their developmental potential. Children are central to sustainable development. Current and future global development goals, including education goals, will be met only with attention to the overall development of young children, which will involve the rolling out of global and localised maternal and children’s healthcare. Dedicated political support is now required to ensure that there is a focus on guaranteeing that every child around the world is given the very best chance for the very best start in life.
Baroness Tyler of Enfield (LD)
My Lords, the inclusion of an early childhood development target in the post-2015 UN millennium development goals would be a hugely important action on behalf of children around the world. I agree with my noble friend Lady Walmsley—I congratulate her on securing this debate—that a global focus on early childhood development is essential as we move into a post-2015 global agenda. I also agree that the UK should be playing a leadership role in this crucial issue. However, if we are to take the lead on early childhood development we need to look long and hard at our own domestic policies to ensure that we truly are a world leader in our policies on early childhood. We must be seen to practise what we preach. That will be part of my focus today.
There is no escaping the unfortunate fact that of the children born around the UK today each will be born with different life chances. Sadly these chances will depend not on innate ability but, in large measure, upon the economic and social conditions into which these children are born. Of course, this inequality is magnified many times over for children living in countries with high levels of absolute poverty.
As policymakers, the natural question to ask ourselves is this: what can be done to improve the life chances of children, both in this country and around the world? To draw an analogy, last year the All-Party Group on Social Mobility, of which I am vice-chair, published a report entitled Seven Key Truths about Social Mobility. The first of those key truths—the one highlighted by my noble friend Lady Walmsley in her speech—is that the point of greatest leverage is what happens to a person between birth and the age of three. Basic cost-effective interventions in the first few years of life can pay big dividends later on in a person’s overall chances of a healthy and fulfilling life.
In the light of these conclusions, early childhood development emerges as one of the key issues for any policymaker or legislator who is seriously concerned about a fair chance in life for all our children. It is my hope that in the coming years the UK will lead the push, both internationally and at home, to put a strong emphasis on ensuring that all young children have that fair chance for a fulfilling life.
In addition to the benefits of early years intervention, the Seven Key Truths about Social Mobility report identified another key causal factor in improving life chances, and that is developing what is called character and resilience among children and young people. By that term “character and resilience”, I mean those habits of mind such as perseverance in the face of setbacks, sticking with it when the going gets really tough, high expectations, confidence, self-esteem and belief that your life is heading in a positive direction and that you can improve things by your own efforts. These habits of mind are even more crucial for children from far less privileged nations than our own. The inclusion of specific targets for early childhood development in the UN’s post-2015 millennium development goals should help to ensure that young children across the world are in an environment that will promote the development of these crucial characteristics that can make such a difference to their later life.
So what concrete interventions can Governments make in those early years that might lead to the development of the resilience that I was talking about? Given that most early-years development takes place in the home, the most important thing that Governments can do is to put policies in place that support parents during the first few years of their child’s life. Clearly a secure and nurturing home life during those early years is crucial for a child’s development. Of course, sadly, as we have already heard in the debate, in too many countries that simply is not possible because of the social and economic conditions, as well as war and conflict.
Many reports, in this country and abroad, have pointed to the fact that one of the most unhelpful assumptions is that people know instinctively how to parent. Of course, all parents want to provide a nurturing environment for their young children, but those from more privileged backgrounds tend to take for granted both the resources and the strong support networks that allow them to parent effectively. For those without those networks, the prospect of parenting on a low income can be extremely daunting. These challenges begin in the prenatal period and continue throughout early childhood and, of course, the quality of parenting varies hugely in both rich and poor households and rich and poor nations. However, clearly, having less time, fewer money worries and fewer resources makes the job of consistent and attentive parenting far harder. While what goes on in the home is, first and foremost, a matter for families, Governments can do more to provide the resources to ensure that mothers and fathers have the degree of physical and mental health, financial security and overall preparedness necessary for raising a child.
As the United Nations develops a plan for global action on early childhood development, we need to look around the world for examples of successful policies that really help parents. I believe that one model for these efforts can be found in Sweden, where expectant mothers and fathers are invited to join local groups run by a trained midwife to prepare them for the birthing process. These groups do not disband at birth but continue to meet throughout the first few years of the child’s life to offer advice and support throughout the parenting process. The data available so far suggest that parents find these programmes helpful, as more than half the parents who join prior to birth are still involved at the time of their child’s third birthday.
In addition to positive parenting, we know that education plays such a large role in enabling young children to develop into capable learners. Although the UK is above the average for OECD countries in overall participation in early-years education, a gap still exists between the more affluent and the less affluent in terms of both participation in and effectiveness of early-years education, particularly in preparing children to be ready to enter primary school. In its report entitled Greater Expectations: Raising Aspirations for our Children, the National Children’s Bureau—of which I am president—notes that, while two-thirds of children overall experience good development during early-years education, only half of children on free school meals in the UK experience that good development.
So what can be done? I suggest that there are three key components. First, we need a strategy for ensuring that success in early-years education, both in this country and elsewhere, is not tied to income. The first step must be to ensure that parents of underprivileged children have easy access to early-years education that is of good quality and promotes good child development, both intellectual and emotional.
Secondly, we need good practice guidance for early-years educators, which can be shared internationally, in order to ensure that early-years education is preparing young children to succeed when they enter school. This also means ensuring that early-years education facilities are staffed with qualified educational professionals, regardless of the affluence of the communities they serve. We need to think critically about the nature of the curriculum in the early years. In my view, early-years education should have a distinct emphasis on educating the whole person.
Finally, we need to understand and organise the way that we address the interests of children and young people at the level of public policy. This is what is so important about the specific inclusion of early childhood development in the UN’s post-2015 goals. Currently, in far too many countries the interests of children and young people are addressed in a decidedly fractured way. Some issues fall under the umbrella of education and others of health—physical, mental and so on. As Dr Nurper Ulkuer, formerly a senior adviser at UNICEF, remarked at a reception in Parliament on early childhood development earlier this month, a unified, holistic approach is needed in order to ensure that our children are physically healthy, mentally healthy, socially engaged, and ready to learn.
The importance of this holistic approach is at the core of the push to include specific benchmarks for early childhood development in the UN’s post-2015 development goals. However, this shift in how children’s issues are addressed can also happen at the national level. In the UK, the National Children’s Bureau makes two key recommendations in its report on how to organise policy-making, which I think are equally applicable in other countries. The first is the creation of a government children and young people’s board with full ministerial representation. This board can help set the agenda on policy that affects children across all levels and dimensions of government.
The second recommendation is to look—in this country it could be through the independent Office for Budget Responsibility—at the impact of each Budget on child poverty and inequality among children. Both these recommendations could help ensure that children’s issues are placed at the centre of all policy decisions and could be used as a model in other countries. Of course, that is ultimately the heart of the matter. Every Government around the world has to be held accountable for the way in which their actions promote the well-being and development of the youngest children. That is why I believe that the UK should use its international profile to push strongly for the inclusion of an early childhood development target in the post-2015 development goals to promote the interests of young children around the world.
Lord Collins of Highbury (Lab)
My Lords, I, too, thank the noble Baroness, Lady Walmsley, for initiating this debate. She has a tremendous record in the field of child welfare.
The UN high-level panel report based its analysis on five transformative shifts, including the idea of leaving no one behind. I welcome many of the recommendations in the panel’s report, especially the objective to end extreme poverty by 2030 and the bringing together of the sustainability and poverty reduction agendas. The report is an important contribution to the debate about a new covenant for development, but there is still a lot of work to be done to ensure that the new goals and partnerships drive the radical change which is essential if we are to be the generation that ends poverty and safeguards scarce planetary resources.
Many questions still remain on content, financing and accountability, but the principles set out in the outcome document represent a good starting point. Having said that, my hope is that the more ambitious parts of the report, including its call for a stand-alone goal on gender equality and women’s empowerment, will be built on as the negotiations now move forward.
The five shifts I have described are only part of the equation. They help to build momentum to meet our aspirations. However, goals with effective monitoring will ensure that the international community moves in the same direction. As we have heard in this debate, the benefits of investment in early childhood development are strong, but the cost of inaction is also very clear.
Science has demonstrated that early childhood interventions are important because they help to mitigate the impact of adverse early experiences which, if not addressed, lead to poor health, poor educational attainment, economic dependency, increased violence and crime, all of which add to the costs and burdens on society. UNICEF and Save the Children operational research published in 2003 revealed the significant improvement in primary education grade promotion, repetition and drop-out rates attributable to school readiness and ECD programmes.
As the noble Baroness, Lady Walmsley, said, children are central to sustainable development. Decreased child mortality, relatively improved nutrition and school enrolment may give a picture that the world is on track on its promises for children. However, many of the children who are surviving now are not achieving their full developmental potential. According to an estimate, 200 million children around the world are not achieving their potential because they suffer from the negative consequences of poverty, nutritional deficiencies and inadequate learning opportunities. Moreover, 61 million children around the world are out of school and thus at risk. If one digs deeper, beyond national averages, one sees widening disparities among regions and countries and within countries based on wealth, gender and geographic location. In the face of increasing conflict, early childhood development is also considered an entry point for peacebuilding in communities. Furthermore, as we have heard, good early learning programmes can help to build the resilience of children and families in emergency and fragile situations.
Each year, about 19 million children in developing countries are born underweight because of poor growth in the womb. More than 200 million children below the age of five living in low and middle-income countries fail to reach their developmental potential. This failure to ensure that children have access to early childhood development has significant consequences for eradicating global poverty and achieving sustainable development. These twin objectives cannot be achieved when significant numbers of children start life at a disadvantage, one that continues to widen as they grow and develop, and becomes an intergenerational transfer of poverty. Eradicating poverty and achieving sustainable development therefore require that significant attention is paid to early childhood development and that strategies to ensure adequate health, nutrition, stimulation and early learning are part of all programmes to eradicate poverty and achieve sustainable development.
On 22 October in a supplementary Oral Question to the Minister, I referred to evidence that investing in children’s earliest years makes the biggest difference to their lives and to the country’s social and economic fortune. I asked the noble Baroness then whether she would support calls to put early childhood development at the heart of the new post-2015 development framework. In response, the Minister correctly pointed to the illustrative universal goals in the high-level panel report, which highlight the new emphasis on, for example, good nutrition, which is so important in the first 1,000 days of a child’s life, as well as education—not just primary education but a wider scope of education. The noble Baroness suggested that, as concerns for young children are built into a number of the goals, the early childhood development approach can be assumed to be there.
The goals to provide quality education and to ensure a healthy life, food security and good nutrition are strong component parts of a comprehensive approach to early childhood development. However, as the noble Baroness, Lady Tyler, said, policies and programmes need to be fully comprehensive if the approach is to be carried through. They must also include parenting support, developmental monitoring with early intervention, and childcare.
It is important that we do not let up on making a strong case for these important points of principle at events and debates in the General Assembly throughout 2014. These will set the scene for member state negotiations, which will culminate in the summit in 2015. Will the noble Baroness give us some indication of how the Government plan to highlight these issues leading up to 2015? I, too, would like to see the good examples being highlighted. Can the noble Baroness highlight some of the programmes that the department is currently engaged in to support the provision of a comprehensive approach to early childhood development?
Children are key stakeholders in the future. The evidence shows clearly that investing in children’s earliest years makes the biggest difference to their lives and to a country’s social and economic fortunes. Straying slightly off my remit, I am only sorry that since 2010 many of the Sure Start centres in this country have been closed.
Baroness Northover (LD)
My Lords, I thank my noble friend Lady Walmsley for securing this important debate and for introducing it, as ever, so cogently.
As the 2015 deadline for the MDGs approaches, it is very important that we seek to ensure that we build on what has already been achieved and move forward in seeking the MDGs’ replacements, having learnt from what worked in the current set and where we need to head in the future. The MDGs seek the relief of poverty internationally and they use various means to do that. As my noble friend Lady Hodgson emphasised, much has been achieved but much still needs to be done.
In the proposed new goals, there is the aim to eradicate extreme poverty and to ensure that no one is left behind, and that clearly includes children. I welcome the opportunity to explore the core issues surrounding progress on early child development globally and how those issues can best be reflected in the post-2015 development framework.
As my noble friend Lady Walmsley stated, the case for a major global effort on early childhood development is compelling. As she indicated, evidence from multiple disciplines, including neuroscience and epigenetics, and across the social sciences tells a similar story: that early childhood matters. When everyone gets a good start in life, we are more likely to see better education and health outcomes, and higher earnings with more inclusive economic and sustainable development for all.
We know that we need to emphasise child development, support for parents and education in the United Kingdom, as my noble friend Lady Tyler noted. Internationally, we are some way off our aims. Of those children who survive birth, globally it is estimated that in low and middle-income countries more than 200 million under-fives are failing to reach their true cognitive development potential and that 165 million are stunted. However, of course, millions never even reach their first birthday. Four overlapping constraints are at the root of these challenges, and noble Lords have referred to them: poverty, nutritional deficiencies, poor healthcare and inadequate learning opportunities. The noble Lord, Lord Collins, crossed over all those.
The UK Government have a long-standing tradition of engagement in development and they work hard to improve early childhood outcomes globally. The noble Lord, Lord Collins, and others have shown how desperate is the situation of many children around the world, and he rightly emphasised the significance of intergenerational poverty.
To achieve their full potential, it is essential that children have a healthy and nutritious start to life, as my noble friend Lady Hodgson and the noble Lord, Lord Collins, emphasised, and that they should be supported by mothers who are in good health themselves. DfID funding for family planning is helping to avert 2.6 million unwanted pregnancies and prevent 70,000 deaths during pregnancy, childbirth and infancy. The benefits of family planning go well beyond the health sector. Evidence shows that when families are able to choose the number of children they have, they choose to have fewer children and do more for them. They particularly choose to invest in their children’s education. As my noble friend Lady Hodgson pointed out, paternal health is critical before, during and after birth.
My noble friend also pointed out the importance of good nutrition, as did the noble Lord, Lord Collins. We recognise that good nutrition is essential, particularly in a child’s first 1,000 days—from conception to their second birthday—to ensure that they reach their full physical and cognitive potential. Noble Lords will no doubt remember the Nutrition for Growth event that we held on 8 June. That brought together partner Governments, civil society, business and science to try to address the neglect of undernutrition. DfID also supports efforts here to increase vaccine coverage and reduce avoidable child deaths, illness and disability. Between 2011 and 2015, UK funding for GAVI—formerly the Global Alliance for Vaccines and Immunisation—will help to vaccinate more than 80 million children.
It is estimated that diarrhoeal diseases are now a leading cause of child deaths in Africa and the second leading cause of child deaths globally. After pneumonia, they are the biggest killer of children under five in the world. DfID is committed to reaching 60 million people with improved water, sanitation and hygiene—WASH—by December 2015. Through partnership with UNICEF, this includes WASH in schools and WASH in health units. Globally, DfID is assisting pre-primary education through core support to UNICEF—an organisation that I know my noble friend Lady Walmsley strongly supports—the World Bank and international NGOs, such as Save the Children, and through our work directly with partner Governments. Ensuring quality early-years provision for all when education budgets are already stretched is key.
While the evidence base on the impact of early childhood development on life chances for all is strong, the capacity and resources needed to implement cost-effective, sustainable and quality programmes that reach the poorest, which is what noble Lords have been emphasising, remain a cause for concern. I hope I can reassure the noble Lord, Lord Collins, and my noble friend Lady Tyler that this is why DfID is stepping up efforts with its partners, such as the World Bank, UNICEF and the Children’s Investment Fund Foundation, to scale up programming in this area. We are working with these partners to explore ways to improve the cross-sectoral links between health, education, water and sanitation and social protection, which is key here, in the provision of services that target children from birth to eight years old. I can tell the noble Lord, Lord Collins, that innovative cross-sectoral programmes have already been developed in Zimbabwe and Bangladesh.
The UK is also currently engaged in a range of research activities to fill gaps in our knowledge of the impacts of early interventions and how they can best be delivered. For example, DfID currently supports the young lives study of childhood poverty, involving 12,000 children in Ethiopia, India, Peru and Vietnam over 15 years. We also recently commissioned a multi-disciplinary team to undertake a rigorous literature review on early childhood development and cognitive development. That report will be published soon and used to inform future research and policy direction. I hope my noble friends are pleased to hear that.
My noble friend Lady Tyler spoke of confidence and self-esteem. I think she should stay and participate in the following debate in the name of the noble Baroness, Lady Grey-Thompson, which addresses such issues and which I shall also be answering. I reassure my noble friend that in the UK we recognise the importance of early years development. There is an overwhelming evidence base from the UK and around the world that shows that high-quality early education has long-lasting benefits for children. By the time that children reach the age of five, there is already a 12% achievement gap between those from lower-income households and the rest. That is unacceptable to us, as a Government who believe in opportunities for all children. The evidence shows that there are social and cognitive benefits for children who receive good quality pre-school provision between the ages of two and two and a half, compared with children who started at the age of three or more. My noble friend will know the details of the provision that the United Kingdom Government are putting in place.
My noble friend Lady Walmsley asked how the UK Government can lead on the post-2015 development settlement. She referred to my right honourable friend the Prime Minister’s role in co-chairing the high-level panel. Through that, we were able to ensure that a commitment to leave no one behind is at the heart of the final report. That is the key to all this. The report, published in May 2013, recognises the importance of early childhood development with illustrative targets on the provision of pre-primary schooling, reduced stunting and wasting among the under-fives and ending preventable infant and under-five deaths.
The high-level panel gave us an excellent starting point for the next two years of discussions on the framework to replace the MDGs. It is extremely important that we focus hard on trying to deliver something that is as comprehensive and deep-rooted as the proposals before us at the moment. We will continue to work hard and actively with others to highlight the important issues raised on early childhood development as part of the ongoing dialogue on a post-2015 development framework. I can assure my noble friend that outreach to civil society, businesses and other key stakeholders, both in the UK and internationally, will continue to be a key part of the UK Government’s work on post-2015. I am pretty sure that my honourable friend the Minister of State in DfID is having a meeting with parliamentarians in the CPA as part of that. It was during the Prime Minister’s tenure as co-chair of the high-level panel reports that those issues were brought forward.
As noble Lords have made abundantly clear, our children are our future. Noble Lords are right to focus on children and their development. I assure noble Lords that we share that view. This has been a wide-ranging debate covering life, death, war and peace among women, men, children and adults, and many other things. It is to ensure that the children of the future survive and thrive and that none are left behind that the new MDGs are needed.
Women: Sport and Physical Activity
(10 years, 5 months ago)
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Baroness Grey-Thompson
To ask Her Majesty’s Government what assessment they have made of the role of sport and physical activity in providing a positive body image among young women.
Baroness Grey-Thompson
My Lords, I thank the Whips’ Office for finding time for this debate and those noble friends who have stayed on.
I have a number of interests in sport—all listed in the register—but perhaps the most pertinent is that I co-chair the All-Party Group on Women's Sport with the right honourable Barbara Keeley MP, which is supported by the Women’s Sport and Fitness Foundation. I also thank the Lords Library for its notes on this topic.
I do not think that we could have picked a better time for this debate. Anyone who was watching Rebecca Adlington on “I'm a Celebrity, Get Me Out of Here” last week will have seen her tearful reaction when talking about body image. She said: “It’s making me very, very insecure that I have to look a certain way. For me, I was an athlete. I wasn't trying to be a model, but pretty much every single week on Twitter I get somebody commenting on the way I look”.
This is a young women that we should all be proud of. She is a four-time Olympic medalist and a world champion, but many will understand how she feels. It is a worrying trend that young women are increasingly put under pressure to conform to look a certain way.
If I had said at the age of 15 that I thought I had poor body image, I would have been told to pull myself together. However, body image anxiety is a leading cause of depression and low self-esteem; health and relationship problems; poor participation at school; and lack of progression at work.
It is worrying that body image has become more important than health; that the majority of young people would rather be thin than healthy. In the UK, 1.6 million people suffer from an eating disorder. Dieting can lead to eating disorders, and girls who diet are 12 times more likely to binge eat. However, a positive body image can help with academic attainment, cutting down on smoking and teenage pregnancy
We need to understand that the relationship between body image and physical activity can be both positive and negative. The reality is that young women are facing pressure from many directions. For many women, a poor body image and lack of self-confidence is the biggest barrier that prevents them being active and it is easy to understand why. Bizarrely it is one of the things that could help them. If you put “Jessica Ennis” and “abs” in to a search engine, there are pages that show how you can look like Jess in just two minutes a day. The reality is more like six hours a day, 50 weeks of the year for about 15 years.
Skimming through some of the other comments over the weekend, I noticed that Chantelle Houghton—described as a former reality TV star, which is a whole other debate in itself—was heavily criticised for going out jogging in a pair of running tights and a cropped top. The obsession with how quickly celebrities lose their baby weight and get back into their pair of jeans puts undue pressure on others. Many of the women's magazines are full of pictures of bodies which are either beach-ready or not. It is hard to find many that do not contain some diet that will help you to look like your chosen celebrity. I cannot even begin to add up the number of women who get more coverage for the colour they have dyed their hair than they do for their achievements.
The data that the YMCA presents is compelling: more than half the UK population suffers from body image anxiety. Media, advertising and celebrity culture account for 75% of the influence on body image in society; and 95% of the population cannot physically achieve the typical “body ideal” presented in media and advertising.
Physical activity in schools is not going to right all those wrongs, but the right PE will help. For most women and girls, we know that once they become physically active, their body image and self-confidence improves, leading to greater academic success and job prospects. Research by Ernst & Young in the USA shows that many of the top female executives played competitive sport at a high level all the way through university.
We need to define a new language around sport. People often say “sport” when they mean “physical activity”—physical literacy as well as competitive sport. You have only to mention PE to most women and they shudder. We need to be clear in thinking about a health agenda and getting more people active. Getting girls to be active will lead to more of them playing competitive sport, which would be great. However, if the starting focus is on competition, it is likely to lead to fewer girls being active.
Since the Olympics and Paralympics, the Department for Education has suggested that there will be an increased focus on competitive sport in schools. That is fine for many. It would have suited me fine at the age of 20 but not when I was 13. So why do we need to find a new way of doing PE in schools? Evidence from the Women’s Sport and Fitness Foundation shows that 46% of the least active girls say that they do not like the activities they do in PE; 45% of girls agree that “sport is too competitive”; and over a third of the least active girls do not think that they have the skills to do well in sport, so it is obvious that we need to do more to build confidence. Some 75% of girls agreed that girls are self-conscious of their bodies and 59% of the least active girls do not think that it is important to be good at physical activity. In many schools it is okay to be a sporty boy but not to be a sporty girl.
On average, female athletes are more likely to have a positive body image, and less likely to consider themselves overweight, than female non-athletes. Earlier this year, I chaired a Task and Finish Group for the Welsh Assembly Government, looking at the role of PE in schools. We recommended that it became a core subject, and that was picked up by the Select Committee on Olympic and Paralympic Legacy, which the noble Lord, Lord Addington, sat on.
We must teach good skills at a young age, which for girls also means a mix of sports and activities as well as being given the option of single-sex and mixed sessions. A number of women wrote to me about this issue. Arriene, who is 28, said:
“I never joined a gym because PE taught me that I wasn't good enough and sport made me feel useless”.
The Women’s Sport and Fitness Foundation’s Changing the Games for Girls shows that 51% of school sport and PE put girls off. Kate Allenby MBE, an Olympian who is now a PE teacher, said that girls need good role models. Keith Kendrick, who wrote on the website Parentdish, said that he desperately needed Becky Adlington to be a strong role model for his stepdaughter. Many women have written to me to express the horror of communal changing rooms—and a few men as well. I am sure that most of us can remember that dreadful feeling. However fit and strong you feel, it puts much undue pressure on people.
The YMCA suggests that if we do not get this right, we will jeopardise the health and well-being of future generations, and I agree. Its research has shown that five year-olds now worry about their size and appearance, that body image is the biggest single worry for many 10 year-olds, that by the age of 14 half of girls and a third of boys have started dieting, and that children are directly influenced by parents’ body image, whether that is positive or negative
Today’s young people aged between 18 and 34 are much more likely than previous generations to have heard their parents talking about dieting, criticising their own appearance or even teasing their children about their appearance or weight. Girlguiding UK has some fantastic research results in its Girls’ Attitudes Survey 2012. When it asked why girls do sport, 29% said that they did it to keep fit, 46% said that it was to lose weight or control their weight, but 44 % said that it helped them to feel good about their bodies. It has also shown that one in seven young people would prefer to be slim than healthy, and findings from the WSFF show that 19% have said that being slim is more important than being healthy.
There is a huge pressure on girls to be skinny. The size zero that we hear about—there is a great deal of discussion about this being the size of many models—is the size of a 12 year-old girl. It is not normal or acceptable. It is worrying that so many women have an aspiration that they cannot achieve.
We need a balanced approached in schools. We need to look at best practice; to celebrate participation and not only winning. We need to look at the uniforms that girls wear—luckily, we have moved on a long way from my days in school, where it was gym knickers and an Aertex blouse—because a key component is that many girls worry about how they look. We need to address the issue of changing rooms and consider putting hairdryers in them. If that is one of the things that stops girls being active, how difficult can it be to put a couple of hairdryers in every changing room? We need to work with young girls to give them confidence.
For me this is a very important area and I would like to ask the Minister a question: how much have the different departments—Health, Education and DCMS—discussed the matter? How can they work together across departments to find a workable solution—because a solution to this will not be found through one department alone?
Lord Addington (LD)
My Lords, I thank the noble Baroness for bringing this subject before us. My point, as the token man in the debate, is that although there is conclusive evidence that body image is a problem that may bite harder on women, it still bites men—and for virtually the same reasons.
Body image is where the problem starts to manifest itself and where physical activity might provide an answer. If you are doing a sport, the starting point is not what your body looks like but what it does, and suddenly a change will be there through physical activity. As an athlete it does not matter whether you look like Adonis or like Venus rising from the sea if you come last consistently. We have a little input there, a point where physical activity and sport put in a reality check.
As the noble Baroness said, what someone decides in a magazine is the fashionable and desirable size and shape, or the best shape to hang clothes on, often bears little resemblance to what most people look like. The fact that tall, thin people are easy to dress and can model the clothes, and thus become the style, does not change the fact that to sell those clothes you will have to be adapt them to what people look like. We could go on in this vein forever—I admit that I have never been able to buy an off-the-peg suit—but we have to try to insert a degree of reality.
We should also address the language of weight. We talk about weight all the time and imply from it that we are referring to fat. However, if you become more physically active it is possible that you will gain weight because muscle is heavier than fat. You can reduce all your measurements and gain weight—that is quiet easy to do. Anyone who plays a sport or takes a reasonable degree of physical activity will, at the very least, increase the density of their muscles. So the language we use and the way in which we approach this issue has to change.
I have ranted against the body mass index, which was clearly designed for an inactive person in the 1950s. I have been dead for 20 years according to the BMI, as has every other rugby player on the planet. Yet it is still actively used despite the fact that it has been proven again and again not to imply anything. We cannot counter it because people go, “Oh, that weight is not right”. We must have a better degree of education about what is required in that, with an awareness that if you are doing physical activities your body will change. For example, how many tennis players look like models? Not many. Indeed, somebody commented that the last female Wimbledon champion did not look like that, and they got their knuckles severely rapped for saying it. We must do something about that because this is a person at the top of an area of very competitive activity.
If sport provides help and a series of answers for these people, how do we access it? Looking at the same information as the noble Baroness, Lady Grey-Thompson, used earlier, I note that it talks about people lacking the skills to do well in sport but not liking the activities in PE. That is not uncommon, because we do not invest in basic physical literacy and good introductory skills. Traditionally it has been far too easy to concentrate on the person who does sport naturally and well—they get the attention, not the person below them. If you do that, you allow for the idea of casual—use sport—I do not like the term “non-competitive”. The fact is we do not have that idea of sport. What you get is a long structured list, and you are expected to turn up every week to complete a series of activities. Being able to take on a casual, non-organised, occasional type of activity with a degree of confidence means that you will have greater enthusiasm for it. If, for instance, you know how to hold a tennis racquet properly and can hit a shot that enables someone to rally with you, then that becomes available, it is easier to do. Racquet sports provide us with excellent casual-use sports activity. You only need two or four of you to do it. My own sport, rugby union, needs 31.
We need to get the skill levels, and the educational levels, right. Most introductory-level types of education, even if they are based on one sport, open you up to other sports: you learn the language of movement and how to be instructed, and when somebody tells you to move your body you get an idea why you have to move your body in order to be better at it. For instance, in racquet sports you learn how to move your feet in order to make a shot. This type of education has to be instilled fairly early if we are to have easy access throughout. We can of course go back later, but it is easier this way. We must try to get into this structure.
One of the ways to improve the situation is to encourage more women to get involved in coaching. At the moment it is quite common for men to coach women; at senior level it is expected. The reverse is very unusual. There is no great difference in the way a woman throws her foot to kick a ball in the right direction to the way a man does it. I have not heard that said and cannot see why it should be true. Yet professional coaching at all levels, including high-level sport, seems to be dominated by men. When we cut into this, and those sports involved make it no longer noteworthy for a woman to coach men, we will have taken a step forward. I do not aim for parity yet, because we must take one step at a time, but we are encouraging women into some of the traditionally male-dominated sports. Surely it is time coaching followed.
To conclude, if we encourage people to be active, and they see their bodies as functional, rather than as clothes-horses, or something seen as an image in itself, then we stand a chance of giving people a better body image, so that they see themselves as individuals who do something as opposed to someone who just stands there. Take the preparation of a male model before a modelling job; it is described as being like the process a bodybuilder goes through before a competition. After amassing the muscle you go on a crash diet, strip away fluid then pump yourself full of sugar to have your photo shoot. That sounds rather more painful than Photoshop, and apparently it is about as sustainable in real life. Across the board, we must get people more used to the idea that their body is a functional thing that will allow them to do various forms of activity. In this way we will start to attack this neurosis and possibly take a step forward.
Baroness Kidron (CB)
My Lords, given that both the previous speakers are sportspeople of considerable stature, I will just add to the very powerful speech of my noble friend Lady Grey-Thompson by talking a little about the landscape in which young women grow up. Unless we look at the entire landscape, we really cannot address the problem of sport, and we will never get beyond the rather shameful statistic that only 12% of 14 year-old girls are doing the recommended amount of exercise. That statistic promises a multitude of future problems for their health and probably for the public purse.
Adolescence is a time of extreme self-consciousness as the body makes the crucial developmental journey from childhood to adulthood. It is a journey fraught with hormonal changes, where the relative anonymity of being camouflaged in a group of little people suddenly changes when differences in shape and image become very manifest. Clifford Nass, who was a professor of communications at Stanford University, did a lot of work on investigating the way that young people see themselves as a reflection of how they see others. He found that the narrow definitions of social success and desirability that are fed to young women distort their self-image, and that heavy users of social media are measurably more negative about their own image and emotional state as they seek to emulate the unachievable. The message of that is almost identical in the Government’s report on body confidence, led by the Minister for Women and Equalities, Jo Swinson. It is in this context that we ask young women to make mature choices about their bodies.
For young women, one of the biggest obstacles to participating is the question of what their friends are prioritising. What we increasingly understand from the data that we are collecting is that they are prioritising their bodies for the way they look and not for what they can do, as the noble Lord said. In this context, it is hugely important that young girls have safe and secure opportunities to talk about their fears and anxieties around their bodies, for example in high-quality PHSE, in addition to the opportunities they may or may not have within their own families. It is important that they see women celebrated for qualities other than their ability to wear a dress, and it is essential for them to be invited into the sports arena in a participatory way. There is some dispute about competition, but I would say that in team sports you learn not only the limits of your own body but the strengths and limits of other people’s contributions. That is a social skill and a skill for life way beyond that of an individual’s fitness.
The Sport England activity programme report says that girls leave school only half as likely as boys to meet the recommended activity level, and one-third of 16 year-old girls do no physical activity at all. It is crucial, even within the terms of this debate, that we imagine how adult women provide role models—or, I would suggest, a lack of role models—for young women. We have to resource and promote activity among the mothers of these young girls, otherwise we will never break the cycle.
For a number of reasons recorded in the register, I visit scores of schools each year. So many girls describe the sports changing room as if it were a gangplank. It is simply the worst moment in their time at school. This needs to be addressed. As my noble friend said, there are specific things here.
I am also a bit concerned as a non-pro about some of the murmurings that I am beginning to hear that sport has become more competitive and that this focus on the elite, the good and the excellent is further alienating young women who should be being encouraged to participate.
I wonder whether Her Majesty’s Government could insist that UK Sport and Sport England take a much stronger position on gender and make their funding of professional sports bodies conditional on imaginative and proactive programmes designed to redress the balance between sportswomen and their male colleagues. As it stands, there are six governing bodies, including cycling, that do not have a single woman on their board.
How important is it for the young women whom we are discussing in this Room that the vilification and objectification of sportswomen, such as Rebecca Adlington or Marion Bartoli, to name just two, should be simply unacceptable? Those women, both talented and triumphant in reaching their aspirations—and ours for them—are a crucial part of the solution. John Inverdale and Derek McGovern today are part of the problem. I feel that all publicly funded bodies—indeed, all sports bodies—should speak publicly and loudly against this kind of offensive abuse of women at the top of their game and the top of their bodies.
It is a miserable state of affairs that the promise of the Olympic legacy one year on has been found so wanting. The Beyond 2012—Outstanding Physical Education For All report states that very few schools have found a balance between participation and elite performance. I am consistently disappointed that the Minister for Education fails to recognise that we must educate the whole child in drama, art, relationships and sexual education, and sport. Happy, fit and confident young people are ready to learn and excel in the ways that we wish them to.
Sport delivers physical confidence and competence. It is essential for health, and it plays an important part in rehearsing social relationships. It allows a young person to feel their strength rather than worry about how they are seen. It helps brain plasticity and developmental growth. As my noble friend said, it is disappointing that DCMS, the Department for Education and the Department of Health publish report after report, all of which we were sent by the Library, yet we do not have a joined-up and effective post-Olympic strategy that even begins to address the statistic that only 12% of girls undertake the recommended amount of activity. That young women do not participate is a problem for us all. In the words of the previous debate, we must not leave them behind.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Baroness, Lady Grey-Thompson, for initiating this debate today, contributing in a thoughtful way and raising some important and complicated issues, as did the other speakers. We have had a very wise and well informed debate, and I am conscious that I may not be able to live up to it because, rather like the noble Baroness, Lady Kidron, I can talk about sport more than I can do it. I occasionally put my running shoes on—not often enough, I am sure.
The fact is that we have been faced with some pretty depressing statistics about young women’s alienation from sport and exercise. If we are not careful, this will develop—we can already see it developing—into on the one hand an epidemic of obesity among young girls and on the other a whole strata of young women with eating disorders or who resort to cosmetic surgery as a solution. That cannot be right and it shows a real distortion in the minds of young people that that is thought to be the solution to having a beautiful body. If we allow those trends to carry on, it is predicted, for the first time since records began, that the next generation will have a lower life expectancy that the previous one—and that when we have so much good food and capacity for healthy living. It is a real challenge to us. Meanwhile, as noble Lords said, an inquiry by the All-Party Parliamentary Group on Body Image heard evidence that more than half the public had a negative body image, and girls as young as five worry about how they look.
We can place clear responsibility for this at the door of the media. We have heard some examples of that this evening. But that is an easy cop-out because, in a sense, we all bear some responsibility for what has happened. All of us, to a greater or lesser degree, have subliminally absorbed some of those messages. Even people who should be more intelligent and knowledgeable seek to improve their body shape and allow their self-confidence to be damaged by images of people with a more perfect body. For example, I think I have been on a diet for most of my adult life. I am probably still on one. I am not quite sure when the last one finished and the new one started. I would like to think I am a sensible grown-up but I still allow myself to be trapped by those sorts of quick fixes about how to get my body back in shape.
As noble Lords have said, although exercise has a crucial role to play, nutrition and the whole concept of food—understanding it and a healthy relationship to it—are equally important in this whole debate. For example, schoolgirls often oscillate between skipping meals and snacking on calories at fast-food outlets. They get into a cycle of unhealthy eating and body rejection. The noble Lord, Lord Addington, made the point that this is not just about girls but about all young people, yet there is a particular problem about girls. A research project by University College London showed that only 38% of girls had an hour’s exercise a day compared to 68% of boys. We can probably all identify with that: it feels about right.
How do we address this problem? We have to start with the school experience. Regrettably, we are still picking up the pieces from the early decision of the coalition to pull the funds from the school sports partnerships. For the first time, we had a successful model of school activities for all ages, combined with targets for every child to do at least two hours’ PE a week. We were well on the way to achieving that goal when the funding was withdrawn. Although some of the money has been reinstated following massive protest, it no longer has the same coverage, co-ordination or clout. In retrospect, that decision was a disaster for sport in schools, particularly as it coincided with the Olympics. It is not surprising that the recent Lords Select Committee on the Olympic and Paralympic Legacy was so critical of what had happened in school sports over that period. What steps are being taken to retrieve the situation and ensure that, going forward, we provide a comprehensive PE programme in schools?
There is another aspect of school sports policy, one that has already been touched upon, where the Government have been equally misguided. Unfortunately, Michael Gove’s decision to focus on competitive team sports has been a complete turn-off for many girls. This has been compounded by the Prime Minister’s disparaging comments about Indian dance. Sadly, both examples illustrate that the Government do not really understand the psychology of teenage girls. We have heard some examples of the problems of teenage girls and how anxious they feel about being expected to join in some school sports activities. Can the Minister reassure us that the Government have now got the message that we need a range of exercise options to ensure the widespread participation of girls in school sports?
Surely, the strategy has to be to start addressing the issue in early years. We have to find ways of making sport fun; anything, I would say, to keep girls moving so that they get to the point where they feel the natural high that you get from exercise. If you have not had it once or only have it occasionally, you do not crave it any more, but we all know that when you are exercising well and properly it is both physically and, in the same way, mentally rewarding. We somehow need to get them on that loop of progressive physical and mental benefit. We obviously welcome the money that the Government recently invested in primary school sports but, again, we are concerned that it has a two-year limit. I am anxious that that is not enough to ingrain a new sports ethos. Perhaps the Minister can also address that point.
If we are to be effective, we have to create a “sport for all” policy which is not just about the achievement of the most talented and able. Sport in schools should be about establishing healthy lifestyles that can lead to a healthy body weight in adulthood as well. As the noble Baroness pointed out, we need to break the cycle whereby young girls are so embarrassed about their bodies that they refuse to wear sports clothes, which they feel would expose them to ridicule. For example, a recent study found that 41% of women avoid exercise altogether because they are worried about their appearance and the clothes that they would be expected to wear. A survey by the beauty product brand Dove’s Campaign for Real Beauty showed that 22% of girls would never go to a beach or a pool for similar reasons—because they are concerned about the clothes that they would have to wear in their circumstances—and that is just very depressing.
We will not break these cycles of the lack of exercise and body loathing unless we educate young women to rise above the advertising and social media hype, and love their bodies for what they are. There is a role for role models, particularly sporting icons, but it is wrong to place too much emphasis on them. What we need are images of women being active in all sorts of aspects of their lives—as second nature and as an essential part of their lives. Media coverage of women’s sports could also do a great deal to spark interest and participation. We could also do a great deal more to invest not only in women coaches but in local women’s sports clubs.
The Government’s Body Confidence campaign is a good initiative but it needs to be rolled out as part of a comprehensive PSHE curriculum. Perhaps the Minister could update us on the plans for the roll-out of this campaign. At the same time, we have to accept that health professionals need better training, so that they are better able, particularly in schools, to address the issues of obesity and body image when they talk to young people.
I agree with the noble Lord, Lord Addington, that the use of the body mass index as an indicator of health is very limiting. Perhaps we should be looking at replacing it, or supplementing it with more accurate measures of overall health, such as cardiovascular fitness, waist circumference and body fat composition. There is a debate to be had about that. Can the Minister confirm whether such a move is being considered? Ultimately, I believe that we will only improve young women’s body image and physical health if we can find a way of making sport enjoyable again at all ages. That is our real challenge and I look forward to hearing what the Minister has to say on the issue.
Baroness Northover (LD)
My Lords, I thank the noble Baroness, Lady Grey-Thompson for tabling this important debate and opening it so effectively. The debate has been wide-ranging, as was the previous debate, and I may need to write to cover anything that I do not have time to address.
The noble Baroness, Lady Grey-Thompson, and other noble Lords are right. There is no doubt that sport and physical fitness play a significant role in promoting a positive body image among young women. Similarly, women with good body confidence are far more likely to participate in sport. Participation in sport does not just get women fitter, it improves their resilience, confidence and self-belief, as noble Lords have said. As the noble Baroness, Lady Jones, said, it is physically and mentally beneficial. Noble Lords will be familiar with my honourable friend Jo Swinson’s work on body confidence. I thank the noble Baroness, Lady Jones, for her tribute to it and the noble Baroness, Lady Kidron, for her reference to it.
We know that girls and women, in particular, but also boys, can have low body confidence which affects their very sense of self. Low body image can contribute to poor mental well-being, eating disorders and a number of risky behaviours. As the noble Baroness, Lady Kidron, made clear, the media’s focus on an unrealistic image can be very damaging; my noble friend Lord Addington also took up that point. It is not just girls who are affected. Studies show that one-third of adolescent boys have been on a diet to change their body shape. That is chilling.
We have been working with the media, advertising, retail and fashion industries to encourage a more diverse and realistic representation of human bodies. I note what my noble friend Lord Addington said about what bodies are for, as opposed to what they might look like. Clearly, the way that the media represent bodies affects involvement in sport. Almost a quarter of girls aged seven to 21 do not participate in exercise because they are unhappy with their body image. I was struck by what the noble Baroness, Lady Kidron, said about changing for PE and games.
More than half of the bullying experienced by young people focuses on appearance, so the noble Baroness, Lady Grey-Thompson, and others are right: poor body confidence can block people from involvement in sport; yet involvement in sport can promote better body confidence. Sport has the potential to show young people that they can master new skills and increase their self-esteem, whether individually or in teams. There has been some discussion of that.
Physical activity helps children developmentally and can often promote a sense of well-being. My noble friend Lord Addington is clearly alive and well despite whatever his BMI might be, which is clearly made up of some weighty muscles. I can vouch for that by his effectiveness when it comes to the annual parliamentary tug-of-war. You want to have him on your side.
The point has been made to me that we need to help not just young women but middle-aged and older women to tackle negative messages. We have packs for parents and teachers of primary school children, which have been developed with the Media Smart trust. They have been downloaded 35,000 times, so they are obviously being used. They will include a guide for parents of teenagers during 2014. I hope that the noble Baronesses, Lady Kidron and Lady Jones, will be pleased to hear about that.
Obviously, we recognise that competition is not for everyone—a point made by the noble Baroness, Lady Kidron. Just as people are diverse, sports in schools need to be diverse. We share the goals of noble Lords in trying both to address body image and to encourage children, young people and everyone to keep themselves fit through various physical activities or through involvement in competitive sport.
I assure noble Lords that the Government remain committed to delivering a lasting sports participation legacy from London 2012. The long-term trends show that we are on track; 1.4 million more people are playing sport regularly since we won the bid in 2005. We are committed to building on that and are delighted that there are good underlying trends in the number of young people, women and disabled people playing sport regularly. Recent data show that 6.8 million women do sport at least once a week, every week. This demonstrates an increase of half a million from 2005. However, we are not sanguine about this and realise that it needs to go a great deal further.
There is still a gender gap in sports participation, but it is shrinking and our ambition is to close it by 2022. That is why, through Sport England, we have put in place a strong programme of different approaches designed to get more women playing sport each week. These include investing £2.3 million of lottery funding in the I Will If You Will project, a year-long pilot in Bury that began earlier this year. This project focuses on listening to why women are not attracted to sport and exploring ways to give them the fitness opportunities they want. There is scope to roll out the emerging solutions across the country so that others can share in the programme’s insights. There are now 100 girl-only satellite clubs in secondary schools which offer opportunities to take up a variety of sports, including netball and football.
My noble friend Lord Addington referred to coaching. Some 31% of sports coaches in the UK are women and Sport England is investing £5 million to improve the standard and availability of coaching. That includes a pilot project to recruit and retain 500 new female coaches in the south-east. The aim is to roll this out nationally from 2015 and to recruit up to 5,000 new female coaches. We recognise the importance of what the noble Lord is saying.
In addition to these activities, we recognise that we need to focus on the involvement of women in sport at the highest level. That is why my right honourable friend the Secretary of State for Culture, Media and Sport recently set up a women and sport advisory board. It has some impressive people serving on it and they are already providing new ideas and support to take the programme forward. We are determined to increase women’s participation in sport, to raise the profile of women’s sport in the media and to get more women into senior roles within sports bodies.
One of the challenges this group will examine is how to raise the profile of women’s sports coverage. In many ways it is encouraging to hear the noise that is being made, not least by women journalists, about this and to see it being pushed forward. Having been familiar with this field for many years, it is good to hear different voices coming in and arguing the same case. The Women’s Sport and Fitness Foundation estimates that before the 2012 Games, only 5% of sports coverage was dedicated to women’s sport. While broadcasters, in particular, have improved things recently, we are always looking at ways of boosting the media profile of women’s sport.
We are also working to help make sports boards more balanced and representative bodies, and Sport England and UK Sport are leading by example on this with women in senior management positions within the organisations at board and CEO level. I should tell the noble Baroness, Lady Kidron, that we expect all national governing bodies for sport to have at least 25% of women on their boards by 2017, and 24 out of 57 national governing bodies already meet this target.
The noble Baroness, Lady Jones, asked me about school sports. She will be aware that despite the previous Government’s no doubt admirable efforts to try to improve them in their time in government, and despite a £2.4 billion investment, only two out of five pupils were competing regularly, which did not seem to be the most effective way of moving the issue forward. Schools obviously remain free to work in partnership if they wish, and a £300 million fund has gone into school sports, which is in the hands of head teachers. We are seeking above all to increase participation for everybody right across the age range. I recognise what the previous Government did and hope that we can take forward that further and wider participation.
The noble Baroness, Lady Grey-Thompson, asked about working across departments. Sometimes I think that we Lords Whips are joined-up government. I used to deputise in health and DCMS matters, and I now lead for GEO and various other things. From my time working across all these departments, I know that these issues come up in every department and I assure the noble Baroness that there is discussion between them. GEO is currently housed within the DCMS, so Helen Grant is in both, and Jo Swinson is working across departments from BIS to GEO and the DCMS.
I realise that I am about to run out of time. In conclusion, it is enough to make me weep to hear about Rebecca Adlington. I know, tangentially, as it were, how much she has put in to reach this point. My kids trained at the same swimming club as her fiancé, Harry Needs, and I know about the early mornings, the late nights, the galas and the falling into bed absolutely exhausted. That is what she has done, and much more, to get to where she is. She should be proud of what she has achieved, and we should be proud of what she has achieved. As we celebrate people’s diversity and encourage girls, as well as boys, to have the confidence to participate in sport, keep themselves fit and find satisfaction in doing so, we will help to address this linkage between how people view themselves and their body and the way they participate in society and, through that, in sport.
House of Lords
(10 years, 5 months ago)
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Food: Food Banks
(10 years, 5 months ago)
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Lord Haskel
To ask Her Majesty’s Government what is their response to the request by the Executive Chairman of the Trussell Trust for an inquiry into the causes of food poverty and the incidence of the usage of food banks.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, the Government recognise the good work of organisations that redistribute surplus food to those who might otherwise struggle to access nutritional meals. However, the root causes of household food insecurity are varied and complex. We are not proposing to record the number of food banks or the potential number of people using them or other types of food aid. To do so would place unnecessary burdens on volunteers trying to help their communities.
Lord Haskel (Lab)
My Lords, yesterday I visited the Trussell food bank in Richmond—the third wealthiest place in the country. There the food bank distributes a tonne of food a month, up 60% on the year, to people referred to it from 40 agencies, many of them associated with the Minister’s department. Is the Minister content to leave it to charity to feed thousands of people who fall through the cracks of his department? Does the Minister agree that this food poverty must not—cannot—go on? How will the Government bring it to an end?
Lord De Mauley
My Lords, the gist of the noble Lord’s question was whether the Government think that it is okay to rely on the voluntary sector. The answer is no. The Government recognise the good work of charitable organisations that redistribute surplus food, but the Government also have a role. It is not the Government’s role to set prices, but we work to promote open and competitive markets that help to offer the best prices to consumers. Through Healthy Start and other initiatives, we provide a nutritional safety net in a way that encourages healthy eating among more than 500,000 pregnant women and children under four years old in very low-income and disadvantaged families throughout the UK.
Lord Martin of Springburn (CB)
My Lords, is it not the case that we are subjecting people—decent men and women—to great indignities by having them queue up for food at the food banks, and that we should find some other way of helping families in need?
Lord De Mauley
I agree with the noble Lord. Of course we appreciate that some of the poorest people are struggling. The best way to help people out of poverty is to help them into work. The latest labour market statistics show employment up, unemployment down and the number of workless households down. We operate a number of government initiatives aimed at helping families with food: Healthy Start, Change4Life and the school fruit and vegetable scheme; and we are extending free school meals. In addition, there are a number of other measures designed to help households in the wider context: the personal tax allowance up £235 from April 2013, 2.4 million people taken out of tax altogether, and fuel duty increases cancelled, to name a few.
Lord Soley (Lab)
Do the Government not understand that while the international financial crisis has hit people on low incomes in many countries, in this country we have an additional problem that the Government are not addressing, which is that utilities—gas, electricity and water—are hitting people on low incomes so hard that they are choosing between the utilities and food? That is what the Government need to address.
Lord De Mauley
The noble Lord makes a fair point about energy prices. Although we cannot control volatile world energy prices, we can still help people get their bills down. The best way to keep everyone’s bills down is to help people save energy, ensure fair tariffs and encourage competition, and that is exactly what we are doing.
Baroness Parminter (LD)
My Lords, usage of food banks is rising right across Europe, including in the relatively wealthy countries of the United Kingdom, France and Germany. In light of this, what discussions have the Government had with the European Commission in advance of its planned initiative on sustainable food?
Lord De Mauley
My noble friend asks an important question. We have been working closely with the Commission and other member states with regard to the communication on sustainable food. We met members of the food and drink sector before responding to the Commission’s consultation in October. We have also convened a meeting between interested parties and the Commission. It is a very complex matter but we have ensured that the Commission is aware of the many sustainability and resource-efficiency initiatives undertaken by the UK food industry in recent years.
Lord Davies of Coity (Lab)
My Lords, does the Minister remember that a very long time ago a man by the name of Galbraith coined the phrase “private affluence and public squalor”? In view of the increase in poverty and the growth of food banks, does the Minister believe that this country is heading for the same situation?
Lord De Mauley
No, my Lords, and I think I have somewhat laboured the point as to the policy initiatives that we are following.
Lord Lucas (Con)
Does my noble friend not take comfort from the fact that there are poor people in Richmond, that we do not live in a segregated society, and that we are not wasting all the food that is in danger of going out of date but are finding a good place for it to go? What would the party opposite do—abolish food banks and send the food to landfill?
Lord De Mauley
My Lords, my noble friend makes a fair point. I am not going to accept his invitation to suggest what the party opposite might or might not do.
Lord McKenzie of Luton (Lab)
My Lords, is it not the case that the increased use of food banks is at least in part attributable to the fact that we have a harsher benefits system, a harsher sanctions system and a harsher hardship system? In the year to June, some 860,000 JSA claimants were sanctioned; under the new three-year sanction, which we were told would apply only to a handful of people, more than 700 people were sanctioned. How healthily can you eat on £42 a week?
Lord De Mauley
My Lords, I think it is right to expect claimants who are able to look for or prepare for work to do so. Claimants will only ever be required to meet reasonable requirements, taking into account their circumstances and capability. A sanction will never be imposed if a claimant has good reason for failing to meet requirements, and sanctions can be reconsidered or appealed. If claimants demonstrate that they cannot buy essential items, including food, as a result of their sanction, they can claim a hardship payment. This means that no claimant should ever have to go without essentials as a result of their sanction.
Lord Kennedy of Southwark (Lab)
My Lords, this year the Government commissioned research on the landscape of food provision. They have had the review since June; they have been reviewing it for longer than it took to write it. Is the reason why they have kept the report and have not published it yet the fact that it shows that the recent increase in food aid provision is due to their own disastrous policies? If I am wrong, publish the report.
Lord De Mauley
My Lords, the noble Lord is right that we have commissioned research to assess publicly available evidence on food aid provision in the UK, including food banks. This work will be made available in due course. All government-funded research reports are required to go through an appropriate review and quality assurance process before publication. The report will be published once this is complete.
Tanzania: North Mara Mine
(10 years, 5 months ago)
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The Lord Bishop of Wakefield
To ask Her Majesty’s Government what representations they have made to the government of Tanzania regarding allegations of human rights violations at the North Mara Mine.
The Lord Bishop of Wakefield
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as the joint leader of the Wakefield-Tanzania Diocesan Link.
Lord Ahmad of Wimbledon (Con)
My Lords, the UK’s high commissioner to Tanzania visited the North Mara mine in March 2013 to raise concerns directly about the alleged human rights violations with African Barrick Gold, the mine owner, and also discussed a range of issues with the local authorities. We are, of course, working closely with the Tanzanian Government on improving respect for human rights and also encouraging them to sign up to the voluntary principles on security and human rights in the extractive sector.
The Lord Bishop of Wakefield
My Lords, I thank the Minister for that response. Would he not agree, however, that the human rights abuse at the North Mara mine, which I have experienced directly and recently, ought to be solved by a proper community relations effort in the region, and would be best resolved by a conciliar process, taking into account community leaders, Barrick Gold and the local police force? What further steps might the Foreign and Commonwealth Office take, please, to move that forward?
Lord Ahmad of Wimbledon
I agree with the right reverend Prelate, and ABG—Barrick Gold—has taken various initiatives. Indeed, our high commissioner, on visiting the area, found that up to $12 million-worth has been spent on corporate social responsibility, including healthcare centres, schools and water boreholes. There is more to be done. For example, she pointed out that although there is a healthcare centre, it is not properly manned with healthcare professionals. We have taken this up with the local authorities, working with our EU partners on the ground.
Baroness Kinnock of Holyhead (Lab)
My Lords, is the Minister aware that African Barrick Gold, which is a British company, has continued to rely on the Tanzanian police to provide security at the North Mara goldmine, despite the shocking number of gunshot deaths and injuries to local people? Will the Government put pressure on African Barrick Gold and insist that it respect the human rights of desperately poor and vulnerable people?
Lord Ahmad of Wimbledon
My Lords, it is my understanding that Barrick Gold is actually a Canadian company, although it is listed on the London Stock Exchange. As for the other matter that the noble Baroness raises, I agree with her: of course it is important for all companies, including Barrick Gold, to work with the local people on the ground to ensure that any human rights violations are addressed. Secondly, I notice that the main purpose of people being there with Barrick Gold is employment, to ensure that local people get the opportunity to gain full employment.
Lord Dholakia (LD)
My Lords, there is a lawsuit by the local residents against the company alleging that it is responsible for injuries to local villagers. While we await the outcome in the court, would it be appropriate to ask the Tanzanian Government about the role of the police in the death of at least six villagers? Should we not encourage them to investigate this matter, as a human rights violation in those mining communities? I declare an interest, as one born in Tanzania.
Lord Ahmad of Wimbledon
My noble friend, of course, knows the country much better than I, and I take on board his valid points. My understanding is indeed that the police authorities and the local authorities are looking at the incident and investigating it. I assure my noble friend that my honourable friend Mark Simmonds, the Minister for Africa, has raised the issue on three separate occasions this year when meeting officials from the Government.
Lord Triesman (Lab)
My Lords, the Minister is right—it is a Canadian company—but it is listed in London and, potentially, we have some responsibilities. Quite aside from the North Mara mine, there are many other reports of human rights issues involving this company—at Marinduque in the Philippines and in Papua New Guinea, where rape victims, allegedly, of the guards employed by the company, have been offered a minimal remedy provided that they give up all legal proceedings. In New Zealand, superannuation funds have now excluded investment in this company. Will the Minister give an undertaking on behalf of the FCO that in the next FCO human rights annual report the dealings of that company will be reviewed?
Lord Ahmad of Wimbledon
I shall certainly take back the views expressed during questions to my noble friend and, indeed, to my right honourable friend the Foreign Secretary. Let me assure the House that ABG is signed up to the voluntary principles on security and human rights. That is a point that we have again reinforced in discussions and representations made.
Lord Avebury (LD)
My Lords, given that this company is listed on the Stock Exchange, what are the responsibilities of the UK Listing Authority in respect of a member company accused of serious criminal offences? Could my noble friend also say what sanctions there are against a company that contravenes the UN guiding principles on business and human rights in that its grievance mechanisms are neither transparent nor equitable?
Lord Ahmad of Wimbledon
My Lords, the Financial Conduct Authority, which includes the UK Listing Authority, is authorised to fine, suspend, prohibit, order injunctions and bring criminal prosecutions, or take other actions against firms or individuals acting illegally. The UN guiding principles are, of course, a voluntary framework, so sanctions would not be applied. But most companies understand the business argument for having transparent grievance mechanisms, not only for their own employees but also to hear local concerns in which they operate.
Bovine Tuberculosis
(10 years, 5 months ago)
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The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, there is, indeed, a debate among veterinarians on this matter. While the evidence does not provide a definitive answer, it is important to note that TB has been eradicated from Scotland and many other countries despite the use of artificial insemination and, furthermore, that bovine TB was already endemic throughout Great Britain well before the widespread adoption of AI in the 1950s.
Lord Dubs (Lab)
My Lords, is the Minister aware that I got the idea for this Question through talking to a local farmer in my valley in Cumbria? He told me that, although there were many badgers in the valley, there was no bovine TB at all, and that local farmers did not use artificial insemination. Given that there is at least some scientific basis for this, would it be right to pursue this rather than going for a badger cull for which the scientific evidence is doubtful?
Lord De Mauley
The noble Lord will not be surprised to hear that I do not agree with the last thing he said, but he might be interested to know that bull pedigree and TB data analysis of Holstein Friesian bulls, carried out by the Roslin Institute for Defra, have shown clear evidence of genetic variation to bovine TB susceptibility with a moderate heritability of 18%. However, no link was found in those studies between selection of bulls for milk yield and greater susceptibility to bovine TB. The study authors went on to conclude that,
“selection for milk yield is unlikely to have contributed to the current”,
bovine TB epidemic in Great Britain.
The Countess of Mar (CB)
My Lords, is it not the case that the bulls chosen at insemination centres are kept to the very highest health standards and are not exposed to TB in any way, and that artificial insemination is probably safer than the ordinary method of insemination?
Lord De Mauley
The noble Countess makes an extremely good point, and I cannot disagree with what she says.
Lord Soulsby of Swaffham Prior (Con)
My Lords, artificial insemination has been a practice in this country in dairy cattle for more than 30 years, and I wonder where this suggestion has come from. There is very little evidence—no evidence whatever to my mind—that AI can result in the transmission of TB to cattle. I hope that the Minister will scotch that idea, because we have an amazing health record in this country for AI and tuberculosis control.
Lord De Mauley
I am most grateful to my noble friend because he enables me to say, perhaps more categorically than I said to start with, that research indicates that there is no link between TB susceptibility and milk production traits.
Lord Clark of Windermere (Lab)
Will the Minister accept my noble friend’s point that in many parts of the country there are plenty of badgers but no TB, and that one of the dangers is not the badgers bringing in TB to the cattle but cattle imported from other parts of the country being transferred into these areas?
Lord De Mauley
My Lords, that is something on which we can all agree. Indeed, our strategy is based on TB being particularly rife in the south and west and moving northwards and eastwards, but in the part of the world that the noble Lord, Lord Dubs, comes from it is not yet endemic in the badger population. What we find in the high-incidence areas is that it forms a reservoir in that element of wildlife, unfortunately badgers. As I say, our strategy is built on trying to slow the spread across the country.
Viscount Ridley (Con)
My Lords, I declare an interest as somebody who has just sold a much loved White Park bull from Northumberland to Gloucestershire, where it promptly got TB and died. The lesson I have learnt is that in future I am going to use artificial insemination instead so as not to risk these animals.
Baroness Parminter (LD)
My Lords, the Minister said that there is an ongoing debate about the role of artificial insemination, and therefore it could merit further research. I suggest that the Government could use the money they are putting aside to research the gassing of badgers, which was deemed inhumane by a Member of this House’s committee in the 1980s.
Lord De Mauley
I can confirm to my noble friend that we are indeed continuing research into AI.
Lord Elystan-Morgan (CB)
The Minister may well recall some weeks ago, in reply to a supplementary question which I raised, that I was told that about 50% of bovine tuberculosis was attributable to badgers and about 50% to other sources. Can the Minister tell the House roughly, in the last financial year or in any other meaningful period, how much money from public sources was spent in relation to non-badger-related bovine tuberculosis?
Lord De Mauley
My Lords, perhaps I should clarify the answer I gave to the noble Lord. Research by Professor Christl Donnelly indicates that up to 50% of infections in the high-incidence area are due to badgers. Bovine TB can affect a wide range of species, including pigs, sheep, goats and camelids; it can affect wildlife—for example, badgers and wild deer—and pets, including cats and dogs, and of course humans. The key thing, however, is that in cattle and badgers the infection is self-sustaining. It is thought that most other species generally only act as spillover hosts.
Lord Knight of Weymouth (Lab)
My Lords, the Government’s strategy is obsessed by badgers and the transfer in what is a really difficult issue for farmers and is costly to the taxpayer. What are the Government learning from the recent outbreak of bovine tuberculosis in County Durham, clearly caused by cattle-to-cattle transmission?
Lord De Mauley
I cannot accept the noble Lord’s first contention, but in response to his question about Durham, this is a beef-fattening unit, and it will therefore have bought animals in from elsewhere. That is why we introduced risk-based trading in partnership with auctioneers and the industry, to provide fuller information about TB status and history of selling herds to the market. Initially this is on a voluntary basis, but we will look at it again if necessary. We are also considering post-movement testing of cattle for those moving from high-incidence areas.
Baroness Hayman (CB)
My Lords, when I arrived at the Ministry of Agriculture in 1999, I was told that a vaccine for bovine TB was 10 years away. I was quite enthusiastic until I learnt that every Minister for animal health during the past 40 years had been told that a vaccine was 10 years away. More than 10 years further on—and I suspect that the same message has been given ever since—could I ask the Minister what the timeframe is now thought to be?
Lord De Mauley
That is a very interesting question, because we had the same discussion with the EU commissioner, Commissioner Borg, on that very subject and he, rather surprisingly, gave the same date. Developing both an oral badger vaccine—noble Lords will know that an injectable badger vaccine already exists—and a cattle vaccine remains a top priority for the Government. Since 1994, more than £43 million has been spent on developing a cattle vaccine and an oral badger vaccine. We have committed to investing a further £15.5 million in vaccine development over four years, but it is an extremely complex issue, involving extensive field trials and so on.
Local Authorities: Child Protection
(10 years, 5 months ago)
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Baroness Howarth of Breckland
To ask Her Majesty’s Government what steps they will take to ensure that local authorities have sufficient social workers employed to undertake child protection work in their areas.
The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)
My Lords, local authorities are responsible for judging what the level of need is locally and recruiting accordingly. Ofsted inspects children’s services and, if an authority is judged inadequate in its provision, we intervene. We should not judge the success of local authority children’s services solely by the size of their workforces. Management is also very important, as is the quality of social workers. However, since 2010, we have spent nearly £0.25 billion on social work training programmes and I am delighted to say that one of these, Frontline, has received more than 5,000 applications from top graduates in just a few weeks for its first 100 posts. The other, Step Up to Social Work, for career-changers with good first degrees, has already trained nearly 400 people and has a third cohort of 320 people in 76 local authorities beginning next year.
Baroness Howarth of Breckland (CB)
I thank the Minister for his reply, but only last week the Association of Directors of Children’s Services said that child protection services in England were under greater pressure than ever. We also heard last week that, following the Francis report, the number of nurses in hospital wards is to be monitored. We have a ratio for the number of children to teachers in education, yet social workers up and down the country are left to deal with uncontrolled caseloads—when the next case comes in, someone has to take it.
With the number of children in care at the moment at a higher level than in the past 30 years and social workers suggesting that the level of need required to get support is greater, is it not time for the Government to do even more to intervene? The position is dangerous for children at risk and social workers alike, and responding simply by saying that social workers are committed and hard-working, and that more money is now being put in, is not good enough. Are the Government waiting for the next report of a child’s death, when no doubt it will not be the institution seen as responsible but some poor individual social worker? Is it not time that greater attention is paid at a national level to what is a crisis in our children’s services?
Lord Nash
The noble Baroness speaks with great experience in this area and anything she has to say on the subject we should all listen to very carefully. We all acknowledge that social workers have a very tough job and, of course, we hear only about the disasters—there are plenty of Daniel Pelkas or Hamzah Khans whom they save and whom we never hear about. It can be a question of volume of cases, but there is evidence that there is no direct correlation between failure and caseload; indeed, a number of local authorities have failed with relatively mild caseloads. It is a question of managing those caseloads and whether the more experienced social workers get the more difficult cases. The Troubled Families programme, for which we have just announced an investment of a further £200 million, is undoubtedly helping in this regard, as are innovative ways of working such as those seen in Hackney. It is also a question of local authorities recruiting better managers for these services.
Baroness Eaton (Con)
In the light of the increased numbers of children in care, what steps is my noble friend the Minister taking to ensure sufficient numbers of adoptive parents are recruited?
Lord Nash
My Lords, this matter is at the top of our list of priorities and my right honourable friend the Secretary of State for Education feels extremely strongly about it, as does my colleague Edward Timpson. We have established the adoption leadership board to drive improvements in adoption recruitment. We have the adoption scorecard, and the adoption support fund for voluntary agencies. We have invested £150 million in the adoption reform grant, and are encouraging partnerships between local authorities and voluntary agencies. Through the Children and Families Bill we are also opening up access to the adoption register.
I can report some good news. Today we announced that in the past year we have recruited just over 4,000 new adopters, an increase of 34%. Nevertheless, the gap between children waiting to be adopted and the numbers of adopters is sadly still widening.
Baroness Pitkeathley (Lab)
My Lords, does the Minister agree that child protection, such as that called for by the noble Baroness, Lady Howarth, requires not just numbers but intense social work casework with troubled and problem families? If there were sufficient people undertaking enough of that, would it help to address some of the horrific problems that we heard about this morning from the Deputy Children’s Commissioner of children being forced into sexual activity, often associated with violence, at an unacceptably young age?
Lord Nash
The matters to which the noble Baroness refers are of course shocking. As I say, we have innovated and started the Troubled Families programme. It seems to be working well and having quite substantial effect, which is why we are expanding it to 400,000 high-risk families until 2016.
Lord Storey (LD)
My Lords, my noble friend the Minister will be aware of the child protection register, which is an important means of recording children at risk. There is also an opportunity to be proactive through use of this register. What plans do Her Majesty’s Government have for the child protection register in future?
Baroness Hughes of Stretford (Lab)
My Lords, in the light of the shocking findings published today by the Children’s Commissioner—that the extensive use by boys of adult pornography is fuelling sexual exploitation and abuse of girls on an apparently massive scale—what action are the Government taking to ensure that social workers and teachers in particular are better equipped to protect young people from this new and escalating abuse taking place among them? In view of the widespread concern across the House about these serious issues, will the Minister host a meeting with the commissioner and interested Peers to discuss further her findings and recommendations?
Defamation (Operators of Websites) Regulations 2013
(10 years, 5 months ago)
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Lord McNally
That the draft regulations, draft order and draft rules laid before the House on 14 and 21 October be approved.
Relevant documents: 10th and 11th Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 19 November.
Financial Services (Banking Reform) Bill
(10 years, 5 months ago)
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16:44 - Division on Amendment 3 - Ayes: 220 / Noes: 229 - Amendment 3 disagreed.
17:53 - Division on Amendment 21 - Ayes: 222 / Noes: 217 - Amendment 21 agreed.
Lord Barnett
Lord Barnett (Lab)
My Lords, in Committee I promised the House that I would table amendments to debate the question of whether we should have separation rather than the present system. The arrangements under the Bill show that it may not work very well.
The speakers we had on the first day in Committee went to the heart of the issue. The noble Lord, Lord Turnbull, a distinguished former head of the Civil Service, told us that the amendment he moved dealt with the whole issue. In practice, I hope that my amendment deals with what I said it would deal with. However, given the problems with drafting amendments to this complex Bill, I had to use the services of a very excellent person in the Public Bill Office, Simon Blackburn. Between us we drafted the amendments, which I hope work. If they do not, and the House agrees, no doubt the Minister will be able to amend the amendments to make sure that they do what I want them to do—that is, reconstruction, not ring-fencing.
The noble Lord, Lord Turnbull, told us at col. 18 —and of course he knows about these things—that the Government’s response to the problem here, and what they plan to do, is to “change banking for good”. Of course, if that could be done, it would be marvellous. However, the plain fact is, as the noble Lord, Lord Turnbull, pointed out, that the reality is somewhat different. The Government have, of course, embraced some recommendations, but the provisions in the Bill make sure that they are heavily diluted. Speaking as a senior official, the noble Lord knows about dilution. Certainly, if you look through the Bill, there are all kinds of dilutions and provisions that make a nonsense of the original recommendation. However, with this complex new Bill it is good to have a former distinguished leader of officials tell us what it will and will not do.
The noble Lord went on to speak about the vigorous debate the parliamentary commission had on Glass-Steagall, which is the US separation of banking. He said that eventually they came down against it because the United States had abandoned it. He was followed by my noble friend Lord Eatwell, who spoke of the importance of reviews. He said that what is being proposed here is,
“a leap in the dark and we have no idea whether it will work”.
As it is, it is a “novel innovation” and we,
“cannot be sure whether it will … have … unintended consequences”.—[Official Report, 8/10/13; col. 20.]
I do not know what kind of unintended consequences those might be, but clearly all kinds of consequences could arise from not dealing with the real issue here.
We therefore have my new amendments, which I hope that the House will eventually approve. However, we are a long way at the moment from achieving what we all want to see. We started with a Bill of 37 pages; the noble Lord, Lord Deighton, paid a well deserved tribute to his staff, who had converted 37 pages to 170 pages—virtually a new Bill. By the time we finish it is likely to be more than 200 pages long, as he knows from his own amendments that have been tabled. I certainly share his approbation of his officials, who have done an incredible job in the most difficult of circumstances. I have never known a Bill of this kind before in either House of Parliament. However, I assume that the House of Commons, which gave us this 37-page Bill, will now have to have a Second Reading on a new Bill, because it will not be able to cope with it as it is.
Lord Eatwell (Lab)
My Lords, I am grateful to my noble friend for moving his amendment and for pointing out the extraordinary complexity and confusion about the procedure that the Bill has gone through to get to this stage. As he pointed out, it came from the Commons as 35 pages and is now 170 pages. Substantial matters were introduced in Committee. Substantial errors were identified in Committee—even, as we shall hear, regarding the definition of a bank in a Bill on banking.
More substantial material is now being introduced under the more restrictive circumstances of Report, and I hope that the government Whips will restrain themselves if the rules are bent somewhat in our attempt to scrutinise nearly 200 new government amendments effectively. Yesterday, on the “Today” programme, the Chancellor announced that further substantial amendments will be introduced at Third Reading with respect to payday loans. Then the Treasury was circulating extra material in e-mails after 9pm last night. We have received copies of correspondence dated today between the Chancellor and the Governor of the Bank of England that changes the perspective on leverage. These measures are relevant to the most important industry in this country, and are measures to which we are supposed to give our consideration.
The correct procedure for a Government who are serious about getting this legislation right is to recommit the Bill. If they undertake that responsible step then we on this side of the House will give them every assistance in ensuring that the passage is completed within the restrictive timetable of a carryover measure. I understand the nature of the restrictions and realise that the Minister cannot make this decision at the Dispatch Box. However, will he at least give the House an assurance that he will take this proposal seriously and ensure that the usual channels also take it seriously?
On Amendment 1, moved by my noble friend, will the Minister tell us exactly what the phrase which my noble friend wishes to have omitted actually means? Can he give the House an illustration of the circumstances in which the taking of deposits from UK households and SMEs would not be a ring-fenced activity as the phrase suggests?
The Commercial Secretary to the Treasury (Lord Deighton) (Con)
My Lords, it is a great pleasure for me to resume our debates on the Bill. We do not believe that there is any need to recommit it. These are radical and important reforms—ring-fencing, bail-in, depositor preference, a new senior person’s regime and new criminal sanctions. The Government wish to put them in action, move forward and leave the period of deliberation behind. We wish to end the uncertainty for the economy, consumers and taxpayers that prolonged reviewing can bring. Where the reforms can be improved to increase their effectiveness, the Government have been prepared to listen, and you will see that we have responded. However, where the Government do not believe the proposals are backed by evidence, or are unreasonable, we have respectfully disagreed and set out our reasons. This is the approach that we have taken to all the amendments.
Specifically on Amendment 1, from the noble Lord, Lord Barnett, the ICB recommended that only retail deposits—that is, the deposits of individuals and small businesses—should be ring-fenced. This amendment would require all deposits to be ring-fenced. The ICB recommended that large organisations and wealthy individuals should be able—though, importantly, not obliged—to deposit with non-ring-fenced banks. This was because these depositors are sufficiently financially sophisticated to tolerate an interruption in access to a single bank, for example because they have multiple banking relationships. These sophisticated depositors therefore do not need the protection that is being mandated inside the ring-fence provides. They may choose to deposit in a ring-fenced bank if they wish, of course. It also provides a little bit more competition. It gives wealthy individuals and businesses the opportunity to shop around.
Large corporates and financial institutions also use complex financial products which ring-fenced banks will rightly be prohibited from selling. To obtain these products, such as complex derivatives, large companies or financial institutions will need to go to a non-ring-fenced bank. Given this, it is reasonable that these customers should be permitted also to deposit with non-ring-fenced banks, as the ICB recommended. The Government accepted the ICB’s recommendation. Therefore the Bill allows the Treasury to specify by order that a non-ring-fenced bank can accept deposits in certain circumstances.
The deposits of individuals—other than very wealthy and sophisticated ones—and small businesses will have to be within the ring-fence. There is no compulsion for large organisations or wealthy individuals to deposit outside the ring-fence, only the option for them to do so if they so choose. This option is provided for in secondary legislation. The Government published a draft of the relevant order for consultation in July this year. It is appropriate that detailed provisions such as this should be made in secondary rather than primary legislation to allow the legislation to keep pace with future developments in the market and to keep it fit for purpose. This approach was endorsed by the PCBS in its first report.
It is also important to highlight that under the Bill the Treasury does not have unlimited power to determine which deposits do not have to be ring-fenced. The Treasury may only allow deposits outside the ring-fence if it is convinced that doing so does not undermine the ring-fence and that the depositors concerned do not need the protection of the ring-fence. This is therefore a constrained power that is needed to implement the recommendations of the ICB. I therefore urge the noble Lord to withdraw his amendment.
Lord Barnett
My Lords, I do not think that the Minister has dealt with the central arguments about separation; he dealt mainly with something quite different and did not reply to my questions. Whether or not he has the information to hand, perhaps he could think about whether the staff of the FSA received millions of pounds in compensation for redundancy before they were reappointed to the FCA. Can he at least tell us that?
Lord Deighton
The central question of full separation is in Amendment 2, which we will address next, and we can go on to discuss it. With respect to the FSA redundancy arrangements, I would be delighted to write to the noble Lord with that information when I have it at my fingertips.
Lord Flight (Con)
My Lords, can I ask the Minister for a little clarity on ring-fencing in terms of what is in this pot and what is in the other pot? The point he has made is that the ring-fenced pot will essentially be individual family deposits while commercial deposits would be outside the ring-fence; but what about the other side of the balance sheet in the sense of which part of the loan portfolio is to be in the ring-fence and which part is to be outside it? My previous understanding was that the ring-fence was going to be all deposit-taking and all lending. My reservations, if you like, with regard to the Glass-Steagall solution are that history has shown it is lending and not investment banking that has always caused banks trouble. This time round it was CDO lending and the unwise lending by HBOS and RBS that actually caused the banks trouble. The idea of separating absolutely banking and investment banking as a great protection for the deposits of ordinary citizens is entirely false in terms of economic history.
Lord Deighton
The clarification is that the ring-fence effectively operates on the liabilities side, so we are dealing with core deposits. Just to correct the point and make it clear, the most sophisticated investors can be either inside or outside the ring-fence, and they have the choice. However, the asset side of the bank’s balance sheet is unconstrained in the rules.
Lord Barnett
My Lords, I will withdraw Amendment 1 and then move Amendment 2, although I spoke to it generally in my first speech and I do not wish to detain the House for too much longer. But as the noble Lord, Lord Lawson, said at the time, these are two totally different cultures and it is going to be virtually impossible to put the two together—those were his words. I therefore suggest to the Minister that Glass-Steagall, which worked for 60 years in the United States, could be made effective here if we had stronger regulations to make sure that those banking lobbyists could not succeed in stopping the separation. That was the major point that I made, and will continue to make. That is also where I would like to leave it so that the Minister can reply to Amendment 2. I beg leave to withdraw the amendment.
Lord Barnett
“Group restructuring powers142K Group restructuring of ring-fenced bodies
(1) A ring-fenced body may not be part of a group which—
(a) carries on an excluded activity or purports to do so, or (b) contravenes any provision of an order under section 142E.(2) The appropriate regulator must exercise the group restructuring powers if it is satisfied that a ring-fenced body is operating in contravention of subsection (1).”
Lord Deighton
My Lords, this Bill legislates for ring-fencing. That is the Government’s policy, not Glass-Steagall-style full separation. The Government support ring-fencing, but not as a compromise option or a lukewarm version of separation, and not as a watered-down policy. Rather, the Government have adopted the ring-fence after careful consideration of the recommendations of the Independent Commission on Banking. As noble Lords will recall, the ICB was established in June 2010. It deliberated for 15 months before making its recommendations in September 2011. As part of its deliberations, the ICB considered full separation as an alternative to ring-fencing, but it rejected that alternative and instead recommended ring-fencing. The Government have accepted the ICB’s recommendation, and the commission set out its rationale for rejecting full separation in its final report.
Let me remind the House of the ICB’s line of reasoning. The ICB argued that an effective, robust ring-fence would deliver the same benefits to financial stability as full separation, on the model of Glass-Steagall. A robust ring-fence will insulate vital retail banking services from shocks to global financial markets—for example, reducing the risk that British high-street banks will be brought down by swings in the prices of complex securities. Let us recall, too, that retail banking has its risks and that market discipline demands that badly run banks must be allowed to fail. If a retail bank fails, a robust ring-fence will enable the authorities to manage that failure in a controlled way, with essential services kept running with the core deposits we were talking about, but without any injection of taxpayers’ money. So, a strong ring-fence will minimise the chance that a future Government will ever be forced to bail out a failing bank. The moral hazard that encouraged excessive risk-taking before the recent crisis would be removed.
The ICB argued that a robust ring-fence would deliver the same benefits as full separation, and would avoid some of full separation’s main disadvantages. In particular, a ring-fenced bank that found itself in financial difficulties could be supported by other group members, such as a healthy sister investment bank. Full separation would not allow this. Essentially the ring-fence is a valve; it does not let any of the bad stuff get into the ring-fence but allows support to come in if it needs it.
Under ring-fencing, a banking group could offer a one-stop-shop service to customers, especially business customers, so there is a strong marketing advantage to the group. Deposits or simple loans could be arranged with the group’s ring-fenced bank, while more complex products are supplied by the group’s investment bank. Full separation would not allow this. Finally, the ICB estimated that by denying banks the legitimate benefits of diversification, full separation would impose higher costs—costs that would likely be passed on to banks’ customers and to lending.
In summary, ring-fencing will bring the same benefits as full separation, but with fewer disadvantages. A rational, sober evaluation of the two thus brought the ICB to identify ring-fencing as the superior policy. I would like to use this opportunity to put paid to some myths around ring-fencing versus full separation. First, some claim that full separation is simpler to legislate for, and there is no complexity. Any separation of banks’ business will inevitably involve detailed rules to specify where the line, whether it is a ring-fence or a complete separation, is to be drawn, and prescribe which activities must take place either side of that line. As banks’ business is complex and involves a wide range of different products and services, so drawing that line will inevitably be complex. But a line will have to be drawn and someone will have to decide what is in each separated type of bank. It is the same problem for ring-fencing and full separation.
Secondly, either form of separation will, unless vigilantly maintained, be vulnerable to erosion or bank lobbying. There are plenty of examples of that through history. I do not, therefore, accept that full separation is either more simple or more robust than ring-fencing. As I have already said, the ICB conducted an exhaustive and detailed investigation of the case for different types of structural reform before coming to its recommendation in favour of ring-fencing. That recommendation commanded a wide consensus—including regulators, industry and the Opposition. Let me quote the shadow Chancellor speaking in the Commons when the Government first responded to the ICB in December 2011. He said that,
“we, too, support the commission’s radical reforms on ring-fencing”.—[Official Report, Commons, 19/12/11; col. 1074.]
Of course, no matter what the weight of evidence, there will always be some who disagree with the consensus. But to those who advocate full separation as an alternative, we need to ask: what is the evidence that supports this alternative policy? Throughout this process so far, the Government have openly invited others to give their views and present new evidence. We consulted widely, and submitted this Bill to pre-legislative scrutiny by the PCBS to seek its input. I do not think that the PCBS produced hard evidence in favour of full separation. It presented nothing that compared the two proposals, although it elicited some strong expressions of scepticism on whether it would work. Those are valid. It is certainly a new way of doing things.
Baroness Cohen of Pimlico (Lab)
My Lords, I have spoken before against ring-fencing and for full separation. We may not be in any kind of agreement on that, but what we ought to be in agreement on is that ring-fencing will require particularly scrupulous and detailed regulation. It will require more of our regulators than full separation, because institutional separation to some extent requires less regulation.
I wonder whether we are quite sane in putting so much faith in our regulators. The people who gave us Mr Flowers as chairman of the Co-operative are hardly those I feel very confident about exercising the very complex regulation that ring-fencing will require. It is complex and it is difficult. It is more difficult than it needs to be than with the policy of full separation. I therefore continue to support my noble friend Lord Barnett in his amendment.
Lord Barnett
My Lords, the Minister has told us that the Government consulted widely and got agreement. Well, more recently, there were 300 professionals who were consulted in a survey and only 35 of them thought it would work. I do not know who he consulted. He also talked about the robust regulations. Who is going to supervise these robust regulations—the old FSA, now called the FCA? Is he confident that it can? I am certainly not clear myself, nor do many people have a lot of confidence that the old FSA, now the FCA, can do that job. He is confident, however, that it can.
My noble friend Lord McFall pointed out what Volcker said to that committee: the chairman of a holding company, of which some part got into trouble because of the lack of regulation or whatever—what would he do? I know what he would do. He would seek to save it. These merchant banks may lose money at times—indeed they have done—but most of the time they make a lot of money and do not want to lose it. They want it separated, but under the same roof, with one holding company. That is what they have got and are going to get under the new administration.
I cannot see this regulation working and would like to hear the views of any other Member of the House who has an interest in this.
Lord Flight
My Lords, can I ask the Minister whether I am right in thinking that the PRA would be the main regulator of the balance sheets of the two entities under ring-fencing, and not the FCA, which is about protecting customers? Secondly, if there were a Glass-Steagall separation, is the job not exactly the same, in that you would need to look carefully at a separate investment bank and a separate banking bank to make sure that one did not have things in it which ought to be in the other? I would have thought that the job of regulating would be exactly the same as under a ring-fenced structure.
Lord Deighton
I agree with my noble friend’s explanation of the roles and responsibilities of the respective regulators in each case.
The Lord Speaker (Baroness D'Souza)
Does the noble Lord wish to withdraw his amendment?
Lord Barnett
If the House is no longer interested in the matter, I beg leave to withdraw.
Lord Eatwell
“Full separation142VA General requirement of separation
(1) Where the members of any group include one or more ring-fenced bodies and one or more other bodies, the members of the group must, before the end of the period of five years beginning with the relevant commencement date, take steps to secure that there are no members of the group that are ring-fenced bodies.
(2) If in the case of any group steps to secure that there are no members of the group that are ring-fenced bodies are not taken within the period specified in subsection (1)—
(a) at the end of that period the Part 4A permission of each member of the group that is a ring-fenced body shall be treated as having been cancelled to the extent that it relates to a core activity, and(b) after the end of that period the appropriate regulator must refuse to give any member of the group a Part 4A permission to carry on a core activity.(3) At the end of the period specified in subsection (1)—
(a) section 142H, subsections (1)(b) and (4) to (7), and, in subsection (8), the definition of “specified”, and(b) sections 142K to 142V,cease to have effect.(4) In subsection (1) “the relevant commencement date” means the day appointed for the coming into force of section 4 of the Financial Services (Banking Reform) Act 2013 so far as it inserts this section.”
Lord Eatwell
My Lords, noble Lords will notice that Amendment 3 is identical to Amendment 6, which is in the name of the group of people who we could perhaps call the commissioners—members of the Parliamentary Commission on Banking Standards who have considered these matters with care and at great length. It is interesting that the noble Lord said just now that no evidence had been provided about issues associated with separation. The parliamentary commission provided extensive evidence, to which I would refer the Minister.
In speaking to Amendment 3, I will argue that the “reserve power” of full separation, as it was described by the parliamentary commission, is a logical and coherent part of the entire strategy of ring-fencing, which consists of three parts. First, there is the provision of the ring-fence itself. Secondly, there is electrification of the ring-fence in the case of individual groups that transgress and are subsequently required to separate. Thirdly, there is the measure put forward in Amendments 3 and 6, under which there is full separation where the process has not been followed successfully or appropriately by the banking industry.
The whole thrust of the commission’s report is about the need to maintain these three stages. Each reinforces the other. The noble Lord argued just now that the Government had seen no case at all for separation. Why then did the Government accept the case for the separation of individual groups should they transgress? That case came from the commission and the case for full separation came from the commission. If he accepts one, he should accept the other. It is quite ridiculous to suggest that the commission’s processes were somehow less rigorous than those of the ICB. Indeed, the whole package put forward in this group, which consists of the case for full separation as the final reserve power and the case for review, is a single coherent package. The case for review and the case for full separation, if that review should argue that ring-fencing is not working successfully, is a coherent structure set out by the commission. The Government are lopping off an essential leg of a three-legged stool.
Let us examine the arguments made against this amendment when it was first put by the commissioners in Committee. As well as the argument that it was somehow less rigorous—an argument that I think is almost offensive to the commission—the Government put forward the suggestion that, should the ring-fence not work, other options might be considered. The Minister raised the red herring of the possible introduction of a Volcker rule. Surely this is spurious, as here we have a coherent, structured package of three nested sets of measures to ensure the stability of the banking industry, which rely on and strengthen each other.
What I found most surprising in the Government’s rejection of the argument for full separation is that they rejected the idea that the ring-fence will consequently be made stronger by self-policing. The banks will have a major concern that others do not transgress lest they be caught in a final decision for full separation. The noble Lord said:
“The notion that banks will watch each other is not how the industry operates”.—[Official Report, 8/10/13; col.51.]
I must tell the noble Lord that that is exactly how a competitive market operates in a capitalist economy—everyone watches each other. The banking market is no different. Each pursues its own interest. As Adam Smith put it—the Chancellor of the Exchequer has taken to quoting him—it is not the benevolence of the butcher or baker that provides us with meat and bread, but the pursuit of their own interest. If the banks see it as being in their own interest to avoid full separation, we can be sure that they will take all necessary steps, including mutual surveillance, to ensure that full separation does not take place. That is why the commission’s proposal is such a strong one. It strengthens the ring-fence by giving those within it the incentive to ensure that it be maintained and be not transgressed. That is why this is a coherent package.
The Minister omitted to mention that the proposals for full separation are predicated on a thorough, independent review of the progress of ring-fencing. We have not only a nested structure, which strengthens at each stage, but, in the amendments put forward by the commissioners, a process of independent review that suggests when each stage should be introduced. That is why, for example, Amendments 15 and 195 are consequential on Amendment 3 and, with respect to Amendment 6—the identical amendment put forward by the commissioners—Amendments 15 and 196 are consequential. Those amendments involve the review of the entire procedure.
If we are to have a successful ring-fence, what better than to have a structure that incentivises the banks within it to maintain the integrity of the ring-fence? That is what the commission’s three-stage process does. I beg to move.
Lord Lawson of Blaby (Con)
My Lords, this is a very important Bill indeed. We all know the great damage that the banking meltdown in the western world has caused, not least in this country. This Bill seeks to deal with that. There are few more important matters—there may be more important matters in the world but they are not susceptible to legislation. This is a vital matter that we can do something about by legislation, and that is what this Bill is about.
In chronological order, I thank the noble Lord, Lord Barnett, for the kind things he said about points that I had made in earlier debates on this Bill. I agree with much of what he said. I also agree with much of what the noble Lord, Lord Eatwell, has just said. I congratulate the Government on setting up the Vickers commission, on having accepted the recommendations of the Vickers commission and on their amendment endorsing part of the recommendations of the Parliamentary Commission on Banking Standards, of which I was a member. The most reverend Primate the Archbishop of Canterbury was a distinguished member; I hope that he will contribute to our debate. The noble Lords, Lord Turnbull and Lord McFall, whose names are on Amendment 4, were also commissioners. I congratulate them on suggesting that there needs to be a review.
The Government have moved a very long way—and I am delighted—but not quite far enough. That is what we are discussing in this group of amendments. To get to the core of the issue, what the Vickers commission concluded and what the Government have accepted is that there is a problem with the relationship and, indeed, the mixing of commercial and retail banking with investment banking. The Vickers commission accepted that; that is why it introduced the ring-fence. The Government accepted that; that is why they accepted the recommendation of the Vickers commission for the ring-fence.
I have always been in favour of full separation—I came out publicly in favour of it long before the Vickers commission was even set up. We know that this works. It worked in the United States for many, many years under the Glass-Steagall arrangements and it is no accident that serious problems emerged after the Glass-Steagall Act had been repealed. Indeed, the Glass-Steagall Act would have worked for a great deal longer had not successive American Administrations been lobbied by the banks to introduce loopholes in one place and another. Anyhow, that is water under the bridge.
What is the danger? The danger accepted by the Vickers commission and the Government is twofold. First, although my noble friend Lord Flight is absolutely right that ordinary, plain, vanilla banking is a very risky business and often goes wrong, there is one particular range of risks in lending: the bad lending. In investment banking you had a whole new and very complex range of risks. It is not the case that nothing has ever gone wrong there; for example, there have been huge problems with derivatives that are a product of the complexity of investment banking. So there is first the question of whether it is sensible—when straightforward, plain, vanilla banking is risking enough —to add to that a whole new range of risks, a whole new complexity, which can make it more likely that the retail deposit-taking banks will get into difficulties. It must be unwise to do that.
The other problem is about the cultures. The Vickers commission did not talk about this, or think about it; it did not raise the issue of culture. But culture is very important. I was glad that when my right honourable friend the Prime Minister introduced the setting up of the Parliamentary Commission on Banking Standards, he explicitly said that it needed to look at the culture of banking, because something had gone wrong with it.
The culture of retail banking and the culture of investment banking are two quite separate things. One is, or should be, a culture of caution and prudence; the other is a culture of creativeness—which is very desirable—and risk-taking of a totally different order. That is another thing that the Vickers commission did not look at.
Now we come to the question of whether the proposal for a ring-fence will do the trick. We do not know. In the Parliamentary Commission on Banking Standards, we decided that although we had our doubts, it should be given a chance—but that there should be a proper review process, so that if it is proved not to be working, we shall move to something that will work.
Another of the things that the Vickers commission did not consider is the problem of governance. The ring-fence is a curious system, because there is one company with two subsidiaries—the retail bank and the investment bank—and we are told that they are completely separate, yet they are together. There is a real question whether that model of governance is workable. I know of distinguished bankers—at least one of whom is present in the Chamber as I speak—who have grave doubts on this score.
There is also a problem within the law. Boards of directors are responsible to the shareholders, so if there is complete separation it is clear that the board of the retail bank has responsibility to the shareholders of the retail bank and the board of the investment bank has responsibility to its shareholders. But under the ring-fence proposal there are two entities that we are told are completely separate, yet there is a single group of shareholders to whom they are responsible. We do not know whether this will work. We do not know whether there might be cultural contamination across the ring-fence. There is no legislation that can prevent cultural contamination, and that would be a very serious matter.
In the commission, we said that two kinds of review powers were needed. The first would look at individual institutions. If, after a number of years, we find that an institution has found a way round, or has burrowed under, the ring-fence and found a way of evading what the Government and Parliament decided, it should be obliged to separate its retail banking and its investment banking. But we also said that a second kind of review power was vital. The proposed system is a right idea of the Vickers commission. A number of the Vickers commission are friends of mine, they are very clever, and I have nothing against them—but they do not know whether it will work either. It has never been tried anywhere in the world, whereas complete separation has been tried, and it has worked. So it is vital that if the system proves not to do the trick, we move to complete separation.
Therefore, we need two kinds of review. The first is a review of an individual institution behaving in a way that undermines the ring-fence, and the second is a review to consider whether the system itself does the trick. The government amendment accepts in principle the first kind of review, but it does not accept the second kind.
I ask my noble friend to give a firm assurance that, as part of the review, the Government will look at whether the system is working and, therefore, whether full separation will be moved to. With the best will in the world, I know that he will wish to make it work, that the PRA and FCA will wish to make it work, and so will Uncle Tom Cobley and all. But if it is not working, will the Government look at full separation? Unless that undertaking is given here, in this House, I will seek to take the opinion of the House on Amendments 5 and 6, which are linked. Amendment 6 derives from Amendment 5, as noble Lords will know.
Given that the Government have gone so far, which I welcome, I hope that they will be prepared to make this further step and give this clear undertaking to the House.
Lord Flight
My Lords, I have broadly been in support of a Glass-Steagall separation of investment and banking banks, but there seems to me something slightly wrong with the concept of having a review and prejudging the outcome of that review. Playing devil’s advocate, I make a point on the other side of the coin. Europe has had universal banking for a long time; that is the banking tradition in continental Europe and there is still a case for universal banking to continue, although it is right out of fashion now. I repeat my point that, to a fair extent, the profits of investment banking have subsidised ordinary banking and benefited ordinary retail customers; the losses have generally come from bad lending. So it is slightly premature to prejudge the review. I cannot see what is wrong with having a review with the understanding that the Government will act on the basis of the recommendation of that review at the time. We will have moved on from the present and other factors may have come to light as well. I do not see what is gained by prejudging the result of the review.
The Archbishop of Canterbury
My Lords, as did the noble Lord, Lord Lawson, I begin by expressing my gratitude to the Government that they have listened to the speeches of many noble Lords and my PCBS colleagues on the need for a full and independent review of the ring-fence. I hope that they will realise that the amendments that have been tabled today are the final pieces of the puzzle in this regard. This work, combined with the vast improvements that we have seen to the electrification of the ring-fence—what is officially known as the first reserve power—is most welcome. The noble Lord, Lord Eatwell, put the case very clearly, not only for them but for the second reserve power. The Government’s approach to that is so far disappointing.
The Minister said that he believed that a robust ring-fence will work, and so do we, as the commission. It is just that we do not think that it is robust—that is the problem. The point of the second reserve power is to make the ring-fence sufficiently robust that it will carry the day if the first one is over a period of years overwhelmed.
The swirling floods unleashed in 2008 with the banking collapse continue to cause eddies all over our economy, particularly in the most vulnerable parts, which so many of us on these Benches are so deeply involved in supporting. Both the ICB and the PCBS concluded that the most appropriate way in which to reform the structure of the industry today is to have the ring-fence within a parent company. It is experimental —we hear the arguments, and we know so. This partial structural separation, with the added provision of ring-fence, should create a disincentive for banks to attempt to test the limits or game the ring-fence, but “should” is not sufficient.
The advantage of the second reserve power and the first reserve power together, in addition to the ones that the noble Lord, Lord Eatwell, put so eloquently, is that they give a second shot to the gun. If the first reserve power fails, and a bank or two has been forced into full separation but the whole industry is still gaming the system, then you have still got the second reserve power. It appears that the Government’s policy on this is to have only one shot and then to say, following that, “We’ll do something. As yet, we know not what. But we will do something, and it will be something very, very serious”.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I have not so far taken part in the debate on this Bill, although I participated during the passage of the earlier Financial Services Act. I therefore need to declare my interests as the chairman of two regulated entities and an as approved person under FiSMA.
I have listened carefully to the arguments deployed on both sides of this complex debate and have a couple of concerns about what is being proposed. The noble Lord, Lord Eatwell, described his amendments as designed to provide—I think that I have got the words right—a three-stage, self-reinforcing regulatory process. In doing that, he may have overlooked the degree of uncertainty that his amendments may cause. If I may follow his analogy further, I think that it is his amendment that may remove the third leg from the three-legged stool that he mentioned.
I agree with my noble friend Lord Lawson about the importance of reviews, particularly in cases where the likely outcome of fundamental legislation is so uncertain. In a parallel case in the Transparency of Lobbying Bill, I have tabled amendments that would have that Bill reviewed in a couple of years when one can begin to distinguish reality from supposition. I therefore favour reviews, but—and it is an important but—a review, as my noble friend Lord Flight said, must not begin with any presuppositions as to its outcome. If I may use a rather vulgar card-playing metaphor, one must not play with a loaded deck. Listening to some of the arguments so far, I formed the impression that these amendments could lead to a loaded deck because of the implicit power of the review to trigger separation without further primary legislation and therefore to introduce radical change without serious parliamentary consideration. As I read it, this would be the result of the House accepting Amendment 196. I think that this implication—and, of course, it is an implication—will weigh heavily on the banks and their executives and, as a result, be by no means to the advantage of the financial services industry specifically or the United Kingdom generally.
It is an oft-repeated truism that financial markets hate uncertainty. Perhaps I may offer at a rather lower level an example from my experience of what I mean. I was for a number of years a chairman of a network of independent financial advisers. For a prolonged period, the IFA sector suffered in the shadow of the uncertainty caused by the drawn-out processes of the retail distribution review. I have absolutely no doubt that the savings regime of this country, a very important part of our body politic, was set back by this elongated debate. I feel the same may be true for the banking sector if these amendments are passed.
Further, I am not quite clear how this approach will impose discipline, unless it is intended that some could suffer full separation and others would not. I have not yet heard that suggested by the noble Lord, Lord Eatwell, although I may have misunderstood him. If I, as a good guy, obey the ring-fence but am treated in exactly the same way as my competitor, a bad guy who has jumped the ring-fence, what incentive is there for me to follow the prescribed path?
My second area of concern can best be summed up by the well rehearsed argument that generals always plan to fight battles that are like the ones of the last war. Of course, we have discovered egregious examples of corporate and personal behaviour that took place in the period leading up to 2008, but it is by no means clear, to me at least, that ring-fencing or not ring-fencing will have any relevance to solving the next financial crisis—and, if history tells us anything, one will be along in due time.
Having listened to the arguments, I am forced to the conclusion that there should be a review but that it should be a review without preconceptions, and that, in any case, to trigger a move to full separation on the basis of secondary legislation, of which the ability of this House to scrutinise and amend is in my view woefully weak, would not be the right way to proceed.
Lord Lea of Crondall (Lab)
My Lords, there are a lot of very interesting propositions in this group. Am I right in thinking that what is in due course printed in Hansard will be one amendment which is moved, with other amendments not printed because they are part of a single group? If so, how can one proceed with that?
Lord Phillips of Sudbury (LD)
My Lords, surely there is no more important issue in relation to this banking situation than whether to go with ring-fencing or with separation—we have had that very clearly debated today. The noble Baroness, Lady Cohen of Pimlico, raised an issue in relation to that, which my noble friend the Minister placed some emphasis on in responding earlier, as he did at the last stage of this debate—namely, to state that the cost of total separation would be exorbitant. The noble Baroness rightly made the riposte that the cost of policing the ring-fence will not be a one-off, as the cost of a separation would be; the cost will be year after year. The task of the regulators in policing a ring-fencing arrangement will be intensely difficult. It is easy to jibe at the regulators, but we may underestimate the extreme difficulty of doing a thorough job in this field, where you have a single holding company and two companies under it. I take the point made vividly by the noble Lord, Lord Lawson of Blaby, about cultural contamination that can easily infect a group, such as the one that the ring-fenced company will be part of.
I hope that my noble friend will feel able to accept Amendment 5. We are all speculating madly. To have a review of how this has gone, and to look at it coolly, objectively and professionally in the period prescribed, must make absolute sense. Frankly, it is not worth taking the risk of not having such a review. The cost of getting this wrong will be insupportable. We are apt to underestimate, in what has happened over the past five years, the cost to this country in all sorts of non-financial ways. We must not let it happen again. The review that Amendment 5 proposes must be prudent, sensible and ultimately economical.
Lord Hamilton of Epsom (Con)
My Lords, I support my noble friend Lord Lawson’s amendment as well. Like him and the noble Baroness, Lady Cohen, I have always been a believer in Glass-Steagall, and in the complete separation of investment banks from clearing banks as the only way in which you can guarantee that there will be no contamination.
My noble friend the Minister described the ring-fencing as robust. I do not know how he can speak with such confidence about the robustness of the ring-fencing. I do know that many people in the City today are, as we speak, working on ways to get round the ring-fence and to make sure that money held in clearing banks can be used in investment banks. The problem is that there is an enormous financial incentive to get round this ring-fence. If that incentive remains when you do not have separation, it is only a matter of time before the clever people employed in the City will find a way round it.
I agree with my noble friend Lord Phillips. Much has been made of the cost of separation, but there is also the cost of ring-fencing. There are a one-off cost and a continuing cost. It would be regrettable if we did not support my noble friend Lord Lawson’s amendment and I intend to do so.
Lord Deighton
My Lords, before I turn to the substance of these amendments, I would like briefly to pause and reflect on the process that has brought us to this point. Throughout the course of this Bill the Government have consistently tried to adopt the most constructive approach possible, welcoming contributions from all sides to help us get this right. I am particularly grateful for the constructive comments to that effect from my noble friend Lord Lawson and the most reverend Primate. I thank them for those.
Our ambition has just been to get this right. Even before the Bill was introduced to Parliament, we asked the PCBS to conduct pre-legislative scrutiny. We considered seriously its recommendations both on the draft Bill and on banking conduct and standards more generally. Almost a third of the Bill before us today was either added or heavily amended in response to its recommendations. We have also showed ourselves to be open to considering ideas proposed by the Opposition, both in the Commons and in this House. Where we have been convinced by the points made, we have been willing to amend the Bill to reflect that. I think that the sentiment of the House has demonstrated that. That includes changes to the process of scrutiny of the ring-fencing proposals, introducing the single bank separation power, putting the so-called Haldane principles in the Bill and clarifying the regulator’s objectives.
Lord Eatwell
My Lords, I am very grateful to the Minister for that expert summary of a complex set of amendments. However, I hope that I may ask him one question before he sits down. He referred to our Amendment 12, which would shorten the period before a review takes place, and said that he was very sympathetic and receptive to that point. Will he therefore accept Amendment 12?
Lord Deighton
I think the right thing for us to do is to discuss it together with our colleagues from the PCBS. The noble Lord is, of course, entitled to take the amendment to a vote, but I have not yet had the chance to discuss it with PCBS colleagues. The Government have an open mind on the relevant period, so I would prefer a fuller discussion.
Lord Eatwell
Does the Minister mean that he is content to return to this issue at Third Reading?
Lord Eatwell
Thank you very much.
This is a complicated set of interrelated amendments. I congratulate the Government on their Amendments 11 and 16 in which they have moved towards the commission’s position in proposing an independent review. By the way, I did not find any evidence that new Section 142J had been deleted, which was the previous requirement that the PRA conducted the review. Is there supposed to be a PRA review and an independent review? Surely that is not the case. It is not an important point but we should not leave both of them on the statute book. As I say, I did not detect that new Section 142J had been deleted.
We have a coherent package with the nested structure of the ring-fence, the electrification applied to individual groups and the electrification applied to the whole structure of banking—the so-called complete separation. That seems to me a coherent, rational structure which is supported by the review. Therefore, there will be the opportunity to take into account the detailed scrutiny by the ICB and the commission and consider which stage of this nested structure should be accepted. It seems to me that that coherence provides certainty as regards the way forward—not uncertainty, as the noble Lord, Lord Hodgson, suggested—because the review will not throw everything up in the air and lead to more years of parliamentary debate. We have been doing this for three years already, leaving the industry in a state of uncertainty. We should not throw it up in the air again but create a clear, rational structure that has been carefully put together by the ICB and the commission to provide for the review and separation.
The ordering of amendments before us makes our consideration a little awkward because we first have to consider my amendment on separation, Amendment 3 —which is identical to the commission’s amendment, Amendment 6—and then talk about the review. However, in the light of the care and consideration that the commission has given, I am content to fully support the commission’s position on the triumvirate of ring-fencing, group separation and full separation. I therefore wish to test the opinion of the House on Amendment 3.
Lord Lawson of Blaby
“142VA Review of operation of legislation relating to ring-fencing
(1) The Treasury must, before the end of the initial period, appoint a panel of at least 5 persons (the review panel) to carry out a review of the operation of the legislation relating to ring-fencing.
(2) The legislation relating to ring-fencing means—
(a) Part 9B of FSMA 2000 (as inserted by section 4);(b) orders and regulations made by the Treasury under that Part;(c) ring-fencing rules, as defined by section 142H(3) of FSMA 2000, made by the FCA or the PRA;(d) section 192JA of FSMA 2000 (as inserted by section 116);(e) rules made by the FCA or the PRA under that section. (3) The initial period is the period of 4 years beginning with the first day on which section 142G of FSMA 2000 is fully in force.
(4) The members of the review panel must be persons—
(a) who appear to the Treasury to be independent of the PRA, the FCA, the Bank of England and the Treasury, and(b) who do not appear to the Treasury to have any financial or other interests that could reasonably be regarded as affecting their suitability to serve as members of the review panel.(5) In appointing the members of the review panel, the Treasury—
(a) must have regard to the need to ensure that the review panel (considered as a whole) has the necessary experience to undertake the review,(b) must ensure that at least one of the members is a person appearing to the Treasury to have substantial experience in central banking or banking regulation at a senior level, and(c) must obtain the consent of the chairman of the Economic Affairs Committee of the House of Lords and the chairman of the Treasury Committee of the House of Commons.(6) The Treasury must appoint one of the members of the review panel to be chair of the panel.
(7) The review panel must, within a reasonable time after the end of the initial period, make a written report to the Treasury—
(a) setting out the results of the review,(b) making such recommendations (if any) as the panel considers appropriate.(8) The report must in particular include—
(a) an assessment of the extent to which the operation of the legislation relating to ring-fencing is facilitating the advancement by the PRA of the objective in section 2B(3)(c) and by the FCA of the continuity objective, and(b) any recommendations which the panel considers appropriate for the making of further changes in the law with a view to better facilitating the advancement of those objectives; provided that such recommendations are consistent with the continued protection of core activities as defined in section 142B of FSMA 2000.(9) The Treasury must—
(a) lay a copy of the report before Parliament, and(b) publish the report in such manner as they think fit.(10) Any expenses reasonably incurred in the conduct of the review are to be paid by the Treasury out of money provided by Parliament.”
Lord Lawson of Blaby
My Lords, in the light of the clear and explicit assurance given by the Minister that the independent review will be able to recommend full separation, I will not move the amendment.
Lord Deighton
Lord Deighton
My Lords, these amendments make a number of minor and technical amendments to the Bill. Amendments 7 and 8 amend new Section 142W, which gives the Treasury the power to require that ring-fenced banks make arrangements to ensure that they cannot become liable for the pension liabilities of any non-ring-fenced entity, and that they minimise such potential liabilities if they cannot entirely prevent them arising. In the process of making these arrangements, the pension scheme trustees may wish to transfer assets or liabilities between schemes. These amendments clarify that the Treasury can make regulations enabling trustees or managers to transfer to another pension scheme all the pension liabilities arising in connection with persons’ service before the date on which ring-fencing comes into effect, together with all the scheme’s assets and not just part of those liabilities and assets.
The Government’s intention is to give banks and trustees flexibility in how they carry out any segregation or separation of pension schemes. If trustees judge that transferring all such liabilities or assets is in the best interests of scheme members, the legislation should not prevent that. The trustees have a duty to act in the best interests of scheme members throughout any restructuring that takes place to comply with ring-fencing. As an added safeguard, we are taking the power under the Bill to require the banks by regulation to do all they can to get clearance from the pensions regulator for their scheme restructuring.
Amendment 9 is a minor and technical amendment which clarifies the definition of a qualifying parent undertaking for the purposes of Part 9B of FiSMA, which deals with ring-fencing. A qualifying parent undertaking is defined in proposed new Section 142L(4), and this amendment ensures that this definition will apply wherever the term is used in Part 9B.
Amendment 173 is a minor and technical amendment which clarifies that the definition of regulator in Section 3A does not apply for the purposes of Sections 410A and 410B, which deal with the Treasury’s power to impose fees on the financial services industry to cover the costs of UK participation in certain international organisations. The amendment ensures that the definition of regulator that applies to these sections includes the Bank of England, rather than the definition given in Section 3A of FiSMA, which is limited to the FCA and the PRA.
Lord Deighton
“(4) Any reference to a qualifying parent undertaking is to be read in accordance with section 142L(4).””
Lord Deighton
Lord Deighton
My Lords, this amendment removes Clause 5 from the Bill. It will leave the regulators, the PRA and the FCA to decide among themselves which one of them designates board members of ring-fenced banks as senior managers and which directors should be designated. Clause 5 requires that the PRA on its own designates all directors of a ring-fenced bank as senior managers under the new senior managers regime. This clause was introduced originally before the senior managers regime was proposed. It now needs to be updated to reflect those changes.
The PRA is considering how to implement the PCBS’s recommendation of focusing the new senior managers regime to strengthen individual responsibility for actions of the firm. The PRA wants to develop the new regime in a way that improves its ability to bring enforcement action against individuals when things go wrong. To achieve this, the PRA thinks that it may be best to limit the number of board members it designates as senior managers, to narrow the scope of accountability. Those directors designated senior managers by the PRA will need to comply with conduct standards that will further the PRA’s safety and soundness objective.
Clause 5 would force the PRA to designate all board members of ring-fenced banks as senior managers. It prejudges the outcome of the regulators’ policy development and could result in the application of the senior managers regime to ring-fenced banks being less focused than for the rest of the sector. A focused regime should improve the ability of the PRA to take enforcement action against individual directors by making clearer which senior managers are responsible for different aspects of the firm’s business. The Government therefore agree with the PRA that Clause 5 should be removed.
Some directors not designated as senior managers by the PRA may be more appropriately designated by the FCA. The precise calibration should be left to the regulators, who will consult on this next year. The removal of the clause also brings the application of the senior managers regime to ring-fenced banks into line with how it will be applied outside the ring-fence. Outside the ring-fence the PRA or the FCA can designate directors as senior managers.
Moving on, the minor and technical amendments to Schedule 2 will help to ensure that the bail-in provisions can be used effectively and as intended. Following the introduction of these provisions in Committee, we have discussed them with various stakeholders and experts. These amendments are the result of those discussions.
First, we have specified that special bail-in provision can be made to release guarantees which are not provided directly by the bank, but by other companies in the banking group, in consequence of the application of the powers to make special bail-in provision in relation to the liabilities of the bank under resolution. This ensures that guarantee arrangements can be adjusted in line with any write-down or cancellation of a liability of a bank covered by that guarantee.
Secondly, the amendments will give the Bank of England the ability to make an agreement with the director or directors of a bank with regard to the preparation of the business reorganisation plan. The existing drafting already allows such an agreement between the Bank of England and the bail-in administrator when appointed to prepare the plan. This is simply an extension of the arrangement to cover the case in which a director is appointed to perform that task.
Thirdly, we have clarified that where any person is acting under the direction of the Treasury for purposes related to state aid, that person is granted immunity from liability in damages save in relation to action in bad faith or in breach of the European Convention on Human Rights. There is a minor linguistic change to subsection (3) of new Section 48D to be inserted into the Banking Act.
Finally, the exercise of any of the stabilisation powers under Part 1 of the Banking Act 2009 to reduce a bank’s debt may lead to taxable loan relationship profits that would hinder its rescue. Consequently we will bring in measures in the next Finance Bill, with retrospective effect to this date, to relieve any such taxable profits that arise. I beg to move.
Lord Deighton
“Independent review of operation of legislation relating to ring-fencing
(1) The Treasury must, before the end of the initial period, appoint a panel of at least 5 persons (“the review panel”) to carry out a review of the operation of the legislation relating to ring-fencing.
(2) “The legislation relating to ring-fencing” means—
(a) Part 9B of FSMA 2000 (as inserted by section 4);(b) orders and regulations made by the Treasury under that Part;(c) ring-fencing rules, as defined by section 142H(3) of FSMA 2000, made by the FCA or the PRA;(d) section 192JA of FSMA 2000 (as inserted by section 116);(e) rules made by the FCA or the PRA under that section.(3) The initial period is the period of 4 years beginning with the first day on which section 142G of FSMA 2000 is fully in force.
(4) The members of the review panel must be persons—
(a) who appear to the Treasury to be independent of the PRA, the FCA, the Bank of England and the Treasury, and(b) who do not appear to the Treasury to have any financial or other interests that could reasonably be regarded as affecting their suitability to serve as members of the review panel.(5) In appointing the members of the review panel, the Treasury—
(a) must have regard to the need to ensure that the review panel (considered as a whole) has the necessary experience to undertake the review, and(b) must ensure that at least one of the members is a person appearing to the Treasury to have substantial experience in central banking or banking regulation at a senior level.(6) Before appointing the members of the review panel, the Treasury must consult the chairman of the Treasury Committee of the House of Commons.
(7) The reference in subsection (6) to the Treasury Committee of the House of Commons—
(a) if the name of that Committee is changed, is a reference to that Committee by its new name, and (b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, is to be treated as a reference to the Committee by which the functions are exercisable;and any question arising under paragraph (a) or (b) is to be determined by the Speaker of the House of Commons.(8) The Treasury must appoint one of the members of the review panel to be the chair of the panel.
(9) The review panel must, within a reasonable time after the end of the initial period, make a written report to the Treasury—
(a) setting out the results of the review, and(b) making such recommendations (if any) as the panel considers appropriate.(10) The Treasury must—
(a) lay a copy of the report before Parliament, and(b) publish the report in such manner as they think fit.(11) Any expenses reasonably incurred in the conduct of the review are to be paid by the Treasury out of money provided by Parliament.”
Lord Eatwell
Lord Eatwell
My Lords, given the assurance given by the Minister that we will return to this matter at Third Reading, I beg to withdraw the amendment.
Lord Deighton
“Right to obtain documents and information
(1) A review panel appointed under section (Independent review of operation of legislation relating to ring-fencing)—
(a) has a right of access at any reasonable time to all such documents as the panel may reasonably require for the purposes of the review, and(b) may require any person holding or accountable for any such document to provide such information and explanation are reasonably necessary for that purpose.(2) An obligation imposed on a person as a result of the exercise of the powers conferred by subsection (1) is enforceable by injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.”
Lord Deighton
“(1A) “Special bail-in provision”, in relation to a bank, also includes any associated provision (see subsection (1B)) that the Bank of England may think it appropriate to make in consequence of any provision under subsection (1) that—
(a) is made in the same resolution instrument, or(b) has been made in another resolution instrument in respect of the bank.(1B) “Associated provision” means provision cancelling or modifying a contract under which a banking group company has a liability.”
“(6) A direction under this section may specify circumstances in which the person given the direction is immune from liability in damages.
(7) Immunity by virtue of subsection (6) does not extend to action—
(a) in bad faith, or(b) in contravention of section 6(1) of the Human Rights Act 1998.(8) Where a direction under this section is given to a director of the institution, the director is not to be regarded as failing to comply with any duty owed to any person (for example, a shareholder, creditor or employee of the institution) by virtue of any action in compliance with the direction.””
Lord Eatwell
“Professional standards
After section 65 of FSMA 2000 insert—“65A Professional standards
(1) The regulator will raise standards of professionalism in financial services by mandating a licensing regime based on training and competence.
(2) This licensing regime must—
(a) apply to all approved persons exercising controlled functions, regardless of financial sector;(b) specify minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct and revised Banking Standards Rules;(c) make provisions in connection with—(i) the granting of a licence;(ii) the refusal of a licence;(iii) the withdrawal of a licence; and(iv) the revalidation of a licensed person of a prescribed description whenever the appropriate regulator sees fit, either as a condition of the person continuing to hold a licence or of the person’s licence being restored;(d) be evidenced by individuals holding an annual validation of competence;(e) include specific provision for a Senior Persons Regime in relation to activities involving the exercise of a significant influence over a controlled function under section 59 of the Act.(3) In section 59, for “authorised” substitute “licensed” throughout the section.””
Lord Eatwell
My Lords, Amendment 21, and Amendments 50 and 51 from the commissioners, refer to the professional standards to be required in the banking industry—particularly to licensing bankers who have attained the required professional standards and, of course, not licensing those who have not. With respect to the conduct and skills of members of the banking industry, the Bill currently refers to “rules of conduct”. Amendments from the commissioners use the words “licensing regime”, but continuously refer to the adherence to rules.
The notion of a licence surely refers to some level of professional competence or professional standards. The Co-operative Bank may have obeyed the rules, but we now know it would have failed even the simplest test for professional competence. Rules may require the attainment of professional qualifications, but we cannot be sure and, as the Government regularly argue, certainty is important in this legislation. The clause in the Bill as drafted refers to rules of conduct. The commissioners’ amendment refers to,
“training in the effect and application of the rules of conduct”.
However, neither of them seem to convey the true context of professional standards.
As an academic, I am perhaps rather overly keen on examinations and the attainment of professional standards. Doctors have professional standards because they are required to pass examinations, undergo rigorous professional training and be thoroughly trained in ethical standards. Lawyers have professional standards because they are required to pass examinations, undergo rigorous professional training and be thoroughly trained in ethical standards. Of course, doctors and lawyers may, on occasion, not maintain the standards we would expect.
Lord Phillips of Sudbury
I hate to interrupt the noble Lord but I cannot resist saying that, unfortunately, the training of solicitors at this time does not involve rigorous ethical training. In fact, it involves little ethical training at all.
Lord Eatwell
I am sure that the noble Lord, as a distinguished solicitor, would attest to that, as indeed he has done. It seems to me that if members of the professions are required to pass examinations to show professional competence and to undertake rigorous training, bankers should do the same. That is what Amendment 21 seeks to achieve. For example, proposed new Section 65A(2)(b) says that the licensing regime must,
“specify minimum thresholds of competence including integrity, professional qualifications, continuous professional development and adherence to a recognised code of conduct and revised Banking Standards Rules”.
Lord Eatwell
Being a “fit and proper person” would perhaps be appropriate. If the noble Lord is not aware of the phrase, it is the standard regulatory threshold which anybody operating in financial services must attain.
Amendment 21 seeks to capture the need for proper training, continuous development and the maintenance of proper professional standards via a licensing regime. I have enormous sympathy with Amendments 50 and 51, tabled by the commissioners, but I am afraid that they do not capture the need for professional qualifications.
With respect to the government amendments in this group, they are mostly concerned with the correct definition of a bank. I am delighted to see that we now have a definition of a bank. It may be of interest to the House to know which banks are now included that were excluded in the past. Barclays Capital, Citigroup, Credit Suisse Securities and Goldman Sachs International were not included in the previous definition of a bank, but I am glad to say that they are now. I congratulate the Government on appropriately incorporating them. However, those government amendments stand slightly aside from the issue of professional standards addressed in Amendment 21 and in Amendments 50 and 51, tabled by the commissioners.
I suggest to your Lordships that this House asserting that the banking industry must maintain appropriate professional standards is the minimum that the public expect of us. I beg to move.
The Archbishop of Canterbury
My Lords, Amendment 50 is in my name and those of the noble Lords, Lord Turnbull, Lord Lawson of Blaby and Lord McFall of Alcluith. It clarifies the scope of who the new senior persons regime will apply to, to ensure that it is rightly focused on material risk-takers, not on all bank employees. I will also speak to Amendments 51 and 60 which stand in my name and those of the noble Lords as colleagues on the commission. Amendment 51 sets out the duties relating to the application of the new licensing regime for the banking regime. Amendment 60 also deals with clarifications in the scope of the senior persons regime.
In Committee, on a day that I was unfortunately unable to attend owing to having to baptise someone, my noble friend Lord Turnbull welcomed many of the Government’s proposals relating to the functions of senior managers in banks, including ensuring that senior managers have a statement of responsibilities and the reversal of the burden of proof on whether a person is fit and proper to take up a senior management position. We are very grateful for that. However, my noble friend Lord Turnbull also raised a number of questions that I hope can be adequately answered today, although I realise that there is still a lot of reflection going on in this area.
At that stage, the Bill made no reference to the second tier of the two-tier system proposed by the Parliamentary Commission on Banking Standards: the licensing regime. As the Bill stands, it simply allows the regulator to,
“make rules about the conduct”,
of any “employee of the bank” if it,
“appears … to be necessary or expedient”.
As both Amendment 50 and Amendment 60 deal with our concerns around the application of these rules to any “employee of the bank”, let me turn to the issues that this language raises.
The commissioners argued that a two-tier system is the right way to deal with the issue. The expectations on senior managers must be high. However, it is also right that those who are not part of the senior management of the bank should have high standards. The noble Lord, Lord Eatwell, has addressed this. By making it explicit that the rules of conduct and the definition of misconduct in Clause 22 refer to,
“employees whose actions or behaviour could seriously harm their employer, its reputation or its customers”,
the amendment is aimed at ensuring that the FCA and the PRA focus their regulatory duties on those employees who could inflict the most significant and material damage on their institutions and on the banking system as a whole. These are not always the most senior employees. They could be a junior dealer, fairly new in the business, who, ignoring his internal limits, deals in a way that does great damage both to customers and to his employer. He can be fired and even sent to prison, but the deals are still the responsibility of the bank.
It is therefore necessary to have an amendment that not only widens beyond the senior management, obviously, but narrows so that it does not try to cover all the employees but has a very focused look at those who are going to be able to do the most damage the most often, and who are at highest risk. In our regular and ongoing conversations with the regulators and in the light of their official responses to our work, the commission has not yet been convinced that they would go far enough to ensure that this specific group of material risk-takers would be central in any further regulation and thus that neither the spirit nor the letter of the commission recommendations would be implemented.
Amendment 51 seeks to correct the failings of the approved persons regime that this new two-tier system replaces. The noble Lord, Lord Turnbull, also stated previously that this regime operates mostly as an initial gateway to taking up a post rather than serving as a system through which regulators can ensure the continuing exercise of responsibility.
The amendment also deals with another concern articulated by the noble Lord, Lord Turnbull, that there is still no requirement that the regulator operate a licensing regime. The Bill states that the regulator may make rules relating to conduct if it appears “necessary or expedient”. By setting out explicitly that the,
“relevant authorised person has a duty to ensure that all relevant employees comply with rules of conduct”
made by the regulator, the amendment makes it clear that the rules of conduct for material risk-takers who are not senior management are just as seriously applied as those governing senior management. This gives a clear identity to the new second tier of the system, which is vital if it is to be taken seriously by regulators and banks.
As I said a few moments ago, I am aware of ongoing conversations between my colleagues and the Treasury over a few remaining issues around the implementation of the licensing regime. I believe that these are mostly in relation to the most appropriate names for the licensing regime and the senior persons regime and, I hope, to some of the matters that I have raised this afternoon. I hope that the Minister will be able to update the House on these areas and that the news can be welcomed by myself and my colleagues.
Lord Davies of Stamford (Lab)
My Lords, I remind the House that for a number of years I was a director of a quite large British investment bank—in those days called a merchant bank. We had a substantial lending book as well as a much bigger investment banking business. The firm was the basis of the present London activities of Deutsche Bank.
The noble Lord, Lord Lawson, said earlier that we were focusing on an area where we could actually use legislation to address effectively a major human problem. It is not always possible to address human problems with legislation—he is absolutely right about that. We have spent much of the afternoon talking about separation and ring-fencing, which is important because there is a theoretical risk that any institution could be destabilised for example by speculation in high-risk instruments such as derivatives and that could undermine the rest of the business. That is a theoretical risk; it is sensible to address it and think about it. It has to be managed. It is not actually the reason why we had the collapse in 2008 or any of the recent banking difficulties.
Similarly, the much praised Glass-Steagall regime, which existed in America between the 1930s and 1980s, was premised on the theoretical risk that if an institution could be involved in both underwriting securities and making loans, and that if the underwriting losses were such as to compromise the capital of the bank, the deposits of the bank would be at risk. Again, that is a straightforward, plausible, coherent risk that it is sensible to address but that was not the reason for the banking crisis in America in the 1930s. I will not waste time by going into the reasons for that crisis. Nevertheless, it was a sensible thing to do.
We have been talking up to now about theoretical risks. I do not resent or reject that and I very much agreed with—and just voted for—my noble friend Lord Eatwell’s amendment to try to deal with some of those risks. Now, however, we are on the really key ground, because Amendments 21 and 51, in the names of my noble friend Lord Eatwell and the most reverend Primate, address the real problem that we have encountered face to face in this country in the past few years. That is human error, and even worse than human error, human negligence—and even worse than that, systematic human negligence and systematic human incompetence. I do not think that those words are in any way excessive to describe the activities of the British banking system, and banking systems elsewhere, in the past decade and a half.
Before 2008 there were an enormous number of bankers who appeared to be able to persuade themselves, and their boards, that when yields were coming down in the market, they could somehow preserve their yields without increasing their risk. In other words, fantastic sums of money were paid to people who appeared to be competent, whom the regulators seemed to trust—as we now know, the regulators were asleep at the time—and who appeared to have completely forgotten the first rule of financial theory, which is that there is always a positive relationship between reward and risk: if you get more of one, you will always have more of the other. That is an extraordinary state of affairs to have in a sophisticated society, but that is exactly what we had.
Again, this was systematic. It was not just one bad apple, or one bad individual. In the process of trying to preserve their yields, banks were putting enormous amounts of their assets into new instruments such as CDOs—collateralised debt obligations, which were, basically, securitised mortgages and other loans—without ever investigating what they actually contained. They acted simply on the basis of endorsements by rating agencies that were themselves incompetent. It is hard to imagine the state of Denmark being more rotten than the state of the City at that time. It was an extraordinary systematic problem. People were, for example, lending on real estate with 5% or less equity. They were making absurd and dangerous mistakes, doing things we cannot imagine they were not told about when they were 25 and doing their accountancy exams, or an economics course. We have to focus on that human area and ensure that we have procedures, filters and incentives that are robust and not perverse. Evidently, in this area we have been absolutely inadequate up to the present time.
We are making some progress this afternoon. These two amendments are moves in the right direction. We must ensure that we have the right professional qualifications and the right conduct standards, so that people are being properly monitored. We could—indeed, we should—go further afield and do more, particularly in terms of making individuals responsible. In the United States, when there are serious cases of negligence and breach of the rules, not only is the institution fined—institutions are fined here—but individuals are regularly fined. Individuals are never fined here. In this country, the people making the appalling mistakes that I just referred to have got away scot-free, without paying a penny. That is a national scandal; indeed, it is a national stupidity. It means that there is a real moral hazard: if you can get away with the irresponsibility, the money is for you—“Well done, congratulations”—and if you do not get away with it, you still will not pay anything.
That is why we had the appalling culture of bonuses, in which people in lots of institutions were regularly piling on to their book a whole lot of supposedly high-yielding rubbish and then taking massive bonuses based on the discounted present value of the supposed yield over future years. Then, when they got a large bonus on that completely bogus basis, they would move on to another institution and spread their poison further through the system in that way.
I have described this in dramatic language, and I do not think that I have exaggerated in any way. That is the awful reality of the situation. It is something that regulators—and the public—ought to think about. It is certainly something that legislators must think about. I congratulate the most reverend Primate and my noble friend on their amendments, which we should put to the vote. I hope that they do so, and I look forward to supporting them.
Lord Phillips of Sudbury
My Lords, I support Amendments 21 and 51 as strongly as I can. We all know that the vast majority of people in the City of London and other financial centres are decent people who try to do good rather than bad, but the system of which they are part has been largely stripped of its ethical underpinning. Although you cannot inculcate morality by statute law, you can at least provide support for the forces of good and truth in dealing.
These two amendments are the very minimum required. I wonder whether the wording of Amendment 51, which refers to “rules of conduct”, is ideal. As a lawyer, whenever I see the word “rules”, I slightly draw back, because lawyers spend their time avoiding rules on behalf of their clients.
I would have hoped, and still hope, that if either or both these amendments were incorporated into the Bill, they would be construed in a wide way. There is no shadow of doubt but that too many people arrive in positions of responsibility without regard to these rules. As the most reverend Primate said, you can have a junior dealer who can cause devastating damage to a bank or other firm. So I hope that the Government accept these amendments or agree to come back at Third Reading with something comparable, bearing in mind the astonishing fact that the vast majority of our business schools have no ethical component in their curriculum at all. I do not think that 10% of them do anything in terms of ethics. If anyone says to me that it is a waste of time and a lot of hot air, they need only glance back at where we have come from. As other noble Lords have said, the degree of cynicism manifest in the policies and actions of so many financial institutions is stunning.
I hope that, if these amendments are brought into the Bill, they are construed widely by those who have to implement them. I am particularly happy that Amendment 51 would require any breach of standards of conduct to be reported to the relevant authority, because that is a real deterrent. People would be anxious about that. This proposal must be the absolute rock-bottom minimum to provide some underpinning for the future of financial services.
Lord Flight
My Lords, I come down to a very practical issue. In the territory that we are discussing, pre-approval is absolutely necessary for dealing with staff and anti-money-laundering requirements.
Baroness Warnock (CB)
My Lords, I support this amendment, which we have heard is really at the heart of the disasters of 2008. I have felt a creeping horror since the 1980s, when I was head of a college. People would frequently come up to me and say, “I’ve changed my mind, I’m not going to go on to a further degree or teach classics—I have had an offer that I can’t refuse”. This would be a young man or woman of about 21. You could see that their ethical standards had dropped away; they did not exist anymore. That was a shock to me then and it has been a shock to me ever since, so I very strongly support the amendment.
Lord Hope of Craighead (CB)
I shall add just a bit, particularly to what the noble Lord, Lord Phillips, was saying. When I entered the legal profession about 40 years ago, the branch that I joined had no rules of conduct at all, and gradually we appreciated that the public would not stand for that. The position now is that the legal profession has rules of conduct, although they are sometimes called codes rather than rules for the reason that was mentioned. I support the amendment against that background. I also suspect that, if we do not take that step now, we will have to take it in five or 10 years’ time when some other crisis emerges. It is an important step and, I respectfully suggest, an inevitable one, in line with what all the professions have had to deal with over the past 10 or 20 years in modernising how they behave and making their behaviour acceptable to the public. There is a lot to be said for the amendment against that background.
Lord McFall of Alcluith (Lab)
I do not think that we should run away with the idea of codes of conduct because, if you look back over the past 10 or 20 years, you will have seen a proliferation of codes of conduct and ethics from banks. When they had rules, they circumvented them, so we must have something deeper here.
On the Parliamentary Commission on Banking Standards, if we heard the phrase, “This time it’s different”, once, we heard it 10,000 times. We were told that there was new management and a new executive, that the past was behind us and the future here, with new staff—and that everything would be better. Since we have taken evidence, tumbling out every month there has been another scandal. So we need to attest to something deeper here.
The lack of individual responsibility at the top is at the core of the problem. I say this with no understatement: many of the very senior individuals who came before the Parliamentary Commission on Banking Standards were economical with the truth. I give an example on PPI, where we now have a scandal of about £25 billion to £30 billion. There was a “no see, no tell” policy from those at the top. Why? Because they preferred to be seen as incompetent than to have any responsibility. There was a hiatus of responsibility from the top to lower down.
My own view was not accepted by the banking commission, which was fair enough. I thought that every year there should be an individual meeting between the chairman and chief executive of a bank and the regulator. That meeting would be recorded but it would not be made public—but they would have to attest to the regulator that they were responsible for their institution and what went on in their institution was their responsibility. If we implement a code, we will only repeat the mistakes of the past; there has to be a deeper cultural change.
Culture has been mentioned. Again, we had individuals coming before us saying, “Look, we have a new chief executive and a new culture—everything is okay”. You would ask how many employees were in that organisation and be told that it was 150,000. When we asked how long it would take to change the culture, they said, “Oh, three months”. That is for the birds. So the responsibility needs to start at the top.
The example I give of PPI is of a chief executive who came along to the commission and said, with a straight face, “As far as PPI is concerned, my organisation is on the side of the angels”. That organisation is the one with the highest PPI penalties in the United Kingdom. So do not let us kid ourselves that we can sort this problem with codes. We need to give the regulator authority—and we have seen a regulator that was captured, cowed and conned by the industry. There should be someone to go to in the organisation to whom we can say, “That was your responsibility”. If we are told, “Well, that person left”, we need to ask for the handover document that indicates that there was a transfer of responsibility that can be understood.
The director of enforcement at the FSA came before the commission at the time of the UBS scandal, which cost the bank billions of pounds. We had four from the top management of the bank before us and, when we asked them if they knew who the individual was, they said that they did not know at all. Then we asked them how they found out, and they said, “Bloomberg wires”. That is how corrupt the institutions are in terms of accountability.
We need to change. I am happy for the Government to accept this amendment, but I am certainly not happy for warm words or for anyone to say, “This time is different”. This time ain’t different. The scandal has kept going and will continue, and we need to do something severe to ensure individual accountability by those at the very top of those organisations.
Lord Spicer
I have enormous respect for the noble Lord, Lord McFall, but I think the idea of legislating to be more responsible—in fact, legislating for human character—is a very dangerous path. It is why I intervened on the question of minimum standards of integrity: you are either honest, or you are not honest. It is quite dangerous to keep loading the statute book with matters which attempt to affect human characteristics. I think that there should be some caution about some of these amendments.
Lord Newby (LD)
My Lords, this is a very large group of amendments dealing with another key aspect of the Government’s reform-namely, how to drive up standards across the banking system. The Government’s amendments in this group, and in the following group, widen the range of firms covered by the reform. They respond to points made in Committee, and I am grateful to the noble Lord, Lord Eatwell, for his welcome for them, but we will deal with them in more detail when we come to the next group.
I would like first to respond to the concern that the Government’s Committee stage amendments did not implement the commission’s recommendations for what it calls the licensing regime. To be completely clear, the Government are committed to implementing the vast majority of the commission’s recommendations on the regulation of individuals in banking, including its recommendations to introduce a licensing regime. The regulators, in their responses to the commission published in October, confirmed that they would do this.
The Government’s amendments in Committee put in place all the essential features of the commission’s licensing regime proposals in Clauses 22 and 23. These clauses give the regulator power to make rules of conduct imposing binding standards on employees and ensure that the regulators can take action when there is any breach of these rules. The relevant provisions would form part of FiSMA and confer powers on the regulators in the normal way.
However, we recognise that this may not be seen as giving the full weight and impetus to the commission’s proposals, so we are looking to see whether we can bring forward at Third Reading amendments which will highlight the proposals more and put beyond doubt the determination which we all share to see real change in this area. In the light of this, the Government are looking to introduce amendments at Third Reading to impose obligations on banks and PRA-regulated investment firms, first, to verify before appointing someone as a senior manager, an employee in a role that could do significant harm to the firm or another role requiring regulatory pre-approval that the person is fit and proper to perform that role in the firm; secondly, to maintain up-to-date lists of such persons which could be made available to the regulators when required; thirdly, to notify the appropriate regulator when they take formal disciplinary action against such persons—formal disciplinary action could include giving a formal written warning, dismissal, suspension or clawing back remuneration; and, fourthly, to notify all such persons of the banking standards rules that apply to them. All these obligations will be regulatory requirements under FiSMA. Failure to comply with the obligations will be a breach of regulatory requirements, and actions could be taken against the bank concerned by the regulators. In addition, deliberately or recklessly submitting a materially false or misleading list of persons to a regulator will be a criminal offence.
The Government will also look at tabling amendments requiring, rather than simply empowering, the regulators to set out those functions for which a bank must do the above. We anticipate that this class will match the category of staff defined in the PCBS report as being those whose actions or behaviour could seriously harm their employer, its reputation or its customers. I hope that when we produce those amendments they will satisfy the concerns addressed by the most reverend Primate.
There are certain detailed respects in which the Government have decided not to follow the recommendations of the commission. These do not change the substance of the impact of the regime, but they will ensure its effectiveness. First, the commission envisages that the licensing regime provisions would entirely replace the regime of regulators, giving pre-approval to people below senior management level. That would mean dropping regulatory pre-approval for all appointments below senior management level, including in areas such as money laundering, with which the noble Lord, Lord Brennan, and others were particularly concerned in Committee.
Lord Lawson of Blaby
Before my noble friend sits down, can he give an undertaking that he will produce the further amendments he proposes to introduce at Third Reading in good time so that we can thoroughly evaluate them and decide whether they go far enough in meeting the commission’s requirements? There has been a tendency recently—I know that a lot of work is involved—to produce complicated amendments at the last minute which do not give noble Lords time to assess them properly.
Lord Newby
I have a great deal of sympathy with what the noble Lord says, and I can give an assurance that we will bring the amendments forward at the earliest possible point. I cannot say what day that will be, and we may of course have different definitions of “giving short notice”, but we will do our best to give the noble Lord several days’ notice. We hope that, as we get towards Third Reading, the number of amendments we bring forward will be much lower than at the previous stage.
Lord Newby
It is not saying a huge amount, but it is saying something, and I hope that because we are talking about a much smaller number of amendments we will be able to concentrate the entire brainpower of the Treasury on them so that we can bring them forward with the maximum possible notice.
Lord Davies of Stamford
Does the noble Lord agree that if we are to make a real difference this time—and he will sense a scepticism about that, which we face in this country and even in this House as a result of the appalling situation that we have had—we will need to emphasise, and really substantially emphasise, the issue of personal responsibility? Would it not in that context be necessary that individuals in this country should in future be subject to fines for regulatory breaches, as happens elsewhere?
Lord Newby
My Lords, that is the key focus of the senior managers regime—that, for the first time, senior managers and their banks will have to tell the regulators what the specific responsibilities of those people are, and we are introducing enhanced penalties if people do not stick to those responsibilities and break the rules. I think that we are indeed doing what the noble Lord requires us to do. I hope that when the noble Lord, Lord Lawson, and the most reverend Primate see our amendments, they will feel that we have done everything we can to meet their requirements.
Amendment 21, proposed by the noble Lords, Lord Eatwell and Lord Tunnicliffe, is an amendment which we saw in Committee. As I explained on that occasion, it would really just rename the existing approved persons regime as a “licensed” persons regime. The only extra feature in the proposal is for annual validation of competence by the regulator. This would have the effect of increasing the number of approved person applications from around 30,000 to around 150,000 a year. This would mean an unnecessary and costly extra burden on firms and regulators.
The Official Opposition’s amendment would not deliver the real reforms proposed by the parliamentary commission, which Clauses 14 to 26 of the Bill deliver and which we will enhance. It would just add to regulatory burdens without producing any real improvement in standards of conduct in the industry. I hope, therefore, that the noble Lords, Lord Eatwell, will agree to withdraw his amendment.
Lord Eatwell
My Lords, I was intrigued by the proposals which the Minister suggests will be brought forward at Third Reading and I look forward to having the opportunity to see them—perhaps in good time—before we have to debate them.
The key issue in Amendment 21 is that of qualification: professional qualification, minimum thresholds of competence and continuous professional development. These are fundamental to any serious professional standards and are vital if we are to have in the future the sort of people who can deliver a banking industry of which we in Britain can once again be proud.
I should make it clear that Amendment 21 is not in any way contrary to Amendments 50 and 51 by the commission; it is complementary. It adds to the overall structure of the requirements to be met by those who seek to pursue a banking profession. It is that word “profession” which we regard as central. It is no accident that we have labelled our amendment “Professional standards”. That is what this amendment seeks and that is what I believe it would achieve in addition to, and complementary to, the amendments by the commission and, as I hear it, the endeavours by the Government to develop a framework of rules which ensure that standards are met. The professional standards must be the bedrock. That is why I have moved Amendment 21 and why I wish to test the opinion of the House.
Lord Newby
Lord Newby
My Lords, this group of amendments, and similar amendments in the previous group, respond to concerns expressed in Committee that the scope of the reform of the senior managers and banking standards regime should be extended beyond ordinary banks to cover what are known, in common parlance, as investment banks. A number of noble Lords were concerned about this point and I undertook to relay the feelings of the House to ministerial colleagues. These amendments are the result.
The definition that we propose is that of the UK investment firms that are regulated by the PRA as well as by the FCA. This captures all those investment firms the activities of which—above all, substantial wholesale market dealing in securities as proprietary traders—are systemically important. These are the most important City firms, and consequently would be treated by the senior managers and standards regime in the same way that banks are. It therefore excludes all investment firms that are regulated solely by the FCA.
The noble Lord, Lord Turnbull, tabled an amendment to a different part of the legislation that would have used the existing definition of “investment firm” in FiSMA. This would have encompassed investment firms solely regulated by the FCA. As explained in Committee, that would cover a wide range of ordinary investment firms—several thousand, in fact. This would include firms far outside what most people would think of as investment banks. The Government have shared this definition with the members of the PCBS and are hopeful that the scope now captures those firms that the PCBS had in mind.
Noble Lords who have had the opportunity to read the paper placed in the Library yesterday know, as the noble Lord, Lord Eatwell, has pointed out, that it covers only nine further firms. They also know that it covers the investment banks that everybody has heard of and would expect to see covered. The small number may be surprising, but the reason for that is simple. Many firms that would be thought of as investment banks will already have a deposit-taking permission, so they will already be covered by the definition in Clause 24. That definition is already broad enough to catch all retail and wholesale banks, whether ring-fenced or not. It covers any UK institution which has the permission to take deposits. It does not cover big City institutions which are not deposit-taking businesses. These amendments will bring them into the scope of the senior managers and banking standards regime. I beg to move.
Lord Newby
“(6D) For the meaning of “relevant authorised person”, see section 71A.””
Lord Brennan
“(b) those aspects involve, or might involve, a risk of—(i) serious consequences for the authorised person,(ii) serious consequences for business or other interests in the United Kingdom, or(iii) conduct or omissions by or on behalf of an authorised person otherwise than in accordance with the requirements of a relevant financial scheme giving rise to criminal liability.”
Lord Brennan (Lab)
My Lords, I declare an interest, as I have done before, as chairman of Global Financial Integrity. In Committee, the Minister, the noble Lord, Lord Newby, said:
“The scale of money-laundering is very large, and the Government and the regulators are determined to cut it down”.—[Official Report, 15/10/13; col. 406.]
The phrase “cut it down” was prudently chosen. Money-laundering, in its widest sense, never goes away. By “its widest sense”, I mean any attempt to create an illicit flow of money for illegal objectives: money-laundering, drugs, terrorism, bribery—whatever it might be. I will use the term in that sense throughout what I am about to say.
The purpose of this group of amendments in my name and that of my noble friend Lord Watson is to identify as clearly as possible a legislative framework within which our banks can be regulated and monitored so as to achieve one of the Financial Conduct Authority’s objectives: to preserve the integrity of the British banking system. I will deal with them briefly. Amendment 26 deals with a scope of responsibility of senior management so as to specify, in a very broad phrase,
“a relevant financial scheme giving rise to criminal liability”.
That is carefully chosen as an omnibus phrase to cover all the kinds of money-laundering activities that I have just described and relates such irresponsibility directly to senior management.
Amendment 28 deals with two issues: redundancy and specificity. “Redundancy” is in inverted commas because it was suggested in Committee that these changes were entirely unnecessary. Plainly, the Financial Conduct Authority and everybody else have a duty to obey the law—of course they do. However, equally, legislation has a component in it that should be designed to relate the existing law to the specific responsibilities to be carried out. No harm is done by such identification, and clarity is achieved. Nobody can say that they did not know. On specificity, subsection (4)(a) of proposed new Section 59ZA in Amendment 28 deals with a general provision for dealing with these schemes that might produce criminal liability. Paragraph (b) sets out the main statutes under which such activities can arise. Paragraph (b)(viii) makes clear that the FCA and the PRA themselves can refer to other relevant statutes, regulations or the like as they think appropriate and are specified in their rules.
Amendment 30 is an attempt, in substance, to achieve the objective of making all persons responsible who engage in money-laundering activities, so that there are no loopholes between different levels of staff and management. Amendments 45 and 47 would provide that the FCA and PRA should, in the banking standards rules, make rules about money-laundering similar to the effect of what these amendments seek to achieve.
Lord Eatwell
My Lords, in the past, anti-money-laundering legislation tended to be associated with crime, typically drugs or gun-running. These days it has achieved a much greater importance in the sense that it is also associated with terrorism. Therefore, the need to maintain the strictest anti-money-laundering rules and to ensure that they are adequately enforced is an element not only of the maintenance of the law, but of national security. Therefore, I would like to commend my noble friends who have put forward these amendments to strengthen the anti-money-laundering regime and to ensure that appropriate levels of criminality or criminal conduct are so defined within this area that suitable penalties for ignoring anti-money-laundering legislation or laundering money in various ways can be enforced.
I hope the Government will accept these amendments; they are hugely important and send a very important signal to the world that London is not a place in which money-laundering will be tolerated in any shape or form. If the Government are not able to accept them at this stage, I hope they will commit to providing in writing both a commentary on the amendments that my noble friend has put forward and a discussion of the relationship between the new personal responsibility mechanism for bankers and the AML compliance. Surely AML compliance should be included as one of the areas of responsibility that is allocated to a named senior banker under the new senior person regime; it should be in the banking standards rules to which all staff at banks will have to adhere, and one of the conditions of the new remuneration code, which makes deferred pay and bonuses contingent on upholding standards. There is no more important standard than those which my noble friend has dealt with in his amendments. I hope that the Government will be able to accept them—if not actually in form, then in spirit—and commit to bringing forward the appropriate form, if necessary, at Third Reading. The best move, however, would be to accept them now.
The Archbishop of Canterbury
I want briefly to add my support to the amendment of the noble Lord, Lord Brennan. Money laundering affects not only the areas that have been mentioned, but in my 10 years’ experience of dealing with conflict management and mitigation work in Africa, it was particularly significant in the ways in which illegal regimes or militias managed to fund and supply themselves. My experience, particularly in some parts of Africa, has shown that London, over time, as one of the deepest and most liquid financial markets on earth has, contrary to the impression given by many senior bankers, played a significant role—not through their collusion in any way at all, but because of its size and the complexity of preventing it. I believe that this amendment and the suggestions put forward by the noble Lord, Lord Eatwell, will contribute extensively to restricting that.
Lord Flight
My Lords, all Members of this House are what is known as PEPs for the purposes of anti-money-laundering. This means that any bank has to pay extra-special attention to any of our transactions. It is perfectly justified. The thought crossed my mind—and I have great sympathy with the noble Lord’s aspirations—that money laundering for corrupt purposes, for armaments, for terrorism and the rest of it, does not particularly come from an ordinary British family living in a suburb. It comes very much from parts of the world where such things are more prevalent. There is a case for requiring a more judicious anti-money-laundering regime for any form of transfer that comes from such parts of the world in an analogous fashion to a PEP if we really want to get to grips with the horrific money-laundering that can come from some parts of the world, causing misery to citizens there. As arrangements presently stand, there is no difference between an evil regime somewhere and an ordinary British citizen living in Birmingham.
Lord Harris of Haringey (Lab)
As I understand it, the money-laundering regulations specifically exclude British citizens, including parliamentarians, from their scope. What has happened is that the banks, as a matter of policy, following what they expect to be European directives on this subject, treat British parliamentarians as though they are politically exposed persons. The actual regulations do not.
Lord Flight
I think the noble Lord may be right, but in practice, we are thus treated as a more dangerous category. I was merely using that as an example of how the more obvious areas of money-laundering offences might be more carefully policed.
Lord Watson of Invergowrie (Lab)
My Lords, I am pleased to associate my name with all five amendments in this group, but I also want to speak to some extent about the FCA note which appeared at about 9 o’clock yesterday evening—typically late in the day, not just literally, as regards the progress of this Bill. I reiterate the point made by my noble friend Lord Brennan that the Government have provided no grounds for reassurance that their amendments adequately deal with the serious issue of anti-money laundering. The fact that the Minister’s promised letter of comfort has not materialised demonstrates that the House should be concerned by the absence of any coalition assurances on this crucial issue. I am not sure whether the FCA note is intended to be in place of such a letter, and I will come on to that later. However, I said in Committee that not only were the Government naive to assume that the amendments we tabled then were unnecessary, they were also complacent. I very much regret to say that the failure to produce the letter setting out the Government’s position which my noble friend Lord Brennan was promised clearly suggests that that complacency remains intact.
We also heard in more general terms in Committee about the devastating human cost caused by the banks’ failure to comply with anti-money-laundering laws. That has not been mentioned this evening but it bears repeating: it is not just a question of what happens in relation to the financial sector in this country but also of money laundering that often amounts to the state looting of developing countries’ aid and haemorrhages billions of pounds from their national budgets, trapping millions of the world’s poorest people in extreme poverty. However, as mentioned in the previous debate, it also threatens the economy of the UK. The integrity of our financial system is hugely compromised by banks failing to prevent access by the worst types of criminals from around the world, whether they be corrupt dictators, drug smugglers, arms dealers or terrorists, as other noble Lords have said. This shows that the stakes could not be higher. I wish that that were reflected in action taken by the Government to counter this problem. It makes their lack of willingness to deal meaningfully with the issue quite unfathomable. Their continuing naivety is potentially dangerous. I apologise for using the word “naivety” again but I feel that I have to do so.
As the noble Lord, Lord Phillips, rightly noted in Committee, should there be any doubt, following the Minister’s letter, about whether the Government’s amendments adequately dealt with money laundering or not, the House should err on the side of caution and choose the alternative amendments. We now know that no such letter has materialised. My noble friends and I have taken great care to move new and refined amendments which reflect the extensive and helpful debate in Committee. In stark contrast the Government have not even offered the explanation they promised. This should leave the House in no doubt as to which set of amendments should be favoured.
I turn to the note from the Financial Conduct Authority that appeared yesterday evening. My noble friend Lord Eatwell said in his opening remarks on Amendment 3, I think, that everything seemed to be done at the last minute as far as the Bill is concerned, and that has been very much the pattern since it first appeared. It is unhelpful in terms of enabling noble Lords to respond meaningfully to new information or, indeed, to draft amendments. It is not clear whether the FCA note on its anti-money-laundering supervision and the new senior managers regime proposed in the Bill is in lieu of the Minister’s letter to my noble friend Lord Brennan, as I said earlier. That letter was intended to outline why the latter’s amendments seeking the explicit inclusion of anti-money laundering in the new senior persons regime and other personal liability mechanisms were unnecessary because the government amendments implicitly did this. However, I submit that the note does not achieve what is required; namely, a guarantee that the FCA will include anti-money-laundering compliance as a key risk and make every bank name a senior banker with personal responsibility for it.
The FCA’s note is largely about what it does and has done, and even refers to what the FSA did. There are just two paragraphs at the end which focus on the proposed new senior managers regime. As the Bill stands, this could give the FCA the power to hold named, individual senior bankers accountable for failures to uphold key standards and risks. However, it seems to me there is a loophole in the Bill which means that it will be left open to the FCA’s interpretation as to whether it uses this power and insists that anti-money-laundering compliance should be one of the issues covered. The note does not indicate that the FCA will include this. It uses terminology such as, “We will consult”, “This will allow firms”, and it, “will help regulators”. These are key phrases in any document but I suggest that they are weak, possibly ambiguous and certainly open to interpretation. I believe that the word “consult” simply means that the outcome is by definition not certain. We should require firms to do something, which is a stronger word than “allowing” them to do something.
My next example is fundamental to the way we deal with anti-money laundering. Instead of the phrase, “for example, anti-money laundering systems”, we should state unequivocally, “including anti-money-laundering systems”. The language that is used is permissive and uncertain rather than being mandatory, which is what I and the noble Lord, Lord Brennan, seek to achieve with these amendments. The content of the note is disappointing and it would be helpful to have clarification of whether it is provided in lieu of the Minister’s letter.
I believe that anti-money laundering compliance should be included as one of the areas of responsibility that is allocated to a named senior banker under the new senior persons regime, is written into the banking standards rules to which staff at banks will have to adhere, and should be one of the conditions of the new remuneration code which makes deferred pay and bonuses contingent on upholding standards. Will the Minister, on behalf of the coalition, ensure that these important requirements are included?
Lord Newby
My Lords, we are dealing here with an issue that everybody realises is an extremely important one in terms of the way banks behave and the way that they are seen to behave. As the noble Lord, Lord Eatwell, pointed out, the importance of money-laundering in financing terrorism has given it an added twist.
These amendments are an expanded version of an amendment tabled by the noble Lord, Lord Brennan, in Committee. Since then, my colleagues in the Treasury have met the noble Lord and explained their view of his original amendment. I hope I can convince the House that the Government’s approach meets the requirements which the noble Lord, Lord Brennan, seeks to impose. These amendments would expand the scope of the senior managers regime to include all persons who are responsible for ensuring that a firm complies with specific obligations under the criminal law, irrespective of the level in the organisation at which they work.
No one doubts the importance of robust action to tackle financial crime such as money-laundering, but I can assure your Lordships that these amendments are not necessary to ensure that financial crime is adequately addressed under the reforms that the Government are bringing forward.
These amendments would bring subordinate staff with relevant responsibilities within the scope of the senior managers regime. That could lead to confusion at least and is contrary to the PCBS recommendation to narrow the senior persons regime to very senior people, and parts of the regime, such as the reversal of the burden of proof, make sense only when applied at the senior level. It is not necessary to bring subordinate staff with specific responsibilities for financial crime within the senior managers regime in order to ensure that these staff are subject to enhanced regulatory scrutiny. It will still be possible for the FCA to ensure that appointments of persons to be money-laundering reporting officers, for example, will be subject to prior regulatory scrutiny and approval under the approved persons regime, if that is considered appropriate, and then subject to rules and standards applicable to their role. This is because the approved persons regime is being retained for financial services firms that are not banks. It is also being retained within the banking sector for appointments below senior management level. The Government have always considered this necessary as there may be critical roles below senior management level with important responsibilities for consumer protection, market integrity or preventing financial crime where prior regulatory scrutiny of appointments remains necessary.
In addition, of course, the regulators will have the ability to make rules of conduct for bank employees who are not approved persons. This will mean that rules of conduct can be applied to staff with more limited roles in preventing financial crime in banks, as well as to approved persons and senior managers.
There is also no need to refer explicitly to breaches of the criminal law to bring senior managers with relevant responsibilities within the scope of the senior managers regime. Under the Government’s proposals, a function can be designated as a senior manager function if a person holding it would be responsible for aspects of the bank’s business that could involve serious consequences for the bank, or for business or other interests in the United Kingdom. There is no doubt that a serious breach of criminal law could have serious consequences for the firm as well as for other people. So senior managers in this area would be covered by this new regime.
The noble Lord, Lord Brennan, asked me three specific questions and for assurances on those points. First, he asked me to confirm that there was no reason to doubt the reliability of the conclusions of the FCA paper. There is no reason to doubt them. Secondly, he asked whether the FCA was properly financed to undertake the level of activity required for it effectively to fulfil its responsibilities under the rules on money-laundering. The FCA budget, as he will know, is funded by the sector as a whole. The FCA is therefore unconstrained, in practical terms, regarding its budget. It is for the authority to determine the resources that it thinks it requires and it can then get them. So no budgetary constraint is imposed on the FCA which reduces its ability to employ as many staff as it feels it wants in this area. Thirdly, he asked whether the FCA represented government policy. The FCA does represent government policy. I am sorry that the note was transmitted later than would ideally have been the case but that in no way undermines its significance as a definitive statement of government policy in this area.
I recognise the concern that noble Lords had in Committee, and still have, in this area. It may be of some minor comfort to know that since Committee I have had a meeting with one of the senior relevant staff at one of the largest UK banks to discuss whether, in its opinion, the FCA was pursuing money-laundering with greater rigour than had been the case in the past. The bank said that the FCA was doing so. It also said that the bank itself had recognised that it simply had to give greater priority to this area.
Two things must happen if we are to achieve the level of compliance that the noble Lord would like. The first, which the noble Lord has concentrated on now, is that the FCA has to do its job properly. As I say, it is putting more resources in and is being, as it states in its list of objectives, more intensive and intrusive. Secondly, as we have discussed in relation to a number of other areas, the banks have to accept that they must adopt a zero tolerance approach to money-laundering. It is clear from the evidence which the parliamentary commission received, and from much other evidence, that this has not always been the case. I believe that the banks are giving a priority to this that they have not done in the past. Is it adequate? It is a great improvement, but it will take some time to be fully clear about whether it is adequate. However there has been a sea change which has been effected in part by the regulatory regime and in part by the pressure put on the banks by a whole range of external stakeholders, not least your Lordships’ House.
The noble Lord, Lord Eatwell, suggested that a further letter might be of help between now and Third Reading to confirm the exact position. I am happy to agree to provide a letter in the terms that the noble Lord suggested. With that assurance, I hope that the noble Lord, Lord Brennan, will feel able not to press his amendments.
Lord Watson of Invergowrie
Perhaps the noble Lord could clarify something. He made it absolutely clear that the FCA note represents government policy. It therefore seems strange that that policy is allowed to be as—shall I say?—ambiguously worded as the FCA note is. It is of concern that it is left that way. Will he commit to write to the FCA before Third Reading to ask it to make anti-money-laundering explicit in the personal responsibility requirements of senior bankers?
Lord Newby
My Lords, I will cover that issue in my letter. I am sorry that the noble Lord thinks that the FCA note is ambiguous, because the fact that it is giving greater priority to this issue and being more intrusive and energetic should give him some comfort. However, as I say, I will write to him.
Lord Brennan
My Lords, first, I had a meeting with officials from the Treasury, the content of which was, in short form, declaratory and, in long form, advisory. It was declaratory when I explained to them that I and my colleagues with whom I am working on this problem were convinced that these amendments were necessary and that the Treasury officials and the Home Office man who was there should revise their thinking accordingly. So they informed our side of the argument of nothing new, except that they felt that they were right. The advisory part of the meeting related to a simple proposition that took a little time to adumbrate. I invited them—both officials were, I am sure, competent young government lawyers—to take advice on this issue and on the terms of the offence, which we shall turn to shortly, from senior Treasury counsel who would be independent and objective as to whether the government views on the strength of the Bill on this point were correct. I do not know whether that has been done. The fact is that the meeting took place but was not productive.
There are times in legislative life when those who see cannot persuade the blind where they are going. In Amendment 30 no attempt is made to disadvantage junior staff and every attempt is made to ensure that senior staff are not allowed to use the fault of junior staff as an excuse for their own responsibility. That is what that amendment is plainly directed at. It makes the senior management’s job crystal clear. It is necessary to consider what the Minister has said in reply and, for the moment, I beg leave to withdraw the amendment.
Lord Mackay of Drumadoon
Lord Mackay of Drumadoon (CB)
My Lords, the amendment seeks to amend Clause 15, and I will speak to Amendment 49, which seeks to amend Clause 22.
When those clauses were introduced into the Bill in Committee they provoked a measure of interest and concern on the part of the Law Society of Scotland, which suggested amendments to be introduced on Report. For that reason, it is necessary that I declare an interest as having been a qualified lawyer in Scotland since 1971, initially as a solicitor and thereafter as counsel at the Scottish Bar.
I mention that with a measure of diffidence, having regard to the comments made earlier about the ethical training of lawyers in general. Joking apart, it is right that your Lordships should be aware that the introduction of these two clauses gave rise to the concern to which I have referred.
I offer no criticism about this because I am aware that on the second day in Committee a considerable volume of amendments were dealt with, but the amendments that introduced Clauses 15 and 22 took place without any detailed discussion. Clause 15 would add an additional section, Section 59ZA, to the Financial Services and Markets Act 2000, the terms of which are relevant to determining whether the carrying on of a controlled function in relation to a regulated activity of an authorised person is for the purposes of the Act “a senior management function”.
Clause 22 would add a further section to the 2000 Act, Section 64A, which gives the Financial Conduct Authority and the Prudential Regulation Authority power to make rules of conduct for approved persons. Clauses 15 and 22 have given rise to concern from the Law Society as to how their provisions impact on the duty of Scottish solicitors to maintain confidentiality in all their dealings with their clients. As your Lordships will be aware, solicitors in Scotland are regulated by the Law Society of Scotland. They are bound to observe their professional obligations and are liable to be sanctioned at the instigation of the Law Society if they fail to meet those obligations. The duty of confidentiality is set out in detail in the Law Society of Scotland’s Rule B1.6. It places a duty on solicitors not to disclose information about their clients, including communications between solicitor and client unless permitted by the client, or compelled by a court or Parliament to do so. This ethical duty of maintaining confidentiality provides for checks and balances, as a solicitor is never the final judge as to whether the information must remain confidential. Legislation and court process, as well as client consent, provide means by which information might legitimately be disclosed. The policy considerations behind this rule of confidentiality are that the rule affords full and open exchange between clients and their lawyers. It also helps to ensure that full and frank advice is provided.
Legal professional privilege, which is also mentioned in the amendments, has a similar, albeit not identical, effect. It protects from disclosure confidential communications and evidence of those communications between a professional legal adviser and their client, provided the communications are for the purposes of preparing for litigation or the client seeking and receiving legal advice. For these purposes, the tendering of legal advice is not confined to informing a client what the law is; it includes the solicitor or counsel involved giving advice as to what action the client should prudently and sensibly take in the relevant legal context.
The need for these amendments was, as I have indicated, identified by the Law Society of Scotland, having consulted a number of its members. It sent earlier drafts of the amendments to among others, the Treasury and the noble and learned Lord, Lord Wallace of Tankerness, the Advocate-General for Scotland. The Law Society and I are grateful to the Treasury and indeed the Advocate-General for responding to that approach and giving us an indication of the Government’s thinking on the issues involved. Before saying a few more words about the details of the amendments, I think it right to note that other regulatory bodies in the United Kingdom which have members who are either solicitors or counsel may have similar interests in the subject matter of these amendments.
The arguments in support of Amendment 27 to Clause 15 can be put very shortly. They relate to the terms of the new Section 59 of the 2000 Act. Those provisions appear to open up the opportunity of legal advice given to a bank by a solicitor being deemed, whether by the Financial Conduct Authority or the Prudential Regulation Authority, as amounting to the taking of decisions or alternatively,
“to participating in the taking of decisions, about how one or more aspects”,
of a serious management function should be carried on. If such a view could be taken of the actions of a solicitor, such actions could be deemed to provide a factual basis for determining, in terms of new Section 59ZA(1) of the 2000 Act, whether a function within a bank is a “serious management function”. The Law Society is concerned that such events might lead to an erosion of the distinct professional relationship between solicitor and client and the obligations that solicitors undertake to provide advice to the client.
What is unclear from new Section 59ZA(3) is whether the Government intend that such solicitors, advising on legal issues alone, will also be considered as having participated in the taking of decisions. The Law Society of Scotland considers they should not be and it believes that that should be made clear in the Bill. That is what Amendment 27 seeks to achieve. If the Minister takes a different view, I am sure he will recognise that this issue is a concern to members of the legal profession in Scotland and I respectfully invite him to explain to your Lordships his reasons for doing so, so that those lawyers will be made aware of them.
The need for Amendment 49 arises out of Clause 22, which was introduced into the Bill on the second day in Committee. It would insert a new Section 64A into the 2000 Act, which would grant power to the regulatory authorities, the FCA and the PRA, to make rules of conduct for approved persons under Section 59 of the 2000 Act and persons who are employees of banks. Both categories could include solicitors, counsel and advocates in different parts of the United Kingdom. They would be under duties of confidentiality and legal professional privilege with regard to communication between agent and client.
It seems abundantly clear that the rules of conduct made by the regulatory authorities could conflict with the duty of confidentiality on solicitors and with legal professional privilege as they are understood and apply in Scotland. Amendment 49 is designed to resolve any potential conflict. In particular it provides in the proposed new Section 64A(12)(b) that in the application of new Section 64A of the 2000 Act in Scotland, no professional legal adviser, either advocate or solicitor, could be required, under the rules of conduct made by the FCA or the PRA, to answer any question that he would be entitled to refuse to answer by virtue of any rule of law relating to confidentiality. In that important respect, it adds to the protection currently afforded to professional legal advisers by Section 413 of the 2000 Act, which severely limits the extent to which a person can be required under the 2000 Act to produce, disclose or permit the inspection of protected items. What Section 413 does not do is make any reference to a lawyer refusing to answer a question.
There is concern that Section 413 of the 2000 Act as currently drafted would not entitle a solicitor in Scotland to refuse to answer questions posed in terms of rules of conduct made by either the FCA or the PRA, even though answering those questions would breach their duty of confidentiality to their client. The Law Society accordingly seeks to have this issue clarified. The society’s view, with which I agree, is that it is important to ensure that rules of conduct made in terms of new Section 64A of the 2000 Act do not place a solicitor who is either a senior manager or employee of a bank in a position where there would be a conflict between his or her duties under the rules of conduct and his or her duties as a professional legal adviser, duties that are regulated by the Law Society of Scotland.
I argue in terms of both amendments that these issues should be addressed now and not deferred until such time as the FCA or the PRA seek to exercise the new statutory powers they are to be given. Against that background, I beg to move.
Lord Flight
My Lords, these amendments have the support of the Law Society of England and Wales as well as that of Scotland—certainly for Amendment 27. The issue is pretty clear. The objective is to ensure that the provision of legal advice is not to be construed as taking decisions or participating in the taking of decisions, and for situations where solicitors or other legally qualified professionals frequently give advice on decisions which a bank or other institution may take. They do not make the decisions, but purely advise on legal issues where the Bill is currently unclear as to whether advising would be included in,
“participating in the taking of decisions”.
Amendment 27 seeks to clarify the position.
There is an irony here in that, as I understand it, Clause 15 creates a broad definition of a senior management function, and the term,
“participating in the taking of decisions”,
as currently drafted will capture legal advice. This could have some perverse results and disproportionate consequences, and a danger that all legal advice is considered as participating in decision-making. If that were to be the case, all banks’ lawyers might need authorisation from the Financial Conduct Authority to give legal advice, whereas of course they are already regulated through the Solicitors Regulation Authority.
Lord Newby
My Lords, I understand the concern of the noble and learned Lord and that of the Law Society about the position of lawyers under the new regime, and I hope very much to be able to reassure him.
Amendment 27 would amend Clause 15, which inserts new Section 59ZA into FiSMA, which provides the definition of a senior management function. A person becomes a senior manager only if they perform a function which has been designated by a regulator as a senior management function and have been approved to perform that function by the appropriate regulator on the application of the authorised person; that is, the firm concerned. A senior management function is one that will,
“require the person performing it to be responsible for managing one or more aspects of the authorised person’s affairs”,
and that,
“those aspects involve, or might involve, a risk of serious consequences—
(i) for the authorised person, or
(ii) for business or other interests in the United Kingdom”.
It is therefore highly unlikely that the regulators would designate being a legal adviser as a senior management function simply because giving advice does not constitute management as set out in the definition of senior management.
Clause 22 inserts new Section 64A into FiSMA, which allows the regulators to make rules of conduct for approved persons, including senior managers, and for bank employees. This implements the Parliamentary Commission on Banking Standards recommendation regarding the introduction of a “licensing regime”. This broadens the population who can be subject to the regulators’ rules, which could for example now apply to an in-house legal adviser in the capacity of an employee. In addition, the regulators already have a broad power to require firms to provide information, as set out in Section 165 of FiSMA. However, the regulators cannot make rules which would trump the protection of legal privilege. Section 413 of FiSMA provides expressly that no power under the Act can be used to require the disclosure of “protected items”. These are defined in terms which are materially identical to the definition of items subject to legal professional privilege in Section 10 of the Police and Criminal Evidence Act 1984. Consequently, FiSMA already prevents the regulator from obtaining legally privileged material.
The noble and learned Lord’s amendment would also introduce a protection against the disclosure to the regulator of “excluded materials” as defined in Section 11 of the Police and Criminal Evidence Act 1984. This includes personal records generated in the course of business and held in confidence, human tissue and journalistic material held in confidence. Clearly, the regulators would not request some of the categories of material included in this section. However, in relation to confidential information such as that compiled during the course of business, it might be appropriate, and indeed sometimes essential, for the regulators to receive it. However, FiSMA itself provides strong protection for confidential information received by the regulators when carrying out their regulatory functions. Section 348 of FiSMA prevents any such information being disclosed to a third party except for very narrow purposes. Further, where any such information constitutes personal data, it would be subject to the Data Protection Act.
The noble and learned Lord asked whether Section 413 of FiSMA covers communications as well as documents. I can give him that assurance. The section is not limited to documents, so regulators cannot require the disclosure of privileged communications. With those reassurances, I hope that the noble and learned Lord will feel able to withdraw his amendment.
Lord Mackay of Drumadoon
My Lords, I am grateful to the Minister for giving a very clear and detailed explanation of the Government’s position in regard to these very complicated statutory provisions. I always think that when you start running out of enough section numbers so that you have to add letters to them, it makes the construction of the contents of those sections much more complicated than it might otherwise be. For these reasons, I beg leave to withdraw the amendment.
Lord Deighton
Lord Deighton
Lord Deighton
“(7) For the meaning of “relevant authorised person”, see section 71A.””
Lord Deighton
“(6) For the meaning of “relevant authorised person”, see section 71A.”
Lord Deighton
Lord Deighton
Lord Deighton
“(7) This section applies only in relation to employees whose actions or behaviour could seriously harm their employer, its reputation or its customers.”
The Archbishop of Canterbury
I have already spoken to the amendment standing in my name. The members of the commission are delighted that the Government are broadly finding agreement with their recommendations, and on all the areas on which the Minister spoke we hope and expect that the government amendments at Third Reading will reflect closely the assurances that we have been given. To ensure that we get this right, we re-emphasise the need to see the amendments as early as possible and reserve the possibility, if we are not content and feel that they do not reflect what has been said, of returning to them at Third Reading. If I have those assurances, I will be happy to withdraw the amendment. I beg to move.
Lord Deighton
“(9) For the meaning of “relevant authorised person”, see section 71A.”
Lord Deighton
““relevant PRA-authorised person” means a PRA-authorised person that is a relevant authorised person;”
“(9) For the meaning of “relevant authorised person”, see section 71A.””
Lord McFall of Alcluith
“Independent review
After section 66B of FSMA 2000 (inserted by section 23 above) insert—“66C Independent review
(1) The Treasury shall commission an independent report in relation to the effectiveness of—
(a) any rules implemented under section 64A; and(b) any action taken by the FCA or PRA by virtue of section 66.(2) The Treasury shall ensure that the report prepared under subsection (1) shall—
(a) include such recommendations as considered appropriate for legislative and other action;(b) be laid before Parliament by the end of 2018; and(c) be published in such manner as it sees fit.””
Lord McFall of Alcluith
This amendment is in response to government amendments to the Bill which amend the Financial Services and Marketing Act 2000. The amendment would require the Treasury to commission a review to provide an opportunity to evaluate the effectiveness of the regulators, particularly the FCA, in implementing and effectively enforcing new powers in relation to individual standards rules and the licensing regime.
The amendment should allow for recommendations that may include the removal of powers from the current regulators or further separation within the current body. That would potentially allow for aspects covering licensing and individual standards rules to be considered for moving across to an independent professional body, should that be appropriate. That echoes the amendment that we on the Labour Front Bench successfully moved a short time ago.
Given the competing priorities for resources—which have the potential to be compounded with the inclusion of consumer credit regulation in 2014 and the payments system regulation, if approved—there is the concern that the FCA may struggle to carry out this challenging role it faces. Therefore, an independent review can assess the effectiveness of the FCA and PRA in being able to implement the recommendations made by the Parliamentary Commission on Banking Standards and, in doing so, provide feedback on how this can be improved, and whether it is more effective for the oversight and enforcement of the professional standards to be undertaken by a genuinely independent professional body.
Lord Newby
My Lords, I start by saying that we strongly agree with the last point made by the noble Lord; people who fall below the standards of conduct required of them should be held effectively to account. We have been discussing a number of ways in which the Bill will help to bring this about. I also appreciate the concerns of the noble Lord that we should take stock at some point and review whether the new system of rules of conduct has delivered an improvement in behaviour among bank staff—the kind of improvement that we are all agreed we want to see. I am not sure, however, that we need legislation to provide for that.
In the first place, the regulators themselves will keep their rules under review in the normal way. There will be no difference in that respect between rules of conduct for bank staff and any other rules that they make. They will similarly review their policy statements about taking action for misconduct under Section 66, and keep their policies and practices under review too. I expect also that the Treasury Committee in the other place, and possibly also the Economic Affairs Committee in your Lordships’ House, will want to keep such matters under review. Nothing, of course, stops the Treasury from commissioning reviews of these and other matters, if it thinks it appropriate. All these reviews can range as widely or as narrowly as is appropriate. They can cover the full range of matters in FiSMA or other relevant legislation—and any other matter as well.
I comment briefly on the point that the noble Lord made about the work of Sir Richard Lambert. We are putting great faith in Sir Richard Lambert to produce worthwhile movement. Having worked with him on other things in the past, I have considerable confidence in him to do that. However, we will have to see how that unfolds. It requires the banking industry to accept the need to take measures that it has not in the past. Sometimes that has been difficult for it. On the amendment, we do not need a mandate for such a specific review in the Bill itself.
Lord McFall of Alcluith
My Lords, given the form of the regulators in the past, the Minister’s words that the regulators will keep the review under review in the normal way are not inspiring. However, I beg leave to withdraw the amendment.
Lord Newby
Lord Newby
(a) meets condition A or B, and(b) is not an insurer.(2) Condition A is that the institution has permission under Part 4A to carry on the regulated activity of accepting deposits.
“(2A) Condition B is that—
(a) the institution is an investment firm,(b) it has permission under Part 4A to carry on the regulated activity of dealing in investments as principal, and(c) when carried on by it, that activity is a PRA-regulated activity.”
Lord Newby
“( ) For subsection (9) substitute—
“(9) “The authorised person concerned”, in relation to an approved person, means the person on whose application approval was given.””
Lord Newby
Lord Newby
Lord Newby
My Lords, we now move to a group of government amendments which pertain to the scope of the offence relating to a decision that results in bank failure. This offence was introduced through amendments to the Bill in response to a recommendation by the PCBS. As tabled in advance of the debates in Committee, and building on the FiSMA definition of “bank”, the offence would have applied to retail banks and building societies. This meant that all deposit takers except credit unions were covered.
As discussed in earlier debates on the scope of the senior managers regime, the Committee debate on 15 October has prompted the Government to reconsider this position. In the light of the persuasive arguments put forward in that debate, we are amending these clauses so that the offence may be committed not only by senior managers of a bank, but by senior managers of relevant authorised persons. “Relevant authorised person” is defined by government Amendment 106 to include banks and those investment firms that are regulated by the PRA as well as the FCA. These are known as systemic investment firms, because their large size means they have a significant impact on the wider financial sector. Smaller investment firms will continue not to be covered by the offence. This is because, like credit unions, they do not represent a significant risk to taxpayer funds, or to financial stability, and their failure is very unlikely to lead to serious harm to customers.
The Government shared this definition with the members of the former PCBS and are hopeful that the scope now captures those firms that the PCBS had in mind. I hope that these amendments fully meet the House’s concerns on the matter.
The other amendments in this group make consequential amendments to Clauses 27 to 28 which are necessary to give effect to this change, and improve the drafting of the existing provisions. There was also some debate in Committee over whether the cross-heading as tabled properly represented the offence. In the light of this, I have asked the House printers to amend the heading so it now reads, “Offence relating to a decision causing a financial institution to fail”. I trust that this addresses the concerns raised. I beg to move.
Lord Lawson of Blaby
I make one point of clarification on what my noble friend said. I apologise for my cold. It is absolutely necessary that the definition of “bank” should be extended in the way that the noble Lord has said. I am very pleased with that. He gave us a reason that these investment banks, or these investment institutions, might be a potential liability for the taxpayer. I hope he will withdraw that. It is very important that there is no taxpayer liability there. The reason we wanted it expanded is that we were concerned about banking standards, which was what this commission was all about: banking standards and culture. That is why it is necessary that there should be this regime for these banks, not because there might be a taxpayer risk or bailout.
NHS: Accident and Emergency Units
(10 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness McDonagh
To ask Her Majesty’s Government what plans they have for the future of NHS accident and emergency units.
Baroness McDonagh (Lab)
It might help the House if I explain why I have asked for this debate. I live near St Helier and St George’s Hospitals. The A&E at St Helier Hospital, which had 80,000 visits last year, may be closed. It is a regular district hospital. St George’s is not a regular hospital, but a regional and national trauma centre, specialising in strokes and coronary care, with very high unit costs. If St Helier were to shut, we all know locally that the people of that area would go to the A&E in St George’s—costing more, blocking beds and destabilising the hospital. That is because hospitals make money on their elective procedures and tend to lose money on emergency care. If you change that ratio, you soon put the hospital into the red. The London Borough of Merton commissioned some independent research and found the same thing. The researchers said, “We questioned CCG board members quite closely regarding their understanding of the baseline financial activity and quality position in Merton. We did not find a good understanding of the current resource position, nor how these resources were being used, and how such use would be compared to other parts of London and England as a whole”. I do not blame them for that, as they probably cannot get hold of the information in the rest of London or England. They go on to say, “Without a thorough assessment of these issues, there is a high risk of taking the wrong or even counterproductive action. For example, if financial problems are caused by high unit costs at St George’s, it makes no sense to close St Helier”.
I took my local knowledge, together with my understanding of what is happening to the NHS nationally, particularly around A&E, and put two Questions down. One Question asked how many A&E departments had been closed by the Government since they came into office in 2010. The answer came back, “We don’t know”. I asked how many A&E closures were currently under consultation. The answer came back, “We don’t know”.
Perhaps I could explain tonight to the noble Earl, Lord Howe, and to the Government, why it is important that they know how many A&Es they have, where those units are and how many are closing. The clue is in the title: National Health Service. The Government are responsible for the oversight, costs, management and planning of the health service. To do that, you need to know where your A&Es are. When A&Es close, maternity units normally follow. The Government are responsible for seeing that there are enough beds for mums to have their babies. They also tell us, because they have the figures, that the population is due to increase to 70 million—so shutting maternity units is probably not a good idea. You also need to know where the A&Es are because, when you shut an A&E, other clinical services close with them. If you shut St Helier A&E, you will also shut the regional renal unit. According to the evidence, you also reduce ITU beds and medical beds; hospitals cannot then meet their elective targets.
The Government also need to know, because—I do not know if this is shocking—they are responsible for disaster and emergency recovery planning, and generally it is a good idea to know where the A&Es are. They are also responsible for sending out the latest advice and, again, you cannot do that if you do not know where the A&Es are. Lastly, the closures of the four A&Es that have already happened have led to unintended consequences, and you need that information for forward public policy-making. We are getting worse results, it is costing more and the care is worse. All in all, it is a lose-lose situation. Closures are not working, largely because they have been built on six terrible government reforms, which are resulting in systemic failure in the NHS. No money announced today or two-tier A&Es will make a difference to that.
The first of the reforms that have led to the problems that we now face is the Government collapsing all targets. Then there is the terrible reform of giving GPs the NHS budget, which took from front-line services, and cost the Government, £3 billion. The Government have also overseen the closure of one-quarter of all walk-in centres, and Monitor says the future for the rest is dicey. They have also overseen cuts in the adult social care bill of £1.8 billion and cuts to aids and adaptations, so that we are seeing record numbers of elderly people go into hospitals through A&Es, who cannot then get out because the aids and adaptations have not been made. The fifth and sixth reforms were shutting NHS Direct and introducing the terrible 111 service. Doctors and nurses are leaving in their droves, and the Government have spent an extra £120 million on emergency medical locums compared to before. All these reforms have led to a threefold increase in attendance at A&Es, and now more than one in four people who go to A&Es are being admitted. If the ministerial health team were doctors, they would be struck off.
When I look into this, I cannot decide whether it is incompetence or ideology that is driving these changes. I fear that it is a dangerous cocktail of both. For me, it is perfectly legitimate in a democracy to be against a national health service, but you need to be honest about that, and it is important to have a debate. I will start that debate by answering my own questions. Four A&Es have been closed since 2010 and a further 15 face closure, which means one-third of all A&Es in the M25 area will close. Last week, NHS England announced that a further 60 A&Es out of 197 will close. Tomorrow, the A&E is closing at Trafford General Hospital, where Aneurin Bevan announced the birth of the NHS.
What am I asking the Minister for Health? I am asking him to call a moratorium on all A&E closures, to listen to the public, to commission independent research on what is happening and, above all, to find out where these A&Es are and to visit them.
Lord Patel (CB)
My Lords, in my three minutes, I will make some brief comments that will lead up to some questions for the Minister. In my view, the pressures on A&E departments are but one component of wider pressures in the NHS. There is a disconnect between A&E and other departments in hospitals, such as diagnostic and in-patient services, which, in contrast to A&E, are both geared to a five-day, nine-to-five working schedule. Added to that of course is the fragmented nature of patient services in the community, which leads to bedblocking and further pressures on A&E. We will have to address the problems of A&E, and the Keogh report goes some way to doing that, but the problems in A&E will not be solved by focusing on just one aspect of the service. The whole system needs to be co-ordinated and to work seamlessly.
Figures show that the main pressures on A&E come from people with long-term conditions. This in turn leads to pressures on in-patient services. This is due in part to poor access to primary and community care. What is needed, as has been discussed on many occasions, is better management of patients with long-term conditions so that they do not end up needing emergency care.
There are other issues. The issue of workforce problems in A&E further compounds the problem. I understand that there is a serious problem with recruitment of trainees, particularly specialist trainees, in A&E. There are also, of course, the vagaries of the tariff, which is set more in favour of elective work than emergency work. I note that the Keogh report tries to address that, or at least intends to explore it. I know that recently the Government have allowed more funds to help with A&E pressures but I am not sure what these funds are to be used for. I hope that the Minister will comment on that. It would be helpful if he could comment on whether the Government have a long-term strategy to cope with the increasing number of patients with long-term conditions, and on what plans the Government have for Health Education England to address the issue of workforce planning, which would help with A&E.
Lord Selsdon (Con)
My Lords, I thank the noble Baroness for introducing this debate. I declare an interest as a director of the construction company that built St George’s. We had quite a lot of trouble with it.
I will use as my text the wonderful brief produced by the Library. I declare an interest as having been on the Information Committee. I want to draw attention to the need to separate the main A&E centres from the patient. I take the point of the noble Lord, Lord Patel, that we should look to people who have a long-term condition, and generally are aware that they have a long-term condition. We should also look at the intermediate situation of what can be done at the place of an incident.
I have used 111 three times. When I first used it, I was quite surprised that I was dealing with foreign doctors who had relatively little knowledge but terribly pleased with the enthusiasm of these people who had only been in the business for a short period of time. There was a tendency to refer someone to A&E immediately rather than to look at what care might be given closer to the place of the incident or to a person’s home. In my day we looked to the district nurse, who seems to have disappeared from real life, or the retired doctor whom we knew down the road or the pharmacist. Our pharmacists in the United Kingdom are among the best in the world. They are extremely well trained and a very good point of contact.
When calling 111, you usually receive an answer to a telephone call quite quickly, and you receive a bit of guidance and advice, but the irrevocable next step is to be taken to A&E. One or perhaps two ambulances may then arrive.
I have often worked abroad and have been privileged to benefit from A&Es in other places. I once suffered from an extremely bad upset stomach in Cairo, which ended in rebuilding the sewers, where the A&E man arrived on a moped with only one working cylinder and a flat tyre and cured me within a couple of hours. He was the doctor to the Egyptian swimming team. Egyptian doctors are really quite good and he explained to me that every one of them was trained to deal with situations on the spot.
When I was in Italy, not so long ago, there was no doctor available when someone was ill so a hotel rang the transport department. The transport department has doctors on motorbikes on call for car accidents. They turned up and sorted everything out. This seems to happen in many places. I live in France part of the time, and there we do not call the health service when there is a problem, we call the fire brigade. They like exercises and they send a small fire engine—if the patient is a woman, there will be a woman with them—and they get patients to hospitals more quickly than ambulances.
There must be further thought on this. I ask your Lordships to read the Library’s report, as that is what I would have said if I were competent to do so.
Lord McKenzie of Luton (Lab)
My Lords, I am grateful to my noble friend Lady McDonagh for initiating this, albeit brief, debate. I plan to use my three minutes to focus on one point. Before I do so, I will say that it is hard to look aside from the mounting problems of A&E departments, spoken to powerfully by my noble friend and evidenced by the number of patients waiting longer than four hours, the numbers waiting on trolleys, the increase of bed days lost because of delayed discharges and staffing problems. A&E departments undoubtedly are struggling to cope. All of this is exacerbated, as identified by the Health Select Committee, by the inadequacy of information about the nature of the demand placed on the service.
There has been hardly any focus in the wider debate on accident prevention in the first place. Prevention would be investing to save: to save on pain and suffering, even death; to prevent days lost at school or work; and to save costs to the NHS, A&E and the welfare system. The current chaos compels us to be radical. At least one-third of the nation’s A&E attendances are the result of accidental injuries. There are millions of injuries every year that are 100% preventable, according to the Office for National Statistics. These injuries are rising as a significant proportion of the overall pressure on A&E because we have stopped investing in the tried and tested antidote. We should not be negligent about the safety of our citizens, our duty to our health professionals and the very future of our National Health Service.
The country’s longest-standing safety charity, the Royal Society for the Prevention of Accidents, of which I am delighted to say that I am now president and in respect of which I declare my interest, has already shown what can be done. In Liverpool, for example, it ran a home safety scheme, working with disadvantaged families with children under five. Equipment such as stair gates, fireguards and blind-cord shorteners were fitted in the homes of those most at risk. Parents were given practical advice to help them keep their children safe. This is not rocket science. The result was that A&E admissions for zero to five year-olds plummeted by about 50% over two years—against the trend, as home accidents have been rising steadily over recent decades.
There is no doubt that increased funding for accident prevention initiatives and a task force to co-ordinate national action could lead to a major reduction in the number of deaths and injuries and the call on A&E departments. The answer is not just more resources or different approaches to treatment, but an alternative that is staring us full in the face. Accidents are the main cause of preventable early death for most of our lives, costing the state £20 billion to £30 billion each year. Given all this, is it not time that we rediscovered that prevention is always better than cure?
Baroness Manzoor (LD)
My Lords, the first choice of most people who think that they need urgent medical attention is to go to their local hospital’s accident and emergency department. I understand that, as A&E departments are trusted by the public as a place of expertise and knowledge. However, as we know, our hospitals and A&E departments are under significant pressure to treat all those who come through their doors. On top of this, the Royal College of Surgeons states that A&E departments are understaffed by around 10% and that in some trusts, such as Barking, Havering and Redbridge University Hospitals NHS Trust, the figure is as much as 43%. The understaffing of A&E departments is a serious issue.
Following the disgraceful events at Mid-Staffordshire hospitals, the Government have given their total commitment to putting patient care first and ensuring that patient safety should always be paramount. However, it is clear that running A&E departments that are under-resourced and poorly staffed poses a high risk to patient care and patient safety. This issue needs urgent attention by the Government and the NHS health board and I look forward to the Minister’s response on the plans that the Government have to rectify this and the timescales involved.
I too have read Sir Bruce Keogh’s review of urgent and emergency care services in England and I agree with the report’s proposals that there must be a “fundamental shift” in the provision of urgent care. I agree with much of the report, which is reasonable. But what we need now is strong leadership to deliver.
I have also read the July 2013 survey findings from the NHS Confederation, which found that its members thought three main solutions could lead to fewer pressures on A&E departments. The first was more money for primary and community care. To this, I would add more extended primary care out-of-hours services provided by GPs. These could be sited in hospitals or perhaps close to A&E departments. This would enable GPs to work in much greater collaboration with hospital A&E staff and could provide the patient with much needed seamless care.
Secondly, winter pressure money for hospitals should be allocated sooner. I would further argue that this money should be part of hospitals’ general allocation so that they can plan service delivery for all their services in a more effective, planned and co-ordinated way. Thirdly, there should be a public-facing campaign about all the alternatives to emergency departments, but these alternatives must provide a good quality of care and service if they are to have the trust of the public.
The Government are moving in the right direction by allocating specific funds, but it is not just about turning the tanker, it is about making our hospitals and GP services fit for the 21st century.
Baroness Masham of Ilton (CB)
My Lords, there is confusion at the moment about where people go when they need treatment at weekends and at night. There is considerable difference between urban and rural health. I thank the noble Baroness, Lady McDonagh, for initiating this very topical debate.
Rural health has changed so much from the days of the family doctor, when he or she knew their patients. Now the doctor is dependent on the computer. My surgery in rural North Yorkshire opens at 9 am, is closed each day from 12.30 pm to 2 pm, has a historical half-day on a Thursday, shuts each day at 6 pm and is shut over the weekend. The out-of-hours service at Ripon is 10 miles away and does not have anyone to operate the X-ray so it has to be the hospitals, which are 26 and 16 miles away. There are no alternatives to the A&E departments. This is not good for elderly, frail people who need attention.
In rural areas there are serious farming injuries and all the usual conditions, but also such conditions as leptospirosis—Weil’s disease—which can be a killer. I agree that serious conditions should go to the correct hospital, however far away, and I must say that the air ambulance is invaluable and supported by the rural communities. Will having two types of emergency department—one an emergency centre and the other a major emergency centre—not cause more confusion? To which centre should a parent take a child with suspected meningitis B, which can kill within 24 hours?
More integrated care in the community is essential. With all the long-term rare conditions and conditions such as diabetes and liver disease, a specialist nurse is vital and can be a lifeline. One of the problems in the community is not being able to have a drip for antibiotics, and not being able to get antibiotics without a doctor means that ill people have to go to hospital. I am sure that if everyone learnt first aid and it was taught in schools, colleges, prisons and the community, lives would be saved.
Up-to-date information about what is available and where to go for treatment in rural areas would be helpful and would reduce confusion. I end by asking the Minister: with the shortage of emergency doctors working in A&E departments, what is being done to recruit and retain them? They need support so they do not get overburdened and disillusioned. They are essential.
Lord Dubs (Lab)
My Lords, I congratulate my noble friend Lady McDonagh on having initiated a debate that enables us to draw attention to the serious crisis in A&E, which is evidenced by people waiting long hours on trolleys or in ambulances, the consequence of social care cuts, the fact that walk-in centres are being reduced and that NHS Direct has been closed down, all of which aggravate the problem.
I will focus my remarks on north-west London, which has been hit harder than most parts of the country. It is going to lose four of its nine A&E services and two of its major hospitals; for example, at Charing Cross Hospital 500 acute beds are going to disappear and will be replaced by up to 50 rehab beds. It means that the service at Charing Cross will be manned by GPs. There will not be a proper A&E service. There will not be a blue-light service at Charing Cross Hospital and people will have to travel much further. We are losing an excellent hospital for the sake of these cuts.
Above all, it means that the intensive care unit at Charing Cross will be closed; the stroke clinic, which I understand is probably the best in the UK, will go; and there will be no emergency surgery. It means that all the current beds and most of the site will go, mostly likely to be sold for development, and we shall lose an excellent hospital. It means that Charing Cross will become a second-tier site and there will be a knock-on effect at Hammersmith Hospital, which is also going to be hit very hard.
Services in north-west London will be decimated and patients will have to travel much further to go to A&E. In the heavy traffic in London, that is not a small thing. It is not a matter of an extra two or three minutes; it could be an extra long period before an emergency can be dealt with. What we will have locally is some very limited services indeed and we shall lose some of the skills and expertise that we have had.
At Charing Cross there will be GP cover; they will be able to treat simple fractures and will have some beds on site that can admit patients, mainly the frail elderly, for short periods of rehab or assessment. But there will be no emergency service at Charing Cross and nearby Hammersmith will have only an urgent care centre, which will not guarantee to walk-in patients that they will be seen by a GP, and there will certainly be no blue-light service.
We are losing a lot of our services in north-west London and I fear that the standards of the National Health Service will deteriorate. It is not necessary to do this and I very much regret that it is happening.
Lord Kakkar (CB)
My Lords, I join noble Lords in thanking the noble Baroness, Lady McDonagh, for having secured this important debate. I declare my interest as professor of surgery at University College London and chairman-elect of UCLPartners Academic Health Science Partnership.
No consideration of the future plans for accident and emergency departments can take place without recognising the important factors that are driving demand in A&E. The most important of these is the growing number of frail elderly patients with multiple comorbidities, as my noble friend Lord Patel has already mentioned. The population aged over 85 has grown at more than three and a half times the rate of the rest of the population in the past 10 years. It is striking that 9% of those aged over 75 have experienced an emergency admission through accident and emergency in the past year. This demonstrates that there is considerable demand and that this considerable demand will grow.
We know that the way that we plan and deliver services for those who are frail, elderly and have multiple comorbidities is not providing the kind of service, the degree of confidence and the relief of anxiety that these patients require. We also recognise that those who are cared for in nursing homes and care homes, who find themselves in an acute situation, will be attended to by excellent paramedics and the ambulance service, but the default position will always be to take these individuals to hospital and very frequently for these individuals to be admitted and then to spend long periods of time in hospital. This is wrong.
With regard to the plans of NHS England, can the Minister tell us what advice is now being provided to local commissioning groups in terms of the commissioning of more holistic and integrated services that recognise the needs of the frail elderly in the community and can better understand how those needs are met, and how the services are delivered in an integrated fashion with local hospitals, while avoiding admission through accident and emergency?
What discussion has taken place about addressing the important problems of workforce development, to help us ensure that we have a medical and paramedical workforce developed for the needs of these large numbers of frail elderly patients with multiple comorbidities? What position has Health Education England taken, and how is this central advice being delivered to local education and training boards to ensure that an appropriate workforce is delivered, able to deliver multidisciplinary care to reduce the demand on accident and emergency services and manage patients rather better in the community?
Finally, may I ask the Minister how much progress has been made on the development of locally sensitive information technology projects that allow a connection between information held on frail elderly patients with multiple comorbidities in different care environments, be it in social care, in primary clinical care in the community or in hospital care? Such information could be shared effectively to reduce the burden on accident and emergency departments.
Lord Kennedy of Southwark (Lab)
My Lords, I am most grateful to my noble friend Lady McDonagh for securing this debate on the future of NHS accident and emergency units. At the start I declare an interest: I chair, on an entirely voluntary basis, a small committee at Lewisham hospital. It is impossible in just three minutes to get across the scale of the problems and the anxiety and concern of local communities about the A&E crisis that is unfolding before us as the winter sets in.
What did the Government do as soon as they came into office? They had a top-down reorganisation of the NHS, after pledging not to do that, which only made matters worse. What is clear is that this is the Government’s problem. It has happened on their watch, with poor implementation of their already flawed policies, and the cuts they have made to the NHS, to social services and other budgets. There has also been the running down of NHS Direct and the ramshackle way in which the NHS 111 service has been introduced.
I hope the Minister will be able to tell the House how the Department of Health and the NHS are going to respond to the challenges they face, and how they propose to do that with thousands and thousands fewer staff than we had only a few years ago. I fear that things could be even worse than last winter, and we will be back with rising numbers of patients waiting on trolleys at A&E.
We have already had an A&E summer crisis, with more than 1 million people waiting more than four hours to be seen, all on the Minister’s watch. The problem is all of this Government’s own making, and they are not going to get away with trying to wriggle out of it. The Minister and the rest of his team would have us believe that it is everyone else’s problem—it is the doctors’ fault, and the fault of the nurses, the GPs, the porters, the radiographers, the support staff, the patients, or even the weather. It is too cold, or it is too warm, or it is the wrong time of the year. But it is this Government’s problem; it is down to mismanagement by this Conservative and Lib Dem coalition.
If the Minister is going to tell us the problem is caused by too many people going to A&E when they should go somewhere else, can he tell the House why the Government cut Labour’s extended opening hours for doctors’ surgeries and why they are closing NHS walk-in centres up and down the country? Can he confirm how many walk-in centres have closed since the Government came into office? Why did they close NHS Direct, and why did they introduce NHS 111?
My noble friend Lady McDonagh has got it right. We have a dangerous mix of incompetence and ideology. They want to get rid of the NHS, but they realise how unpopular that would be, so instead they pare down to the bone, to the minimum that they can get away with.
Baroness Finlay of Llandaff (CB)
My Lords, I should declare, in this important debate, that my daughter is an A&E consultant in London. The current crisis is multi-factorial, at the one place in the system that is open 24 hours—open all hours, in fact. As the National Audit Office report, Emergency Admissions to Hospital, says:
“A&E departments are facing increasing pressure and there is evidence that at times of increased pressure there is a greater tendency to admit patients. Urgent access to primary care is variable and has been linked to higher A&E attendances … the severity of patients in major A&E departments is worsening, with higher proportions of patients arriving via ambulance and a sharp increase in the percentage of patients attending A&E … who are then admitted".
The College of Emergency Medicine also highlights insufficient workforce capacity, with 383 of 699 specialist registrar posts in emergency medicine unfilled. That equates to a capacity of 1 million patient contacts a year. There is also an exit block from A&E departments through delayed hospital discharges, estimated at 830,000 last year, which reduce bed capacity. This is compounded by inadequate ongoing community social support for those sent home. The £500 million in extra funding over two years has been targeted on those with the worst A&E performance last winter, and an extra £150 million was announced. Can the Minister confirm that this money will go directly to provide A&E services and its distribution will not inadvertently penalise departments that radically changed practices in their struggle to perform?
The staffing crisis jeopardises care. Consultant numbers need to rise from the current average of seven to a minimum of 10 per A&E to allow consultant cover 365 days a year from 8 am to midnight, with higher numbers of consultants in larger trauma centres. Today’s registrars are tomorrow's consultants, and this has to be a consultant-led service, because rapid diagnosis is absolutely essential for the complex trauma and urgent cases that are in the high-risk categories. These are not simple cases coming through the door; they present completely unselected problems.
The relentless pressure of work has driven more than 50 A&E consultants to emigrate this year—a tenfold rise. The College of Emergency Medicine survey of more than 1,000 consultants found that overall, 62% report that their current job plans are unsustainable, while 94% of respondents regularly work in excess of their planned activities.
The Keogh review is a longer-term attempt to solve the crisis. But it is silent on the workforce issues. Can the Minister assure me that these are being urgently considered? What is planned to develop primary care and better co-ordinated community care for a seven-day service? How quickly will the needed IT support be introduced, and how will the system of two-tier A&Es be implemented—over what timescale—to ensure that geographically remote regions are serviced without greatly increasing journey times to hospital and so risking higher patient mortality? This is not a simple problem.
Lord Hunt of Kings Heath (Lab)
My Lords, I first declare an interest as chair of a foundation trust, president of GS1 and consultant and trainer with Cumberlege Connections.
I too am grateful to my noble friend for raising such an important issue. The case she put for her local hospital, St Helier, was put with great force. The issues she raises are symptomatic of a whole range of issues around emergency care. They are well known, and they are symptomatic of a near collapse of the system in many parts of the country. My noble friends have already referred to the inexplicable closure of walk-in centres, and I ask the Minister why NHS England has pressurised clinical commissioning groups to close those centres. That has exacerbated poor access in primary care, and people are often left with no choice but to turn to A&E, with hospitals becoming very full as a result.
As my noble friend Lord Dubs said, the discharge of patients is becoming ever harder because the severe cutbacks in social services have impacted on councils’ ability to provide community support. The result of this cumulative failure is that more and more old people are left without the care and support needed to let them stay at home.
I want to reinforce a question asked by the noble Lord, Lord Kakkar. What are clinical commissioning groups doing about this? They are, as it were, the treasure of the Government—the people who are supposed to be able to sort the situation out. I see no sign whatever of their getting to grips with the issues. I echo the noble Baroness, Lady Manzoor, in asking; why on earth were they given the money to spend in relation to A&E? Why not give it to the hospitals to spend where it would have an impact on the system?
At a time when the NHS should be focusing all its energies on getting the system to work properly, as my noble friend Lord Kennedy says, the Government have forced it to spend the past three years implementing a costly and completely unnecessary structural change. Remarkably, during that time, rather than increasing staff we have seen a loss of more than 6,600 nurses.
There is a pressing need to integrate health and social care, provide whole person care and prevent avoidable admissions to hospital. That would also embrace the comments of my noble friend Lord McKenzie about accident prevention. Urgent emergency care has a similar need of change. Of course, the recent review by Sir Bruce Keogh argues for a “fundamental shift” in the provision of urgent care and for introducing two types of hospital emergency department with current working titles of emergency centres and major emergency centres. I am not opposed to reform of emergency care, but it is essential, before there is a stampede of closures of current A&E departments, that decisions are based on robust clinical evidence. Any signs of closure for financial reasons must be resisted. I agree with my noble friends Lord Dubs and Lady McDonagh about the domino effect of A&E closures on the services in those hospitals.
I finish by reminding the Minister that what happened in the case of Lewisham hospital was quite disgraceful. A good hospital suddenly found itself having its A&E proposed for closure to shore up problems in neighbouring hospitals. It is shameful that the Government forced through an amendment in the Care Bill to make this kind of thing much easier to force through in future. The Government’s disastrous reforms and failure to manage the system are putting the NHS under ever more pressure. It is time that they got a grip.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I join other noble Lords in thanking the noble Baroness, Lady McDonagh, for raising this important issue, in which I know that she has a significant interest. I thank other noble Lords who have contributed to this very interesting debate.
I would like to respond initially by explaining the Government’s policy with regard to service change in general, before moving on to the provision of care in A&E specifically. I find it difficult to say much about the noble Baroness’s speech beyond observing that there is such a gulf separating us in our respective understanding of the facts and what is actually happening in the NHS that I shall have to write to her—and I shall do so.
The Government are absolutely clear that the design of front-line health services, including accident and emergency units, is a matter for the local NHS. It is the policy of this Government that services should be tailored to meet the needs of the local population. Reconfiguration is about modernising the delivery of care and facilities to improve patient outcomes, develop services closer to home and, most importantly, to save lives. Therefore, all service changes should be led by clinicians, and be in the best interests of patients, not driven from the top down. That is why we are putting patients, carers and local communities at the heart of the NHS, shifting decision-making as close as possible to individual patients, by devolving power to professionals and providers, and liberating them from top-down control.
Lord Hunt of Kings Heath
My Lords, if that is so, why has NHS England put so much pressure on clinical commissioning groups to close walk-in centres? It is simply not happening that clinicians are deciding. The fact is that NHS England is carrying on a micro- management of what is happening; it is simply not playing out in the way that the noble Earl describes.
Baroness McDonagh
I have another example. If what the Minister said were true, how did the Secretary of State for Health try to shut Lewisham general when all the clinicians called for it not to be shut?
Earl Howe
I shall say more on Lewisham in a moment. This is a time-limited debate, and I hope that I may be allowed to conclude my speech.
The principles that I have just enunciated are further enshrined in the four reconfiguration tests first set down to the NHS in 2010, which all local reconfiguration plans should demonstrate. These are support from GP commissioners, strengthened public and patient engagements, clarity on the clinical evidence base, and support for patient choice.
Our reforms allow strategic decisions to be taken at the appropriate level. We are enabling clinical commissioners to make the changes that will deliver real improvements in health outcomes. That is the purpose of reconfiguration. Furthermore, local commissioners proposing significant service change should engage with NHS England throughout the process to ensure that any changes are well managed strategically and, crucially, that they will meet the four tests that I have just referred to.
Given the scale of change across the health system, it is important that local NHS organisations are now supported when redesigning their health services. We are working with our national partners, NHS England, the Trust Development Authority and Monitor, on the continuing design of the interfaces, roles and responsibilities of organisations in the new system. For example, stroke care in London, which has been centralised into eight hyper-acute stroke units, now provides 24 hours a day, seven days a week acute stroke care to patients regardless of where they live. Stroke mortality is now 20% lower in London than in the rest of the UK, and survivors, with lower levels of long-term disability, are experiencing a better quality of life. That is why we must allow the local NHS to continually challenge the status quo and look for the best way of serving its patients.
I turn specifically to accident and emergency departments and points raised by a number of noble Lords. The NHS is seeing more than 1 million additional patients in A&E compared to three years ago and, despite this additional workload, it is generally coping well. I can say to the noble Lord, Lord Kennedy, that we are meeting our four-hour A&E standard and have done since the end of April. The latest figures show that around 96% of patients were admitted, transferred or discharged within four hours of arrival. There are now 500 more A&E doctors in the NHS than there were under the previous Government. Trusts expect to hire 4,000 more nurses, due to the Francis effect, as a result of the public inquiry that the party opposite decided not to pursue.
I have heard many noble Lords describe the current situation as a crisis. I do not share that perception. The NHS is performing well under pressure. Dealing with an extra 1 million patients in A&E does, however, mean that we must look at the underlying causes. Providing urgent and emergency care for people is not just about A&E. It is about how the NHS works as a whole and how it works with other areas such as social care, and how it faces up to the challenge of an ageing population of more people with long-term conditions. Therefore, the Government are taking action to respond to the immediate winter pressures and, looking longer term, we will tackle the unsustainable increasing demand on the system.
NHS England, Monitor and the Trust Development Authority, working with ADASS, have been working together on the A&E improvement and winter planning since May. Staff across the service have worked extremely hard to prepare this year and are committed to making sure that their plans are robust and that patients will receive the services they should expect and deserve. This process was started earlier and is more comprehensive than in previous years. We are determined to do everything we can for the NHS to continue providing high-quality care to patients throughout the winter, which is why we are backing the system with additional funds in the short term to help local areas prepare for and manage additional pressure during the winter.
We have allocated £250 million of funding to NHS England to help cope with winter pressures, with another £250 million for 2014-15. There will also be an extra £150 million from within the NHS England existing budget this year to ensure that everywhere receives a fair share of the funding.
It is, however, clear that the current situation is unsustainable in the long term. That is why we asked Sir Bruce Keogh to lead a review of urgent and emergency care with the first phase published on 13 November, which was also roundly welcomed by the system, including, as noble Lords will be aware, by the NHS Confederation and the Royal College of Surgeons. There will be a further update in spring 2014.
The review is aimed at delivering system-wide change, not just in A&E but across all health and care services in England by concentrating specialist expertise where appropriate to ensure that patients with the most serious illnesses and injuries get the best possible care and ensuring that other services, such as primary and community care, are more responsive and delivered locally. This will mean that people will understand how to access the most appropriate treatment in the right place as close to home as possible.
The noble Baroness, Lady McDonagh, the noble Lord, Lord Patel, and others referred to NHS 111. The introduction of the NHS 111 service is part of the wider revisions to the urgent care system to deliver a 24/7 urgent care service that ensures people receive the best care from the best person in the right place at the right time. This is not only government policy; it was a policy fully signed up to by the previous Government and initiated by them. Although NHS 111 has had a difficult start, we have backed the service with a £15 million fund to support it over the winter. NHS 111 now deals with more than half a million calls a month, and 97% of them are answered in under a minute. The first phase of the urgent and emergency care review sets out a significant expansion and enhancement of the NHS 111 service so that patients know to use the 111 number first time, every time, for the right advice or treatment.
NHS Direct, which was referred to by the noble Baroness, Lady McDonagh, and the noble Lord, Lord Patel, will continue to provide 111 services to patients until alternative arrangements can be made by commissioners. The transfer of NHS Direct’s 111 services is progressing well.
Together with NHS England, we are putting together a strategy focusing on the people who are the heaviest users of the NHS, vulnerable older people and those with multiple long-term conditions. Here I am addressing particularly the points raised by the noble Lords, Lord Patel and Lord Kakkar, and my noble friend Lord Selsdon. The vulnerable older people’s plan will focus on improving out-of-hospital care services centred on the role of general practice in leading proactive, person-centred care within a broader team and is due to be published later this year. A key element of the plan is the provision of joined-up care for vulnerable older people, spanning GPs, social services, and A&E departments themselves, which is overseen by an accountable GP. The aim of proactive care management is to help keep people healthy and independent longer.
A number of noble Lords referred to the workforce challenge. Health Education England is working with stakeholders on a number of innovations to help alleviate the workforce problems in emergency medicine. Through the Emergency Medicine Workforce Implementation Group, Health Education England will work to develop alternative training routes for emergency medicine and a range of mid-level non-doctor clinician posts. They will work with NHS England on potential workforce and training requirements.
I would like to address the point made by the noble Lord, Lord Kennedy, about Lewisham. Lewisham’s A&E is not closing. The TSA proposals were a response, as he is well aware, to a very difficult, long-standing challenge facing south London. The new Lewisham and Greenwich NHS Trust must now work with its commissioners and community to deliver a clinically and financially sustainable future. As regards north- west London, which the noble Lord, Lord Dubs, referred to, the Secretary of State has endorsed the recommendations of the Independent Review Panel, and it is now for CCGs in north-west London, working with NHS England, to take this forward. The decisions here were supported by all the commissioners in the area and all the medical directors in the trusts and all but one of the relevant local authorities.
My noble friend Lady Manzoor spoke about public awareness and engagement. I agreed with a lot of what she said. Through our reforms we have strengthened local partnership arrangements through health and well-being boards. These will provide a forum where commissioners of services, local authorities and providers can discuss the future shape of health services. As I have said, local cases for clinical change should be driven from a local level. We know that these reconfigurations work best when a partnership approach underlies them.
The NHS is one of the greatest institutions in the world. Ensuring that it is sustainable and that it serves the best interests of patients sometimes means taking tough decisions, including on the provision of urgent and emergency care. However—and this is the thought which I leave with your Lordships—those decisions are made only when the local NHS, working with local people and local authorities, is convinced that what it proposes is absolutely in the best interests of its patients.
Financial Services (Banking Reform) Bill
(10 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Brennan
“(i) takes or agrees to the taking of any decision or the carrying on of any activity by or on behalf of B as to the business of a group bank, or”
Lord Brennan (Lab)
My Lords, in moving this amendment I am gratified to see so few people in the Chamber. I drafted two amendments in this area of the Bill and found to my astonishment that the Public Bill Office had converted them into 10. The excess is not due to lowly endeavour. Their quantity does not overcome their simplicity, which is designed to improve the drafting of this section; the section creates a major new criminal offence in respect of banking.
I draw the attention of the House to the following facts. First, because it is a criminal offence in nearly all circumstances it would have had full attention from both Houses. Secondly, however, in this Bill’s history, this offence was not in the original Bill before the other House. It is a criminal offence of a major kind that will have serious attention only from this House, because, thirdly, if it goes back to the Commons in a shuttle process it is hardly likely to receive the appropriate attention that it would otherwise merit. That is an important question.
As the House agreed when this first came up in debate, one of the main purposes of the draft offence was to phrase it to create a major deterrent just by its wording. Of course people who transgress can be punished, but one would devise this kind of offence in order to deter people from thinking of committing it. Therefore, its wording is extremely important—more than in most circumstances. Many criminal offences are the result of spontaneous behaviour. This offence is directed at what you might call systematic misconduct.
With those points in mind, I turn to the amendments. First, Amendment 84 is not pedantry. In the Bill’s present wording on decisions with which the amendment deals,
“as to the way in which the business of a group … is … carried on”,
the use of “way” in this phrase is in legal terms extremely loose. When it is substituted by the word “activity”, as in,
“carrying on of any activity”,
it is more precise. The word “activity” is defined as behaviour or actions of a particular kind, whereas “way” is much more nebulous. This amendment is a drafting one designed for precision. If one did not want to accept it, one would want to be persuaded why “way” is more accurate and more easily understood by a jury than,
“carrying on of any activity”.
That amendment is straightforward. Amendments 88, 91, 93 and 99 carry on its usage in other parts of the clause. Amendment 105 makes clear the words “decision” and “activity”, although the singular includes the plural. Amendment 84 and consequential amendments stand apart from what I shall add. It is a simple and sensible amendment.
On Amendment 95, when you are dealing with corporate activity and the decisions or activity of a group of individuals that lead to a major event such as the failure of a bank, all that imports a mixture of events and circumstance. Therefore, with that background, one must be very careful in a legal context about using just the word “cause”. You face the inevitable argument from defendants: “I may have done something wrong, but it wasn’t the real cause”. Most statutes that deal with this kind of issue use words like the ones in this amendment or in the amendment in the name of the noble Lord, Lord Phillips, “cause”, or “contribute significantly to”. That wording prevents defendants inviting juries and judges to enter into philosophical discussions about the extent of causation by virtue of the acts that were committed. That is extremely important; when it comes to a trial we deal with juries, and we want language that will enable them to come to common-sense conclusions. I suggest to the House that this is a commonsense amendment; the amendment in the name of the noble Lord, Lord Phillips, is to the same effect but with slightly different wording. Therefore, that also stands apart.
The next issue is recklessness. The noble Lord, Lord Deighton, on opening at Second Reading, said that this created an offence of “reckless misconduct”. The terms of the offence do not use the word “reckless” as we identified it on the previous occasion. That is extremely important, because at Clause 80(6) in the same Bill the intended statute creates an offence of recklessness. It actually uses the word “recklessly” to describe a certain action. It can be guaranteed that lawyers will argue that if a statute uses the word in one clause but not in another, then where it was not used it was not intended. How could Parliament describe two offences as having the same effect, using the word “reckless” in one but not in the other? That point therefore requires us to consider whether the wording covers recklessness to an adequate extent.
In the helpful but indeterminate discussion that I had with Treasury and Home Office lawyers, it crossed my mind that the case which they mentioned—a case called Cunningham—is not the current Supreme Court authority on the word “reckless” in this kind of offence. The appropriate authority to look at is R v G in 2004. The wording is simple. The decision says that a person acts recklessly with respect to a result if he is aware of a risk that it will occur—that is straightforward enough—and it is, in the circumstances known to him,
“unreasonable to take the risk”.
The intention of that case was to produce a definitive meaning of the word “reckless” for general criminal law. Therefore, let us test that standard set by the Supreme Court against the present wording, to determine whether it meets the current judicial test and whether it should match that test or if there is justification for a different test. This offence differs from R v G in three ways.
The first is the use of the phrase,
“far below what could reasonably be expected”,
rather than, “is unreasonable”. It makes a difference. This means that the jury will be told—in a case where a judge will have to determine whether there is an offence of this kind—whether “far below” only creates criminal liability for the most egregious acts or omissions—disastrously bad mistakes which jump off the page. That is what “far below” imports. This, to many, would strike one as an extraordinarily lenient way of approaching people who ruin a bank—that they should only be liable if they have been guilty of the most stupid and egregious mistake. That difference, having regard to the risk, is not justified. In this amendment, therefore, “far below” is deleted so as to be replaced by the words, “is unreasonable”.
The second point, by way of a difference to the case of R v G, is that the risk to be guarded against by the people involved is the failure of a bank. Therefore, to favour such conduct with a narrow test—the most egregious conduct—appears to be unwarranted in social justice terms. Why should this test be narrow? If, as I understand it, the offence is intended, despite my suggestion to the contrary that it does not in Committee, to involve wilful blindness—people deliberately avoiding looking at the risk— how is a judge or a jury going to assess somebody who is wilfully blind so as to be totally unreasonable, compared to somebody who is wilfully blind in the most egregious of circumstance? It is a complete paradox of terminology. You are either blind to the risk or you are not. The concept of extensive, as opposed to minimal, wilful blindness is absurd. It is an invidious distinction and will produce serious confusion. The fact that it is used in corporate manslaughter terms is not to the point. As I indicated in Committee, a corporate manslaughter event is usually an explosion, a building collapse, or a crane falling over: the circumstances cry out as indicating the “far below” standard compared to ordinary industrial safety standards. It is not the same circumstance; it is not an appropriate analogy.
The third difference that I suggest to the House is unwarranted is the test. If you look at the offence outlined in Clause 27(1)(c), the test is whether the conduct fell “far below” or was unreasonable, having regard to,
“what could reasonably be expected of a person in S’s position”.
In this context, the unreasonableness of conduct should be tested against the standards of people in that position: the unreasonableness, not gross unreasonableness. There is already a test that can be used and the “far below” point simply does not add to that. What could reasonably be expected of a person in his position is enough.
The House has been patient in listening to this. The fact is that in a few minutes I have summarised what will take days in court hearings about what this all means. What we want to avoid is the occurrence of court hearings. We do not want terminology that will provoke legal argument. The supposed improvements by these amendments that I have advanced at this stage have been debated before. If the Government are not sure of their ground regarding what judges and juries will do, they really ought to take independent opinion from Treasury counsel, not internal lawyers who have no real experience of criminal litigation. I commend these amendments to the House.
The Deputy Speaker (Lord Faulkner of Worcester) (Lab)
I must advise the House that if Amendment 84 is agreed to, I shall be unable to call Amendments 85 to 87 for reasons of pre-emption.
Lord Phillips of Sudbury (LD)
My Lords, my name is on the 18 amendments in this group and I am the sole signatory on eight of them. I endorse entirely what the noble Lord, Lord Brennan, said. He speaks from great experience, which is of great help to the House.
One of the scandals—I think one can fairly use that word—of the past five years in terms of financial failings has been the extreme paucity of prosecutions for some of the greatest criminal failings, to use a neutral word, in the history of our or any country. It is rather staggering to think that over the past five years you can count on the fingers of your two hands the number of City malefactors who have been prosecuted, when during that time probably 20,000 or 30,000 people have been prosecuted for shoplifting at an average of £25 a time.
I tabled these amendments not in any spirit of vindictiveness—one can also say that, I am sure, of the noble Lord, Lord Brennan, and the other signatories—but to try to give real teeth to a very important clause, Clause 27, which is designed and put forward on the basis that it will be a significant deterrent to conduct arising in the future which is comparable to the conduct that has occurred in the past five or six years. The wording of Clause 27(1) in particular seems to those of us who have tabled these amendments to be so narrow—to cite the word used by the noble Lord, Lord Brennan—that the prospects of getting a conviction before a jury, or, indeed, starting to prosecute at all, will be remote. To give a simple, direct example of that point, Clause 27(1)(b) makes plain that a conviction can be secured only if the implementation of a single decision—“the decision”—causes,
“the failure of the group bank”.
When, except in the rarest of circumstances, did a single decision cause the failure of a bank? Life is much more complicated. Very often a series of decisions is involved and even then you cannot say that the decision or decisions cause the failure but rather that they,
“contribute directly and significantly to”,
the failure of a group bank, as I have put it in my amendment.
We have tabled these amendments to give practical effect to Clause 27 and other clauses. They are important clauses and we must not shackle them with such a narrow set of requirements that they will not serve their purpose. We should never forget that British criminal law is rightly strictly construed, and construed against the prosecution. If you think of that and you think of the wording in the clause, you will realise that it is not fit for purpose. I hope that if my noble friend the Minister does not accept the wording of these amendments—they could be drafted differently—he will at least undertake to come back at Third Reading with wording that the Government find acceptable and which will serve the purpose that we seek to serve in putting these amendments forward.
Lord Eatwell (Lab)
My Lords, having listened to my noble friend Lord Brennan and the noble Lord, Lord Phillips, I found this discussion quite disturbing. The creation of a criminal offence is one aspect of the Bill that pushes forward the regulatory regime in the UK and creates an environment more suited to the somewhat cavalier nature of finance in a global marketplace—in particular by identifying those activities that have inflicted enormous harm upon our fellow citizens. What I heard was that, as drafted, the probability of securing a conviction or even a prosecution, as the noble Lord, Lord Phillips, put it, is vanishingly small. Unless the terminology is clarified in a way laid out so clearly by my noble friend, this part of the Bill will simply bring that aspect of regulation into disrepute because it will be worthless. That is why I regard the remarks that I have heard from the two distinguished lawyers who have just spoken to be very disturbing. It is incumbent upon the Government not simply to produce a pat answer here this evening but again to produce a carefully written assessment of the case for an appropriate criminal regime and its implementation in order that the whole House has an opportunity to assess this important aspect prior to Third Reading.
Lord Newby (LD)
My Lords, these amendments essentially aim to make three changes to the criminal offence: first, to allow defendants to be prosecuted under the offence when a number of decisions taken together cause the bank to fail; secondly, to enable the offence to be made out when the decision or decisions in question were a significant contributory factor to the failure of the bank, rather than its sole cause; and, thirdly, to include within the definition of bank failure the systematic failure of the bank to prevent liability with regards to broader criminal offences.
On the first two issues, while I understand noble Lords’ concerns, I assure them that these amendments are not necessary to deliver the effects they intend. First, I assure noble Lords that, as a matter of law, under Section 6 of the Interpretation Act 1978 words in the singular include the plural unless express provision is made otherwise. The term “decision” includes “decisions”, plural. Therefore, where appropriate, it will be possible to prosecute on the basis of the implementation of a number of decisions. The Interpretation Act 1978 ensures that it is not necessary to repeat the defined terms or make express provision for the singular to include the plural in every single statute. The case for abandoning that practice seems rather minimal in this instance.
Moreover, in practice we generally expect a prosecution of the offence to focus on one individual decision in order to maximise the ability of the prosecution to make its case effectively when asking the jury to consider what are likely to be very complex events. This would enable the prosecution to focus on the causal relationship between the implementation of one decision and the failure of the bank, where that relationship seems to be most clear. In these cases, any other relevant decisions would be taken into account by the jury as the circumstances in which the key decision was taken, when the jury was deciding whether the defendant’s behaviour fell far below that which reasonably could be expected of him or her. For example, a decision to take on a risky acquisition may be more or less reasonable depending on earlier decisions to strengthen or weaken the bank’s capital position.
These amendments also include references to agreeing to the carrying on of activities by a firm. This would add nothing to the offence as currently drafted, since the reference to agreeing to the firm carrying on certain activities assumes that those activities in some way require authorisation and this must involve taking a decision, or agreeing to the taking of a decision, by or on behalf of the firm, and is therefore already included in the offence.
Moving on to Amendments 94, 95, 100 and 102, under general principles of criminal law the test for an action having “caused” an event to occur is that, had that action not been taken, the event would not have occurred. Therefore, in this specific offence the test is that, if the decision or decisions in question had not been implemented, the bank would not have failed. The implementation of the decision need not be the sole or even the main cause of the bank’s failure. In practice, because of the evidential standard that applies to criminal cases, we expect that cases will be prosecuted only where it is very clear that the implementation of the decision or decisions in question was a significant contributing factor to the failure of the bank.
In addition to these general points, the Government oppose some aspects of the amendments in principle. As well as including reference to “activity”, Amendment 97 would lower the bar of the reasonableness test for when the offence would be committed. As set out in Committee, the Government do not think this is appropriate. Referring to conduct which is far below that which would be expected has precedents in the Law Commission proposal for a statutory offence of killing by gross carelessness and in legislation creating the offence of corporate manslaughter. We have used this particular phrase knowing that it works and can be effectively interpreted by the courts. There is no precedent in UK criminal law for criminalising behaviour that is merely unreasonable. To do so would amount to an indiscriminate diffusion of criminal liability, in a way that made it hard for individuals to know with sufficient certainty when they might be committing an offence.
Amendment 118 would expand the definition of institutional failure that would trigger the offence to include occasions where there was a systematic failure of the bank to comply with a range of laws imposing criminal liability in connection with the conduct of financial services business. A similar amendment was raised in Committee, focused specifically on compliance with the Fraud Act 2006, the Proceeds of Crime Act 2002 or the Money Laundering Regulations 2007. The Government’s position on this remains unchanged—this offence has been introduced to plug a gap in existing legislation where there are no criminal powers available to sanction senior managers who have recklessly caused their banks to fail. By definition, criminal liability can arise where offences already exist that individuals can be convicted for and appropriately punished, depending on the seriousness of the breach. In certain cases, they can also be charged with consenting to or conniving in such activities. It is difficult to see how this amendment strengthens the offence.
The noble Lord, Lord Brennan, raised the question of the definition of “way”. The expression includes both the activities in the business and how those activities are carried out. This makes the offence broader. The noble Lord also suggested, if I understood him right, that in some cases the real risk is that people did not know what risk they were taking or wilfully turned a blind eye. While it might appear attractive to include incompetence by senior managers in the offence, doing so could introduce unwelcome and potentially damaging uncertainty into the sector. Further, to comply with the European Convention on Human Rights, the offence must be sufficiently certain to enable individuals to know when they are at risk of committing the offence. However, this does not mean that it is possible for a senior manager to simply close their eyes to the risk the bank is taking. In some cases a court may decide that it can be inferred that a particular person had knowledge of a risk. In the case of a director, ignorance of a risk to the bank’s existence may, in some cases, be to admit to breaches of the duties under the Companies Act 2006. Accordingly, there are cases in which an argument that a defendant had no knowledge of a particular risk would carry very little credibility and could even expose the defendant to criticism for breach of duty.
We take this offence extremely seriously as a key part of the new infrastructure that we are putting in place and we believe that it meets the test we have set out. On that basis, I hope that the noble Lord will withdraw his amendment.
Lord Phillips of Sudbury
My Lords, first, is my noble friend quite certain that the Interpretation Act 1978 does not itself operate subject to the context of the language which is being interpreted? If that is so, I believe that there will be real ambiguity about this clause because, as I say, the law is construed strictly in favour of the accused. Secondly, does he accept that in a clause like this, to rely on the Interpretation Act rather than put in some plain words that make it clear, is unhelpful to people who must refer to this piece of legislation in the future?
Lord Newby
I am not sure that I do, my Lords, but I wonder if I might write to the noble Lord to clarify our thinking and, it is hoped, persuade him that we have got it right.
Lord Brennan
My Lords, listening to the exposition of the Minister leads an experienced lawyer to think that those were the kinds of arguments that would make for an entertaining tutorial at university and deprive the participants of any career at the criminal Bar, because they simply would not know what they were talking about in terms of what a judge and jury would expect by way of argument. I am sorry to put it so bluntly, but it really is a clash with the Interpretation Act that would lead to ribald laughter in most criminal chambers. I am being serious about this. It is the kind of argument that you would expect to get from a bright lawyer with no criminal law experience. The Government must face up to this. I do not understand why they cannot take advice from a competent independent Treasury counsel on the scope of the offence in order to make sure that they can prosecute, or at least hope to prosecute. Creating such an offence in-house is, I think, highly suspect.
I will go through this point by point. First, why should not the statute say decision and/or decisions—one of the two? Secondly, why, as the noble Lord has suggested, do we have to get ourselves into the circumstance of having to identify the key decision? It may be extremely difficult to do that because it may be a refined banking judgment where a series of acts or decisions which led to failure may be cumulative and not the result of the key decision. Thirdly, how the word “cause” in the criminal law can be construed to be “significantly contributed to” is not, I think, something that figures in the criminal law books.
I turn next to corporate manslaughter. The argument has to be met. The fact that you get the same words in another statute is of no importance until you consider the context in which the words are being used. Far below that, in the industrial safety context, is the matter of common sense. In terms of banking behaviour, it is an extremely complex exercise to expect a jury to carry out, and an unnecessary one. The answer given in response to the amendments did not include any explanation of why this statute is taking itself down a different route from R v G. Wilful blindness is a specific criminal law phrase designed to embrace the people who deliberately close their eyes to something. It does not embrace innocent incompetence. The very word wilful imports the culpability of it.
My last point, in agreement with my noble friend Lord Eatwell, who is known as an academic, is that the legislature would be shooting itself in the foot if it created a criminal offence which the public came to treat as having no effect, bordering on the ridiculous. That would be a major political mistake. Those on the government Bench who take such matters into account should pay more attention to that than to the legal advice they are getting. I beg leave to withdraw the amendment.
Lord Deighton
Lord Deighton
Lord Deighton
Lord Deighton
“(2) “Financial institution” means a UK institution which—
(a) meets condition A or B, and(b) is not an insurer or a credit union.(2A) Condition A is that it has permission under Part 4A of FSMA 2000 to carry on the regulated activity of accepting deposits.
(2B) Condition B is that—
(a) it is for the purposes of FSMA 2000 an investment firm (see section 424A of that Act),(b) it has permission under Part 4A of that Act to carry on the regulated activity of dealing in investments as principal, and(c) when carried on by it, that activity is a PRA-regulated activity.”
“(5) Subsections (2A), (2B) and (4)(b) are to be read in accordance with sections 22 and 22A of FSMA 2000, taken with Schedule 2 to that Act and any order under section 22.”
(6A) A “senior management function” is a function designated as such—”
Lord Deighton
Lord Sharkey
“Part 4ARegulation of High Cost CreditRegulation of high-cost credit agreements
(1) The FCA shall, within 6 months of the passing of this Act, include among the regulations governing high-cost, short-term credit agreements provisions to—
(a) restrict such loans to one outstanding loan per customer at any given time;(b) provide for a 24-hour cooling off period between loans in which no new loan may be entered into less than 24 hours after the settlement in full of a previous loan;(c) establish at the lender’s cost a real time database of loans outstanding to be used in the enforcement of paragraphs (a) and (b);(d) restrict the amount of any loan to a maximum face value of £300, exclusive of permissible fees; (e) restrict any transaction fees and charges of any kind to a maximum of 10% of the face value of the loan plus a £3 verification fee;(f) restrict the term of any loan to between 7 and 31 days;(g) allow the borrower to extend the loan term for an additional 60 days beyond the due date without any additional charges of any kind;(h) require borrowers who avail themselves of the extension in paragraph (g) to undergo credit counselling with a designated professional counsellor or organisation and to abide by the plan established to retire the debt.(2) For the purposes of this section—
“high-cost credit agreement” means a regulated credit agreement as defined by section 137C of the Financial Services and Markets Act 2000 (as inserted by the Financial Services Act 2012) that provides for—
(a) the payment by the borrower of charges of a description from time to time specified by the FCA; or(b) the payment by the borrower over the duration of the agreement of charges that, taken with the charges paid under one or more other agreements which are treated by the FCA’s rules as being connected with it, exceed, or are capable of exceeding, an amount specified by the FCA;“charges” means charges payable, by way of interest or otherwise, in connection with the provision of credit under the regulated credit agreement, whether or not the agreement itself makes provision for them and whether or not the person to whom they are payable is a party to the regulated credit agreement or an authorised person; “authorised person” has the same meaning as in the Financial Services and Markets Act 2000.”
Lord Sharkey (LD)
My Lords, this amendment has been somewhat overtaken by events. As little as four weeks ago, the Government were claiming in this Chamber that there was insufficient evidence for a cap on the cost of payday loans. They said:
“The Government do not believe that current evidence provides sufficient justification to support a cap on the cost of credit”.—[Official Report, 23/10/13; col. 1109.]
On Sunday, the Chancellor underwent a kind of Damascene conversion. He is now convinced that there is sufficient evidence for a cap. That is very good news. Surely it would be unkind to point out that there was no more evidence available to him on Sunday night than there was four weeks ago.
After the Chancellor’s announcement that there would be a mandatory cap, there was another late intervention. At nine o’clock last night, like all of us, I was e-mailed a letter from the noble Lord, Lord Deighton. Without elaboration, it says that,
“the balance of evidence has tipped in favour of a cap”.
He says that the Government,
“will give the FCA a clear duty in legislation to use the powers we have given it to implement a cap”.
He continues:
“The FCA must ensure that it designs a cap that works in UK consumers’ interests and fits the UK market”;
but he goes on to say that the FCA will draw upon,
“the analysis and findings of the Competition Commission, whose investigation of the payday lending market is currently underway”.
The investigation is indeed under way, but it has a statutory reporting date of 26 June 2015. That is far too late. It means that any cap is unlikely to be in place before the end of 2016. That would mean millions of the most financially troubled people continuing to pay millions of pounds to PDL companies entirely unnecessarily. The Chancellor, in his interview on the “Today” programme on Monday morning, said clearly that installing a cap could happen in parallel with the Competition Commission investigation. I spoke to the noble Lord, Lord Deighton, about this issue earlier today. At the close of our conversation, he committed the Government to have the cap fully implemented by the end of January 2015. This seems to me to be reasonable and to allow the time necessary to put all the systems in place. I would be grateful if the Minister would explicitly confirm to the House the commitment made to me by the noble Lord, Lord Deighton.
The main difficulty this evening, of course, is the lack of any concrete proposals from the Government. We cannot know exactly what the Government will propose. This is a fundamental problem because the devil is very much in the detail when it comes to the regulation of payday loans. We can only make a little progress tonight, but it would help to hear the Minister confirm to the House that they will by legislation oblige the FCA to impose a cap on the total costs associated with any payday loan.
It would help to hear the Minister say that the FCA will be instructed to look again at the restrictions on rollovers. The FCA has said that it is minded to restrict rollovers to two. This is completely wrong. Some 28% of all borrowers have one or more rollovers, and a full 50% of payday lending revenue comes from rolled-over loans. Rollovers should be banned. We should do here what they have been doing in Florida for the last 11 years. In Florida, no loan may be taken out until any previous loan has been settled in full; and no new loan may be taken out within 24 hours of the settlement of a previous loan.
Will the Minister confirm that he will instruct the FCA to consider this system? In Florida there is a real-time lending database in operation. This database prevents rollovers. It also prevents borrowers having multiple simultaneous loans. Will the Minister confirm that we will have a similar real-time database here in the UK? Will he confirm that the FCA will be instructed to consider banning multiple simultaneous loans?
There are another couple of features of the Florida regulatory system which should be closely examined on the basis that we should use them here unless there is overwhelming evidence to the contrary. First, in Florida, any loan may be extended by 60 days without any additional charge at all. That is certainly not true here, but it should be true here. Secondly, any borrower in Florida who extends a loan by 60 days is required to undergo approved credit counselling and to abide by the plan agreed to retire the debt. This helps stop the spiral of increasing debt and provides a way out. We should have this here in the UK too.
The fact is that the Florida regulatory system is a model for payday loan regulation. Perhaps this is what the Chancellor suddenly realised on Sunday night. I ask the Government to ask the FCA to consider all aspects of the Florida regime for adoption here in the UK. At its simplest, in Florida, if you borrow £300 for 30 days you pay back £333. Here, if you borrow £300 for 30 days from Wonga, you pay back £397. That is three times as much—a wholly unjustifiable transfer of cash from the poor to the rich.
In closing, I simply ask the Minister to confirm that when we come to the capping amendment at Third Reading, we can operate under the less restrictive Committee-stage rules, as I think is entirely appropriate given the late stage at which the amendment is being introduced. I beg to move.
Lord Selsdon (Con)
My Lords, I support the noble Lord, Lord Sharkey, but I speak from a slightly different point of view. After so many years in your Lordships’ House, from time to time certain problems are raised with me when people have nowhere else to go. I want to talk about the link between the payday loan and credit and other things, particularly unemployment.
Take the situation at the moment of the young unemployed, or with some sort of weighting allowance in some form or other, who want to buy a mobile telephone or an iPad or something like this. They go along to any one of the suppliers, which then offers them a package that means they do not need to pay £500 up front but can pay it later. They sign up to something that they do not quite understand and then find that they cannot meet the necessary payments. They may have various allowances but, before they know it, the pressure builds up. So what starts as a £500 transaction can multiply into £1,000 fairly quickly. They cannot afford to pay the bill, so they go to a payday loan company—I will not mention their names—which, without the necessary research, offers them facilities at an exorbitant rate of interest. What starts with the wish to buy an iPhone or something of that sort for £500, when they have not got the money up front, can turn into nearly £5,000.
Lord Watson of Invergowrie (Lab)
My Lords, the noble Lord, Lord Selsdon, makes an interesting and important point about those people who are in the situation where they see this as a last resort for receiving credit. If any noble Lords were watching “Newsnight” yesterday evening, they would have seen a disturbing feature concerning Wonga; the noble Lord, Lord Selsdon, did not want to name companies, but this company was named in the programme. It turned out that people who had had loans from Wonga, and had then gone to try to get a mortgage, had been told by their financial adviser, or by the mortgage company, that they were not going to get a mortgage simply because they had had a loan. I am sure that would apply to any payday loan company.
It seems perfectly wrong that somebody who takes out that kind of loan and pays it back within the defined period at no additional cost and without extending it or anything—in other words, someone who has done nothing wrong or outwith the agreement—is then penalised. It seems that this stain on their record remains for six years. It seems fundamental that any payday loan company ought to be saying on its website, or telling people over the telephone, “Yes, we are happy to give you this money, but we have to tell you that some mortgage companies and some lenders will not lend to you for a period of six years simply because you have taken this loan”. This seems to be a nefarious practice, and it also seems quite wrong that those companies are not obliged to state unequivocally and perfectly clearly that this could be the case.
Lord Eatwell
My Lords, we of course look forward with interest to the amendments that the Government will put down at Third Reading. However, I was somewhat disturbed by newspaper reports suggesting that the Government are going to ask the FCA to formulate a policy on the level of the cap. That would be entirely inappropriate. It is for the Government to formulate and to define the objectives of the policy and for the FCA to then implement it. The FCA may, on the basis of research, be charged with setting the level of the cap in relation to principles defined by the Government, but it is up to the Government to specify those principles, specify the objectives and, indeed, design the policy. We do not want to hear a cop-out, where the Government declare, to general acclaim, that they are going to cap payday loans and then hand the whole design of the policy over to an organisation which is a regulator and not designed, in and of itself, for the formulation of policy.
I hope that the Minister can give us some reassurance that when these amendments are brought forward at Third Reading, they will contain clear objectives, principles and processes that will define the approach and policy that the Government are prepared to implement with respect to payday loans and that the responsibility that is then handed to the FCA will be one of implementation, not of policy design.
Lord McFall of Alcluith (Lab)
My Lords, Amendment 178 concerns continuous payment authorities. This is an issue that I raised during the passage of the Financial Services Act 2012. Continuous payment authorities are a recurring payment mechanism involving a debit or credit card where the debtor gives his or her card to the company and they contact the bank. Unlike direct debits or standing orders, this allows a firm to take regular payments from a customer’s bank account without having to seek express authority for each payment. When I made this point to the Minister, the noble Lord Lord Newby said that,
“abuse of the CPA is one of the most concerning practices of payday lenders”.—[Official Report, 28/11/12, col. 235.]
Consumer groups, the Law Society and the OFT have expressed ongoing concerns about this issue. The real issue is that the debtor—the customer—is not in full charge of their affairs. The continuous payment authorities do not offer the same guarantee as direct debits or standing orders. In effect, they give the company authority about how much is taken from an individual’s account and when. This is hugely important to those who take out payday loans, whose financial position is tenuous. Unlike direct debits and standing orders, there is no written communication between the individual and the bank. This situation has led to the banks reviewing up to 30,000 complaints from customers since 2009. According to the Financial Conduct Authority, quite a number of those will be eligible for compensation. That authority has said that many of the banks or providers are not cancelling recurring payments to payday loan firms.
Last December, the OFT warned that businesses should not lock customers into CPA traps because people did not know what they were signing up to. The OFT opened formal investigations last November into several payday lenders over aggressive debt collection practices. Their progress report focused on concerns regarding unfair or improper practices:
“Using the CPA in a manner which is unreasonable or disproportionate or excessive in failing to have proper regard to the possibility that a debtor is in financial difficulties”.
This includes,
“seeking payment before income or other funds may reasonably be expected to reach the account”.
The Financial Ombudsman Service was seeing 50 new cases a month at the end of last year. My information is that that number has increased since.
Such blatantly unfair treatment of consumers should not be restricted to a matter of guidance. The new clause that I am proposing ensures that debtors are informed about their rights and that only the debtor may cancel or vary a CPA in communication with the bank. Furthermore, the debtor’s bank is obliged to comply with the debtor’s instructions, as they do with direct debits and standing orders. I suggest to the Minister that in these austere times we ought to legislate to protect such debtors and to ensure a level playing field between the lender and the debtor.
Lord Newby
My Lords, I am grateful to the noble Lords, Lord Sharkey and Lord McFall, for raising this very important issue again. The Government wholeheartedly agree that consumers must be protected when they borrow from payday lenders and use other high-cost forms of credit. Payday lenders are causing unacceptable consumer harm and the Government are committed to putting that right.
As noble Lords will know, the Government have taken decisive action to protect borrowers by fundamentally reforming the regulatory system governing these lenders. This House strongly supported the Government’s proposals to transfer the regulation of consumer credit to the FCA during the passage of the Financial Services Bill last year.
The Government have ensured that the FCA has robust powers to protect customers of high-cost lenders. It will thoroughly assess every lender’s fitness to continue to trade. It will put in place much higher standards that firms will have to meet, and those requirements will, for the first time, be binding on firms. It will proactively monitor the market, focusing on the areas most likely to cause consumer harm. The FCA has a broad enforcement toolkit to punish breaches of the rules: there is no limit on the fines it can levy and, crucially, it can force lenders to provide redress to consumers.
The FCA takes up its new regulatory responsibilities in this area on 1 April next year. But it has already demonstrated that it is serious about cracking down on high-cost lenders. Its draft rules, published on 3 October, restrict some of the practices that cause most consumer detriment, and have won widespread support. But we are convinced that further action will be needed to ensure that this market functions in a way that is in consumers’ interests. As noble Lords will be aware, the Government have announced that they will bring forward an amendment to this Bill at Third Reading to require the FCA to use its powers to cap the cost of payday loans.
I will not pre-empt our discussion at Third Reading but I would just like to make a few key points on the need for a cap on the costs of credit. The Government have always kept the case for a cap under review as the market has evolved. With growing evidence, including from other countries, in support of a cap, we believe that now is the right time to give the FCA a clear parliamentary mandate to take action under the powers we have given it to implement a cap on total costs.
The FCA has an important job to do: it must ensure that it designs a cap that works in UK consumers’ best interests and fits the UK market. To do that, it needs to consider the evidence thoroughly, including drawing on the valuable work being undertaken by the Competition Commission to investigate the fundamental problems in the payday market. As the noble Lord, Lord Sharkey, has already pointed out, we do not intend to wait until the Competition Commission has finished its work and have committed to implementing the cap in January 2015.
The Government’s commitment this week sends a strong message to lenders: “Do not wait for the authorities to act, raise your game and start charging and treating your customers fairly now”. We will have a full debate on the government amendments at Third Reading—
Lord Watson of Invergowrie
I thank the Minister for giving way. He made the point about treating customers fairly. I understand that he is making a broader point but I noticed that he was nodding a few minutes ago when I spoke about the potential damage to somebody trying to get a mortgage, having taken out a payday loan. Does he agree that some way should be found of ensuring that specific information is given to those taking out a payday loan so that they do not affect their ability to handle other aspects of their financial affairs?
Lord Newby
I was going to come on to this point but I will do so now. I did not see “Newsnight” but I read about the report in today’s papers. It seems demonstrably unfair. I have two sons in their 20s. I have no idea whether they take out payday loans but I know that at some point in the next six years one or both of them might think of getting a mortgage—if they keep working hard. It does seem demonstrably unfair that someone taking out 50 quid for a payday loan today could be automatically denied a mortgage in six years’ time. If the noble Lord will permit me, I propose to draw that to the attention of the FCA.
There are two elements to this. First, there is the point that the noble Lord made about what might be on the website to point this out. There is also another issue, which is whether it is reasonable for people offering mortgages automatically to deny them to someone who may have taken out a small payday loan and paid it off rapidly. I do not know, for example, whether that rule applies to somebody who has taken out a loan under the traditional method of door-to-door payday-type loans that we had in this country for many decades. I shall draw that to the attention of the FCA.
I was just beginning to say that we will have a full debate on Third Reading, and I can commit to operating, as the noble Lord, Lord Sharkey suggested, on Committee stage rules. Having sat through many debates in your Lordships’ House, I do not think that, even if I said that we were resistant to noble Lords’ proposals, that would make a huge difference to the behaviour of noble Lords. In any event, I am happy to give that assurance now.
Turning to the amendments before us, starting with that tabled by the noble Lord, Lord McFall, the Government share his deep concern about the potential for consumers to be misled by lenders. It is essential that consumers are well informed of the risks before entering into an agreement. However, I believe the noble Lord’s concerns will largely be addressed by the FCA’s proposed rules, or already exist in legislation.
Regulations made under the Consumer Credit Act 1974 in accordance with the consumer credit directive currently require that creditors provide adequate information to enable the consumer to assess whether a proposed credit agreement is suitable to their needs and financial situation. Requirements on lenders to be clear to consumers are also set out in the OFT’s Irresponsible Lending guidance. These requirements will be transposed into binding FCA rules. The noble Lord was worried about guidance; this is being transposed from guidance into rules.
The FCA has also proposed a tough package of measures to restrict how payday lenders can access money from their customers’ bank accounts via the continuous payment authority mechanism on their debit and credit cards. These include limiting the use of CPAs to two attempts, and banning part payment. The FCA is also proposing to turn the guidance around the use of CPAs from the outgoing regulator, the OFT, into binding FCA rules. Several of the provisions set out in the noble Lord’s amendment are therefore directly covered by these proposed rules, including a requirement for lenders to give the debtor a statement of their rights in relation to the CPA, and the ability of a borrower to cancel a CPA at any time.
The Government believe that the provisions set out by the noble Lord and not reflected in FCA rules will not, in practice, serve to improve consumer protections. Requiring lenders to provide additional information to consumers on their legal rights presents a real risk of information overload and confusion for consumers. As the noble Lord said in Committee, no one wants to be swamped by hundreds of pages of dense legal text. It is also important to balance awareness of legal rights with promoting awareness of the Financial Ombudsman Service, the free service to help consumers resolve disputes. Taking a case to court can be too expensive for consumers.
Lord McFall of Alcluith
The issue here is a level playing field for continuous payment authorities, and direct debits and standing orders. There has to be a loud and clear message from the Financial Conduct Authority to banks, which have 30,000 complaints against them at the moment, and to companies, that we cannot tolerate an imbalance between the power and authority of a lender and the debtor, who can be in ignorance about what is happening to their account. If the Minister can assure me that he will send that message to the FCA, which in turn will send out the message that it needs a level playing field, at least that would be a step forward.
Lord Newby
Absolutely, I am very happy to do that. I hope that the rules would send that message very clearly, but I am very happy to reinforce it.
I go back to the terms of the amendments. I am concerned that some of the provisions could make it more difficult for a consumer to cancel an agreement—for example, requiring borrowers to sign for cancellation of a CPA. I am confident that the FCA’s proposals will give consumers control with respect to CPAs and in managing their repayments. I strongly support the noble Lord in seeking to protect consumers using the high-cost credit market and ensuring that they know their rights. However, I believe the objectives of transparency and protections for consumers are already provided for by the new regulatory regime; the FCA has already set out the action that it proposes to take in this area.
I turn to the amendment proposed by the noble Lord, Lord Sharkey. His proposal would require the FCA to implement a number of rules from the Florida model of payday regulation, including a requirement for a cap on credit. I can give the noble Lord at least some of the assurances that he seeks in terms of the FCA considering the Florida approach to regulating payday lenders very closely, as it decides how to design a cap on the total cost of payday loans for the UK market and make sure that it works effectively here. It will consider rollovers and look, for example, at the experience of Florida with a real-time database.
While I completely support the noble Lord’s desire to learn lessons from other countries’ experience, I have some doubts as to whether it is as straightforward as he thinks to simply import almost an entire regulatory framework from another jurisdiction. The UK has a very different market from other countries, and it is right that the rules governing regulation of payday loans in the UK reflect our own unique national characteristics. The FCA will be charged with doing that, building on the international evidence and examination of the UK market, and drawing on the Competition Commission’s analysis among other things. Therefore, while I share the noble Lord’s commitment to ensuring the UK consumers are protected when they borrow from high-cost lenders, I hope that he will agree that the best way to achieve that is through development of evidence-based rules that are tailored to protect UK consumers. We have a clear action plan to deliver this objective.
The noble Lord, Lord Eatwell, raised the question of the content of the amendments and the relationship between the Government, in setting policy in this area, and the FCA—where the Government stop and the FCA begins. I heard very clearly what he said. The exact nature of the amendment that we will debate at Third Reading is currently being formulated, and I shall make sure that his point is very much in the minds not only of Ministers but of officials as they set about that task.
With those assurances about the amendment that we will introduce, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Sharkey
I was struck by the point made by the noble Lord, Lord Eatwell, that the Government must at some point surely say how the FCA is to arrive at a rate or an amount for a cap and by what criteria the cap should be determined. I am sure that they will want to revisit that whole notion again at Third Reading.
As to Florida, I am encouraged by what the Minister says. I make the overriding point that the Florida system has been operating for 11 years; it is simple, it is easy to understand and it works. What we have here now does not work, is not simple and is not easy to understand—and it costs three times as much as Florida. That is a powerful reason for looking carefully at Florida and assuming that there is something that we can really learn here, no matter the differences between the two jurisdictions. However, I am very grateful for the Government’s decision to cap the total cost of payday loans, and I look forward to a further discussion of the issues at Third Reading under Committee stage rules. In the mean time, I beg leave to withdraw the amendment.
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